SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) July 2, 1999
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Riviera Holdings Corporation
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(Exact Name of Registrant as Specified in Charter)
Nevada 000-21430 88-0296885
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
2901 Las Vegas Boulevard South, Las Vegas, Nevada 89109
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (702) 734-5110
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
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The registrant has entered into a Settlement Agreement, dated
as of July 1, 1999 (the "Settlement Agreement"), by and among Allen E.
Paulson ("Paulson"), an individual residing in the State of California,
R&E Gaming Corp. ("Gaming"), a Delaware corporation, Riviera
Acquisition Sub, Inc. ("RAS"), a Nevada corporation, Elsinore
Acquisition Sub, Inc. ("EAS"), a Nevada corporation, and Carlo
Corporation, a Delaware corporation ("Carlo," and collectively with
Paulson, Gaming, EAS and RAS, the "Paulson Plaintiffs"), and the
registrant ("RHC"), a Nevada corporation. See Settlement Agreement
attached hereto as Exhibit 10.1.
The Settlement Agreement is subject to court approval. If the
Settlement Agreement is approved, Paulson would recive $5 million
consisting of (i) $3,477,000 ($7.50 per share) for the 463,655 shares
of RHC common stock owned by Paulson and (ii) $,523,000 out of the
funds being held in escrow for the benefit of holders of RHC Contingent
Value Rights ("CVR's"). The remainder of the escrow (about $4,350,000
at May 31, 1999) would be distributed to the holders of the CVR's. Each
CVR would receive about $2.46 per CVR. See Press Release dated July 2,
1999, attached hereto as Exhibit 99.1
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(c) Exhibits
10.1 Settlement Agreement, dated as of July 1, 1999, by and
among Paulson, Gaming, RAS, EAS, Carlo and RHC.
99.1 Press Release, dated July 2, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RIVIERA HOLDINGS CORPORATION
(Registrant)
Date: July 2, 1999 /s/ Duane Krohn
-------------------------------------
Duane Krohn
Treasurer and Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number Description
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10.1 Settlement Agreement, dated as of July 1, 1999, by and among
Paulson, Gaming, RAS, EAS, Carlo and RHC.
99.1 Press Release, dated July 2, 1999.
Settlement Agreement
SETTLEMENT AGREEMENT, dated as of July 1, 1999 (the "Settlement
Agreement'), by and among ALLEN E. PAULSON ("Paulson"), an individual residing
in the State of California, R&E GAMING CORP. ("Gaming"), a Delaware Corporation,
RIVIERA ACQUISITION SUB, INC. ("RAS"), a Nevada Corporation, ELSINORE
ACQUISITION SUB, INC. ("EAS"), a Nevada Corporation, and CARLO CORPORATION, a
Delaware Corporation ("Carlo," and collectively with Paulson, Gaming, EAS and
RAS, the "Paulson Plaintiffs"), and RIVIERA HOLDINGS CORPORATION ("RHC"), a
Nevada Corporation.
WHEREAS, Gaming, RAS and RHC entered into an Agreement and Plan of
Merger dated as of September 15, 1997 (the "Riviera Merger Agreement").
WHEREAS, Gaming, RHC and State Street Bank and Trust Company of
California, N.A., as escrow agent (the "Escrow Agent") entered into an Escrow
Agreement dated as of September 15, 1997 (the "Escrow Agreement").
WHEREAS, pursuant to the Escrow Agreement, Gaming deposited certain
letters of credit ("Letters of Credit") with and made certain payments to the
Escrow Agent. (The Letters of Credit, the payments and accrued interest on the
payments are collectively referred to as the "Escrow Consideration.")
WHEREAS, it is the position of the Paulson Plaintiffs that the Escrow
Agent should transfer the Escrow Consideration to Gaming, and it is RHC's
position that the Escrow Consideration should be paid over to holders of certain
securities issued by RHC (the "RHC Contingent Value Rights Holders").
WHEREAS, on or about April 8, 1998, the Paulson Plaintiffs commenced an
action (the "Federal Court Action") in the United States District Court for the
Central District of California, Western Division (Case No. 98-2644) against
Jefferies & Company, Inc., M. Brent Stevens, Steven Croxton, Elsinore
Corporation, Morgens, Waterfall, Vintiadis & Company, Inc., Keyport Life
Insurance Company and SunAmerica Life Insurance Company (collectively, the
"Non-Settling Defendants") and RHC.
WHEREAS, the Paulson Plaintiffs subsequently filed First, Second and
Third Amended Complaints.
WHEREAS, in their initial Complaint, and in each of their Amended
Complaints, the Paulson Plaintiffs asserted claims against the Non-Settling
Defendants and RHC for federal securities law violations, fraud, constructive
fraud, negligent misrepresentation, breaches of contract, rescission,
declaratory relief with respect to the Escrow Consideration, and violations of
the Nevada RICO statutes (Nev. Rev. Stat. Sections 207.350 et seq.,
207.400(c)(1) and (2), 205.380, 90.570.1, 90.570.2, 207.400(h) and 207.470).
<PAGE>
WHEREAS, in its Answer to the First Amended Complaint filed by the
Paulson Plaintiffs, RHC denied all of the claims asserted by the Paulson
Plaintiffs against it and asserted counterclaims against Paulson and Gaming (the
"RHC Counterclaims").
WHEREAS, RHC did not answer the initial Complaint or the Second Amended
Complaint and has not yet answered the Third Amended Complaint.
WHEREAS, Paulson owns 463,655 shares of RHC's common stock (the
"Paulson Shares").
WHEREAS, Paulson desires to sell and RHC desires to acquire or arrange
for the purchase of the Paulson Shares.
WHEREAS, the parties hereto also desire to settle the claims asserted
by the Paulson Plaintiffs against RHC and the RHC Counterclaims.
NOW, THEREFORE, the parties hereto agree as follows:
Purchase and Sale of the Paulson Shares
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1. On the "Effective Date," as defined in Section 15 hereof, RHC will
purchase from Paulson and Paulson will sell to RHC (or its assignees) the
Paulson Shares at a price of $7.50 per share for a total purchase price of
$3,477,412.50. The Paulson Plaintiffs hereby represent, warrant and agree that
the Paulson Shares will be transferred to RHC (or its assignees) free and clear
of all liens, charges and encumbrances or rights of any third parties.
Disposition of Escrow Consideration
-----------------------------------
2. On the Effective Date, RHC and Gaming and, if necessary, any other
Paulson Plaintiff, shall execute a letter of instruction substantially in the
form annexed hereto as Exhibit A: (i) instructing the Escrow Agent to present
the Letters of Credit for payment; and (ii) directing the Escrow Agent to
distribute $1,522,587.50 of the Escrow Consideration to Gaming and to distribute
the remainder of the Escrow Consideration to a disbursing agent designated by
RHC, for the benefit of the Contingent Value Rights Holders.
Releases
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3. Effective on the Release Date, as defined in Section 16 hereof, the
Paulson Plaintiffs, on behalf of themselves and their officers, directors,
agents, employees, attorneys, representatives, affiliates, subsidiaries, heirs,
executors, administrators, successors and assigns (collectively, the "Paulson
Releasors"), for good and sufficient consideration, receipt of which is hereby
acknowledged, release and forever discharge each and every claim, right and
cause of action, whether in law or in equity, whether known or unknown, that the
Paulson Releasors or any of them had, now have or may hereafter have against RHC
or any of its present or former
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officers, directors, agents, employees, attorneys, representatives, affiliates,
subsidiaries, successors and assigns excluding, however, any of the Non-Settling
Defendants (the "RHC Related Parties") which: (i) has been or might have been
asserted in the Federal Court Action or in any other court or forum in
connection with, or arising out of, or in any way related to, any acts, facts,
events, transactions, occurrences, representations or omissions set forth or
alleged by any of the Paulson Plaintiffs in the Federal Court Action; or (ii)
arises out of, or is in any that way related to, the settlement of this action
(the "Paulson Released Claims"), provided, however, that this Release is not
intended to release any party from its obligations under this Settlement
Agreement. The Paulson Plaintiffs do hereby expressly waive and relinquish, to
the fullest extent permitted by law, the provisions, rights and benefits of
Section 1542 of the California Civil Code, which provides that:
A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor
at the time of executing the release which, if known by
him must have materially affected his settlement with
the debtor;
and any and all provisions, rights and benefits of any similar statute or law of
California, Nevada, the United States, or any other jurisdiction.
4. Effective on the Release Date, RHC, on behalf of itself and its
officers, directors, agents, employees, attorneys, representatives, affiliates,
subsidiaries, successors and assigns (collectively, the "RHC Releasors"), for
good and sufficient consideration, receipt of which is hereby acknowledged,
releases and forever discharges each and every claim, right, cause of action,
whether in law or in equity, whether known or unknown, that the RHC Releasors,
or any of them had, now have or may hereafter have against the Paulson
Plaintiffs, or any of their present or former officers, directors, agents,
employees, attorneys, representatives, affiliates, subsidiaries, heirs,
executors, administrators, successors and assigns (the "Paulson Related
Parties") which: (i) has been or might have been asserted in the Federal Court
Action or in any court or forum in connection with, arising out of, or in any
way related to, any acts, facts, events, transactions, occurrences,
representations or omissions set forth or alleged by RHC in the RHC
Counterclaims; or (ii) arises out of, or is in any way related to, the
settlement of this action (the "RHC Released Counterclaims") provided, however,
that this Release is not intended to release any party from its obligations
under this Settlement Agreement. RHC hereby expressly waives and relinquishes,
to the fullest extent permitted by law, the provisions, rights and benefits of
Section 1542 of the California Civil Code, which provides that:
A general release does not extend to claims which
the creditor does not know or suspect to exist in
his favor at the time of executing the release which,
if known by him must have materially affected his
settlement with the debtor;
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and any and all provisions, rights and benefits of any similar statute or law of
California, Nevada, the United States or any other jurisdiction.
Amendment of Complaint
----------------------
5. The Paulson Plaintiffs will use their best efforts and shall direct
their attorneys to use their best efforts to amend the Third Amended Complaint
so that all claims against a Non-Settling Defendant based on an allegation of
wrongdoing by RHC or any of its officers and directors are eliminated from its
pleading. Included in the allegations that the Paulson Plaintiffs will delete
from the Third Amended Complaint and not include in any subsequent Amended
Complaint are the allegations set forth in Paragraph 95, Paragraphs 319-401 and
Paragraphs 428-435. In addition, the Paulson Plaintiffs will amend their
Forty-First, Forty-Second, Forty-Third and Forty-Fourth Claims for Relief so as
to delete all references to conduct on the part of RHC. Also, the Paulson
Plaintiffs will amend Paragraph 21 so that the allegation that Morgens Waterfall
acted as an agent for RHC is not based on any allegation that RHC, directly or
indirectly, by word, action or omission, appointed Morgens Waterfall as its
agent.
Dismissal of Action; Contribution and Indemnity Bar
---------------------------------------------------
6. The Paulson Plaintiffs and RHC shall execute a Stipulation of
Dismissal with Prejudice in the form annexed hereto as Exhibit B, and they shall
direct their respective attorneys to cooperate with one another to have the
Federal Court Action dismissed with prejudice as against each other and to have
the Court enter a Settlement Bar Order and Final Judgment pursuant to 15 USC
section 78u-4 (and, if appropriate, California Code of Civil Procedure sections
877 and 877.6) and Fed. R. Civ. P. 54(b), in the form annexed hereto as Exhibit
C (the "Settlement Bar Order").
7. (a) The Paulson Plaintiffs shall reduce the amount of any final
judgment entered against any of the Non-Settling Defendants to which they may be
entitled in connection with the Paulson Released Claims by the amount, if any,
of such final judgment which constitutes the RHC Apportioned Liability and which
the Non-Settling Defendants might be entitled to recover from RHC by way of
contribution, indemnification or otherwise; it being understood that the purpose
of this provision is to eliminate the possibility of any liability of RHC for
contribution, indemnification, or for any other claim in connection with any
judgment rendered in favor of the Paulson Plaintiffs against any of the
Non-Settling Defendants on the Paulson Released Claims. As used herein, "RHC
Apportioned Liability" means an apportionment among RHC and the Non-Settling
Defendants of that fraction, portion and percentage, if any, of the Paulson
Plaintiffs' total causes of action and claims for damages for which each of RHC
and the Non-Settling Defendants are liable (the "RHC Apportioned Liability"), in
any final judgment entered against any of the Non-Settling Defendants.
(b) The Paulson Plaintiffs will not oppose on procedural grounds a
Non-Settling Defendant's motion to have a Court, or other finder of fact, to
determine the RHC Apportioned Liability; provided, however, that nothing
contained herein shall be deemed to limit
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the Paulson Plaintiffs' right or ability to argue that apportionment of
liability to RHC is inappropriate or to dispute the portion or percentage of
liability that any Non-Settling Defendant seeks to attribute to RHC.
(c) It is expressly understood that the Releases set forth herein
shall release and discharge RHC from the RHC Apportioned Liability.
(d) The Paulson Plaintiffs shall be barred and enjoined from
instituting or prosecuting in this or in any other jurisdiction any action based
upon the Paulson Released Claims against RHC.
Indemnification of Paulson Plaintiffs
-------------------------------------
8. RHC shall indemnify and hold the Paulson Plaintiffs and its
employees, officers, directors and agents (collectively, the "Paulson
Indemnified Parties") harmless from and against, and agree promptly to defend
any Paulson Indemnified Party from any claim based on or resulting from this
Settlement Agreement that may be asserted by or on behalf of any RHC Contingent
Value Rights Holder.
9. If any Paulson Indemnified Party has a claim or receives notice of
any claim or the commencement of any action or proceeding which could give rise
to an obligation on the part of RHC to provide indemnification (an
"Indemnification Claim") to the Paulson Indemnified Party, the Paulson
Indemnified Party shall promptly give RHC written notice thereof.
10. With the consent of a Paulson Indemnified Party, which consent may
not be unreasonably withheld, RHC may appoint counsel to represent the Paulson
Indemnified Parties on any action or matter including an Indemnification Claim.
Miscellaneous
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11. This Agreement contains the entire agreement between the parties
relating to the transactions completed hereby and all prior or contemporaneous
agreements, understandings, representations, and statements, oral or written,
are merged into this Agreement.
12. No modification, waiver or discharge of this Agreement will be
valid unless it is in writing and signed by the party against which the
enforcement of the modifications, waiver or discharge is or may be sought.
13. This Agreement may be executed in counterpart originals, each of
which shall be deemed to be an original, with the same effect as if the
signatures thereto were on the same instrument. This Agreement contains the
entire understandings of the Parties hereto in connection with the subject
matter hereof. This Agreement may not be amended, altered or modified, except by
a written amendment executed by the Parties or their successors or assigns.
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14. Each party shall bear its own costs and be responsible for its own
attorneys' fees.
15. The "Effective Date," as used herein, shall mean the date on which
the Court enters the Settlement Bar Order referenced in paragraph 6, above, in
the Federal Court Action.
16. The "Release Date," as used herein, shall mean the occurrence of
the later of: (i) the date Paulson delivers the Paulson Shares to RHC; and (ii)
the date the Escrow Agent delivers the Escrow Consideration pursuant to Section
2 hereof.
17. The parties will execute all documents needed to effectuate the
terms of this Agreement, and they shall direct their respective attorneys to
cooperate to obtain orders from the Court as set forth in Paragraphs 6 and 7
hereof.
18. This Agreement shall be governed by the laws of the State of
California, without giving effect to its choice of law provisions.
19. All notices requests, claims, demand and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by overnight courier with
receipt requested, by facsimile transmission (with receipt confirmed by
telephone) or two business days after being sent by registered or certified mail
(postage, prepaid, return receipt requested), to the other party as follows:
if to the Paulson Plaintiffs:
P.O. Box 9660
Rancho Santa Fe, CA 92067
Fax: (619) 756-3194
with a copy to:
Musick, Peeler & Garrett LLP
One Wilshire Boulevard
Los Angeles, CA 90017-3383
Fax: (213) 624-1376
Attention: Joseph J. McCann, Jr.
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if to Riviera Holdings Corporation:
2901 Las Vegas Boulevard South
Las Vegas, NV 89109
Fax: (702) 794-9277
Attention: Mr. William L. Westerman
with a copy to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, NY 10112
Fax: (212) 698-3599
Attention: Frederic Klink, Esq.
or to such other address as the party to whom notice is given may have
previously furnished to the other party in writing in the manner set forth
above.
ALLEN E. PAULSON R&E GAMING CORP.
_____________________________ By:____________________________
Name
Title
RIVIERA ACQUISITION SUB, INC. ELSINORE ACQUISITION SUB, INC.
By:___________________________ By:_____________________________
Name Name
Title Title
CARLO CORPORATION
By:___________________________
Name
Title
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<PAGE>
RIVIERA HOLDINGS CORPORATION
By:_______________________________
William L. Westerman
Chair
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<PAGE>
EXHIBIT A
Date: ______________
State Street Bank and Trust Company of
California, N.A.
725 South Figueroa Street, Ste. 3100
Los Angeles, CA 90017
Attention: Corporate Trust Department (R&E Gaming Corp. 1997 Escrow)
Gentlemen:
Reference is made to the Escrow Agreement, dated as of September 15,
1997 (the "Escrow Agreement"), by and among R&E Gaming Corp. ("Gaming'), Riviera
Holdings Corporation (the "Company") and you, as esrow agent (the "Escrow
Agreement").
All capitalized terms, which are not defined herein, shall have the
same meaning as in the Escrow Agreement.
You are hereby directed to cash the Letters of Credit and wire transfer
$1,522,587.50 to Gaming at ____________ [wire transfer number] and wire transfer
the remaining Escrow Consideration to ______________ for the benefit of the
Company's Contingent Value Right Holders.
Upon completion of the foregoing transactions, the Escrow Agreement
will be terminated, except that the provisions of Section 7 thereof will survive
for one year following such termination. The Company and Gaming will each pay
one-half of your fees through such termination.
R&E GAMING CORP.
By:
--------------------------
RIVIERA HOLDINGS CORPORATION
By:
--------------------------
<PAGE>
EXHIBIT B
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
ALLEN E. PAULSON, et al., ) Case No. 98-2644 ABC (AIJx)
)
Plaintiffs, )
)
vs. )
)
JEFFERIES & COMPANY, INC., et al., )
)
Defendants. ) STIPULATION OF DISMISSAL
) WITH PREJUDICE
- -------------------------------------------)
)
RIVIERA HOLDINGS CORPORATION, )
a Nevada Corporation, )
)
Counterclaimant, )
)
vs. )
)
ALLEN E. PAULSON, an individual; and )
R&E GAMING CORP., a Delaware Corporation, )
)
Counterdefendant. )
)
- -------------------------------------------
It is hereby stipulated and agreed, by and between the undersigned
counsel to plaintiffs Allen E. Paulson, R&E Gaming Corp., Riviera Acquisition
Sub, Inc., Elsinore Acquisition Sub, Inc. and Carlo Corporation (collectively,
the "Paulson Plaintiffs"), and defendant Riviera Holdings Corporation ("RHC"),
that the "Paulson Released Claims" and the "RHC Released Counterclaims," as
those terms are
<PAGE>
defined and used in the Settlement Agreement between the Paulson Plaintiffs and
RHC, dated July ___, 1999, be and are dismissed with prejudice.
Dated: _________, 1999 IRELL & MANELLA LLP
Richard B. Kendall
Bruce A. Wessel
By:
-----------------------------------------
Bruce A. Wessel
Attorneys for Defendant and Counterclaimant
Riviera Holdings Corporation
DECHERT PRICE & RHOADS
Thomas F. Munno
30 Rockefeller Plaza
New York, New York 10112
Telephone: (212) 698-3500
Dated: ____________, 1999 MUSICK PEELER & GARRETT LLP
Joseph J. McCann, Jr.
By:
--------------------------------
Joseph J. McCann, Jr.
Attorneys for Plaintiffs Allen
E. Paulson, R&E Gaming Corp.,
Riviera Acquisition Sub, Inc.,
Elsinore Acquisition Sub, Inc.
and Carlo Corporation
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EXHIBIT C
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
ALLEN E. PAULSON, et al., ) Case No. 98-2644 ABC (AIJx)
)
Plaintiffs, )
)
vs. )
)
JEFFERIES & COMPANY, INC., et al., )
)
Defendants. ) [PROPOSED] SETTLEMENT BAR
- --------------------------------------------) ORDER AND FINAL JUDGMENT
)
)
RIVIERA HOLDINGS CORPORATION, )
a Nevada Corporation, )
)
Counterclaimant, )
)
vs. )
)
ALLEN E. PAULSON, an individual; and )
R&E GAMING CORP., a Delaware Corporation, )
)
Counterdefendant. )
)
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<PAGE>
This matter having come before this Court on the joint motion (the
"Motion") of plaintiffs Allen E. Paulson, R&E Gaming Corp., Riviera Acquisition
Sub, Inc., Elsinore Acquisition Sub, Inc. and Carlo Corporation (collectively,
the "Paulson Plaintiffs") and defendant Riviera Holdings Corporation ("the
Settling Defendant"), (collectively, the "Settling Parties"), each of which is
party to a Settlement Agreement dated as of [date], 1999, all filed herein on
[date], 1999 (collectively referred to herein as the "Settlement"), for entry of
settlement and entry of a bar order and final judgment ("Settlement Bar Order")
dismissing and prohibiting certain claims against the Settling Defendant and
dismissing and prohibiting certain counterclaims against the plaintiffs; a
hearing thereon having been held before this Court on [date], 1999; each of the
Non-Settling Defendants who have been served with process in this action having
been given an opportunity to be heard at the hearing, after due notice thereof
to all such persons; this Court having considered the Motion, all other
submissions, motions and arguments by counsel made in connection therewith, and
the pleadings, files, records and proceedings and hearings in this action; and
this Court otherwise being fully advised and informed; this Court enters the
following Order:
THE COURT, GOOD CAUSE APPEARING, HEREBY ORDERS, FINDS, CONCLUDES,
ADJUDGES AND DECREES THAT:
1. The settlement between the Paulson Plaintiffs and the Settling
Defendant, as contained and reflected in the Settlement, be and hereby is
entered. The terms used in this Settlement Bar Order shall have the same
meanings as defined in the Settlement except as otherwise specified herein.
2. This Court has jurisdiction over the subject matter of this
litigation and all claims raised in this action, and, for purposes of this
Settlement Bar Order, over all of the Settling Parties and the Non-Settling
Defendants.
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3. Pursuant to the Private Securities Litigation Reform Act of 1995, 15
U.S.C. section 78u-4(f)(7)(A), the Paulson Released Claims and the RHC Released
Counterclaims are hereby dismissed with prejudice and are extinguished,
discharged and otherwise satisfied.
4. Pursuant to the Private Securities Litigation Reform Act of 1995, 15
U.S.C. section 78u-4(f)(7)(A)(i), all claims, actions, allegations, causes of
action, demands or rights or claims over, for, or seeking contribution,
indemnification, equitable apportionment, reimbursement or other recovery,
however denominated, by any person, including but not limited to the
Non-Settling Defendants, against the Settling Defendant and/or the RHC Related
Parties, which are based upon or which seek recovery of liability (in whole or
in part) for, or which result or arise in any way from, either directly or
indirectly, any of the Paulson Released Claims, are hereby extinguished,
discharged and otherwise satisfied.
5. Pursuant to the Private Securities Litigation Reform Act of 1995, 15
U.S.C. section 78u-4(f)(7)(A)(ii), all claims, actions, allegations, causes of
action, demands or rights or claims over, for, or seeking contribution,
indemnification, equitable apportionment, reimbursement or other recovery,
however denominated, by the Settling Defendant and/or the RHC Related Parties,
against any person (excepting only those persons whose liability has been
extinguished by the settlement of the Settling Defendant) which are based upon
or which seek recovery of liability (in whole or in part) for, or which result
or arise in any way from, either directly or indirectly, any of the Paulson
Released Claims, are hereby extinguished, discharged and otherwise satisfied.
6. All persons, including but not limited to the Paulson Plaintiffs,
the Settling Defendant and the Non-Settling Defendants, and each of them, are
fully and forever barred and enjoined from instituting or prosecuting, either
directly or indirectly, any and all claims and matters set forth in Paragraphs
3, 4 and 5 above.
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<PAGE>
7. Subject only to the conditions set forth in the following sub-
paragraph 7(a), the Paulson Plaintiffs shall reduce the amount of any final
judgment entered against any of the Non-Settling Defendants to which they may be
entitled in connection with the Paulson Released Claims by the amount, if any,
of such final judgment which constitutes the RHC Apportioned Liability and which
the Non-Settling Defendants might be entitled to recover from the Settling
Defendant by way of contribution, indemnification, equitable apportionment,
reimbursement or other recovery, however denominated.
(a) The Court retains jurisdiction to hear and consider a possible
future motion by the Paulson Plaintiffs for a determination that apportionment
of liability to the Settling Defendant is inappropriate or that the portion or
percentage of liability that any Non-Settling Defendant seeks to attribute to
the Settling Defendant is inappropriate or incorrect in any respect or manner.
8. Without in any way affecting the finality of this Settlement Bar
Order, this Court reserves jurisdiction over the litigation, this action, the
Paulson Released Claims, the RHC Released Counterclaims, the Paulson Plaintiffs,
the Settling Defendant and all of the Non-Settling Defendants for the purposes
of enforcing and administering this Settlement Bar Order.
9. Any finding of fact made in this Settlement Bar Order shall also be
deemed a conclusion of law, and any conclusion of law made in this Settlement
Bar Order shall also be deemed a finding of fact.
10. This Court determines that there is no just reason for delay of the
entry of the Settlement Bar Order because, inter alia, (i) this Settlement Bar
Order fully disposes of the claims of the Paulson Plaintiffs and the
Non-Settling Defendants against the Settling Defendant, (ii) any factual or
legal issues raised on possible appeal from this Settlement Bar Order would
likely be different from those remaining in the case against the Non-Settling
Defendants, (iii) the Paulson Plaintiffs would be harshly and unjustly
prejudiced should this Settlement Bar Order not be entered forthwith; (iv) the
Settling Defendant would be harshly and unjustly prejudiced should this
Settlement Bar Order not be made final forthwith; and
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<PAGE>
(v) the Contingent Value Rights Holders would be harshly and unjustly prejudiced
from delay in the disbursement of their portion of the Escrow Consideration
should this Settlement Bar Order not be entered forthwith. Accordingly, the
Court hereby directs entry of this Settlement Bar Order as a final judgment
pursuant to Rule 54(b) of the Federal Rules of Civil Procedure.
After due notice having been given to each of the Non-Settling
Defendants who have been served with process in this action, a hearing on the
Motion having been held, and having fully considered the Motion, all other
submissions, motions and arguments by counsel made in connection therewith, and
the pleadings, files, records and proceedings and hearings in this action, ENTRY
OF THIS ORDER IS RECOMMENDED.
IT IS SO ORDERED.
Dated: ____________, 1999
-------------------------------------
THE HONORABLE AUDREY B. COLLINS
U.S.D.J.
Submitted by:
Dated: ____________, 1999 IRELL & MANELLA LLP
Richard B. Kendall
Bruce A. Wessel
By:
-------------------------------------------
Bruce A. Wessel
Attorneys for Defendant and Counterclaimant
Riviera Holdings Corporation
DECHERT PRICE & RHOADS
Thomas F. Munno
30 Rockefeller Plaza
New York, New York 10112
Telephone: (212) 698-3500
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<PAGE>
Dated: ____________, 1999 MUSICK PEELER & GARRETT LLP
Joseph J. McCann, Jr.
By:
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Joseph J. McCann, Jr.
Attorneys for Plaintiffs Allen
E. Paulson, R&E Gaming Corp., Riviera
Acquisition Sub, Inc., Elsinore
Acquisition Sub, Inc. and Carlo
Corporation
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FOR IMMEDIATE RELEASE
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Riviera Holdings Corporation Reaches Settlement with Allen Paulson
LAS VEGAS, NV -- Friday, August 2, 1999 -- Riviera Holdings Corporation
("RHC") announced today (July 2, 1999) that it had agreed with Allen Paulson to
settle the action brought by Mr. Paulson against RHC, pending in the U.S.
District Court in Los Angeles. Such settlement is subject to court approval.
Such action will continue against the other defendants.
If the settlement is approved, Paulson would receive $5 million
consisting of (i) $3,477,000 ($7.50 per share) for the 463,655 shares of RHC
common stock owned by Paulson and (ii) $1,523,000 out of the funds being held in
escrow for the benefit of holders of RHC Contingent Value Rights ("CVR's"). The
remainder of the escrow (about $4,350,000 at May 31, 1999) would be distributed
to the holders o the CVR's. Each CVR would receive about $2.46 per CVR.
About Riviera Holdings:
Riviera Holdings Corporation owns and operates the Riviera Hotel and
Casino on the Las Vegas Strip, operates the Four Queens Hotel/Casino in downtown
Las Vegas and is developing a casino in Black Hawk, Colorado. Riviera is traded
on the American Stock Exchange under symbol, RIV.
The forward-looking statements included in this news release, which
reflect management's best judgment based on factors currently known, involve
risks and uncertainties including expansion timetables, hotel and casino market
conditions and other risks detailed from time to time in the Company's SEC
reports, including the Report on Form 10-K for December 31, 1998 and Form 10-Q
for March 31, 1999. Actual results may differ.
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For more information on Riviera, dial 800-PRO-INFO, symbol RIV.
