EXHIBIT B
OPTION AND VOTING AGREEMENT
BY
AND
AMONG
R&E GAMING CORP.,
AS PURCHASER,
AND
MORGENS, WATERFALL, VINTIADIS & COMPANY, INC.,
KEYPORT LIFE INSURANCE COMPANY
SUNAMERICA LIFE INSURANCE COMPANY,
ON BEHALF OF CERTAIN INVESTMENT ACCOUNTS,
AS SELLERS
DATED AS OF SEPTEMBER 15, 1997
OPTION AND VOTING AGREEMENT
OPTION AND VOTING AGREEMENT (this
"Agreement"), dated as of September 15, 1997, by and among
R&E Gaming Corp., a Delaware corporation (together with its
assignees or designees, the "Purchaser"), Morgens,
Waterfall, Vintiadis & Company, Inc., on behalf of certain
investment accounts identified on the signature pages hereto
("Morgens, Waterfall"), Keyport Life Insurance Company,
("Keyport"), and SunAmerica Life Insurance Company, an
Arizona corporation ("SunAmerica," and together with
Morgens, Waterfall and Keyport, the "Sellers").
WHEREAS, concurrently with the execution and
delivery of this Agreement, the Purchaser is entering into
an Agreement and Plan of Merger (the "Riviera Merger
Agreement") with Riviera Acquisition Sub, Inc., a Nevada
corporation and a wholly owned subsidiary of the Purchaser
("Acquisition Sub"), and Riviera Holdings Corporation, a
Nevada corporation ("RHC"), pursuant to which the
Acquisition Sub shall merge with and into RHC (the "Riviera
Merger"), upon the terms and conditions set forth therein;
WHEREAS, each Seller desires that the
Purchaser, Acquisition Sub and RHC enter into the Riviera
Merger Agreement;
WHEREAS, as partial consideration for the
grant by the Sellers of the option hereunder, the Purchaser
agrees to pay to each Seller an amount equal to 20% of the
Purchase Price (as defined in Section 1.2(a) hereof) for the
shares of common stock, par value $.001 per share, of RHC
(the "Common Stock") owned by such Seller, if the
transactions contemplated by the Riviera Merger Agreement
are not consummated, other than as a result of certain
circumstances specified herein;
WHEREAS, in order to ensure payment of the
obligation described in the immediately preceding paragraph,
concurrently with the execution and delivery of this
Agreement and the Riviera Merger Agreement, the Purchaser
has delivered a letter of credit in the face amount of
$3,817,680 to Morgens, Waterfall, a letter of credit in the
face amount of $2,571,480 to Keyport, and a letter of credit
in the face amount of $2,285,760 to SunAmerica, each of
which is substantially in the form of Exhibit A hereto
(collectively, the "Letters of Credit"), each of which shall
provide that it may be drawn on in the event the
transactions contemplated by the Riviera Merger Agreement
are not consummated, other than as a result of certain
circumstances as specified herein;
WHEREAS, Morgens, Waterfall beneficially owns
1,272,560 shares of Common Stock, which shares represent
approximately 25.9% of the issued and outstanding shares of
Common Stock, Keyport beneficially owns 857,160 shares of
Common Stock, which Shares represent approximately 17.5% of
the issued and outstanding shares of Common Stock and
SunAmerica beneficially owns 761,920 shares of Common Stock,
which shares represent approximately 15.5% of the issued and
outstanding shares of Common Stock (such shares of Common
Stock owned by the Sellers being the "Shares"); and
WHEREAS, in consideration for entering into
the Riviera Merger Agreement, the Sellers desire to (i)
grant to the Purchaser options to purchase, from the
Sellers, all (but not less than all) of the Shares held by
them as set forth above upon the terms and subject to the
conditions set forth herein and (ii) vote the Shares in the
manner set forth herein;
NOW, THEREFORE, in consideration of the
foregoing premises and the agreements contained herein, and
for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties
hereto, intending to be legally bound, agree as follows:
ARTICLE I
GRANT OF OPTION
SECTION 1.1 Grant of Option. Upon the terms
and subject to the conditions set forth herein, each Seller
hereby grants to the Purchaser an irrevocable option
(individually, a "Purchase Option" and, together with each
Purchase Option granted by each of the other Sellers, the
"Purchase Options") to purchase the Shares owned by such
Seller.
The Purchase Options shall be exercisable, in
whole and not in part, by written notice (the "Exercise
Notice") by the Purchaser delivered to each Seller, at any
time after the date hereof, but not later than the date on
which the Riviera Merger Agreement is terminated pursuant to
Section 6.1(c) thereof or, if the Riviera Merger Agreement
has otherwise been terminated, then June 1, 1998 (such
period being hereinafter referred to as the "Exercise
Period"). No one Purchase Option shall be exercised
individually unless all Purchase Options are exercised. In
addition, in the event the Riviera Merger is consummated,
the Purchase Options shall terminate automatically, the
Shares shall be converted into the right to receive the
Merger Consideration set forth in the Riviera Merger
Agreement; it being understood that the Riviera Merger
Agreement provides for a reduction of the consideration
payable, upon consummation of the Riviera Merger, to each of
the Sellers on account of any interest previously paid to
the Sellers pursuant to Section 1.2(b) hereof. Each of the
Sellers hereby consents to the reduction of the
consideration payable to them under the terms of the Riviera
Merger Agreement by the amount of the interest paid to them
pursuant to Section 1.2(b) hereof.
Upon exercise of the Purchase Options, subject
to the conditions contained in Article V hereof, each of the
Sellers shall sell, assign, transfer, convey and deliver to
the Purchaser, and the Purchaser shall purchase and accept
from each such Seller at the closing (the "Closing") to be
held as soon as possible after the satisfaction or waiver of
the conditions set forth in this Agreement (the date on
which the Closing occurs shall be referred to herein as the
"Closing Date"), such Seller's rights, title and interest in
and to the Shares in exchange for the Purchase Price (as
defined below).
SECTION 1.2 Purchase Price.
(a) Upon exercise of the Purchase Options,
the Purchaser agrees to pay to each of the Sellers, on the
Closing Date, in consideration for the purchase of the
Shares, an aggregate amount equal to $15 per Share, (the
"Initial Purchase Price" and, when adjusted as provided in
this Section 1.2, the "Purchase Price"), for an aggregate
amount of $43,374,600 payable as follows: (i) $19,088,400
shall be paid to Morgens, Waterfall, (ii) $12,857,400 shall
be paid to Keyport and (iii) $11,428,800 shall be paid to
SunAmerica, in addition to any accrued but unpaid interest
payments required by Section 1.2(b).
(b) During the period commencing on June 1,
1997 and ending on the date immediately preceding the
earlier of the Closing Date or the date this Agreement is
terminated in accordance with its terms, the Purchaser
agrees to pay to each of the Sellers their pro rata portion,
based on the number of Shares owned, of the daily interest
of $8,318.42 per day, which represents interest calculated
at 7% per annum on the Initial Purchase Price for all
Shares, payable monthly in arrears no later than 5 days
after the date of each monthly anniversary of such
execution, unless otherwise provided in this Section 1.2(b).
The first payment to be made by the Purchaser shall be made
on the date of execution and shall consist of all amounts
due and payable until such date under this Section 1.2(b).
All payments required to be made in accordance with this
Section 1.2(b) shall be made by wire transfer of immediately
available funds to such account as each Seller shall have
designated on Exhibit B hereto.
(c) If, between the date of this Agreement
and the Closing Date, the number of issued and outstanding
shares of Common Stock shall have been changed (or RHC shall
have declared a record date with respect to a prospective
change of the Common Stock) into a different number of
shares or a different class of shares by reason of any stock
dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares, this Agreement
(including the terms "Share" and "Common Stock") will be
deemed to relate to all securities issued with respect to
the Common Stock, and the Purchase Price shall be
correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split,
combination or exchange of shares.
(d) If, between the date of this Agreement
and the Closing Date, any dividend or other distribution
(other than a stock dividend, which shall require the
adjustment set forth in clause (c) above) is declared or
paid upon the Common Stock (whether in cash, property or
securities), the Purchase Price shall be reduced by the per
share amount of such dividend or distribution (in the case
of non-cash dividends or distributions, by an amount equal
to the fair market value thereof).
(e) If, between the date of this Agreement
and the Closing Date, RHC or any of its subsidiaries shall
repurchase or otherwise acquire any shares of Common Stock
(other than shares issued pursuant to warrants, options,
convertible securities and other rights to acquire shares of
Common Stock referred to in Section 2.2 of the Riviera
Merger Agreement or issued in accordance with Section 4.1
thereof), and the per share consideration paid by RHC or its
subsidiaries (in the case of non-cash consideration, valued
of the fair market value thereof) exceeds the Purchase
Price, the total Purchase Price for all Shares shall be
reduced to the price determined by dividing (i) the
difference between (A) the number of shares of Common Stock
outstanding immediately prior to such repurchase or
redemption multiplied by the Purchase Price in effect
immediately prior to such purchase or redemption minus (B)
the consideration, if any, paid by RHC for such repurchase
or redemption, by (ii) the total number of shares of Common
Stock outstanding immediately after such repurchase or
redemption.
SECTION 1.3 Termination of Riviera Merger
Agreement.
(a) The Sellers shall be entitled to receive,
as partial consideration for the grant by the Sellers of the
Purchase Options to the Purchaser hereunder, an amount equal
to $3,817,680 (in the case of Morgens, Waterfall),
$2,571,480 (in the case of Keyport) and $2,285,760 (in the
case of SunAmerica), if (A) the Riviera Merger Agreement is
terminated (except pursuant to a Non-Payment Termination
Event (as defined herein) or (B) the Riviera Merger does not
occur in accordance with the terms thereof on or before
April 2, 1998 (or, if the termination date of the Riviera
Merger Agreement is extended in accordance with
Section 6.1(c) thereof, June 2, 1998) for any reason other
than the occurrence of a Non-Payment Termination Event,
provided that the Sellers shall be entitled to the
consideration described above if the Riviera Merger is not
consummated as a result of the breach of the Riviera Merger
Agreement by Purchaser, Acquisition Sub, or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
of any covenants or warranties made by or about them in the
Riviera Merger Agreement; and provided further, in any
event, that no Seller shall be entitled to such compensation
if the Riviera Merger Agreement is not consummated as a
result of the breach of this Agreement by such Seller. A
"Non-Payment Termination Event" shall mean the termination
of the Riviera Merger Agreement pursuant to Sections 6.1(a),
6.1(b), 6.1(c) (because of the failure to satisfy Sections
5.1(a), 5.1(c), 5.1(d), 5.2(b) or 5.2(c)), 6.1(d),
6.1(e)(iii) or 6.1(e)(iv) thereof. In addition, in the
event that the Riviera Merger Agreement is terminated
pursuant to Section 6.1(c) because of the failure of
Purchaser, Acquisition Sub or ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to obtain
the required approvals of the Gaming Authorities, then such
event shall constitute a Non-Payment Termination Event,
unless ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ is in breach of his
representation and covenant contained in Section 6.2(c) of
the Riviera Merger Agreement.
(b) In order to ensure payment of the
obligation described in Section 1.3(a) hereof, concurrently
with the execution and delivery of this Agreement, the
Purchaser shall deliver a Letter of Credit in the face
amount of $3,817,680 to Morgens, Waterfall, a Letter of
Credit in the face amount of $2,571,480 to Keyport and a
Letter of Credit in the face amount of $2,285,760 to
SunAmerica. In the event that any Seller shall be entitled
to receive compensation pursuant to Section 1.3(a) hereof,
such Seller shall be entitled to receive demand payment
under the Letter of Credit issued to such Seller.
(c) In the event that the Riviera Merger
Agreement is terminated pursuant to a Non-Payment
Termination Event other than Sections 6.1(a) or 6.1(c)
thereof, each Seller shall immediately pay to the Purchaser
an amount equal to all payments received by such Seller
pursuant to this Agreement (each such payment, an "Option
Payment"); provided, that the Sellers shall be entitled to
retain such payments if either (i) all Shares shall be
purchased pursuant to this Agreement or (ii) the Riviera
Merger is not consummated as a result of the breach by the
Purchaser, Acquisition Sub, or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ of any
covenants or warranties made by or about them in the Riviera
Merger Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1 Representations and Warranties
of the Sellers. Each of the Sellers severally and not
jointly represents and warrants to the Purchaser as follows:
(a) Organization and Standing. Such Seller
is duly organized, validly existing and in good standing
under the laws of its state of organization, and has all
requisite power and authority to enter into and perform its
obligations under this Agreement.
(b) Authority. The execution and delivery of
this Agreement, and the performance by such Seller of its
obligations hereunder, have been duly authorized by all
necessary action on the part of such Seller and the owners
of the investment accounts, if any, as to which it is
acting. This Agreement has been duly executed and delivered
by such Seller and, assuming the due execution and delivery
hereof by the Purchaser and assuming that approval of this
Agreement by RHC remains effective, this Agreement
constitutes a valid and binding obligation of such Seller,
enforceable against such Seller in accordance with its
terms; provided, however, that Section 4.7 hereof shall be
enforceable in any event.
(c) The Stock. Such Seller is the record and
beneficial owner of, and has good and valid title to, the
number of Shares recited to be owned by it in the recitals
hereof, free and clear of all liens, encumbrances, claims,
charges, security interests, pledges, restrictions,
assessments and limitations (including voting limitations)
of every kind whatsoever (collectively, "Liens"). Assuming
that approval of this Agreement by RHC remains effective,
such Seller shall deliver to the Purchaser, and the
Purchaser will acquire, good and valid title in such Shares,
with full voting rights, free and clear of any Liens.
Except for this Agreement, there are no outstanding
warrants, subscriptions, rights (including preemptive
rights), options, calls, commitments or other agreements or
Liens to encumber, purchase or acquire any of the Shares of
such Seller or securities convertible into the Shares of
such Seller. Neither such Seller nor any of its affiliates
or associates (as such terms are defined in Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as
amended, or the rules and regulations thereunder) holds
either of record or beneficially any securities or capital
stock of RHC or any of RHC's direct or indirect subsidiaries
other than such Seller's Shares.
(d) No Conflict. Assuming that approval of
this Agreement by RHC remains effective, the execution of
this Agreement and the consummation of the transactions
contemplated hereby will not require notice to, or the
consent of, any party to any contract, lease, agreement,
mortgage or indenture (each a "Contract") to which such
Seller is a party or by which it is bound, or the consent,
approval, order or authorization of, or the registration,
declaration or filing with, any governmental authority,
except for those (i) required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), if any, (ii) required by the Nevada Gaming Commission
(the "Gaming Commission"), the Nevada State Gaming Control
Board (the "Control Board"), the City of Las Vegas ("Las
Vegas") and the ▇▇▇▇▇ County Liquor and Gaming Licensing
Board (the "CCB") (the Gaming Commission, the Control Board,
Las Vegas and the CCB are collectively referred to as the
"Gaming Authorities"), including, without limitation,
approvals under the Nevada Gaming Control Act, as amended,
and the rules and regulations promulgated thereunder (the
"Nevada Act") or (iii) set forth on Schedule 2.1(d) hereto.
Assuming that the notices, consents and approvals referred
to in the preceding sentence have been given, made or
obtained and remain effective, the execution, delivery and
performance by such Seller of this Agreement and the
consummation of the transactions contemplated hereby will
not (i) violate any law, statute, ordinance, regulation,
rule or order of any Federal or Nevada authority
(collectively, "Laws"), (ii) result in a breach or violation
of any provision of, constitute a default under, or result
in the termination of, or an acceleration of indebtedness or
creation of any Lien under, any material contract to which
such Seller is a party or by which it is bound or (iii)
conflict with or violate any provision of the organizational
documents of such Seller.
(e) Brokers, Finders, etc. Such Seller is
not a party to any agreement or understanding that would
make it subject to any valid claim of any broker, investment
banker, finder or other intermediary in connection with the
transactions contemplated by this Agreement.
SECTION 2.2 Representations and Warranties
of the Purchaser. The Purchaser hereby represents and
warrants to each of the Sellers as follows:
(a) Organization and Standing. The Purchaser
is duly organized, validly existing and in good standing
under the laws of its state of incorporation, and has all
requisite power and authority to enter into and perform its
obligations under this Agreement.
(b) Authority. The execution and delivery of
this Agreement, and the performance by the Purchaser of its
obligations hereunder, have been duly authorized by all
necessary action on the part of the Purchaser. This
Agreement has been duly executed and delivered on behalf of
the Purchaser and, assuming the due execution and delivery
hereof by the Sellers and assuming that approval of this
Agreement by RHC remains effective, this Agreement
constitutes a valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its
terms.
(c) No Conflict. The execution of this
Agreement and the consummation of the transactions
contemplated hereby will not require notice to, or the
consent of, any party to any Contract to which the Purchaser
or any of its affiliates is a party or by which any of them
is bound, or the consent, approval, order or authorization
of, or the registration, declaration or filing with, any
governmental authority, except for (i) those required under
the HSR Act, if any, (ii) approvals, as necessary, by the
Gaming Authorities, including, without limitation, approvals
under the Nevada Act, (iii) approval by the RHC Board of
Directors (which the Sellers represent has been granted);
and (iv) set forth on Schedule 2.2(c) hereto. Assuming that
the notices, consents and approvals referred to in the
preceding sentence have been given, made or obtained and
remain effective, the execution, delivery and performance by
the Purchaser of this Agreement and the consummation of the
transactions contemplated hereby will not (i) violate any
Laws, (ii) result in a breach or violation of any provision
of, or constitute a default under, any contract to which the
Purchaser is a party or by which it is bound or (iii)
conflict with any provision of the certificate of
incorporation or bylaws of the Purchaser.
(d) Purchase For Investment. Upon exercising
the Purchase Options, the Purchaser represents and warrants
that it intends to acquire the Shares for its own account,
not as a nominee or agent, and not with a view to, or for
offer or resale in connection with, any distribution thereof
in violation of the Securities Act of 1933, as amended, and
the rules and regulations thereunder (the "Securities Act"),
without prejudice, however, to the Purchaser's right at all
times to sell or otherwise dispose of all or any part of
said Shares pursuant to an effective registration statement
under the Securities Act and any applicable state securities
laws, or under an exemption from registration available
under the Securities Act and such other applicable state
securities laws. The Purchaser represents and warrants that
it (i) is knowledgeable, sophisticated and experienced in
business and financial matters, and fully understands the
limitations on transfer described above, and (ii) is an
"accredited investor" as such term is defined in Rule 501(a)
of Regulation D under the Securities Act.
(e) No Brokers. Except for Jefferies & Co.,
Inc. whose fee will be paid by the Purchaser, neither the
Purchaser nor Acquisition Sub has employed any broker or
finder, nor has it incurred any liability for any brokerage
fees, commissions or finders' fees in connection with the
transactions contemplated by this Agreement or the Riviera
Merger Agreement.
ARTICLE III
VOTING AGREEMENTS
SECTION 3.1 Merger. Each Seller severally
agrees and covenants to each party hereto that at any
meeting of stockholders of RHC called to vote upon the
Riviera Merger and the Riviera Merger Agreement or at any
adjournment thereof or in any other circumstances upon which
a vote, consent or other approval with respect to the
Riviera Merger and the Riviera Merger Agreement is sought,
such Seller shall cause its Shares to be present for quorum
purposes and to vote (or caused to be voted) its Shares in
favor of the terms thereof and each of the other
transactions contemplated by the Riviera Merger Agreement.
SECTION 3.2 Competing Transaction. Each
Seller severally agrees and covenants to each party hereto
that at any meeting of stockholders of RHC or at any
adjournment thereof or in any other circumstances upon which
their vote, consent or other approval is sought, such Seller
shall vote (or cause to be voted) its Shares against (i) any
merger agreement or merger (other than the Riviera Merger
Agreement and the Riviera Merger), consolidation,
combination, sale of substantial assets, sale or issuance of
securities of RHC or its subsidiaries, reorganization, joint
venture, recapitalization, dissolution, liquidation or
winding up of or by RHC or its subsidiaries and (ii) any
amendment of RHC's Second Amended and Restated Articles of
Incorporation (the "Articles of Incorporation") or Bylaws or
other proposal or transaction involving RHC or any of its
subsidiaries which amendment or other proposal or
transaction would in any manner impede, frustrate, prevent
or nullify or result in a breach of any covenant,
representation or warranty or any other obligation or
agreement of RHC under or with respect to, the Riviera
Merger, the Riviera Merger Agreement or any of the other
transactions contemplated by the Riviera Merger Agreement or
by this Agreement (each of the foregoing in clause (i) or
(ii) above, a "Competing Transaction").
ARTICLE IV
COVENANTS
SECTION 4.1 Exclusive Dealing. Each Seller
agrees that it will not, directly or indirectly, through any
director, officer, agent, partner, shareholder, affiliate,
representative or otherwise:
(a) solicit, initiate, encourage submission
of offers or proposals from, or participate in any
discussions, negotiations, agreements, arrangements or
understandings with, any person in respect of a Competing
Transaction; or
(b) participate in any discussions or
negotiations with, or furnish or afford access to any
information to, any other person regarding a Competing
Transaction, or otherwise cooperate in any manner with, or
assist or participate in, facilitate or encourage, any
effort or attempt by any other person to engage in any
Competing Transaction.
SECTION 4.2 No Sale. Without limiting the
foregoing, each Seller agrees that it will not, directly or
indirectly, (i) sell, transfer, assign, pledge, hypothecate
or otherwise encumber or dispose of, (ii) give a proxy with
respect to, or (iii) limit the right to vote in any manner,
any of the Shares owned by it, except pursuant to the
express terms of this Agreement.
SECTION 4.3 Further Assurances. From time
to time, whether before, at, or after the Closing, each
party hereto agrees to execute and deliver, or cause to be
executed and delivered, such additional instruments,
certificates and other documents, and to take such other
action, as any other party hereto may reasonably require in
order to carry out the terms and provisions of this
Agreement and the transactions contemplated hereby
(including, without limitation, voting the Shares in favor
of any such transaction).
SECTION 4.4 Expenses. All reasonable actual
out of pocket costs and expenses, including reasonable legal
fees incurred solely and directly in connection with the
negotiation, execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby
shall be paid by the Purchaser upon receipt of reasonably
detailed statements or invoices therefor.
SECTION 4.5 Publicity. Each Seller and the
Purchaser agree that, prior to the Closing, no public
release or announcement concerning this Agreement shall be
issued by any such party without the prior written consent
(which consent shall not be unreasonably withheld) of the
other parties hereto, except as such release or announcement
may be required by law (in which event the other parties
hereto shall have reasonable opportunity to comment on the
form and content of the disclosure).
SECTION 4.6 Notice of Certain Events. Each
Seller and the Purchaser each agrees to notify each other
party hereto promptly of (a) any event or condition that,
with or without notice or lapse of time, would cause any of
the representations and warranties made by such party herein
to be no longer complete and accurate as of any date on or
before the Closing Date, (b) any failure, with or without
notice or lapse of time, on the part of such party to comply
with any of the covenants or agreements on its part
contained herein at any time on or before the Closing Date
or (c) the occurrence of any event, with or without notice
or lapse of time, that may make the satisfaction of any of
the conditions set forth in Section 5.1 hereof impossible or
unlikely.
SECTION 4.7 Excess Proceeds. Morgens,
Waterfall hereby acknowledges its satisfaction with the
price per Share provided herein and in the Riviera Merger
Agreement and, in recognition thereof, hereby agrees to pay
to the Purchaser an amount equal to 100% of the fair market
value of the net after tax proceeds per Share from any sale,
transfer or other disposition of its Shares (other than
pursuant to the Purchase Option, the Riviera Merger or the
transactions contemplated thereby) in excess of the Purchase
Price, if all of the following conditions are satisfied:
(i) such sale, transfer or other disposition
(x) occurs prior to the date which is 12
months subsequent to the date of the
termination of the Riviera Merger Agreement
pursuant to Sections 6.1(d)(iii), 6.1(d)(iv),
6.1(e)(iii), or 6.1(e) (iv) of the Riviera
Merger Agreement or (y) is effected pursuant
to an agreement or understanding, oral or
written, which is entered into prior to such
date;
(ii) Morgens, Waterfall shall have also sold,
transferred or disposed (including by way of
merger) of its shares of common stock in
Elsinore Corporation, a Nevada Corporation
("Elsinore"), for consideration equal to or
greater than $3.16 per share, which sale,
transfer or other disposition of shares in
Elsinore (x) occurs prior to the date which is
12 months subsequent to the date of the
termination of the Riviera Merger Agreement
pursuant to Sections 6.1(d)(iii), 6.1(d)(iv),
6.1(e)(iii) or 6.1(e)(iv) of the Riviera
Merger Agreement or (y) is effected pursuant
to an agreement or understanding, oral or
written, which is entered into prior to such
date; and
(iii) the Purchaser was not able to exercise
the Purchase Options because of the failure to
satisfy (but not by waiver) the conditions set
forth in Sections 5.2(a), 5.2(b), 5.2(c), or
5.2(d) hereof.
Morgens, Waterfall shall make the payment referenced herein
within two business days of receipt of such proceeds.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.1 Conditions Precedent to Exercise
of Purchase Options. The Purchaser shall have no obligation
to exercise the Purchase Options. Upon exercise of the
Purchase Options, the obligation of the Purchaser to
purchase the Shares shall be subject to the satisfaction or
(except in the case of Section 5.1(c)(i), which may not be
waived) waiver by the Purchaser on the Closing Date of each
of the following conditions precedent:
(a) HSR Act. The waiting period under the
HSR Act, if applicable, shall have expired or been
terminated.
(b) No Injunctions or Restraints. No
temporary restraining order or preliminary or permanent
injunction of any court or administrative agency of
competent jurisdiction prohibiting the transactions
contemplated by this Agreement, the Riviera Merger
Agreement, the Agreement and Plan of Merger, by and among
the Purchaser, Elsinore Acquisition Sub, Inc., a Nevada
corporation, and Elsinore, or the Option and Voting
Agreement by and between the Purchaser and Morgens,
Waterfall with respect to Elsinore, shall be in effect or
shall be threatened.
(c) Consents. All consents, approvals,
authorizations and waivers from third parties and
governmental and regulatory authorities required or
advisable to consummate the transactions contemplated hereby
(the "Approvals") shall have been obtained before the
Closing Date and, in the case of clauses (ii) and (iii)
below, before the execution of this Agreement and shall not
have expired or been rescinded, including the following:
(i) All necessary gaming approvals,
including, without limitation, licensing or
finding of suitability of the Purchaser and
approval of a change of control of RHC by the
Gaming Authorities;
(ii) Waiver by the Board of Directors of RHC
of any voting restrictions under the Articles
of Incorporation that are applicable to a
purchaser of greater than ten percent of the
issued and outstanding shares of Common Stock;
and
(iii) All approvals and waivers necessary to
exempt the Purchaser for purposes of the
transactions contemplated hereby from
applicable merger moratorium statutes and
control share acquisition statutes, including,
without limitation, Nevada Revised Statutes
Sections 78.411-.444 and 78.378-.3793;
(d) Representations and Warranties. The
representations and warranties of each Seller set forth in
this Agreement shall be true and correct in all material
respects on and as of the Closing Date, as though made on
and as of the Closing Date (and by delivery of the Shares
each Seller shall be deemed to affirm the satisfaction of
this condition).
(e) Performance of Obligations of Sellers.
Each Seller shall have performed all obligations required to
be performed by it under this Agreement on or prior to the
Closing Date (and by delivery of the Shares each Seller
shall be deemed to affirm the satisfaction of this
condition).
(f) Death and Disability. There shall not
have occurred the death or the Disability of ▇▇. ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇. As used herein, "Disability" means ▇▇. ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇'▇ incapacity due to physical or mental illness,
injury or disease, which incapacity renders him unable to
perform the requisite duties of the chief executive officer
of the Purchaser for a consecutive period of 90 days or
more. Any question as to the existence, extent or
potentiality of ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇'▇ disability upon which
the Purchaser and the Sellers cannot agree, such question
shall be determined by a qualified, independent physician
selected by RHC and approved by the Purchaser and the
disputing Sellers (each of whose approval shall not be
unreasonably withheld or delayed). The determination of
such physician shall be final and conclusive for all
purposes of this Agreement.
(g) No Violation of Law. The consummation of
the Purchase Options shall not constitute a violation of any
Laws.
SECTION 5.2 Conditions Precedent to the
Sellers' Obligation. The obligation of each of the Sellers
to sell, assign, transfer, convey and deliver the Shares
owned by it or the investment accounts it manages, as
applicable, upon exercise of the Purchase Options by the
Purchaser shall be subject to the satisfaction or (except in
the case of Sections 5.2(a) and 5.2(c), which may not be
waived), waiver on the Closing Date of each of the following
conditions precedent:
(a) HSR Act. The waiting period under the
HSR Act, if applicable to the Purchaser, shall have expired
or been terminated.
(b) No Injunctions or Restraints. No
temporary restraining order or preliminary or permanent
injunction of any court or administrative agency of
competent jurisdiction prohibiting the transactions
contemplated by this Agreement shall be in effect.
(c) Consents. All Approvals shall have been
obtained and shall not have expired or been rescinded,
including those set forth in Section 5.1(c).
(d) No Violation of Law. The consummation of
the Purchase Options shall not constitute a violation of any
Laws.
(e) Representations and Warranties. The
representations and warranties of the Purchaser set forth in
this Agreement shall be true and correct in all material
respects on and as of the Closing Date, as though made on
and as of the Closing Date, except as otherwise contemplated
by this Agreement (and by its acceptance of the Shares, the
Purchaser shall be deemed to reaffirm the accuracy of such
representations and warranties).
(f) Performance of Obligations of the
Purchaser. The Purchaser shall have performed all
obligations required to be performed by it under this
Agreement on or prior to the Closing Date (and by its
acceptance of the Shares, the Purchaser shall be deemed to
affirm the satisfaction of this condition), including the
payment of the Purchase Price and all unpaid amounts, if any
payable under Section 1.2(b).
ARTICLE VI
TERMINATION AND AMENDMENT
SECTION 6.1 Termination. This Agreement
shall terminate without any further action on the part of
the Purchaser or any of the Sellers if (i) the Purchase
Options have been exercised and the Closing has occurred,
(ii) the Purchase Options have not been exercised and either
(x) the Riviera Merger has been consummated or (y) the
Riviera Merger Agreement has been terminated pursuant to
Sections 6.1(a), (b), (c), (d), (e)(i) or (e)(ii) thereof or
(iii) June 1, 1998 shall have occurred.
SECTION 6.2 Effect of Termination. In the
event this Agreement shall have been terminated in
accordance with Section 6.1 of this Agreement, this
Agreement shall forthwith become void and have no effect,
except (i) to the extent such termination results from a
breach by any of the parties hereto of any of its
obligations hereunder (in which case such breaching party
shall be liable for all damages allowable at law and any
relief available in equity), (ii) as otherwise set forth in
any written termination agreement, if any, (iii) that
Sections 1.3 and 4.7 shall survive the termination of this
Agreement, and (iv) that the provisions of Sections 3.1 and
3.2 hereof shall survive the termination of the Riviera
Merger Agreement until the earlier of (A) the consent of the
Sellers to the termination of the provisions of Sections 3.1
and 3.2 hereof and (B) June 1, 1998.
SECTION 6.3 Amendment. This Agreement and
the Schedules and Exhibits hereto may not be amended except
by an instrument or instruments in writing signed and
delivered on behalf of each of the parties hereto. At any
time prior to the Closing Date, any party hereto which is
entitled to the benefits hereof may (a) extend the time for
the performance of any of the obligations or other acts of
any other party, (b) waive any inaccuracy in the
representations and warranties of any other party contained
herein, in any Schedule and Exhibit hereto, or in any
document delivered pursuant hereto, and (c), subject to
applicable law, waive compliance with any of the agreements
of any other party hereto or any conditions contained
herein. Any agreement on the part of any of the parties
hereto to any such extension or waiver (i) shall be valid
only if set forth in an instrument in writing signed and
delivered on behalf of each such party, and (ii) shall not
be construed as a waiver or extension of any subsequent
breach or time for performance hereunder.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Notices. All notices, requests,
claims, demands 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 automatic
transmission report), or two business days after being sent
by registered or certified mail (postage prepaid, return
receipt requested) to the other party as follows:
(a) if to the Purchaser, to:
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Morgens, Waterfall, to:
Swiss Bank Tower
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ Waterfall
Telephone:(▇▇▇) ▇▇▇-▇▇▇▇
Telecopy:(▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
O'Melveny & ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: C. ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telephone:(▇▇▇) ▇▇▇-▇▇▇▇
Telecopy:(▇▇▇) ▇▇▇-▇▇▇▇
(c) if to Keyport, to:
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ & ▇▇▇▇▇▇▇ Incorporated
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone:(▇▇▇) ▇▇▇-▇▇▇▇
Telecopy:(▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ & Farnham Incorporated
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(d) if to SunAmerica, to:
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
SunAmerica, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone:(▇▇▇) ▇▇▇-▇▇▇▇
Telecopy:(▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
SunAmerica, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 7.2 Release. Upon the exercise of the
option by the Purchaser to acquire the Shares, the Purchaser
shall hereby release on behalf of itself and RHC all claims,
causes of actions, rights and liabilities held by the Purchaser
or RHC against each Seller based on or arising from such Seller's
ownership of the Shares or actions as a Stockholder of RHC at all
times to and including the Closing Date, and the sale of the
Shares to the Purchaser, except for the representations and
warranties of each Seller set forth in Sections 2.1(b) and 2.1(c)
hereof which shall survive indefinitely.
SECTION 7.3 Interpretation. When a reference is
made in this Agreement to a Section, Schedule or Exhibit, such
reference shall be to the applicable Section, Schedule or Exhibit
of this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement. When the words "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words
"without limitation." All accounting terms not defined in this
Agreement shall have the meanings determined by generally
accepted accounting principles as of the date hereof. All
capitalized terms defined herein are equally applicable to both
the singular and plural forms of such terms.
SECTION 7.4 Severability. If any provision of
this Agreement or the application of any such provision shall be
held invalid, illegal or unenforceable in any respect by a court
of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof. In
lieu of any such invalid, illegal or unenforceable provision, the
parties hereto intend that there shall be added as part of this
Agreement a valid, legal and enforceable provision as similar in
terms to such invalid, illegal or unenforceable provision as may
be possible or practicable under the circumstances.
SECTION 7.5 Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed an original, and all of which, when taken together, shall
be deemed to constitute but one and the same instrument.
SECTION 7.6 Entire Agreement. This Agreement and
the Schedules and Exhibits hereto constitute the entire
agreement, and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the
subject matter hereof.
SECTION 7.7 Governing Law. This Agreement shall
be governed by and construed in accordance with the laws of the
State of Nevada, regardless of the laws that otherwise might
govern under any applicable principles of conflicts of law,
except that gaming approval requirements shall be governed by and
construed in accordance with the laws of the State of Nevada.
SECTION 7.8 Assignment. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors and assigns. Neither this
Agreement nor any of the rights, interests or obligations
hereunder shall be assigned or delegated by any of the parties
hereto without the prior written consent of the other parties;
provided, that the Purchaser may assign the Purchase Options and
the obligations under this Agreement to any other person who is
designated by the Purchaser and; further provided, that the
Purchaser shall remain responsible for the performance of such
designee's obligations.
SECTION 7.9 No Third-Party Beneficiaries.
Nothing herein expressed or implied shall be construed to give
any person other than the parties hereto (and their respective
successors and assigns) any legal or equitable rights hereunder.
SECTION 7.10 OBLIGATIONS SEVERAL AND NOT JOINT.
The obligations of the Sellers hereunder are several and not
joint, and no Seller shall be liable for the breach or default
hereunder by any other Seller.
IN WITNESS WHEREOF, each of the parties hereto has
caused its duly authorized officers to execute this Agreement as
of the date first above written.
R&E GAMING CORP.
By:_____________________________
Name:
Title:
MORGENS, WATERFALL,
VINTIADIS & COMPANY, INC.
By:_____________________________
Name:
Title:
on behalf of the investment
accounts for the entities listed
below
BETJE PARTNERS
THE COMMON FUND
MORGENS WATERFALL INCOME PARTNERS
PHOENIX PARTNERS, L.P.
MWV EMPLOYEE RETIREMENT PLAN
GROUP TRUST
RESTART PARTNERS, L.P.
RESTART PARTNERS II, L.P.
RESTART PARTNERS III, L.P.
KEYPORT LIFE INSURANCE COMPANY
By:________________________________
Name:
Title:
SUNAMERICA LIFE INSURANCE
COMPANY
By:________________________________
Name:
Title: