Exhibit 10.1
AMENDMENT
TO
ESCROW AGREEMENT
Amendment, dated as of May 1, 1998 (this "Amendment"), to Escrow
Agreement, dated as of September 15, 1998 (the "Escrow Agreement"), among R&E
Gaming Corp., a Delaware corporation ("R&E Gaming"), Riviera Holdings
Corporation, a Nevada corporation ("RHC"), and State Street Bank and Trust
Company of California, N.A. ("State Street Bank") (the "Parties").
WHEREAS, the Escrow Agreement provides that Letter of Credit No.
970919.OD.0002 (the "Escrow L/C") issued by City National Bank ("CNB") and
certain cash are to be held in escrow by State Street Bank and that a
determination of entitlement as between R&E Gaming and RHC to the Escrow L/C and
such cash, less the Cash Interest, as defined in the Escrow Agreement (the
"Disputed Consideration"), is to be made in accordance with the terms of the
Escrow Agreement;
WHEREAS, a dispute (the "Dispute") has arisen between R&E Gaming and
RHC regarding their respective entitlement to the Disputed Consideration, some
or all of which Dispute is to be resolved, pursuant to the terms of the Escrow
Agreement, in an arbitration (the "Arbitration");
WHEREAS, R&E Gaming and RHC have delivered respective demands on State
Street Bank with respect to the Disputed Consideration, and have contested each
other's respective demands;
WHEREAS, RHC has initiated with the American Arbitration Association a
Demand for Arbitration (the "Demand for Arbitration") to resolve some or all
aspects of the Dispute pursuant to the Arbitration;
WHEREAS, RHC is concerned that the Escrow L/C will expire according to
its terms before any of the aspects of the Dispute can be resolved in the
Arbitration and, accordingly, RHC desires to obtain an amendment and extension
of the Escrow L/C until resolution of the Dispute;
WHEREAS, R&E Gaming desires that, in lieu of the Arbitration, the
Dispute should be resolved in an action initiated by R&E Gaming against RHC and
certain other parties in the United States District Court for the Central
District of California (the "Federal Court"), Case No. CV98-2644-LGB(AIJx) (the
"Federal Court Action") or -- in the event the Federal Court remands the case to
state court or dismisses the Federal Court Action for lack of subject matter
jurisdiction -- in another court of competent jurisdiction located in Los
Angeles, California or Las Vegas, Nevada (the "Other Court Action"); and
WHEREAS, R&E Gaming and RHC desire to amend the instructions to State
Street Bank, as Escrow Agent, regarding when and to whom the Disputed
Consideration is to be paid or delivered, as the case may be;
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and adequacy of which hereby
are acknowledged, the Parties agree as follows:
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1. Except as otherwise defined in this Amendment, capitalized terms
have the meaning set forth in the Escrow Agreement.
2. In consideration of RHC's agreement set forth in Section 3 below,
R&E Gaming agrees to execute and deliver to CNB the letter set forth as Exhibit
"A" to this Amendment (the "CNB Letter Request") requesting that CNB amend and
extend the Escrow L/C. RHC and State Street Bank agree to join in and execute
the CNB Letter Request. State Street Bank agrees to return the original Escrow
L/C to R&E Gaming promptly upon delivery to it of an amended and extended Escrow
L/C in accordance with the CNB Letter Request, and R&E Gaming agrees to file a
notice dismissing State Street Bank from the Federal Court Action.
3. Effective upon delivery to State Street Bank of an amended and
extended Escrow L/C (hereinafter "Escrow L/C") in accordance with the CNB Letter
Request, RHC agrees that: (i) unless settled, all aspects of the Dispute will be
resolved in the Federal Court Action or Other Court Action and any actual or
potential right of any party to have any aspect of the Dispute resolved in the
Arbitration is terminated; (ii) RHC will withdraw its pending Demand for
Arbitration within five days of such delivery, which withdrawal will be without
prejudice to any claim that RHC may have against R&E Gaming. RHC agrees it will
submit to and not contest nor join in the contesting of the subject matter
and/or personal jurisdiction of the United States District Court for the Central
District of California of all aspects of the Dispute and of all currently and/or
subsequently named parties in the Federal Court Action. RHC agrees it will
accept service of the operative pleading in the Federal Court Action by United
States Mail or personal service upon Xxxxxx X. Xxxxx, Xxxxxxx Price & Xxxxxx, 00
Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
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4. If at any time CNB provides written notice that CNB will not extend
the Escrow L/C past its then upcoming Expiration Date, R&E Gaming agrees that it
will obtain a letter of credit having the identical terms and for the identical
amount as the Escrow L/C (the "Replacement L/C") except that the initial
expiration date of the Replacement L/C shall be at least 12 months after the
then upcoming Expiration Date of the Escrow L/C. R&E Gaming shall deliver said
Replacement L/C to State Street Bank no later than 15 days prior to the then
upcoming Expiration Date of the Escrow L/C. In the event the issuer of the
Replacement L/C provides notice that it will not extend such Replacement L/C
past its then upcoming Expiration Date, R&E Gaming agrees to obtain a subsequent
Replacement L/C so that a Replacement L/C is in effect until State Street Bank,
pursuant to the terms of this Amendment, either has presented the Replacement
L/C and obtained payment thereon or has returned such L/C to R&E Gaming. In
addition to the requirement that R&E Gaming obtain Replacement L/Cs as set forth
in the preceding two sentences, R&E Gaming may at any time prior to honor of the
Escrow L/C, replace the Escrow L/C with a Replacement L/C. Upon delivery of a
Replacement L/C to State Street: (i) State Street Bank agrees to return the
Escrow L/C to R&E Gaming; (ii) the Escrow L/C will be canceled; and (iii) the
terms of this Amendment pertaining to the Escrow L/C and CNB will be deemed
amended to mean the then in force Replacement L/C and the issuer of that
Replacement L/C.
5. R&E Gaming and RHC agree, and State Street Bank is instructed, that
the Disputed Consideration will be paid or delivered, as the case may be, as
follows:
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(a) R&E Gaming agrees that RHC will be entitled to make a demand on
State Street Bank that it present the Escrow L/C to CNB for honor
and payment (the "Payment Demand") on the earliest of the
following events:
(i) if and when the Court in the Federal Court Action or Other
Court Action executes and enters an Order declaring that RHC
is entitled to present the Escrow L/C to, and receive the
proceeds thereof from, CNB and the Order becomes a Final
Court Order. For purposes of this Amendment, a Final Court
Order means the Order has been executed and entered by the
Court and the parties' rights and times for all appeals have
expired, been exhausted or waived; if the Court shall issue
an order determining the Dispute as between R&E Gaming and
RHC but such order shall not be appealable by reason of the
continued pendency of pending claims involving other parties
to the Federal Court Action, RHC and R&E Gaming agree to
jointly petition the Court for the entry of a final
judgement pursuant to Federal Rules of Civil Procedure, Rule
54(b);
(ii) if R&E Gaming fails to commence an Other Court Action within
30 days after the Federal Court Action is dismissed for lack
of subject matter jurisdiction or if for any reason the
Federal Court issues an order declining to determine the
Dispute between RHC and R&E Gaming;
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(iii)if RHC does not deliver a Replacement L/C to State Street
Bank pursuant to Paragraph 4 hereof.
(b) In the event that State Street Bank obtains the proceeds for the
Escrow L/C or Replacement L/C by reason of a Final Order or R&E
Gaming's failure to commence an Other Action pursuant
respectively to Paragraph 5a(i) and (ii) hereof, then State
Street Bank, upon receipt of a Payment Demand from RHC, shall
deliver such funds together with the balance of the Disputed
Consideration to RHC. (Upon RHC's receipt of such funds from
State Street Bank, RHC shall distribute such funds to the
Stockholders, other than the Disqualified Holders.)
(c) In the event that State Street Bank obtains the proceeds for the
Escrow L/C or Replacement L/C by reason of R&E Gaming's failure
to obtain and deliver Replacement L/C to State Street Bank
pursuant to Paragraph 5a(iii), no later than 15 days prior to the
expiration of the term of the then current Escrow L/C or
Replacement L/C, pursuant to Paragraph 4 hereof, then State
Street Bank shall hold the proceeds resulting from the
presentment of the Escrow or Replacement L/C in Escrow and
distribute those proceeds pursuant to 5(b), or (d) whichever the
case may be.
(d) RHC agrees that, if and when a Court Order in the Federal Court
Action declaring that R&E Gaming is entitled to the return of the
Disputed Consideration becomes a Final Court Order, R&E Gaming
will be entitled
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to make a demand on State Street Bank that it return the Disputed
Consideration to R&E Gaming (the "Return Demand").
(e) State Street Bank agrees that, promptly upon receipt of the
Return Demand, it will deliver the Disputed Consideration to R&E
Gaming.
6. R&E Gaming and RHC agree the Disputed Consideration does not include
the Cash Interest and that State Street Bank hereby is instructed that the Cash
Interest will be paid to R&E Gaming at the same time that the Disputed
Consideration is delivered to R&E Gaming or paid to RHC in accordance with the
terms set forth in Section 5 above.
7. The terms of Sections 6, 7, 8, 9, 10, 12, 13 and 14 of the Escrow
Agreement shall not be affected by this Amendment, except that references in
such Sections to "this Agreement" shall be deemed to mean references to the
Escrow Agreement, as amended by this Amendment.
8. Except that all notices to R&E Gaming should henceforth be delivered
to Xxxxxx, Xxxxxx & Xxxxxxx LLP, Xxx Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx, 00000, Facsimile (000) 000-0000, attention: Xxxxxxx X.
Xxxxx, Xx., in lieu of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, the provisions
of Section 11 shall not be affected by this Amendment.
9. If there is any inconsistency between the terms of this Amendment
and the terms of the Escrow Agreement, the terms of this Amendment shall be
controlling.
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IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be
executed by their duly authorized officers as of the date and year first above
written.
R&E GAMING CORP.
By:/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
President
RIVIERA HOLDINGS CORPORATION
By:/s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
President
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A., as Escrow Agent
By:/s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Senior Vice President
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