EXHIBIT A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
R&E GAMING CORP.,
RIVIERA ACQUISITION SUB, INC.
AND
RIVIERA HOLDINGS CORPORATION
DATED AS OF SEPTEMBER 15, 1997
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of
September 15, 1997 (the "Agreement"), by and among R&E Gaming
Corp., a Delaware corporation ("Gaming"), Riviera Acquisition
Sub, Inc., a Nevada corporation and a wholly owned subsidiary of
Gaming ("RAS"), and Riviera Holdings Corporation, a Nevada
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Gaming,
RAS and the Company have each approved the transactions
contemplated by the terms and conditions set forth in this
Agreement;
WHEREAS, in furtherance thereof, upon the terms and
subject to the conditions of this Agreement, (i) RAS would be
merged (the "Riviera Merger") with and into the Company, (ii)
each share of common stock, par value $.001 per share, of the
Company (the "Common Stock"), issued and outstanding immediately
prior to the Effective Time (as defined herein) (the "Shares")
would, except as otherwise expressly provided herein, be
converted into the right to receive the Merger Consideration (as
defined herein) and (iii) Riviera Operating Corporation , a
Nevada corporation and a wholly owned subsidiary of the Company
("ROC"), will, as a result of the Riviera Merger, become a wholly
owned subsidiary of the surviving corporation of the Riviera
Merger (the Surviving Corporation );
WHEREAS, Gaming and RAS are unwilling to enter into
this Agreement unless Gaming, contemporaneously with the
execution and delivery of this Agreement, enters into an Option
and Voting Agreement (the "Riviera Option Agreement") with
Morgens, Waterfall, Vintiadis & Company, Inc., on behalf of
certain investment accounts ("Morgens Waterfall"), Keyport Life
Insurance Company on behalf of a certain investment account
("Keyport"), and SunAmerica Life Insurance Company ("SunAmerica"
and, together with Morgens Waterfall and Keyport, the "Option
Sellers"), providing for, among other things, (i) the grant by
the Option Sellers to Gaming of an option to purchase all of the
Shares owned, directly or indirectly, by the Option Sellers and
(ii) the agreement by the Option Sellers to cause the Shares
owned by them to be present for quorum purposes at any meeting of
the stockholders of the Company (the "Company Stockholders")
called to vote upon the Riviera Merger, and to vote for the
transactions contemplated by this Agreement and against any
Alternative Transaction (as defined in Section 4.9(b) hereof) and
any other action which may be adverse to the transactions
contemplated in this Agreement; and the Board of Directors of the
Company (the "Board") has approved the execution and delivery of
the Riviera Option Agreement which is being executed
contemporaneously with the execution hereof; and
WHEREAS, the Board has determined that the Riviera
Merger and the consideration to be received by the holders of the
Shares are fair to, and in the best interests of, the Company and
the Company Stockholders.
NOW, THEREFORE, in consideration of the foregoing
premises, the mutual representations, warranties and covenants
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
THE MERGER
Section 1.1 The Riviera Merger. At the Effective Time
and upon the terms and subject to the conditions of this
Agreement, and in accordance with the applicable provisions of
Nevada law, RAS shall be merged with and into the Company,
whereupon the separate existence of RAS shall cease and the
Company shall continue as the Surviving Corporation, and shall be
a wholly owned subsidiary of Gaming, and, further, immediately
after the Effective Time, ROC shall continue its existence as a
wholly owned subsidiary of the Surviving Corporation.
Section 1.2 Effective Time; Closing. Unless this
Agreement shall have been terminated pursuant to Section 6.1
hereof, as soon as practicable after the satisfaction or (if
permissible) waiver of the conditions set forth in Article V of
this Agreement, the Company will file articles of merger with the
Secretary of State of the State of Nevada in accordance with the
provisions of Section 92A.005 et seq. of the Nevada Revised
Statutes (the "Nevada Merger Law") and make all other filings or
recordings required by law in connection with the Riviera Merger.
The Riviera Merger shall become effective at such time (the
"Effective Time") as the articles of merger are filed with the
Secretary of State of the State of Nevada in accordance with the
provisions of Chapter 92A of the Nevada Revised Statutes, or such
later date as set forth in such filing, but in no event later
than April 1, 1998, unless extended as provided in Section 6.1(c)
hereof. Prior to such filing, but no later than 30 days after
the satisfaction or (if permissible) waiver of the conditions set
forth in Article V of this Agreement, a closing (the "Closing")
shall be held at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
or such other place as the parties to this Agreement shall agree,
for the purpose of confirming 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."
Section 1.3 Escrow. (a) Contemporaneously with the
execution of this Agreement and the Riviera Option Agreement, (a)
Gaming and the Company have entered into an Escrow Agreement in
substantially the form attached as Exhibit A hereto (the "Escrow
Agreement"), with First Trust National Association, a national
association, as escrow agent (the "Escrow Agent"), under which
Gaming has deposited with the Escrow Agent, pursuant to the terms
of the Escrow Agreement, such amount in cash or irrevocable
letters of credit (the "Escrow Consideration"), containing terms
reasonably acceptable to the Company, as set forth in the Escrow
Agreement and (b) Gaming will cause to be issued irrevocable
letters of credit in accordance with the terms of the Riviera
Option Agreement.
(b) Contemporaneously with the execution of this
Agreement and the Riviera Option Agreement, Gaming will cause to
be issued an irrevocable letter of credit in accordance with the
terms of the Riviera Option Agreement.
Section 1.4 Effects of the Riviera Merger. The
Riviera Merger shall have the effects set forth in the Nevada
Merger Law. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, except as otherwise
provided herein, all of the property, rights, privileges, powers
and franchises of a public as well as of a private nature, and
the title to any real estate vested by deed or otherwise in the
Company and RAS shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and RAS shall become
the debts, liabilities and duties of the Surviving Corporation.
Section 1.5 Articles of Incorporation and Bylaws. (a)
The Articles of Incorporation of RAS in effect immediately prior
to the Effective Time, attached hereto as Exhibit B, shall be
the Articles of Incorporation of the Surviving Corporation (the
"Surviving Corporation Articles of Incorporation"), until amended
in accordance with Nevada law, except that Article I thereof
shall be amended to read in its entirety as follows: "The name
of the corporation shall be Riviera Holdings Corporation."
(b) The Bylaws of RAS in effect at the Effective Time,
attached hereto as Exhibit C, shall be the Bylaws of the
Surviving Corporation (the "Surviving Corporation Bylaws"), until
amended in accordance with Nevada law and the Surviving
Corporation Articles of Incorporation.
Section 1.6 Directors. The directors of the Company
at the Effective Time, and, subject to the requirements of Gaming
Laws (as defined herein), any additional individuals designated
by Gaming at or prior to the Effective Time, shall be the initial
directors of the Surviving Corporation, each to hold office in
accordance with the Surviving Corporation Articles of
Incorporation and the Surviving Corporation Bylaws and until his
or her successor is duly elected and qualified.
Section 1.7 Officers. The officers of the Company at
the Effective Time, and, subject to the requirements of Gaming
Laws, any additional individuals designated by Gaming at or prior
to the Effective Time, shall be the initial officers of the
Surviving Corporation from and after the Effective Time, each to
hold office in accordance with the Surviving Corporation Articles
of Incorporation and the Surviving Corporation Bylaws and until
his or her successor is duly appointed and qualified.
Section 1.8 Consideration for the Merger. At the
Effective Time, by virtue of the Riviera Merger and without any
action on the part of Gaming, RAS, the Company or the holder of
any of the following securities:
(a) Each Share (other than Shares to be cancelled
pursuant to Section 1.8(b) hereof) shall be converted into and
represent the right to receive the Merger Consideration (as
defined below). From and after the Effective Time, all Shares
shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder
of a certificate representing any of the Shares (a Certificate )
shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration payable to the holder
thereof, without interest, upon surrender of such Certificate in
the manner provided in Section 1.9 hereof. As used herein,
"Merger Consideration" means the amount of $15.00 in cash per
Share, plus an amount of additional consideration (the
"Additional Consideration") equal to the daily portion of the
accrual on $15.00 at 7% compounded annually, accruing from June
1, 1997 to the Effective Time; provided, that the Merger
Consideration paid to each Option Seller shall be reduced by the
amount of Additional Consideration paid to such Option Seller
pursuant to Section 1.2(b) of the Riviera Option Agreement. It
being understood that, assuming consummation of the Riviera
Merger, the proviso in the preceding sentence shall have the
effect of causing the consideration per Share to be received
hereunder and under the Riviera Option Agreement by the Option
Sellers from Gaming on account of the Shares owned by the Option
Sellers to be equal to the consideration per Share received by
the Company Stockholders (other than the Option Sellers)
hereunder from Gaming on account of the Shares owned by the
Company Stockholders (other than the Option Sellers). Each of
Gaming and RAS represents and warrants that the Merger
Consideration to be received hereunder by the Option Sellers for
each Share owned by the Option Sellers and any other
consideration paid by Gaming or RAS to the Option Sellers for
such Shares (but excluding consideration paid under the Riviera
Option Agreement) shall be equal to the Merger Consideration
received by the other holders of Shares.
(b) Each Share owned by Gaming, RAS or their
stockholders or affiliates (the "▇▇▇▇▇▇▇ Shares"), or which is
held in the treasury of the Company or any of its subsidiaries,
shall be cancelled and retired and shall cease to exist, and no
payment of any consideration shall be made with respect thereto.
(c) Each share of capital stock of RAS issued and
outstanding immediately prior to the Effective Time shall be
converted into and shall become one validly issued, fully paid
and nonassessable share of common stock, par value $.001 per
share, of the Surviving Corporation.
Section 1.9 Exchange of Shares. (a) At or prior to
the Effective Time, Gaming shall designate a bank or trust
company reasonably acceptable to the Company to serve as exchange
agent (the "Exchange Agent") for the Shares. As soon as
reasonably practicable after the Effective Time, Gaming shall
deposit, or shall cause to be deposited, with the Exchange Agent
for the benefit of the holders of Certificates, cash or
immediately available funds in United States dollars in an amount
that equals the aggregate Merger Consideration. Such funds (the
"Payment Fund") shall be invested by the Exchange Agent as
directed by Gaming in obligations of or obligations guaranteed by
the United States of America, in commercial paper obligations
rated A-1 or P-1 or better by ▇▇▇▇▇'▇ Investor Services, Inc. or
Standard & Poor's Corporation, respectively, or in certificates
of deposit, bank repurchase agreements, or bankers acceptances of
commercial banks with capital exceeding $500 million; provided,
however, that in the event that the Payment Fund shall realize a
loss on such investment, Gaming shall promptly thereafter deposit
in the Payment Fund cash in an amount sufficient to enable the
Payment Fund to satisfy all remaining obligations originally
contemplated to be paid out of the Payment Fund.
(b) Promptly after the Effective Time, the Surviving
Corporation shall instruct the Exchange Agent to mail to each
record holder of outstanding Certificates as of the Effective
Time, a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) and instructions for use in
effecting the surrender of the Certificates for payment therefor.
Upon surrender to the Exchange Agent of a Certificate, together
with such letter of transmittal duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor the
amount of cash that such holder has the right to receive under
this Article I, and such Certificate shall forthwith be
cancelled. If payment (or any portion thereof) is to be made to
a person other than the person in whose name the Certificate
surrendered is registered, it shall be a condition of payment
that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person
requesting such payment shall pay to the Exchange Agent any
transfer or other taxes required by reason of the payment to a
person other than the registered holder of the Certificate
surrendered or such person shall establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions
of this Section 1.9, each Certificate (other than Certificates
representing Shares to be cancelled pursuant to Section 1.8(b)
hereof) shall represent, for all purposes, the right to receive
the Merger Consideration multiplied by the number of Shares
previously evidenced by such Certificate, without any interest
thereon.
(c) All cash paid upon the surrender of the
Certificates in accordance with the terms of this Article I shall
be deemed to have been paid in full satisfaction of all rights
pertaining to the Shares theretofore represented by such
Certificates, and there shall be no further registration of
transfers on the stock transfer books of the Surviving
Corporation of the Shares which were outstanding immediately
prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this
Article I, except as otherwise provided by Nevada law.
(d) At any time following the date six months after
the Effective Time, the Surviving Corporation shall be entitled
to require the Exchange Agent to deliver to it any funds
(including any interest received with respect thereto) that have
been made available to the Exchange Agent and that have not been
disbursed to holders of Certificates and, thereafter, such
holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or other similar laws)
only as general creditors thereof with respect to the Merger
Consideration payable upon surrender of their Certificates.
Notwithstanding the foregoing, neither the Surviving Corporation
nor the Exchange Agent shall be liable to any holder of a
Certificate for the Merger Consideration delivered to a public
official pursuant to any applicable abandoned property, escheat
or similar law.
Section 1.10 Company Plans. (a) At the Effective
Time, each outstanding option (an "Employee Option"), issued,
awarded or granted pursuant to the Company's 1993 Stock Option
Plan, as in effect on the date hereof (the "Company Plan"), to
purchase shares of Common Stock shall be cancelled, and the
Surviving Corporation shall pay to each holder of a cancelled
Employee Option an amount in cash (less applicable withholding
Taxes, as defined in Section 2.12 hereof) equal to the product of
(i) the number of shares of Common Stock previously subject to
such Employee Option, on the basis of full vesting, and (ii) the
excess, if any, of the Merger Consideration over the exercise
price per share of Common Stock previously subject to such
Employee Option.
(b) At the Effective Time, each outstanding option (a
"Directors' Option"), issued, awarded or granted pursuant to the
Company's Nonqualified Stock Options Plan For Non-Employee
Directors, as in effect on the date hereof ("Directors' Plan"),
to purchase shares of Common Stock shall be cancelled and the
Surviving Corporation shall pay to each holder of a cancelled
Directors' Option an amount in cash equal to the product of (i)
the number of shares of Common Stock previously subject to such
Directors' Option, on the basis of full vesting, and (ii) the
excess, if any, of the Merger Consideration over the exercise
price per share of Common Stock previously subject to such
Directors' Option.
(c) At the Effective Time, each Share issued pursuant
to the Company's Employee Stock Purchase Plan, as in effect on
the date hereof (the "Company Stock Plan"), shall be cancelled,
and the Surviving Corporation shall pay to each owner of each
Share issued pursuant to the Company Stock Plan an amount in cash
equal to (A) the product of (i) the number of such Shares issued
pursuant to the Company Stock Plan owned by such person, and (ii)
the Merger Consideration per Share, less (B) any unpaid balance
of any loans by the Company to any such owner.
(d) At the Effective Time, each Share issued pursuant
to the Company's Stock Compensation Plan for Directors Serving on
the Compensation Committee, as in effect on the date hereof (the
"Compensation Committee Plan"), shall be cancelled, and the
Surviving Corporation shall pay to each owner of each Share
issued pursuant to the Compensation Committee Plan an amount in
cash equal to (A) the product of (i) the number of such shares of
Common Stock issued pursuant to the Compensation Committee Plan
on the basis of full vesting owned by such person, and (ii) the
Merger Consideration per Share less (B) any unpaid balance of any
loans by the Company to any such owner.
(e) A listing of all outstanding options, warrants or
other rights to acquire shares of Common Stock or other equity
interests of the Company and its subsidiaries as of June 30,
1997, showing what portions of such stock options, warrants or
other rights are exercisable as of the dates upon which such
stock options, warrants or other rights expire, and the exercise
price of such stock options, warrants or other rights, is set
forth in Schedule 1.10 hereto.
Section 1.11 Stockholders' Meeting. The Company,
acting through the Board, shall, in accordance with applicable
law, the Amended and Restated Articles of Incorporation of the
Company in effect on the date hereof (the "Company Articles of
Incorporation") and the Bylaws of the Company in effect on the
date hereof (the "Company Bylaws"), as soon as practicable
following the date hereof:
(a) duly call, give notice of, convene and hold an
annual or special meeting of the Company Stockholders (the
"Stockholders' Meeting") for the purpose of approving and
adopting this Agreement and the transactions contemplated hereby;
(b) subject to the fiduciary duties of the Board under
applicable law, recommend that the Company Stockholders vote in
favor of approving and adopting this Agreement and the
transactions contemplated hereby; and
(c) subject to the fiduciary duties of the Board under
applicable law, use its reasonable best efforts to obtain the
necessary approvals by the Company Stockholders of this Agreement
and the transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Gaming as
follows:
Section 2.1 Organization and Qualification;
Subsidiaries. (a) Each of the Company and its subsidiaries is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has
all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being
conducted, except where the failure to be so organized, existing
and in good standing or to have such power and authority would
not, individually or in the aggregate, have a Company Material
Adverse Effect (as defined herein). When used in this Agreement,
the term "Company Material Adverse Effect" means any change or
effect that would (i) be materially adverse to the business,
results of operations, or financial condition of the Company and
its subsidiaries, taken as a whole, or (ii) impair the ability of
the Company to consummate the transactions contemplated hereby.
(b) Each of the Company and its subsidiaries is duly
qualified or licensed (excluding gaming and liquor licenses,
which are covered by Section 2.5 hereof) and in good standing to
do business in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, and to
perform all of its obligations under any contract under which the
Company or any of its subsidiaries (a) has or may acquire any
rights, (b) has or may become subject to any obligation or
liability or (c) is or may, or any of the assets used or owned by
it are or may, become bound, except where the failure to be so
duly qualified or licensed and in good standing or to effect such
performance would not, individually or in the aggregate, have a
Company Material Adverse Effect.
(c) The Company has heretofore furnished or made
available to Gaming complete and correct copies of the Company
Articles of Incorporation and the Company Bylaws and the
equivalent organizational documents of each of its subsidiaries,
each as amended to the date hereof. The Company Articles of
Incorporation, the Company Bylaws and equivalent organizational
documents are in full force and effect. The Company is not in
violation of any of the provisions of the Company Articles of
Incorporation or the Company Bylaws, and no subsidiary of the
Company is in violation of any of the provisions of such
subsidiary's equivalent organizational documents. The
organizational documents of the subsidiaries of the Company do
not contain any provision limiting or otherwise restricting the
ability of the Company to control such subsidiaries.
(d) The Company has heretofore furnished or made
available to Gaming a complete and correct list of the
subsidiaries of the Company, which list sets forth the amount of
capital stock of or other equity interests in such subsidiaries
owned by the Company, directly or indirectly.
Section 2.2 Capitalization of the Company and its
Subsidiaries. The authorized capital stock of the Company
consists of (i) 20,000,000 shares of Common Stock of which, as of
July 31, 1997, 4,910,880 shares of Common Stock were issued and
outstanding. All outstanding shares of capital stock of the
Company have been validly issued, and are fully paid,
nonassessable and free of preemptive rights. Set forth in
Schedule 2.2(a) are all outstanding options, warrants, or other
rights to purchase Riviera Stock. Except as set forth above or
in Schedule 2.2, and except as a result of the exercise of
Employee Options, Directors' Options and such rights under the
Company Stock Plan and the Compensation Committee Plan
outstanding as of July 31, 1997, there are outstanding (i) no
shares of capital stock or other voting securities of the
Company, (ii) no securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of
the Company, (iii) no options, subscriptions, warrants,
convertible securities, calls or other rights to acquire from the
Company, and no obligation of the Company to issue, deliver or
sell, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting
securities of the Company, and (iv) no equity equivalents,
performance shares, interests in the ownership or earnings of the
Company or other similar rights issued by the Company
(collectively, "Company Securities"). Except as set forth on
Schedule 2.2 hereto, there are no outstanding obligations of the
Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any Company Securities. Except as set forth on
Schedule 2.2 hereto, each of the outstanding shares of capital
stock of each of the Company's subsidiaries is duly authorized,
validly issued, fully paid and nonassessable and is directly or
indirectly owned by the Company, free and clear of all security
interests, liens, claims, pledges, charges, voting agreements or
other encumbrances of any nature whatsoever (collectively,
"Liens"). Except as set forth on Schedules 1.10 and 2.2 hereto,
there are no existing options, calls or commitments of any
character relating to the issued or unissued capital stock or
other equity securities of any subsidiary of the Company.
Section 2.3 Power and Authority. The Company has the
requisite corporate power and authority to execute and deliver
this Agreement and, subject to approval of this Agreement by the
Company Stockholders, to consummate the transactions contemplated
by this Agreement. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the
transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the
Company, subject, in the case of this Agreement, to approval of
this Agreement by the Company Stockholders. This Agreement has
been duly executed and delivered by the Company and, assuming
this Agreement constitutes a valid and binding obligation of
Gaming and RAS, constitutes the valid and binding obligation of
the Company, enforceable against the Company in accordance with
its terms, except as such enforcement may be limited by
bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors rights
generally (collectively, the "Bankruptcy Exceptions") and subject
to the general principles of equity.
Section 2.4 Approval of Options. The Company has
taken all action necessary to authorize and approve the grant of
options to acquire Shares pursuant to the Riviera Option
Agreement and the sale of such Shares upon the exercise of such
options.
Section 2.5 Compliance. (a) Except as set forth in
Schedule 2.5(a), since January 1, 1994, the Company, its
subsidiaries and affiliates and their respective officers or
directors or, to the best knowledge of the Company, their
respective agents or employees (if any), have been and are in
compliance with all applicable laws and regulations of foreign,
Federal, state and local governmental authorities applicable to
the businesses conducted by any of the Company and its
subsidiaries (including without limitation any federal, state,
local or foreign statute, ordinance, rule, regulation, permit,
consent, approval, license, judgment, order, decree, injunction
or other authorization governing or relating to the current or
contemplated casino, liquor related activities and gaming
activities and operations, including, without limitation, the
Nevada Gaming Control Act, as amended (the "Nevada Act"), and the
rules and regulations promulgated thereunder, or applicable to
the properties owned or leased and used by the Company or its
subsidiaries (collectively, "Gaming Laws")), and neither the
Company, nor, to the best knowledge of the Company, any of its
subsidiaries or affiliates, is aware of any claim of violation,
or of any actual violation, of any such laws and regulations, by
the Company or any of its subsidiaries, except where such failure
or violation (whether actual or claimed) would not have a Company
Material Adverse Effect. None of the Company or its
subsidiaries, any employee, officer, director or stockholder or,
to the best knowledge of the Company or affiliate thereof, has
received any written claim, demand, notice, complaint, court
order or administrative order from any governmental authority
since January 1, 1994, asserting that a license of it or them, as
applicable, under any Gaming Laws should be revoked or suspended.
The Company, based upon its current operations, is not obligated
to file any documents under the Indian Gaming Regulatory Act.
(b) Except as set forth in Schedule 2.5(b), since
January 1, 1994, each of the Company and its subsidiaries has and
currently possesses, and is current on all fees with regard to,
all franchises, certificates, licenses, permits and other
authorizations from any governmental authorities and all patents,
trademarks, service marks, trade names, copyrights, licenses and
other rights that are necessary to each of the Company and its
subsidiaries for the present ownership, maintenance and operation
of its business, properties and assets (including without
limitation all gaming and liquor licenses), except where the
failure to possess such franchises, certificates, licenses,
permits, and other authorizations, patents, trademarks, service
marks, trade names, copyrights, licenses and other rights (other
than those required to be obtained from the Nevada Gaming
Commission (the "Gaming Commission"), the Nevada State Gaming
Control Board (the "Control Board"), the ▇▇▇▇▇ County Liquor and
Gaming Licensing Board (the "CCB"), and the City of Las Vegas
("Las Vegas") (the Gaming Commission, the Control Board, the CCB,
and Las Vegas are collectively referred to as the "Gaming
Authorities"), including approvals under the Gaming Laws) would
not have a Company Material Adverse Effect; and none of the
Company and its subsidiaries is in violation of any thereof,
except where such violation would not have a Company Material
Adverse Effect.
(c) Since January 1, 1994, neither the Company nor any
of its subsidiaries is in violation of, or has violated (with or
without notice or lapse of time), any applicable provisions of
(i) any laws, rules, statutes, orders, ordinances or regulations,
or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise, or other instrument or
obligations to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or its
or any of their respective properties are bound or affected,
which, individually or in the aggregate, would have a Company
Material Adverse Effect.
(d) Except as set forth in Schedule 2.5(d), since
January 1, 1994: (i) the Company and each of its subsidiaries
is, and has been, in full compliance with all of the terms and
requirements of each award, decision, injunction, judgment,
order, ruling, subpoena, or verdict (each, an "Order") entered,
issued, made, or rendered by any court, administrative agency, or
other governmental entity, officer or authority or by any
arbitrator to which it, or any of the assets owned or used by it,
is or has been subject, and (ii) no event has occurred or
circumstance exists that may constitute or result in (with or
without notice or lapse of time) a violation of or failure to
comply with any term or requirement of any Order to which the
Company or its subsidiaries, or any of the assets owned or used
by the Company or its subsidiaries, is subject, except where such
non-compliance, violation or failure to comply would not have a
Company Material Adverse Effect.
(e) Neither the Company nor any of its subsidiaries
has received, at any time since January 1, 1994, any notice or
other communication (whether oral or written) regarding any
actual, alleged, possible, or potential violation of, or failure
to comply with, any term or requirement of any Order to which the
Company or its subsidiaries, or any of the assets owned or used
by the Company or its subsidiaries, is or has been subject and
which would have a Company Material Adverse Effect.
(f) No investigation or review by any government
entity, officer or authority with respect to the Company or its
subsidiaries is pending or, to the knowledge of the Company,
threatened, nor, to the knowledge of the Company, has any
government entity, officer or authority indicated an intention to
conduct the same, other than, in each case, those which would not
have a Company Material Adverse Effect.
Section 2.6 Non-Contravention; Required Filings and
Consents. (a) Except as set forth in Schedule 2.6 hereto and as
contemplated by Section 2.6(b), the execution, delivery and
performance by the Company of this Agreement and the consummation
of the transactions contemplated hereby (including, without
limitation, the Riviera Option Agreement and the Riviera Merger)
do not and will not (i) contravene or conflict with the Company
Articles of Incorporation or the Company Bylaws or the equivalent
organizational documents of any of its subsidiaries or any
resolution adopted by the Board or the Company Stockholders or
the board of directors or stockholders of any of the Company s
subsidiaries, (ii) contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to the
Company, any of its subsidiaries or any of their respective
properties, (iii) contravene, conflict with, or result in a
violation of any of the terms or requirements of, or give any
governmental entity, official or authority right to revoke,
withdraw, suspend, cancel, terminate or modify, any authorization
that is held by the Company or any of its subsidiaries, or that
otherwise relates to the business of, or any of the assets owned
by, the Company or any of its subsidiaries, (iv) conflict with,
or result in the breach or termination of any provision of or
constitute a default (with or without the giving of notice or the
lapse of time or both) under, or give rise to any right of
termination, cancellation, or loss of any benefit to which the
Company or any of its subsidiaries is entitled under any
provision of any agreement, contract, license or other instrument
binding upon the Company, any of its subsidiaries or any of their
respective properties, or allow the acceleration of the
performance of, any obligation of the Company or any of its
subsidiaries under any indenture, mortgage, deed of trust, lease,
license, contract, instrument or other agreement to which the
Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or any of their respective
assets or properties is subject or bound, or (v) result in the
creation or imposition of any Lien on any asset of the Company or
any of its subsidiaries, except in the case of clauses (i), (ii),
(iii) and (iv) for any such contraventions, conflicts,
violations, breaches, terminations, defaults, cancellations,
losses, accelerations and Liens which would not, individually or
in the aggregate, have a Company Material Adverse Effect or be
reasonably expected to prevent the consummation by the Company of
the transactions contemplated by this Agreement.
(b) The execution, delivery and performance by the
Company of this Agreement and the consummation of the
transactions contemplated hereby (including, without limitation,
the Riviera Option Agreement, the Escrow Agreement and the
Riviera Merger) by the Company require no action by or in respect
of, or filing with, any governmental entity, official or
authority (either domestic or foreign) other than (i) the filing
of articles of merger in accordance with the Nevada Merger Law,
(ii) compliance with any applicable requirements of the ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (iii) compliance with any applicable requirements of
the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder (the "Exchange Act"), and
state securities, takeover and Blue Sky laws, (iv) obtaining all
necessary gaming approvals, including those required by the
Gaming Authorities, including approvals under the Gaming Laws,
and (v) such additional actions or filings which, if not taken or
made, would not, individually or in the aggregate, have a Company
Material Adverse Effect or be reasonably expected to prevent the
consummation by the Company of the transactions contemplated by
this Agreement.
Section 2.7 SEC Reports. (a) The Company has filed
all required forms, reports and documents with the Securities and
Exchange Commission (the "SEC") since January 1, 1994. The
Company has made available to Gaming, in the form filed with the
SEC, the Company's (i) Annual Reports on Form 10-K for the fiscal
years ended December 31, 1996, 1995 and 1994, (ii) all Quarterly
Reports on Form 10-Q filed by the Company with the SEC since
January 1, 1994, (iii) all proxy statements relating to meetings
of the Company's stockholders since January 1, 1994 and (iv) all
Current Reports on Form 8-K and registration statements filed by
the Company with the SEC since January 1, 1994 (collectively and
as amended as required, the "SEC Reports"). As of their
respective dates, the SEC Reports complied in all material
respects with all applicable requirements of the Securities Act
of 1933, as amended, and the rules and regulations promulgated
thereunder (the "Securities Act"), and the Exchange Act, each as
in effect on the dates such SEC Reports were filed. As of their
respective dates, none of the SEC Reports, including, without
limitation, any financial statements or schedules included
therein, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. No
subsidiary of the Company is required, as of the date hereof, to
file any form, report, or other document with the SEC under
Section 12 of the Exchange Act. The audited consolidated
financial statements and unaudited consolidated interim financial
statements of the Company included in the SEC Reports fairly
present, in all material respects, in conformity with GAAP (as
defined in Section 4.11 of this Agreement) applied on a
consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of the Company and
its consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the periods
then ended (subject to normal year-end adjustments in the case of
any unaudited interim financial statements). The Company has
heretofore made available or promptly will make available to
Gaming a complete and correct copy of any amendments or
modifications, which are required to be filed with the SEC but
have not yet been filed with the SEC, to the SEC Reports.
(b) Except as set forth in Schedule 2.7(b) hereto, the
Company and its subsidiaries have no liabilities of any nature
(whether accrued, absolute, contingent or otherwise), except for
(i) liabilities set forth in the audited balance sheet of the
Company dated December 31, 1996 or on the notes thereto,
contained in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, (ii) liabilities incurred in
the ordinary course of business consistent with past practice
since January 1, 1997 and (iii) liabilities which would not,
individually or in the aggregate, have a Company Material Adverse
Effect.
Section 2.8 Absence of Certain Changes. Except as set
forth in Schedule 2.8 hereto, since January 1, 1997, the Company
and its subsidiaries have conducted their respective businesses
only in the ordinary course, and there has not been (i) any
declaration, setting aside or payment of any dividend or other
distribution with respect to its capital stock, (ii) any
incurrence, assumption or guarantees by the Company or any of its
subsidiaries of any indebtedness for borrowed money other than in
the ordinary course of business, (iii) any making of any loan,
advance or capital contributions to, or investments in, any other
person, (iv) any split, combination or reclassification of any of
its capital stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, (v) (x) any
granting by the Company or any of its subsidiaries to any officer
of the Company or any of its subsidiaries of any increase in
compensation, except in the ordinary course of business
(including in connection with promotions) consistent with past
practice or as was required under employment agreements in effect
as of the date of the most recent audited financial statements
included in the SEC Reports filed and publicly available prior to
the date of this Agreement, (y) any granting by the Company or
any of its subsidiaries to any such officer of any increase in
severance or termination pay, except as part of a standard
employment package to any person promoted or hired, or as was
required under employment, severance or termination agreements in
effect as of the date of the most recent audited financial
statements included in the SEC Reports filed or (z) except
termination arrangements in the ordinary course of business
consistent with past practice with employees other than any
executive officer of the Company, any entry by the Company or any
of its subsidiaries into any employment, severance or termination
agreement with any such officer, (vi) any damage, destruction or
loss, whether or not covered by insurance, that would be expected
to have a Company Material Adverse Effect, (vii) any transaction
or commitment made, or any contract or agreement entered into, by
the Company or any of its subsidiaries relating to any of their
assets or business (including the acquisition or disposition of
any assets) or any relinquishment by the Company or any of its
subsidiaries or any contract or other right, in either case,
material to the Company and its subsidiaries, taken as a whole,
other than transactions and commitments in the ordinary course of
business and those contemplated by this Agreement, (viii) any
change in accounting methods, principles or practices by the
Company materially affecting its assets, liabilities or business,
except insofar as may have been required by a change in generally
accepted accounting principles or (ix) any other change which
would have a Company Material Adverse Effect.
Section 2.9 Proxy Statement. The proxy or information
statement or similar materials distributed to the Company's
Stockholders in connection with the Riviera Merger, including any
amendments or supplements thereto (the "Proxy Statement"), shall
not, at the time filed with the SEC, at the time mailed to the
Company Stockholders, at the time of the Stockholders' Meeting or
at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not
misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information
provided by Gaming specifically for use in the Proxy Statement.
The Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act.
Section 2.10 No Brokers. Except for the engagement of
Ladenburg, ▇▇▇▇▇▇▇▇ & Co. Inc. ("Ladenburg"), pursuant to an
engagement letter, a copy of which has previously been delivered
to Gaming, the fees and expenses of such engagement will be paid
by the Company, the Company has not employed any broker, finder
or financial advisor or incurred any liability for any brokerage
fees, commissions, finders' or financial advisory fees in
connection with the transactions contemplated hereby. No
amendment has been or shall be made to the Company's agreement
with Ladenburg that would increase the amount of fees or other
compensation required thereunder.
Section 2.11 Absence of Litigation. Except as
disclosed in Schedule 2.11 hereto, since January 1, 1997, there
has not been any action, suit, claim, investigation or proceeding
pending against, or to the knowledge of the Company, threatened
against, the Company or any of its subsidiaries or any of their
respective properties or the Board before any court or arbitrator
or any administrative, regulatory or governmental body, or any
agency or official which, individually or in the aggregate, would
have a Company Material Adverse Effect. Except as disclosed in
Schedule 2.11 hereto, since January 1, 1997, there has not been
any action, suit, claim, investigation or proceeding pending
against, or to the knowledge of the Company, threatened against,
the Company or any of its subsidiaries or any of their respective
properties or the Board before any court or arbitrator or any
administrative, regulatory or governmental body, or any agency or
official which (i) challenges or seeks to prevent, enjoin, alter
or delay the Riviera Merger or any of the other transactions
contemplated hereby or (ii) alleges any criminal action or
inaction. Except as disclosed in Schedule 2.11 hereto, since
January 1, 1997, neither the Company nor any of its subsidiaries
nor any of their respective properties has been subject to any
order, writ, judgment, injunction, decree, determination or award
having, or which would have a Company Material Adverse Effect or
which would prevent or delay the consummation of the transactions
contemplated hereby.
Section 2.12 Taxes. Except as set forth in
Schedule 2.12 hereto, (a) the Company and its subsidiaries have
filed, been included in or sent, all material returns, material
declarations and reports and information returns and statements
required to be filed or sent by or relating to any of them
relating to any Taxes (as defined herein) with respect to any
material income, properties or operations of the Company or any
of its subsidiaries (collectively, "Returns"); (b) as of the time
of filing, the Returns correctly reflected in all material
respects the facts regarding the income, business, assets,
operations, activities and status of the Company and its
subsidiaries and any other material information required to be
shown therein; (c) the Company and its subsidiaries have timely
paid or made provision for all material Taxes that have been
shown as due and payable on the Returns that have been filed; (d)
the Company and its subsidiaries have made or will make provision
for all material Taxes payable for any periods that end before
the Effective Time for which no Returns have yet been filed and
for any periods that begin before the Effective Time and end
after the Effective Time to the extent such Taxes are
attributable to the portion of any such period ending at the
Effective Time; (e) the charges, accruals and reserves for Taxes
reflected on the books of the Company and its subsidiaries are
adequate under generally accepted accounting principles to cover
the Tax liabilities accruing or payable by the Company and its
subsidiaries; (f) neither the Company nor any of its subsidiaries
is delinquent in the payment of any material Taxes or has
requested any extension of time within which to file or send any
material Return (other than extensions granted to the Company for
the filing of its Returns as set forth in Schedule 2.12), which
Return has not since been filed or sent; (g) no material
deficiency for any Taxes has been proposed, asserted or assessed
in writing against the Company or any of its subsidiaries other
than those Taxes being contested in good faith by appropriate
proceedings and set forth in Schedule 2.12 (which shall set forth
the nature of the proceeding, the type of return, the
deficiencies proposed, asserted or assessed and the amount
thereof, and the taxable year in question); (h) neither the
Company nor any of its subsidiaries has granted any extension of
the limitation period applicable to any material Tax claims other
than those Taxes being contested in good faith by appropriate
proceedings; and (i) neither the Company nor any of its
subsidiaries is subject to liability for Taxes of any person
(other than the Company or its subsidiaries).
For purposes of this Agreement, "Tax" or "Taxes" means
all Federal, state, local and foreign taxes, and other
assessments of a similar nature (whether imposed directly or
through withholding), including any interest, additions to tax,
or penalties applicable thereto, imposed by any Tax Authority.
"Tax Authority" means the Internal Revenue Service and any other
domestic or foreign governmental authority responsible for the
administration of any Taxes.
Section 2.13 Employee Benefits. (a) Schedule 2.13(a)
hereto contains a true and complete list of each bonus, deferred
compensation, incentive compensation, stock purchase, stock
option, severance or termination pay, hospitalization or other
medical, dental, life, disability or other insurance,
supplemental unemployment benefits, profit-sharing, pension,
savings or retirement plan, program, agreement or arrangement,
and each other employee benefit plan, program, agreement or
arrangement, sponsored, maintained or contributed to or required
to be contributed to by the Company or by any trade or business,
whether or not incorporated (an "ERISA Affiliate"), that together
with the Company would be deemed a "single employer" within the
meaning of section 4001 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), for the benefit of
any employee or terminated employee of the Company or any ERISA
Affiliate (the "Plans"). Schedule 2.13(a) hereto identifies each
of the Plans that is an "employee benefit plan," as that term is
defined in section 3(3) of ERISA (the "ERISA Plans"). Neither
the Company nor any ERISA Affiliate has ever maintained,
administered, contributed to or had any contingent liability with
respect to any employee pension benefit plan subject to Title IV
of ERISA or Section 412 of the Code, other than the multiemployer
plans (as defined in Section 3(37)(A) of ERISA) which are
identified on Schedule 2.13(a) hereto.
(b) With respect to each Plan, the Company has
heretofore delivered or made available to Gaming true and
complete copies of each of the following documents (to the extent
applicable):
(i) a copy thereof;
(ii) a copy of the most recent annual
report and actuarial report, if required under ERISA,
and the most recent report prepared with respect
thereto in accordance with Statement of Financial
Accounting Standards No. 87, Employer's Accounting for
Pensions;
(iii) a copy of the most recent
actuarial report prepared with respect thereto in
accordance with Statement of Financial Accounting
Standards No. 106, Employer's Accounting for Non-
Pension Postretirement Benefits;
(iv) a copy of the most recent Summary
Plan Description;
(v) if the Plan is funded through a
trust or any third party funding vehicle, a copy of the
trust or other funding agreement and the latest
financial statements thereof; and
(vi) the most recent determination
letter received from the Internal Revenue Service with
respect to each Plan intended to qualify under section
401(a) of the Internal Revenue Code of 1986, as amended
(the "Code").
(c) Neither the Company nor any ERISA Affiliate has
incurred any liability under Title IV of ERISA, including any
"withdrawal liability" (within the meaning of Section 4201 of
ERISA) with respect to any Benefit Plan, and, to the knowledge of
the Company, no condition exists that presents a material risk to
the Company or any ERISA Affiliate of incurring a material
liability under such Title.
(d) Neither the Company nor any ERISA Affiliate, nor,
to the knowledge of the Company, any ERISA Plan, any trust
created thereunder, nor any trustee or administrator thereof has
engaged in a transaction in connection with which the Company or
any ERISA Affiliate, any ERISA Plan, any such trust, or any
trustee or administrator thereof, or any party dealing with any
ERISA Plan or any such trust would be subject to either a civil
penalty assessed pursuant to section 409 or 502(i) of ERISA or a
Tax imposed pursuant to section 4975 or 4976 of the Code, except
for such penalties and Taxes which would not, individually or in
the aggregate, have a Company Material Adverse Effect.
(e) All contributions required to be made with respect
to any ERISA Plan (whether pursuant to the terms of any ERISA
Plan or otherwise) on or prior to the Effective Time have been
timely made.
(f) To the knowledge of the Company, each Plan has
been operated and administered in all material respects in
accordance with its terms and applicable law, including but not
limited to ERISA and the Code except where such noncompliance
would not be expected to have a Company Material Adverse Effect.
(g) Each ERISA Plan intended to be "qualified" within
the meaning of section 401(a) of the Code has been drafted with
the intention to be so qualified and has received a favorable
determination letter from the Internal Revenue Service on or
before the date hereof.
(h) To the Company's knowledge, except as reasonably
estimated and as set forth in Schedule 2.13(h), no amounts
payable under the Plans as a result of the consummation of the
transactions contemplated by this Agreement will fail to be
deductible for federal income tax purposes by application of
section 280G of the Code.
(i) Except as set forth on Schedule 2.13(i) hereto, no
Plan provides benefits, including without limitation death or
medical benefits (whether or not insured), with respect to
current or former employees of the Company or any ERISA Affiliate
beyond their retirement or other termination of service (other
than (i) coverage mandated by applicable law or (ii) death
benefits or retirement benefits under any "employee pension
plan," as that term is defined in section 3(2) of ERISA).
(j) Except as provided in Schedule 2.13(j) hereto, the
consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee or officer of
the Company or any ERISA Affiliate to severance pay, unemployment
compensation or any other payment, or (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due
any such employee or officer.
(k) There are no pending or, to the knowledge of the
Company, threatened claims by or on behalf of any Plan, by any
employee or beneficiary covered under any such Plan, or otherwise
involving any such Plan (other than routine claims for benefits).
(l) The Company has reserved the right to amend or
terminate any Plan which is a welfare benefit plan, as that term
is defined in section 3(l) of ERISA.
Section 2.14 Intellectual Property. Except as
disclosed in the SEC Reports filed prior to the date of this
Agreement or as set forth in Schedule 2.14 hereto, the Company
and each of its subsidiaries owns, or is licensed or has the
right to use (in each case, free and clear of any Liens), all
Intellectual Property (as defined below) used in or necessary for
the conduct of its business substantially as currently conducted,
to the knowledge of the Company, the use of any Intellectual
Property by the Company and its subsidiaries does not infringe on
or otherwise violate the rights of any person; and, to the
knowledge of the Company, no person is challenging, infringing on
or otherwise violating any right of the Company or any of its
subsidiaries with respect to any Intellectual Property owned by
and/or licensed to the Company and its subsidiaries, except in
each case for such infringements or failures to own or be
licensed as would not, individually or in the aggregate, have a
Company Material Adverse Effect. For purposes of this Agreement,
"Intellectual Property" shall mean trademarks, service marks,
brand names, certification marks, trade dress, assumed names,
trade names and other indications of origin, the goodwill
associated with the foregoing and any registration in any
jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or
renewal of any such registration or application; inventions,
discoveries and ideas, whether patentable or not in any
jurisdiction; patents, applications for patents (including,
without limitation, divisions, continuations, continuations in
part and renewal applications), and any renewals, extensions or
reissues thereof, in any jurisdiction; nonpublic information,
trade secrets and confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any
person; writings and other works, whether copyrightable or not in
any jurisdiction; registrations or applications for registration
of copyrights in any jurisdiction, and any renewals or extensions
thereof; and any similar intellectual property or proprietary
rights.
Section 2.15 Material Contracts. Except as set forth
in Schedule 2.15 hereto, there are no (i) agreements of the
Company or any of its subsidiaries containing an unexpired
covenant not to compete or similar restriction applying to the
Company or any of its subsidiaries, (ii) interest rate, currency
or commodity hedging, swap or similar derivative transactions to
which the Company or any of its subsidiaries is a party nor (iii)
other contracts or amendments thereto that would be required to
be filed and have not been filed as an exhibit to a Form 10-K
filed by the Company with the SEC as of the date of this
Agreement (collectively, the Material Contracts ). Assuming
each Material Contract constitutes a valid and binding obligation
of each other party thereto, each Material Contract is a valid
and binding obligation of the Company or a subsidiary of the
Company, as the case may be. To the Company's knowledge, each
Material Contract is a valid and binding obligation of each other
party thereto, and each such Material Contract is in full force
and effect and is enforceable by the Company or its subsidiaries
in accordance with its terms, except as such enforcement may be
limited by the Bankruptcy Exceptions and subject to the general
principles of equity. There are no existing defaults (or
circumstances or events that, with the giving of notice or lapse
of time or both would become defaults) of the Company or any of
its subsidiaries (or, to the knowledge of the Company, any other
party thereto) under any of the Material Contracts except for
defaults that would not, individually or in the aggregate, have a
Company Material Adverse Effect.
Section 2.16 Insurance. The Company and its
subsidiaries have obtained and maintained in full force and
effect insurance with responsible and reputable insurance
companies or associations in such amounts, on such terms and
covering such risks, including fire and other risks insured
against by extended coverage, as is consistent with industry
practice for companies (i) engaged in similar businesses and (ii)
of at least similar size to that of the Company and its
Subsidiaries, and has maintained in full force and effect public
liability insurance, insurance against claims for personal injury
or death or property damage occurring in connection with any of
the activities of the Company or its subsidiaries or any of any
properties owned, occupied or controlled by the Company or its
subsidiaries, in such amount as reasonably deemed necessary by
the Company or its subsidiaries. Schedule 2.16 hereto sets forth
a complete and correct list of all material insurance policies
(including a brief summary of the nature and terms thereof and
any amounts paid or payable to the Company or any of its
subsidiaries thereunder) providing coverage in favor of the
Company or any of its subsidiaries or any of their respective
properties. Each such policy is in full force and effect, no
notice of termination, cancellation or reservation of rights has
been received with respect to any such policy, there is no
default with respect to any provision contained in any such
policy, and there has not been any failure to give any notice or
present any claim under any such policy in a timely fashion or in
the manner or detail required by any such policy, except for any
such failures to be in full force and effect, any such
terminations, cancellations, reservations or defaults, or any
such failures to give notice or present claims which would not,
individually or in the aggregate, have a Company Material Adverse
Effect.
Section 2.17 Labor Matters. (a) Except as set forth
in Schedule 2.17(a) hereto, neither the Company nor any of its
subsidiaries is a party to any collective bargaining or other
labor union contract applicable to persons employed by the
Company or any of its subsidiaries, no collective bargaining
agreement is being negotiated by the Company or any of its
subsidiaries and the Company has no knowledge of any material
activities or proceedings (i) involving any unorganized employees
of the Company or its subsidiaries seeking to certify a
collective bargaining unit or (ii) of any labor union to organize
any of the employees of the Company or its subsidiaries. There
is no labor dispute, strike or work stoppage against the Company
or any of its subsidiaries pending or, to the Company's
knowledge, threatened which may interfere with the respective
business activities of the Company or any of its subsidiaries,
except where such dispute, strike or work stoppage would not have
a Company Material Adverse Effect.
(b) Except as set forth in Schedule 2.17(b) hereto,
the Company and each of its subsidiaries have paid in full, or
fully accrued for in their financial statements, all wages,
salaries, commissions, bonuses, severance payments, vacation
payments, holiday pay, sick pay, pay in lieu of compensatory time
and other compensation due or to become due to all current and
former employees of the Company and each Subsidiary for all
services performed by any of them on or prior to the date hereof.
The Company and its subsidiaries are in compliance with all
applicable federal, state, local and foreign laws, rules and
regulations relating to the employment of labor, including
without limitation, laws, rules and regulations relating to
payment of wages, employment and employment practices, terms and
conditions of employment, hours, immigration, discrimination,
child labor, occupational health and safety, collective
bargaining and the payment and withholding of Taxes and other
sums required by governmental authorities.
Section 2.18 Real Property. Schedule 2.18 hereto
identifies all real property owned, leased or used by the Company
or its subsidiaries in the conduct of its business. Except as
set forth in Schedule 2.18, the Company and each of its
subsidiaries have good and marketable title to all of their
properties and assets, free and clear of all Liens, except for
those disclosed in the financial statements and except Liens for
taxes not yet due and payable and such Liens or other
imperfections of title, if any, as do not materially detract from
the value of or interfere with the present use of the property
affected thereby or which, individually or in the aggregate,
would not have a Company Material Adverse Effect; and all leases
pursuant to which the Company or any of its subsidiaries lease
from others real or personal property are in good standing, valid
and effective in accordance with their respective terms, and
there is not, to the knowledge of the Company, under any of such
leases, any existing material default or event of default (or
event which with notice or lapse of time, or both, would
constitute a material default and in respect of which the Company
or such subsidiary has not taken adequate steps to prevent such a
default from occurring) except where the lack of such good
standing, validity and effectiveness, or the existence of such
default or event, would not have a Company Material Adverse
Effect.
Section 2.19 Environmental Matters. (a) Except as
set forth on Schedule 2.19(a) (i) the Company and its
subsidiaries are in compliance with all Environmental Laws (as
defined herein), except where the failure to be in compliance
would not have a Company Material Adverse Effect, and (ii) to the
best knowledge of the Company, there are not, with respect to the
Company or any of its subsidiaries, any past violations of
Environmental Laws, releases of any material into the
environment, actions, activities, circumstances, conditions,
events, incidents, contractual obligations or other legal
requirements that may give rise to any liability, cost or expense
under any Environmental Laws, which liabilities, costs or
expenses, either individually or in the aggregate, would have a
Company Material Adverse Effect.
(b) As used in this Section 2.19, the term
"Environmental Laws" means the applicable common law and all
applicable Federal, state, local and foreign laws relating to
pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges,
releases or threatened releases of, or exposure to, chemicals,
pollutants, contaminants, asbestos-containing materials or
industrial, toxic or hazardous substances or wastes into the
environment, as well as all applicable authorizations or codes,
decrees, injunctions, judgments, licenses, orders, permits or
regulations in effect thereunder.
Section 2.20 Representations Complete. None of the
representations or warranties made by the Company herein or in
any Schedule or Exhibit hereto contains or will contain at the
Effective Time any untrue statement of a material fact, or
omits or will omit at the Effective Time any material fact or
necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they are made,
not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GAMING AND RAS
Each of Gaming and RAS represents and warrants to the
Company as follows:
Section 3.1 Organization; Power and Authority. Each
of Gaming and RAS is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation, and has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions
contemplated hereby, except where the failure to be so organized,
existing and in good standing or to have such power and authority
would not, individually or in the aggregate, have a Gaming
Material Adverse Effect (as defined herein). When used in this
Agreement, the term "Gaming Material Adverse Effect" means any
change or effect that would (i) be materially adverse to the
business, results of operations, or financial condition of Gaming
and RAS and their subsidiaries, taken as a whole, or (ii) impair
the ability of Gaming and RAS to consummate the transactions
contemplated hereby. Each of Gaming and RAS has the requisite
corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on
the part of each of Gaming and RAS and by the sole stockholder of
each of Gaming and RAS, and no other corporate proceedings on the
part of Gaming or RAS are necessary to authorize this Agreement
or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by
each of Gaming and RAS and, assuming this Agreement constitutes a
valid and binding agreement of the other parties hereto,
constitutes a legal, valid and binding agreement of each of
Gaming and RAS, enforceable against each of Gaming and RAS in
accordance with its terms, except as such enforcement may be
limited by the Bankruptcy Exceptions and subject to the general
principles of equity.
Section 3.2 Non-Contravention; Required Filings and
Consents. (a) Except as set forth on Schedule 3.2(a) hereto,
the execution, delivery and performance by each of Gaming and RAS
of this Agreement and the consummation of the transactions
contemplated hereby (including, without limitation, the Riviera
Option Agreement, the Escrow Agreement and the Riviera Merger) do
not and will not: (i) contravene or conflict with the Certificate
of Incorporation or Bylaws of Gaming or the equivalent
organizational documents of RAS, or any resolution adopted by the
board of directors or stockholders of Gaming or RAS, (ii)
assuming that all consents, authorizations and approvals
contemplated by subsection (b) below have been obtained and all
filings described therein have been made, contravene or conflict
with or constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding upon or
applicable to Gaming or to RAS or any of their respective
properties, (iii) contravene, conflict with, or result in a
violation of any of the terms or requirements of, or give any
governmental entity, official or authority right to revoke,
withdraw, suspend, cancel, terminate or modify, any authorization
that is held by Gaming or RAS or that otherwise relates to the
business of, or any of the assets owned by Gaming or RAS, (iv)
conflict with, or result in the breach or termination of any
provision of or constitute a default (with or without the giving
of notice or the lapse of time or both) under, or give rise to
any right of termination, cancellation, or loss of any benefit to
which either Gaming or RAS is entitled under any provision of any
agreement, contract, license or other instrument binding upon
either Gaming or RAS, or allow the acceleration of the
performance of, any obligation of either Gaming or RAS under any
other agreement to which Gaming or RAS is a party or by which
Gaming or RAS is subject or bound, or (v) result in the creation
or imposition of any Lien on any asset of Gaming or RAS, except
in the case of clauses (ii), (iii) and (iv) for any such
contraventions, conflicts, violations, breaches, terminations,
defaults, cancellations, losses, accelerations and Liens which
would not individually or in the aggregate have a Gaming Material
Adverse Effect or be reasonably expected to prevent the
consummation by Gaming or by RAS of the transactions contemplated
by this Agreement.
(b) The execution, delivery and performance by Gaming
and by RAS of this Agreement and the consummation of the
transactions contemplated hereby (including the Riviera Option
Agreement, the Escrow Agreement and the Riviera Merger) by Gaming
and by RAS require no action by or in respect of, or filing with,
any governmental entity, official or authority (either domestic
or foreign), other than: (i) the filing of Articles of Merger in
accordance with the Nevada Merger Law; (ii) compliance with any
applicable requirements of the HSR Act; (iii) compliance with any
applicable requirements of the Exchange Act and state securities,
takeover and Blue Sky laws; (iv) obtaining all necessary gaming
approvals, including those required by the Gaming Authorities,
including, without limitation, approvals under the Gaming Laws,
if any; and (v) such additional actions or filings which, if not
taken or made, would not individually or in the aggregate have a
Gaming Material Adverse Effect or be reasonably expected to
prevent the consummation by Gaming or by RAS of the transactions
contemplated by this Agreement.
Section 3.3 Absence of Litigation. Since January 1,
1997, there has not been any action, suit, claim, investigation
or proceeding pending against, or to the knowledge of Gaming or
RAS, threatened against, Gaming or RAS or any of their
subsidiaries or any of their respective properties, or their
respective boards of directors, before any court or arbitrator or
any administrative, regulatory or governmental body, or any
agency or official which, individually or in the aggregate, would
have a Gaming Material Adverse Effect. Since January 1, 1997,
neither Gaming nor RAS nor any of their subsidiaries nor any of
their respective properties has been subject to any order, writ,
judgment, injunction, decree, determination or award having, or
which would have, a Gaming Material Adverse Effect or which would
prevent or delay the consummation of the transactions
contemplated hereby.
Section 3.4 Proxy Statement. None of the information
provided by Gaming specifically for use in the Proxy Statement
shall, at the time filed with the SEC, at the time mailed to the
Company Stockholders, at the time of the Stockholders' Meeting or
at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not
misleading.
Section 3.5 No Prior Activities. Since the date of
its incorporation, neither Gaming nor RAS has engaged in any
activities other than in connection with or as contemplated by
this Agreement or in connection with arranging any financing
required to consummate the transactions contemplated hereby.
Section 3.6 No Brokers. Except for Jefferies & Co.,
Inc. neither Gaming nor RAS 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.
Section 3.7 Capitalization of Gaming. On the Closing
Date and at the Effective Time, Gaming will have cash or
immediately available funds in an amount not less than the sum of
(i) the aggregate amount of Merger Consideration to be paid
hereunder and (ii) the aggregate amount to be paid at the
Effective Time pursuant to Section 1.10 hereof.
Section 3.8 Representations Complete. None of the
representations or warranties made by either Gaming or RAS herein
or any Exhibit hereto contains or will contain at the Effective
Time any untrue statement of a material fact, or omits or will
omit at the Effective Time any material fact necessary in order
to make the statements contained herein, in light of the
circumstances under which they are made, not misleading.
ARTICLE IV
COVENANTS
Section 4.1 Conduct of Business of the Company.
Except as otherwise expressly provided in this Agreement, during
the period from the date hereof to the Effective Time, the
Company and its subsidiaries will each conduct their respective
operations according to its ordinary course of business
consistent with past practice, and the Company and its
subsidiaries will each use its reasonable best efforts to
preserve intact its business organization, to keep available the
services of its officers and employees and to maintain existing
relationships with licensors, licensees, suppliers, contractors,
distributors, and others having business relationships with it.
Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement, or as set forth
in Schedule 4.1 hereto, prior to the Effective Time, neither the
Company nor any of its subsidiaries will, without the prior
written consent of Gaming:
(a) amend its Articles of Incorporation or Bylaws or
other comparable organizational documents;
(b) authorize for issuance, issue, pledge, sell,
deliver or agree or commit to issue, sell or deliver (whether
through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) or
otherwise encumber, any capital stock of any class or any other
securities or equity equivalents (including, without limitation,
stock appreciation rights), except as required by option
agreements or the Company Stock Plan, warrants or other
securities listed on Schedule 2.2, as such are in effect as of
the date hereof, or amend any of the terms of any such securities
or agreements outstanding as of the date hereof;
(c) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other
distribution (whether in cash, stock, or property or any
combination thereof) in respect of its capital stock, or, redeem,
repurchase or otherwise acquire any of its securities or any
securities of its subsidiaries;
(d) (i) except as set forth in Schedule 4.1(d)(i)
hereto or in the ordinary course of business consistent with past
practice or for the senior mortgage note offering (the "Note
Offering") described in the offering circular dated August 8,
1997 (the "Note Offering Circular"), create or incur any
Indebtedness (as defined herein), (ii) make any loans, advances
or capital contributions to, or investments in, any other person,
(iii) pledge or otherwise encumber any shares of capital stock of
the Company or any of its subsidiaries, or (iv) mortgage or
pledge any of its assets, tangible or intangible, or create or
suffer to exist any Lien thereupon;
(e) except as otherwise provided in this Section 4.1,
enter into any transaction, other than in the ordinary course of
business consistent with past practice, or make any investment,
which individually or in the aggregate exceeds the amount of
$500,000;
(f) enter into, adopt or (except as may be required by
law or by the terms of any such arrangement) amend or terminate
any bonus, profit-sharing, compensation, severance, termination,
stock option, pension, retirement, deferred compensation,
employment or other employee benefit agreement, trust, plan, fund
or other arrangement for the benefit or welfare of any director,
officer or employee, or increase in any manner the compensation
or benefits of any director, officer or employee, or grant any
benefit or termination or severance pay to any director, officer,
or employee not required by any plan or arrangement as in effect
as of the date hereof (including, without limitation, the
granting of stock options) or by law;
(g) acquire, sell, lease or dispose of, or encumber
any assets outside the ordinary course of business or any assets
which in the aggregate are material to the Company and its
subsidiaries, taken as a whole, or enter into any contract,
agreement, commitment or transaction outside the ordinary course
of business;
(h) change any of the accounting principles or
practices used by the Company, except as may be required as a
result of a change in law, SEC guidelines or GAAP;
(i) (A) acquire (including, without limitation, by
merger, consolidation, or acquisition of stock or assets) any
corporation, partnership or other business organization or
division thereof; (B) except in connection with the construction
of a casino in Black Hawk, Colorado, authorize any new capital
expenditure or expenditures which are in excess of the amounts
estimated in the Company's capital expenditure budget, dated as
of August 28, 1997 and the capital expenditure budget, dated as
of August 28, 1997, relating to the development of the Company's
property in Black Hawk, Colorado, previously provided to Gaming
in excess of $500,000 or, in the aggregate, are in excess of
$1,500,000; (C) settle any litigation for amounts in excess of
$100,000 individually or $500,000 in the aggregate after giving
effect to insurance recoveries; or (iv) enter into or amend any
contract, agreement, commitment or arrangement with respect to
any of the foregoing;
(j) make any Tax election or settle or compromise any
Tax liability, other than in the ordinary course of business;
(k) pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business consistent with
past practice or in accordance with their terms, of liabilities
set forth in Schedule 2.8 hereto or reflected or reserved against
in the financial statements (or the notes thereto) of the Company
and its subsidiaries or incurred in the ordinary course of
business consistent with past practice;
(l) terminate, modify, amend or waive compliance with
any provision of any Material Contract, or fail to take any
action necessary to preserve the benefits of any such Material
Contract to the Company or any of its subsidiaries;
(m) fail to comply with any laws, ordinances or other
governmental regulations applicable to the Company or any of its
subsidiaries, including, but not limited to, the Gaming Laws and
any regulations promulgated thereunder, that may have a Company
Material Adverse Effect; or
(n) take, or agree in writing or otherwise to take,
any of the actions described in this Section 4.1.
Section 4.2 Proxy Statement. (a) The Company shall,
as promptly as practicable following the date hereof, prepare and
file the Proxy Statement with the SEC under the Exchange Act.
Gaming and RAS shall use their respective reasonable best efforts
to cooperate with the Company in the preparation of the Proxy
Statement. As soon as practicable following completion of review
of the Proxy Statement by the SEC, the Company shall mail the
Proxy Statement to its stockholders who are entitled to vote at
the Stockholders' Meeting. Subject to the fiduciary obligations
of the Board under applicable law, the Proxy Statement shall
contain the recommendation of the Board that the Company
Stockholders approve this Agreement and the transactions
contemplated hereby.
(b) The Company shall use its reasonable best efforts
to promptly obtain and furnish the information required to be
included in the Proxy Statement and to respond promptly to any
comments from, or requests made by the SEC with respect to the
Proxy Statement. The Company shall promptly notify Gaming of the
receipt of comments from, or any requests by, the SEC with
respect to the Proxy Statement, and shall promptly supply Gaming
with copies of all correspondence between the Company (or its
representatives) and the SEC (or its staff) relating thereto.
The Company agrees to correct any information provided by it for
use in the Proxy Statement which shall have become, or is, false
or misleading; provided, however, that the Company shall first
use its reasonable best efforts to consult with Gaming about the
form and substance of each such correction.
Section 4.3 Access to Information. (a) Subject to
applicable law and the agreements set forth in Section 4.3(b),
between the date hereof and the Effective Time, the Company will
give Gaming and its counsel, financial advisors, auditors and
other authorized representatives reasonable access (during
regular business hours upon reasonable notice) to all employees,
offices and other facilities and to all books and records of the
Company and its subsidiaries, will permit Gaming and its counsel,
financial advisors, auditors and other authorized representatives
to make such inspections Gaming may reasonably require, and will
cause the Company's officers and those of its subsidiaries to
furnish Gaming or its representatives with such financial and
operating data and other information with respect to the business
and properties of the Company and any of its subsidiaries as
Gaming may from time to time reasonably request. No
investigation pursuant to this Section 4.3 shall affect any
representations or warranties of the Company herein or the
conditions to the obligations of Gaming or RAS hereunder.
(b) The parties hereto each agree that the provisions
of the Confidentiality Agreement, dated as of April 21, 1997 and
attached hereto as Exhibit D (the "Confidentiality Agreement"),
between the Company and ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall apply to and
be binding on Gaming and RAS, and that the terms of the
Confidentiality Agreement are incorporated herein by reference.
Section 4.4 Reasonable Best Efforts. Subject to the
terms and conditions contained herein, each of the parties hereto
agrees to use its reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things
reasonably necessary, proper or advisable under all applicable
laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as soon as reasonably
practicable. Without limiting the generality of the foregoing,
the parties hereto shall cooperate with one another (i) in the
preparation and filing of any required filings under the HSR Act,
the Gaming Laws and the other laws referred to in Sections 2.5
and 3.2 hereof, (ii) in determining whether action by or in
respect of, or filing with, any governmental body, agency,
official or authority is required, proper or advisable, or any
actions, consents, waivers or approvals are required to be
obtained from parties to any contracts in connection with the
transactions contemplated by this Agreement, (iii) in seeking to
obtain any such actions, consents and waivers and in making any
such filings, and (iv) in seeking to lift any order, decree or
ruling restraining, enjoining, or otherwise prohibiting the
Riviera Merger. If at any time after the Effective Time any
further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of
each party hereto shall take all such necessary action.
Section 4.5 Public Announcements. Each of the parties
hereto agrees that it will not issue any press release or
otherwise make any public statement with respect to this
Agreement or the transactions contemplated hereby without the
prior consent of the other party, which consent shall not be
unreasonably withheld or delayed; provided, however, that such
disclosure can be made without obtaining such prior consent if
(i) the disclosure is required by law, and (ii) the party making
such disclosure has first used its reasonable best efforts to
consult with the other party about the form and substance of such
disclosure.
Section 4.6 Indemnification; Insurance. (a) From and
after the Effective Time, the Surviving Corporation shall
indemnify and hold harmless each person who is, or has been at
any time prior to the date hereof or who becomes prior to the
Effective Time, an officer, director or employee of the Company
or any of its subsidiaries (collectively, the "Indemnified
Parties" and individually, an "Indemnified Party") against all
losses, liabilities, expenses (including attorneys' fees), claims
or damages in connection with any claim, suit, action, proceeding
or investigation based in whole or in part upon the fact that
such Indemnified Party is or was a director, officer or employee
of the Company or any of its subsidiaries and arising out of acts
or omissions occurring prior to and including the Effective Time
(including but not limited to the transactions contemplated by
this Agreement) to the fullest extent permitted by Nevada law,
for a period of not less than six years following the Effective
Time; provided, that in the event any claim or claims are
asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall
continue until final disposition of any and all such claims.
(b) The provisions of the Surviving Corporation
Articles of Incorporation and the Surviving Corporation Bylaws
with respect to indemnification and exculpation shall not be
amended, repealed or otherwise modified for a period of six years
after the Effective Time in any manner that would adversely
affect the rights thereunder of individuals who at the Effective
Time are or were current or former directors or officers of the
Company in respect of actions or omissions occurring at or prior
to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement), unless such
modification is required by law.
(c) For six years after the Effective Time, the
Surviving Corporation shall cause to be maintained the current
policies of directors' and officers' liability insurance
maintained by the Company covering the current and former
directors and officers of the Company with respect to matters
occurring prior to the Effective Time (provided, that the
Surviving Corporation may substitute therefor policies of at
least the same coverage containing terms and conditions which are
no less advantageous to the current and former directors and
officers of the Company than the policy in effect on the date
hereof with respect to acts or failures to act prior to the
Effective Time (including dollar amount and scope of coverage),
to the extent such policies are available; provided, that in no
event shall the Surviving Corporation be required to expend, in
order to maintain or procure insurance coverage pursuant to this
Section 4.6(c), any amount per annum greater than 150% of the
current annual premiums paid by the Company for such insurance
(which the Company represents and warrants to be not more than
$225,000). If for any reason during such period the Surviving
Corporation is unable to obtain such insurance for an annual
premium of not more than $337,500, it shall notify ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, who will act as authorized representative of all such
directors and officers (the "Representative"). The
Representative may require either that the Surviving Corporation
shall (i) pay $337,500 in annual premiums for such insurance,
with the insured directors and officers paying any excess, or
(ii) deposit $337,500 per annum in an escrow account with an
independent escrow agent as a fund to cover counsel fees and
other litigation expenses of, or judgments or settlements paid
by, such directors and officers for claims made against them
during such six-year period by reason of their having been
directors and officers of the Company or its subsidiaries prior
to the Effective Time, which expenses are not paid by the
Surviving Corporation pursuant to its indemnification obligations
to such directors and officers.
(d) From and after the Effective Time, no Indemnified
Party shall be liable to Gaming, RAS or the Surviving Corporation
(or anyone claiming rights through any of them, including ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇) for breach of any of the representations, warranties,
covenants or agreements contained in this Agreement. It is the
express understanding of the parties that the sole remedy of
Gaming and RAS under this Agreement (or anyone claiming rights
under this Agreement through Gaming or RAS) in the event of a
breach or alleged breach by the Company of its representations,
warranties, covenants or agreements, shall be to refuse to
consummate the Riviera Merger, subject, however, to Gaming s
rights under Article VI hereof.
(e) This Section 4.6 is intended to benefit the
Indemnified Parties and their respective heirs, executors and
personal representatives, and shall be binding on the successors
and assigns of the Company and the Surviving Corporation.
Section 4.7 Notification of Certain Matters. The
Company shall give prompt notice to Gaming and RAS, and Gaming
and RAS shall give prompt notice to the Company, upon becoming
aware of: (i) the occurrence or non-occurrence, of any event the
occurrence, or non-occurrence of which would cause any
representation or warranty contained in this Agreement to be
untrue or inaccurate, and (ii) any failure of the Company or
Gaming and RAS, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, that the delivery of any notice
pursuant to this Section 4.7 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such
notice.
Section 4.8 Termination of Stock Plans. Except as may
be otherwise agreed to by Gaming and the Company, the Company
Plan, the Directors Plan, the Company Stock Plan and the
Compensation Committee Plan shall terminate as of the Effective
Time. Prior to the Effective Time, the Board (or, if
appropriate, any committee thereof) shall adopt such resolutions
or take such other actions as are required to: (i) effect the
transactions contemplated by Section 1.10 hereof and (ii) with
respect to any stock option, stock appreciation or other stock
benefit plan of the Company or any of its subsidiaries not
addressed by the preceding clause (i), ensure that, following the
Effective Time, no participant therein shall have any right
thereunder to acquire any capital stock of the Surviving
Corporation or any subsidiary thereof.
Section 4.9 No Solicitation. (a) The Company and its
subsidiaries and affiliates will not, and the Company and its
subsidiaries and affiliates will use their reasonable best
efforts to ensure that their respective officers, directors,
employees, investment bankers, attorneys, accountants and other
agents do not, directly or indirectly: (i) initiate, solicit or
encourage, or take any action to facilitate the making of, any
offer or proposal which constitutes or is reasonably likely to
lead to any Alternative Transaction (as defined below) with
respect to the Company or any of its subsidiaries or an inquiry
with respect thereto, or, (ii) in the event of an unsolicited
Alternative Transaction for the Company or any of its
subsidiaries, engage in negotiations or discussions with, or
provide any information or data to any person relating to any
Alternative Transaction, subject to the Board's good faith
determination, after consulting with outside legal counsel to the
Company, that the failure to engage in such negotiations or
discussions or provide such information would likely result in a
breach of the Board's fiduciary duties under applicable law if
such Alternative Transaction would provide the Company
Stockholders with a purchase price per Share that is higher (the
amount of such excess in the purchase price per Share is
hereinafter referred to as the "Spread") than the Merger
Consideration to be received by the Company Stockholders. The
Company shall notify Gaming and RAS orally and in writing of any
such inquiries, offers or proposals (including, without
limitation, the terms and conditions thereof and the identity of
the person making such), within twenty four hours of the receipt
thereof. The Company shall, and shall cause its subsidiaries and
affiliates, and their respective officers, directors, employees,
investment bankers, attorneys, accountants and other agents to,
immediately cease and cause to be terminated all existing
discussions and negotiations, if any, with any parties conducted
heretofore with respect to any Alternative Transaction relating
to the Company or any of its subsidiaries. Notwithstanding
anything to the contrary, nothing contained in this Section 4.9
shall prohibit the Company or the Board from communicating to the
Company Stockholders a position as required by Rules 14d-9 and
14a-2 promulgated under the Exchange Act.
(b) As used in this Agreement, "Alternative
Transaction" shall mean any tender or exchange offer for the
Common Stock or for the equivalent securities of any of the
Company's subsidiaries, any proposal for a merger, consolidation
or other business combination involving any such person, any
proposal or offer to acquire in any manner a ten percent or more
equity interest in, or ten percent or more of the business or
assets of, such person, any proposal or offer with respect to any
recapitalization or restructuring with respect to such person or
any proposal or offer with respect to any other transaction
similar to any of the foregoing with respect to such person or
any subsidiary of such person; provided, however, that, as used
in this Agreement, the term "Alternative Transaction" shall not
apply to any transaction of the type described in this subsection
(b) involving Gaming, RAS or their affiliates.
Section 4.10 Projected Results. In connection with
the monthly projections of the Company's consolidated statement
of operations (the "Projected Results") for the twelve months
ending March 31, 1998, which have been previously delivered to
Gaming, the Company shall (i) deliver to Gaming, no earlier than
ten and no later than five business days prior to the Closing
Date, a certificate, in form satisfactory to Gaming, from the
Company's Chief Executive Officer and Chief Financial Officer
specifying the Company's actual monthly Consolidated EBITDA (as
defined herein) since April 1, 1997 on a cumulative basis and
(ii) provide Gaming, RAS and their representatives with all
information which may be reasonably requested by Gaming, RAS or
their representatives to allow them to verify and analyze the
Consolidated EBITDA for the period of March 31, 1997 through and
including the earlier of (x) the Latest Fiscal Month (as defined
herein) and (y) March 31, 1998 (the "Projected Period").
"Consolidated EBITDA" means, in each case for the Projected
Period, the Consolidated Net Income (as defined herein) of the
Company adjusted, (x) to add thereto (to the extent deducted from
net revenues in determining Consolidated Net Income), without
duplication, the sum of the Company's (i) Consolidated Fixed
Charges (as defined herein), (ii) consolidated income tax expense
and (iii) consolidated depreciation and amortization expense and
(y) to subtract therefrom, to the extent included in the
determination of Consolidated Net Income, any interest earned on
any asset set aside with respect to any defeased obligation,
provided that consolidated depreciation and amortization of a
subsidiary of the Company that is a less than wholly owned
subsidiary of the Company shall only be added to the extent of
the pro rata equity interest of the Company in such subsidiary.
"Consolidated Net Income" means, in each case for the
Projected Period, the net income (or loss) of the Company
(determined on a consolidated basis in accordance with GAAP)
adjusted to exclude (only to the extent included in computing
such net income (or loss), and without duplication): (a) all
gains and not losses which are either extraordinary (as
determined in accordance with GAAP) or are either unusual or
nonrecurring (including any gain from the sale or other
disposition of assets outside the ordinary course of business,
including the gain, if any, from the Company's warrants to
purchase shares of common stock of Elsinore Corporation, a Nevada
corporation, provided, however, that the exclusion relating to
such warrants set forth in the preceding clause shall not effect
the calculation of executive incentive compensation, pursuant to
executive compensation agreements in effect on the date hereof,
and provided, further, that the amount of executive incentive
compensation, as so calculated, during the Projected Period
shall be taken into account in the calculation of Consolidated
Net Income, or from the issuance or sale of any capital stock),
(b) the net income of an entity (other than a wholly owned
subsidiary of the Company) in which the Company or any of its
consolidated subsidiaries has an interest, except to the extent
of the amount of any dividends or distributions actually paid in
cash to the Company or a wholly owned subsidiary of the Company
during such period, but in any case not in excess of the
Company's or such wholly owned subsidiary's pro rata share of
such entity's net income for such period, (c) the net income, if
positive, of any consolidated subsidiary of the Company to the
extent that the declaration or payment of dividends or similar
distributions is not at the time permitted by operation of the
terms of its charter or bylaws or any other agreement,
instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such subsidiary of the
Company; provided, that, charges relating to the following
expenses shall not be included: (i) the transactions contemplated
by this Agreement; (ii) the offering of $175,000,000 10% First
Mortgage Notes due 2004 (the "New Notes") (provided, however,
that interest accrued with respect to the New Notes during the
Projected Period shall be taken into account in the calculation
of Consolidated Net Income), and the defeasance (the
"Defeasance") as of June 1, 1998 for the price specified in the
Note Offering Circular of the 11% Notes and the costs (including
premium, if any) associated therewith; (iii) the transactions
contemplated in the Black Hawk Agreement; (iv) the proposed
public offering of shares of Common Stock which was terminated in
April 1997; and (v) any costs related to the extinguishment of
the Company's obligation to Bank of America.
"Consolidated Fixed Charges" means, for the Projected
Period, the aggregate amount (without duplication and determined
in each case in accordance with GAAP) of interest expensed, paid,
accrued, or scheduled to be paid or accrued (including, in
accordance with the following sentence, interest attributable to
capitalized lease obligations) of the Company and its
consolidated subsidiaries during such period, including (i)
original issue discount and non-cash interest payments or
accruals on any Indebtedness (as defined herein), (ii) the
interest portion of all deferred payment obligations, and (iii)
all commissions, discounts and other fees and charges owed with
respect to bankers' acceptances and letters of credit financings
and currency and Interest Swap and Hedging Obligations (as
defined below), in each case to the extent attributable to such
period. For purposes of this definition, (x) interest on a
capitalized lease obligation shall be deemed to accrue at an
interest rate reasonably determined in good faith by the Company
to be the rate of interest implicit in such capitalized lease
obligation in accordance with GAAP and (y) interest expense
attributable to any Indebtedness (as defined herein) represented
by the guaranty by the Company or any of its subsidiaries of an
obligation of another person shall be deemed to be the interest
expense attributable to the Indebtedness guaranteed.
"Interest Swap and Hedging Obligation" means any obligation
of the Company or its subsidiaries pursuant to any interest rate
swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate exchange agreement, currency exchange
agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency
values, including, without limitation, any arrangement whereby,
directly or indirectly, the Company or its subsidiaries are
entitled to receive from time to time periodic payments
calculated by applying either a fixed or floating rate of
interest on a stated notional amount in exchange for periodic
payments made by the Company or its subsidiaries calculated by
applying a fixed or floating rate of interest on the same
notional amount.
"Indebtedness" of any person means, without duplication, (a)
all liabilities and obligations, contingent or otherwise, of such
any person, (i) in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such
person or only to a portion thereof), (ii) evidenced by bonds,
notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property
or services, except (other than accounts payable or other
obligations to trade creditors which have remained unpaid for
greater than 60 days past their original due date) those incurred
in the ordinary course of its business that would constitute
ordinarily a trade payable to trade creditors, (iv) evidenced by
bankers' acceptances or similar instruments issued or accepted by
banks, (v) relating to any capitalized lease obligation, or (vi)
evidenced by a letter of credit or a reimbursement obligation of
such person with respect to any letter of credit; (b) all net
obligations of such person under Interest Swap and Hedging
Obligations; (c) all liabilities and obligations of others of the
kind described in the preceding clause (a) or (b) that such
person has guaranteed or that is otherwise its legal liability or
which are secured by any assets or property of such person and
all obligations to purchase, redeem or acquire any equity
interests; (d) all equity interest of such person that, by its
terms or the terms of any security into which it is convertible,
exercisable or exchangeable, is, or upon the happening of an
event or the passage of time would be, required to be redeemed or
repurchased (including at the option of the holder thereof),
measured at the greater of its voluntary or involuntary maximum
fixed repurchase price or, if there is no fixed purchase price,
at fair market value to be determined in good faith by the board
of directors of the issuer (or managing general partner of the
issuer) of such equity interest plus accrued and unpaid
dividends; and (e) any and all deferrals, renewals, extensions,
refinancing and refunding (whether direct or indirect) of, or
amendments, modifications or supplements to, any liability of the
kind described in any of the preceding clauses (a), (b) (c) or
(d), or this clause (e), whether or not between or among the same
parties.
"Latest Fiscal Month" means the month immediately preceding
the Closing Date unless the Closing Date occurs prior to twenty-
one days after a month's end, in which event, it shall mean the
second preceding month.
As used in this Agreement "GAAP" means United States
generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity
as approved by a significant segment of the accounting profession
in the United States as in effect on the date hereof.
If there is a dispute as to the Company's Projected Results
or the Company's actual Consolidated EBITDA, such dispute will be
resolved by a "Big Six" accounting firm mutually selected by the
Company and Gaming (the "Outside CPA"). The Company and Gaming
will each pay 50% of the fees of the Outside CPA whose decision
will be reached on an expedited basis and will be final and
binding upon the parties hereto.
Section 4.11 Compliance with Gaming Laws. None of
Gaming, RAS or their officers, directors or stockholders will
attempt to influence, direct or cause the direction of the
management or policies of the Company or ROC pending receipt of
all required approvals of the Gaming Authorities, pursuant to the
Gaming Laws, for the transactions contemplated by this Agreement
and the Riviera Option Agreement.
ARTICLE V
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 5.1 Conditions to each Party's Obligation to
Effect the Riviera Merger. The respective obligation of each
party to effect the Riviera Merger is subject to the satisfaction
or waiver on or prior to the Effective Time of the following
conditions:
(a) Any waiting period applicable to the consummation
of the Riviera Merger under the HSR Act shall have expired or
been terminated, and no action shall have been instituted by the
Department of Justice or Federal Trade Commission challenging or
seeking to enjoin the consummation of this transaction, which
action shall have not been withdrawn or terminated.
(b) At the Stockholders' Meeting, this Agreement shall
have been approved and adopted by the affirmative vote of the
holders of at least sixty percent of all Shares, excluding the
▇▇▇▇▇▇▇ Shares.
(c) There shall not have been any statute, rule,
regulation, judgment, order or injunction promulgated, entered,
enforced, enacted or issued applicable to the Riviera Merger by
any governmental entity which, directly or indirectly, (i)
prohibits the consummation of the Riviera Merger or the
transactions contemplated by the Riviera Option Agreement, (ii)
prohibits or materially limits the ownership or operation by the
Company, or any of its respective subsidiaries of a material
portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or seeks to compel the Company or
Gaming or RAS to dispose of or hold separate any material portion
of the business or assets of the Company or Gaming or RAS and its
subsidiaries, taken as a whole, as a result of the Riviera Merger
or any of the other transactions contemplated by this Agreement,
or (iii) prohibits Gaming or RAS from effectively controlling in
any material respect the business or operations of the Company,
taken as a whole; provided, that the parties hereto shall have
used their reasonable best efforts to cause any such statute,
rule, regulation, judgment, order or injunction to be repealed,
vacated or lifted.
(d) At or prior to the Effective Time, the Company
shall have irrevocably deposited the funds for the Defeasance as
specified in the Note Offering.
(e) Other than the filing of the articles of merger in
accordance with the Nevada Merger Law, all licenses, permits,
registrations, authorizations, consents, waivers, orders or other
approvals required to be obtained, and all filings, notices or
declarations required to be made by Gaming, RAS, ▇▇. ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, the Company and any of its subsidiaries in order to
consummate the Riviera Merger and the transactions contemplated
by this Agreement, and in order to permit the Company and its
subsidiaries to conduct their respective business in the
jurisdictions regulated by the Gaming Authorities after the
Effective Time in the same manner as conducted by the Company or
its subsidiaries prior to the Effective Time shall have been
obtained or made.
Section 5.2 Conditions to Obligations of Gaming and
RAS to Effect the Riviera Merger. The obligations of Gaming and
RAS to effect the Riviera Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following
additional conditions:
(a) The Company shall have performed in all material
respects all of its obligations under this Agreement required to
be performed by it at or prior to the Effective Time and the
representations and warranties of the Company contained in this
Agreement shall be true and correct in all material respects as
of the date of this Agreement and at and as of the Effective Time
as if made at and as of such time, except (i) for changes
specifically permitted by this Agreement and (ii) that those
representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date.
(b) The actual Consolidated EBITDA reflected in the
consolidated statement of operations of the Company for the
Projected Period shall not have declined by 7.5% or more when
compared to the Projected Results for the Projected Period.
(c) The Option Sellers shall have entered into the
Riviera Option Agreement concurrent with the execution of this
Agreement, and the Riviera Option Agreement shall be in full
force and effect and the Option Sellers shall have complied in
all respects with the terms thereof;
(d) ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall not have become
deceased or Disabled (as defined herein). As used herein,
"Disabled" 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 Gaming for a consecutive period of 90 days
or more. Any question as to the existence, extent or
potentiality of ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇'▇ disability upon which
Gaming and the Company cannot agree shall be determined by a
qualified, independent physician selected by the Company approved
by Gaming and the disputing Option 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.
(e) Gaming shall have received such documents as
Gaming or RAS may reasonably request for the purpose of (i)
evidencing the accuracy at any time on or prior to the Closing
Date of any of the Company's representations and warranties, (ii)
evidencing the performance by the Company of, or the compliance
by the Company with, any covenant or obligation required to be
performed or complied with by the Company, (iii) evidencing the
satisfaction of any condition referred to in Sections 5.1 and 5.2
hereof or (iv) otherwise facilitating the consummation or
performance of any of the transactions contemplated hereby.
Section 5.3 Conditions to Obligations of the Company
to Effect the Riviera Merger. The obligations of the Company to
effect the Riviera Merger shall be subject to the satisfaction at
or prior to the Effective Time of the following additional
conditions:
(a) Each of Gaming and RAS shall have performed in all
material respects all of its obligations under this Agreement
required to be performed by it at or prior to the Effective Time
and the representations and warranties of Gaming and RAS
contained in this Agreement shall be true and correct in all
respects as of the date of this Agreement and at and as of the
Effective Time as if made at and as of such time, except (i) for
changes specifically permitted by this Agreement, and (ii) that
those representations and warranties made only as of a particular
date shall remain true and correct as of such particular date.
(b) At the Closing Date, Gaming shall have in cash or
immediately available funds, an amount equal to the sum of (i)
the aggregate amount of Merger Consideration to be paid hereunder
and (ii) the aggregate amount to be paid at the Effective Time
pursuant to Section 1.10 hereof.
(c) The Company shall have received such documents as
the Company may reasonably request for the purpose of (i)
evidencing the accuracy of any of Gaming's and RAS'
representations and warranties, (ii) evidencing the performance
by Gaming and RAS of, or the compliance by Gaming and RAS with,
any covenant or obligation required to be performed or complied
with by Gaming and RAS, (iv) evidencing the satisfaction of any
condition referred to in Sections 5.1 and 5.3 hereof, or (v)
otherwise facilitating the consummation or performance of any of
the transactions contemplated hereby.
ARTICLE VI
TERMINATION; AMENDMENT; WAIVER
Section 6.1 Termination. This Agreement may be
terminated and the Riviera Merger may be abandoned at any time
prior to the Effective Time, notwithstanding approval thereof by
the Company Stockholders:
(a) by mutual written consent of Gaming and RAS, on
the one hand, and the Company, on the other hand;
(b) by Gaming and RAS, on the one hand, and the
Company, on the other hand, if any court or governmental
authority of competent jurisdiction shall have issued an order,
decree or ruling or taken any other action restraining, enjoining
or otherwise prohibiting the Riviera Merger and such order,
decree, ruling or other action shall have become final and
nonappealable; provided, that Gaming and the Company shall have
used their reasonable best efforts to have such injunction
lifted;
(c) by Gaming and RAS, on the one hand, and the
Company, on the other hand, at any time after April 1, 1998, (the
"Termination Date") if the Riviera Merger shall not have occurred
by such date; provided, that if the Riviera Merger has not
occurred solely by virtue of the fact that the required approvals
of one or more of the Gaming Authorities have not been obtained
and the Gaming Authorities have informed ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Gaming or the Company that a review of the applications for such
approvals is scheduled by the appropriate Gaming Authorities for
a later date, then the Termination Date shall be extended until
such approvals have been granted or denied, except that under no
circumstances shall such extension continue after June 1, 1998;
and, provided, further, that the right to terminate this
Agreement under this subparagraph (c) shall not be available to
any party whose failure to fulfill any obligation under this
Agreement has been the principal cause of the failure of the
Riviera Merger to have occurred by such date;
(d) by Gaming and RAS if (i) there shall have been a
breach of any representation or warranty of the Company contained
herein which would have a Company Material Adverse Effect or
prevent the consummation of the Riviera Merger or the
transactions contemplated hereby, which shall not have been cured
on or prior to ten business days following notice from Gaming of
such breach, (ii) there shall have been a breach of any covenant
or agreement of the Company contained herein which would have a
Company Material Adverse Effect or prevent the consummation of
the Riviera Merger or the transactions contemplated hereby, which
shall not have been cured on or prior to ten business days
following notice of such breach, (iii) the Board shall have
withdrawn or modified, in a manner materially adverse to Gaming,
its approval or recommendation of this Agreement, the Riviera
Merger or the transactions contemplated hereby or shall have
recommended, or the Company shall have entered into an agreement
providing for, an Alternative Transaction, or the Board shall
have resolved to do any of the foregoing, (iv) the Stockholders
Meeting shall have been held and the vote described in
Section 5.1(b) shall not have been obtained or (v) ▇▇. ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ shall have become deceased or Disabled; or
(e) by the Company if (i) there shall have been a
breach of any representation or warranty of Gaming or RAS
contained herein which would have a Gaming Material Adverse
Effect or prevent the consummation of the Riviera Merger or the
transactions contemplated hereby, which shall not have been cured
on or prior to ten business days following notice from the
Company of such breach, (ii) there shall have been a breach of
any covenant or agreement of Gaming or RAS contained herein which
would have a Gaming Material Adverse Effect or prevent the
consummation of the Riviera Merger or the transactions
contemplated hereby, which shall not have been cured on or prior
to ten business days following notice of such breach, (iii) the
Board determines, in good faith, after consulting with outside
legal counsel to the Company, that it is required, in the
exercise of its fiduciary duties under applicable law, to enter
into a definitive agreement with respect to an Alternative
Transaction or (iv) the Stockholders Meeting shall have been held
and the vote described in Section 5.1(b) shall not have been
obtained.
(f) by the Company if the Closing has not occurred
within 30 days after receipt of required approvals of the Gaming
Authorities; provided, however, that all of the conditions to
Gaming's obligation to effect the Riviera Merger contained in
Sections 5.1 and 5.2 hereof shall have been satisfied or waived
by Gaming.
Section 6.2 Effect of Termination; Termination Fee.
(a) In the event of the termination and abandonment of this
Agreement pursuant to Section 6.1, this Agreement shall forthwith
become void and have no effect, without any liability on the part
of any party hereto, other than pursuant to the provisions set
forth in Section 6.2(b) and Section 6.3 hereof.
(b) In the event this Agreement is terminated pursuant
to Sections 6.1(d)(iii) or 6.1(e)(iii) hereof, the Company shall
pay to Gaming immediately upon the closing of an Alternative
Transaction an aggregate amount equal to three percent of the
consideration for the equity of the Company which is received by
the Company or its stockholders in the Alternative Transaction
valued at the higher of the value of the consideration on the
date of (i) the execution of the definitive agreement with
respect to an Alternative Transaction and (ii) the closing of the
Alternative Transaction (the "Termination Fee").
(c) The ability of Gaming and RAS to terminate their
obligations without triggering the right of the Company
Stockholders to receive the Escrow Consideration under
Section 6.1(c) is predicated upon the accuracy of the following
representation and performance by ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ of the
following agreement: (A) ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ has represented
that prior to the execution of this Agreement, he has discussed
in detail with his Nevada counsel his background and knows of no
reason why he should not be able to obtain all necessary Gaming
Authorities approvals prior to April 1, 1998; and (B) ▇▇. ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ has agreed that he will pursue vigorously and will
give complete and prompt attention to requests of Gaming
Authorities for information and will do nothing which might delay
receipt of all necessary Gaming Authorities approvals.
Section 6.3 Fees and Expenses. Except as set forth
herein, each party shall bear its own expenses and costs,
including brokers' fees, in connection with this Agreement and
the transactions contemplated hereby. In the event this
Agreement is terminated pursuant to Sections 6.1(d)(i),
6.1(d)(ii), 6.1(d)(iii) or 6.1(e)(iii) hereof, and as a condition
to such termination, the Company shall, immediately upon (i) the
execution of a definitive agreement with respect to an
Alternative Transaction or (ii) the approval or recommendation by
the Board, directly or indirectly, of such an Alternative
Transaction, reimburse Gaming, RAS and ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ the
documented out-of-pocket expenses (the "Expenses") of Gaming, RAS
and ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, incurred from April 15, 1997, in
connection with (i) the transactions contemplated by this
Agreement and (ii) the Letter of Intent, dated May 15, 1997, by
and between ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and the Company; such
reimbursement and the Termination Fee being the sole remedy upon
such termination.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Survival. Subject to the following
sentence, the representations, warranties, covenants and
agreements contained herein, shall not survive beyond the
Effective Time. The covenants and agreements contained herein
which by their terms contemplate performance after the Effective
Time (including by the Surviving Corporation after the Riviera
Merger) shall survive the Effective Time. In addition, Sections
6.2 and 6.3 hereof shall survive termination of this Agreement.
Section 7.2 Entire Agreement; Assignment. This
Agreement (including the Schedules and Exhibits hereto) (i) shall
constitute the entire agreement among the parties hereto with
respect to the subject matter hereof, and supersedes all other
prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and (ii)
shall not be assigned by operation of law or otherwise and any
purported assignment shall be null and void, except that Gaming
and RAS may assign this Agreement to any of their affiliates
without the prior written consent of the Company; provided, that
(i) no such assignment shall relieve Gaming and RAS of their
obligations hereunder if such assignee does not perform such
obligations, and (ii) such assignment will not result in any
delay in (a) the consummation of the transactions contemplated
hereby by more than one month as determined by the Company's
counsel or (b) the ability to satisfy the condition contained in
Section 5.1(e) hereof by more than one month as determined by the
Company's counsel; and, provided further that, such delay shall
not extend beyond the Termination Date as extended under Section
6.1(c) hereof.
Section 7.3 Amendment. This Agreement may be amended
by action taken by the Company, Gaming and RAS at any time before
or after adoption of the Riviera Merger by the Company
Stockholders but, after any such approval, no amendment shall be
made which decreases the Merger Consideration or changes the form
thereof or which adversely affects the rights of the Company
Stockholders hereunder without the approval of the Company
Stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties
hereto.
Section 7.4 Extension or Waiver. At any time prior to
the Effective Time, the Company, on the one hand, and Gaming, on
the other hand, may (i) extend the time for the performance of
any of the obligations or other acts of the other party, (ii)
waive any inaccuracies in the representations and warranties of
the other party contained herein or in any document, certificate
or writing delivered pursuant hereto, or (iii), subject to
applicable law, waive compliance by the other party with any of
the agreements or conditions contained herein. Any agreement on
the part of any party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party hereto
to assert any of its rights hereunder shall not constitute a
waiver of such rights.
Section 7.5 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 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 Gaming:
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
if to the Company:
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
with a copy to:
Dechert Price & ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, 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.
Section 7.6 Governing Law. This Agreement shall
be governed by and construed in accordance with the laws of the
State of Nevada, without regard to the principles of conflicts of
law thereof. Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to jurisdiction of the courts
of the State of Nevada and of the United States of America
located in the State of Nevada for any litigation arising out of
or relating to this Agreement and the transactions contemplated
hereby.
Section 7.7 Parties in Interest. This Agreement
shall be binding upon and shall inure solely to the benefit of
each party hereto and its successors and permitted assigns, and,
except as set forth in Section 4.6, nothing in this Agreement,
express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement; provided, that, in addition
to Gaming and RAS, the Option Sellers are intended beneficiaries
of the representation and warranty contained in Section 2.4
hereof.
Section 7.8 Subsequent Actions. If, at any time
after the Effective Time, the Surviving Corporation shall
consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or
otherwise in the Surviving Corporation its right, title or
interest in, to or under any of the rights, properties or assets
of the Company or RAS acquired or to be acquired by the Surviving
Corporation as a result of or in connection with the Riviera
Merger, or otherwise to carry out this Agreement, the officers
and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of the Company or
RAS, all such deeds, bills of sale, assignments, assumption
agreements and assurances, and to take and do, in the name and on
behalf of each of such corporations or otherwise, all such other
actions and things as may be necessary or desirable to vest,
perfect or confirm any and all right, title and interest in, to
and under such rights, properties or assets of the Surviving
Corporation or otherwise to carry out this Agreement.
Section 7.9 Remedies. The parties hereto agree
that irreparable damage would occur in the event any provision of
this Agreement was not performed in accordance with the terms
hereof and that the parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy
at law or in equity.
Section 7.10 Severability. The provisions of
this Agreement shall be deemed severable, and the invalidity or
unenforceability of any provision shall not affect the validity
and enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any
person or entity or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be
substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid and
unenforceable provision and (b) the remainder of this Agreement
and the application of such provision to other persons, entities
or circumstances shall not be affected by such invalidity or
unenforceability.
Section 7.11 Descriptive Headings. The
descriptive headings herein are inserted for convenience of
reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
Section 7.12 Certain Definitions. For purposes
of this Agreement, the term:
(a) "affiliate" of a person means a person that
directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the
first mentioned person;
(b) "control" (including the terms "controlled
by" and "under common control with") means the possession,
directly or indirectly or as trustee or executor, of the power to
direct or cause the direction of the management policies of a
person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(c) "person" means an individual, corporation,
partnership, association, trust, unincorporated organization,
other entity or group (as defined in Section 13(d)(3) of the
Exchange Act); and
(d) "subsidiary" or "subsidiaries" of any person
means any corporation, partnership, joint venture or other legal
entity of which such person (either alone or through or together
with any other subsidiary), owns, directly or indirectly, fifty
percent or more of the stock or other equity interests, the
holder of which is generally entitled to vote for the election of
the board of directors or other governing body of such
corporation, partnership, joint venture or other legal entity.
Section 7.13 Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be
deemed to be an original, but all of which shall constitute one
and the same Agreement.
IN WITNESS WHEREOF, each of the parties hereto has
caused this Agreement to be executed by its duly authorized
officers as of the date first above written.
R&E GAMING CORP.
By: ________________________________
Name:
Title:
RIVIERA ACQUISITION SUB, INC.
By: ________________________________
Name:
Title:
RIVIERA HOLDINGS CORPORATION
By: ________________________________
Name:
Title:
