STOCK PLEDGE AND SECURITY AGREEMENT
THIS STOCK PLEDGE AND SECURITY AGREEMENT (the "Stock Pledge Agreement"),
dated as of August 13, 1997, is executed by RIVIERA HOLDINGS CORPORATION, a
Nevada corporation ("Shareholder"), in favor of NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as collateral agent ("Agent") for the holders of those certain
$175,000,000 10% First Mortgage Notes due 2004 (the "Notes", and the holders of
such, the "Noteholders") under that certain Indenture dated as of August 13,
1997 (together with all Subsidiary Guarantees executed in connection therewith,
the "Indenture") by and among Agent, as trustee, Shareholder, as borrower, and
Riviera Operating Corporation, a Nevada corporation ("ROC"), Riviera Gaming
Management, Inc., a Nevada corporation, Riviera Gaming Management-Elsinore,
Inc., a Nevada corporation, and Riviera Gaming Management of Colorado, Inc., a
Colorado corporation, as guarantors.
RECITALS
A. Shareholder owns 100% of the outstanding stock of ROC.
B. The Noteholders are willing to purchase the Notes for the purposes of,
among other things, providing funds to the Shareholder to repay existing
indebtedness and to fund the development of Shareholder's proposed construction
project in Black Hawk, Colorado, the development of certain projects at its
property in Las Vegas, Nevada and for the Shareholder's general business
purposes.
C. Shareholder will derive substantial benefit from the purchase of the
Notes by the Noteholders.
D. It is a condition precedent to purchasing the Notes that Shareholder
pledge 100% of its interest in ROC, for the benefit of the Noteholders, as
security for the Obligations (as defined below).
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Shareholder hereby agrees with Agent as follows:
1. Definitions and Interpretation. When used in this Stock Pledge
Agreement, the following terms shall have the following respective meanings:
"Collateral" shall have the meaning given to that
term in Paragraph 2 hereof.
"Nevada Gaming Authorities" shall mean the Nevada
Gaming Commission, the Nevada State Gaming Control
Board and any other agency with authority to regulate
any gaming operation (or proposed gaming operation)
owned, managed or operated by the Shareholder or ROC.
"Obligations" shall mean (i) the payment by
Shareholder to the Noteholders or Agent of all
indebtedness now or hereafter owed to Agent by
Shareholder in connection with the Notes, the
Indenture, this Stock Pledge Agreement and the other
Collateral Documents executed by Shareholder (the
"Riviera Financing"), whether at stated maturity, by
acceleration or otherwise, including, without
limitation, Shareholder's obligations under the
Indenture, the Notes, the Collateral Documents or any
related documents securing the obligations
thereunder, together with any interest thereon, fees,
expenses, Liquidated Damages, indemnification or
otherwise, in connection therewith and extensions,
modifications and renewals thereof, (ii) the
performance by Shareholder of all other obligations
and the discharge of all other liabilities of
Shareholder to Agent of every kind and character
arising from the Riviera Financing, whether direct or
indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, joint,
several and joint and several, and whether created
under this Stock Pledge Agreement, the other
Collateral Documents or any other agreement to which
Shareholder and Agent are parties, (iii) any and all
sums advanced by Agent in order to preserve the
Collateral or preserve Agent's security interest in
the Collateral (or the priority thereof) and (iv) the
expenses of retaking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing
on the Collateral, of any proceeding for the
collection or enforcement of any indebtedness,
obligations or liabilities of Agent referred to
above, or of any exercise by Agent of its rights
hereunder, together with reasonable attorneys' fees
and disbursements and court costs.
"ROC" means Riviera Operating Corporation, a Nevada
corporation.
"Stock" shall mean all shares, options, warrants,
interests, participations or other equivalents
(regardless of how designated) of or in ROC, whether
voting or nonvoting, including, without limitation,
common stock, preferred stock, or any other equity
ownership interest in ROC.
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"UCC" shall mean the Uniform Commercial Code as the
same may, from time to time, be in effect in the
State of Nevada.
Unless otherwise defined herein, all other capitalized terms used herein and
defined in the Indenture shall have the respective meanings given to those terms
in the Indenture, and all terms defined in the UCC shall have the respective
meanings given to those terms in the UCC. To the extent the meanings given
herein are inconsistent with those given in the UCC, the meanings given herein
shall govern.
2. Pledge. As security for the Obligations, subject to the receipt of all
necessary gaming approvals from the Nevada Gaming Authorities, Shareholder
hereby pledges and assigns to Agent, for the equal and ratable benefit of the
Noteholders and grants to Agent, for the equal and ratable benefit of the
Noteholders, a security interest in all right, title and interests of
Shareholder in and to the Stock, whether now owned or hereafter acquired
(collectively, the "Shareholder's Stock"), including without limitation the
Shareholder's Stock described in Exhibit "A" hereto, and all proceeds thereof,
including, without limitation, dividends and other property received and
receivable by Shareholder in connection with the Shareholder's Stock other than
dividends and other distributions made by ROC which are expressly permitted by
the Indenture, if any (the Shareholder's Stock and such proceeds to be referred
to herein collectively as the "Collateral").
3. Representations and Warranties. Shareholder represents and warrants to
Agent, for the benefit of the Noteholders, that: (a) subject to the receipt of
all necessary gaming approvals from the Nevada Gaming Authorities, the
execution, delivery and performance by Shareholder of this Stock Pledge
Agreement are within the power of Shareholder and have been duly authorized by
all necessary actions on the part of Shareholder; (b) this Stock Pledge
Agreement has been duly executed and delivered by Shareholder and constitutes a
legal, valid and binding obligation of Shareholder, enforceable against it in
accordance with its terms, except as limited by gaming, bankruptcy, insolvency
or other laws of general application relating to or affecting the enforcement of
creditors' rights generally and general principles of equity; (c) the execution,
delivery and performance of this Stock Pledge Agreement do not (i) subject to
the receipt of all necessary gaming approvals from the Nevada Gaming
Authorities, violate any requirement of law, regulation or statute, (ii) violate
any provision of, or result in the breach or the acceleration of or entitle any
Person to accelerate (whether after the giving of notice or lapse of time or
both) any obligation under, any indenture, mortgage, lien, lease, agreement,
license, instrument, guaranty, or other document to which Shareholder is a party
or by which Shareholder or its property is bound, or (iii) result in the
creation or imposition of any lien upon any property, asset or revenue of
Shareholder (except such liens as may be created in favor of Agent, for the
benefit of the Noteholders, pursuant to this Stock Pledge Agreement); (d) except
as set forth herein, no consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority or other
Person (including, without limitation, the shareholders of any Person) is
required in connection with the execution, delivery and performance by the
Shareholder of this Stock Pledge Agreement, except such consents,
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approvals, orders, authorizations, registrations, declarations and filings that
are so required and which have been obtained and are in full force and effect;
(e) Shareholder is the beneficial and, in the case of capital stock, record
owner of the Collateral (or, in the case of after-acquired Collateral, at the
time Shareholder acquires rights in the Collateral, will be the beneficial and,
in the case of capital stock, record owner thereof) and no other Person has (or,
in the case of after-acquired Collateral, at the time Shareholder acquires
rights therein, will have) any right, title, claim or interest (by way of lien
or otherwise) in, against or to the Collateral, other than "Permitted Liens" (as
such term is defined in the Indenture); (f) all of the Collateral which are
shares of capital stock are and such future Collateral will be validly issued,
fully paid and nonassessable securities of ROC; (g) the Collateral includes all
of the issued and outstanding shares of capital stock of ROC; (h) except for the
Collateral, there are no outstanding options, warrants or other rights to
subscribe for or purchase voting or non-voting capital stock of ROC, nor any
notes, bonds, debentures or other evidences of indebtedness that (1) are at any
time convertible into capital stock of ROC, or (2) have or at any time would
have voting rights with respect to ROC; (i) upon transfer to Agent of all
Collateral consisting of securities and continuous maintenance of possession
thereof, Agent (on behalf of the Noteholders) will have a first priority
perfected security interest in such Collateral, and (or in the case of all other
after-acquired Collateral, at the time Shareholder acquires rights therein, will
have) a first priority perfected security interest in all other Collateral,
subject to Permitted Liens; (j) all information heretofore, herein or hereafter
supplied in writing to Agent, taken as a whole, by or on behalf of Shareholder
with respect to the Collateral does not contain and will not contain any untrue
statements of a material fact and does not omit and will not omit to state any
material fact necessary to make any information so supplied, in light of the
circumstances under which they were supplied, not misleading; and (k)
Shareholder's principal place of business is 0000 Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxx
Xxxxx, Xxxxxx.
4. Covenants. Shareholder hereby agrees: (a) to perform all acts requested
by Agent that are necessary to maintain, preserve, protect and perfect the
Collateral, the lien granted to Agent hereunder and the first priority of such
lien, subject only to Permitted Liens; (b) subject to the receipt of all
necessary gaming approvals from the Nevada Gaming Authorities, to promptly
deliver to Agent all originals of certificates and other documents, instruments
and agreements evidencing the Collateral which are now held or hereafter
received by Shareholder, together with such blank stock powers executed by
Shareholder as Agent may request; (c) to procure, execute and deliver from time
to time any endorsements, assignments, financing statements and other documents,
instruments and agreements and take other actions deemed necessary, as Agent may
request, to perfect, maintain and protect its lien hereunder and the priority
thereof; (d) to defend its title to or Agent's interest in the Collateral; (e)
to keep the Collateral free of all liens except those created hereunder and the
Permitted Liens; (f) not to vote to enable, or take any other action to permit,
ROC to issue any Stock except for Stock permitted to be issued by the Indenture;
(g) to pay, and to save Agent and the Noteholders harmless from, any and all
liabilities with respect to, or resulting from any delay by Shareholder in
paying, any and all stamps, excise, sales or other similar taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions
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contemplated by this Stock Pledge Agreement; and (h) not to, without the written
consent of the Agent pursuant to or otherwise expressly permitted by the
Indenture, sell, dispose of or transfer (directly or indirectly) or covenant to
sell, dispose of or transfer (directly or indirectly) the Collateral.
5. Dividends and Voting Rights Prior to Default. Until an Event of Default
(as defined in the Indenture) shall have occurred and be continuing and Agent
shall have given notice to Shareholder of Agent's intent to exercise its rights
pursuant to Subparagraph 6(b) below, Shareholder shall be permitted (a) to
receive all dividends paid on Shareholder's Stock (other than dividends paid in
additional Stock unless such additional Stock is pledged to Agent, for the
benefit of the Noteholders, pursuant to this Stock Pledge Agreement) which are
permitted by the Indenture and (b) to exercise all voting and corporate rights
with respect to the Stock; provided, however, that no vote shall be cast or
corporate right exercised or other action taken which would be reasonably likely
to impair the Collateral or result in any violation of any provision of the
Indenture.
6. Default and Remedies.
(a) Event of Default. The occurrence (whether as a result of acts or
omissions by ROC or any other Person) of an Event of Default under the
Indenture (subject to such cure rights as may be expressly set forth in
such Indenture), whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body, shall constitute
an "Event of Default" hereunder.
(b) Dividends and Voting Rights. Upon the occurrence and during the
continuance of any Event of Default hereunder and subject to the receipt of
all necessary gaming approvals from the Nevada Gaming Authorities, Agent
may, upon notice to Shareholder, (i) notify ROC to pay all dividends on
Shareholder's Stock to Agent, for the benefit of the Noteholders, receive
and collect all such dividends and make application thereof to the
Obligations in the order set forth in Section 6.10 of the Indenture, and
(ii) register all of Shareholder's Stock in the name of Agent or its
nominee, for the benefit of the Noteholders, and Agent or its nominee may
thereafter exercise (A) all voting, corporate and other rights pertaining
to Shareholder's Stock at any meeting of shareholders of ROC or otherwise
and (B) any and all rights of conversion, exchange, subscription and any
other rights, privileges or options pertaining to Shareholder's Stock as if
it were the absolute owner thereof (including, without limitation, after
Agent has commenced to exercise remedies (or such remedies are deemed
commenced) under the Indenture, the right to exchange at its discretion any
and all of Shareholder's Stock upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the
corporate structure of ROC, or upon the exercise by Shareholder or Agent of
any right, privilege or option pertaining to Shareholder's Stock,
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and in connection therewith, the right to deposit and deliver any and all
of Shareholder's Stock with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as it
may determine), all without liability except to account for property
actually received by it, but Agent shall have no duty to Shareholder to
exercise any such right, privilege or option and shall not be responsible
for any failure to do so or delay in so doing. Promptly after the waiver or
cure of the Event of Default giving rise to Agent's election under this
Paragraph 6(b), Agent shall notify Shareholder and ROC of such waiver or
cure and for so long as no subsequent continuing Event of Default exists,
Shareholder shall have all rights as a shareholder it had prior to the
occurrence of such Event of Default, the Shareholder's Stock shall again be
registered in the name of Shareholder and ROC shall again make all payments
and distributions with respect to Shareholder's Stock to Shareholder.
(c) Additional Remedies. Subject to the terms of the Indenture, upon
the occurrence and during the continuance of an Event of Default and
subject to the receipt of all necessary gaming approvals from the Nevada
Gaming Authorities, Agent may exercise, in addition to all other rights and
remedies granted in this Stock Pledge Agreement and in any other instrument
or agreement securing, evidencing or relating to the Obligations, any and
all rights and remedies at law, including, without limitation, all rights
and remedies of a secured party under the UCC. Without limiting the
generality of the foregoing, Agent may, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind to
or upon Shareholder, ROC or any other Person (except notice of time and
place of sale and any other notice required by law and any notice referred
to below or in the Indenture) forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith
sell, assign, give option or options to purchase or otherwise dispose of
and deliver the Collateral or any part thereof (or contract to do any of
the foregoing), in one or more parcels at public or private sale or sales,
in the over-the-counter market, at any exchange, broker's board or office
of Agent or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem commercially reasonable, for
cash or on credit or for future delivery without assumption of any credit
risk. Agent shall have the right upon any such public sale or sales, and,
to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption in Shareholder, which right or equity is hereby
waived and released. Agent shall apply any proceeds from time to time held
by it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs
and expenses of every kind incurred in respect thereof or incidental to the
care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of Agent hereunder, including, without limitation,
attorneys' fees and disbursements of counsel to Agent, to the payment in
whole or in part of the Obligations, in such order as specified by the
Indenture, and only after such application and after the payment by Agent
of any other amount required by any provision of law, need Agent account
for the surplus, if any, to
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Shareholder. To the extent permitted by applicable law, Shareholder waives
all claims, damages and demands it may acquire against Agent arising out of
the exercise by it of any rights hereunder except as may arise solely from
Agent's negligence or willful misconduct. If any notice of a proposed sale
or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 15 business days
before such sale or other disposition. Shareholder further waives and
agrees not to assert any rights or privileges which it may acquire under
paragraphs (a) through (e) of Section 9112 of the UCC.
7. Limitation on Duties Regarding Collateral. Agent's sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the UCC or otherwise, shall be to deal
with it in the same manner as Agent deals with similar securities and property
for its own account and as would be dealt by a prudent person in the reasonable
administration of its affairs. Neither Agent nor any of its directors, officers,
employees or agents shall be liable for failure to demand, collect or realize
upon any of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
Shareholder or otherwise. Notwithstanding the foregoing, nothing contained
herein shall be deemed a waiver or release of the provisions of Section 7.01 of
the Indenture.
8. Nevada Gaming Law. This agreement will be governed by the Gaming Control
Act. Without limiting the generality of the foregoing, the parties agree that:
(a) the pledge of the Stock provided for herein will be subject to the
approval of the Nevada Gaming Authorities (as defined herein);
(b) Notwithstanding approval by the Nevada Gaming Authorities pursuant to
paragraph (a), other approvals of the Gaming Authorities may, and in some cases
will, be required before certain transactions relating to this Agreement may
occur, including but not limited to the following:
(i) any re-registration or action similar to re-registration of the
Stock (or any distribution in respect of, in addition to, in substitution
of, or in exchange for, the Stock or any part thereof);
(ii) any foreclosure, sale, transfer or other disposition of the
Stock; and
(iii) pursuant to Regulation 8.050 of the Nevada Gaming Commission,
the payment or receipt of any money or other thing of value constituting
any part of the consideration for the transfer or acquisition of the Stock,
except that such consideration may be placed in escrow pending the
necessary approvals; and
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(c) the Agent, through an agent or representative, shall retain all
evidence of ownership in the Stock or any distribution of additional securities
in respect of, in addition to, in substitution of, or in exchange for, such
Stock or any part thereof, in the State of Nevada. Such agent or representative
shall be located in and authorized to do business in the State of Nevada, and
designated to the Nevada State Gaming Control Board, and shall make all
certificates evidencing stock available for inspection by agents of the Nevada
Gaming Authorities immediately upon request during normal business hours.
9. Termination. This Stock Pledge Agreement shall terminate upon the
satisfaction of all Obligations or upon Legal Defeasance or Covenant Defeasance,
and Agent shall promptly thereafter deliver the Stock certificates held by it
hereunder to Shareholder and, at Shareholder's expense, execute and deliver to
Shareholder such documents as Shareholder shall reasonably request to evidence
such termination.
10. Power of Attorney. Shareholder hereby appoints and constitutes Agent as
Shareholder's attorney-in-fact for purposes of, at any time while an Event of
Default exists, (a) collecting any Collateral, (b) conveying any item of
Collateral to any purchaser thereof, and (c) making any payments or taking any
acts under Paragraph 6 hereof. Subject to the receipt of all necessary gaming
approvals from the Nevada Gaming Authorities, Agent's authority hereunder shall
include, without limitation, upon the occurrence and during the continuance of
an Event of Default, the authority to endorse and negotiate, for Agent's own
account, any checks or instruments in the name of Agent, to execute or receipt
for any document, to transfer title to any item of Collateral, and to take any
other actions necessary or incident to the powers granted to Agent in this Stock
Pledge Agreement. This power of attorney is coupled with an interest and is
irrevocable by Shareholder.
11. Miscellaneous.
(a) Notices. Except as otherwise provided herein, all notices,
requests, demands of other communications to or upon the parties hereto
shall be addressed to the parties at the respective addresses indicated
below or at such other address as either party hereto may designate by
written notice to the other party, and shall be deemed to have been given
(i) in the case of notice by letter, three (3) days after deposited in the
mails registered and return receipt requested, or (ii) in the case of
notice given by telecommunication, when sent:
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Agent: Norwest Bank Minnesota, National Association
Corporate Trust Department
6th and Marquette
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxxx
Shareholder: Riviera Holdings Corporation
0000 Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Chief Executive Officer
With a copy to:
Dechert Price & Xxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
ROC: Riviera Operating Corporation
0000 Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Chief Executive Officer
With a copy to:
Dechert Price & Xxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
(b) Nonwaiver. No failure or delay on Agent's part in exercising any
right hereunder shall operate as a waiver thereof or of any other right nor
shall any single or partial exercise of any such right preclude any other
further exercise thereof or of any other right.
(c) Amendments and Waivers. This Stock Pledge Agreement may not be
amended or modified, nor may any of its terms be waived, except by written
instruments signed by the party or parties against which enforcement
thereof is sought.
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Each waiver or consent under any provision hereof shall be effective only
in the specific instances for the purpose for which given.
(d) Assignment. This Stock Pledge Agreement shall be binding upon
inure to the benefit of Agent, the Noteholders and Shareholder and their
respective successors and assigns; provided, however, that Shareholder may
not assign its rights or delegate its duties hereunder without the prior
written consent of Agent. To the extent permitted in the Indenture and
subject to the receipt of all necessary gaming approvals from the Nevada
Gaming Authorities, Agent may assign or otherwise transfer all or any part
of its interest under this Stock Pledge Agreement, upon notice to
Shareholder. Agent may disclose this Stock Pledge Agreement and any
financial or other information relating to Shareholder to any potential
assignee or participant.
(e) Cumulative Rights, etc. The rights, powers and remedies of Agent
under this Stock Pledge Agreement shall be in addition to all rights,
powers and remedies given to Agent by virtue of the Indenture, any
applicable governmental rule or regulation or any other agreement, all of
which rights, powers, and remedies shall be cumulative and may be exercised
successively or concurrently without impairing Agent's lien in the
Collateral. Shareholder waives any right to require Agent to proceed
against any Person or to exhaust any Collateral or to pursue any remedy in
Agent's power.
(f) Governing Law. This Stock Pledge Agreement shall be governed by
and construed in accordance with the laws of the State of Nevada.
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IN WITNESS WHEREOF, Shareholder has caused this Stock Pledge and Security
Agreement to be executed in favor of Agent as of the day and year first above
written.
SHAREHOLDER:
RIVIERA HOLDINGS CORPORATION, a Nevada
corporation
By:______________________________________
Name:____________________________________
Title:___________________________________
S-1
ACKNOWLEDGMENT AND
CONSENT OF ROC
Riviera Operating Corporation, a Nevada corporation ("ROC"), hereby
acknowledges receipt of a copy of the above Stock Pledge and Security Agreement,
agrees to be bound by and comply with the terms thereof, including, without
limitation, Paragraph 6 thereof and agrees to perform all covenants and
obligations therein which, by their terms are to be performed by ROC.
RIVIERA HOLDINGS CORPORATION, a Nevada
corporation
By:______________________________________
Name:____________________________________
Title:___________________________________
S-2
EXHIBIT "A"
DESCRIPTION OF SHAREHOLDER'S STOCK
Percentage of
Issuer Class of Stock Certificate No. No. of Shares Outstanding Shares
------ -------------- --------------- ------------- ------------------
Riviera Operating Common 1 1,000 100%
Corporation
