KEEP-WELL AGREEMENT
Keep-Well Agreement (this "Agreement") dated as of June 3, 1999,
between Riviera Holdings Corporation, a Nevada corporation ("Riviera Holdings"),
and RIVIERA BLACK HAWK, INC., a Colorado corporation (the "Company").
R E C I T A L S
A. First Mortgage Notes. The Company has issued $45,000,000 aggregate
principal amount of 13% First Mortgage Notes due 2005 With Contingent Interest
(together with all notes issued in exchange or replacement therefor, the
"Notes") pursuant to an Indenture (as amended, supplemented or otherwise
modified from time to time, the "Indenture") dated as of the date hereof between
the Company and IBJ Whitehall Bank & Trust Company, a New York banking
association, as trustee (the "Trustee"), for the benefit of the holders from
time to time (the "Holders") of the Notes.
B. Proceeds of the Notes. The Company will use the proceeds of the
Notes for the development, construction, equipping and operation of the Riviera
Black Hawk (as defined in the Indenture) upon certain real property located in
Black Hawk, Colorado (the "Property") and for certain other purposes described
in the Indenture.
C. Riviera Holdings' Benefit. The Company is a wholly-owned subsidiary
of Riviera Holdings and, as a result, Riviera Holdings will significantly
benefit from the construction and operation of the Riviera Black Hawk.
D. Material Inducement. It is a condition precedent and material
inducement to the purchase of the Notes that (1) Riviera Holdings and the
Company shall have executed and delivered this Agreement whereby Riviera
Holdings has agreed that it will commit, subject to the limitations set forth
herein, for the benefit of the Company and the Holders, to make capital
contributions to the Company upon the terms, conditions and limitations provided
herein, (2) the Company shall have executed the Collateral Assignment assigning
this Agreement, among other things, to the Trustee, and (3) Riviera Holdings
shall have executed and delivered the Consent to Collateral Assignment of
Keep-Well Agreement pursuant to which, among other things, Riviera Holdings
consents to the Company's assignment of this Agreement to the Trustee.
E. Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed thereto in the Indenture.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing recitals, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Riviera Holdings and the Company hereby agree as follows:
1. Definitions.
"Contribution Limitation" means the product of (i) $1.25 million and
(ii) the
number of fiscal quarters of Riviera Holdings contained in the relevant
Operating Period.
"First Operating Period" means the period beginning on the first day
of Riviera Holdings' first full fiscal quarter after the Riviera Black Hawk
becomes Operating through and including the last day of the fiscal year of which
such fiscal quarter is a part.
"Fourth Operating Period" means the period beginning immediately
following the end of the Third Operating Period through and including the last
day of the full fiscal quarter of Riviera Holdings ending after the third
anniversary of the date on which the Riviera Black Hawk became Operating.
"Funding Amounts" means the Interest Contribution Amount (as defined
below) and the Cash Flow Contribution Amount (as defined below).
"Operating Period" means any of the First Operating Period, Second
Operating Period, Third Operating Period or Fourth Operating Period.
"Second Operating Period" means the first fiscal year of Riviera
Holdings after the First Operating Period.
"Target Consolidated Cash Flow" means, for any Operating Period, the
product of (i) $2.25 million and (ii) the number of fiscal quarters of Riviera
Holdings contained in such Operating Period.
"Third Operating Period" means the first fiscal year of Riviera
Holdings after the Second Operating Period.
2. Riviera Holdings' Commitments.
2.1. Fixed Interest Contribution Commitment. Subject to Section
2.3 below, at least ten days prior to each date on which the Company
is required to pay the fixed interest payable on the Notes (the "Fixed
Interest Payment") which occurs before the end of the Fourth Operating
Period (each an "Fixed Interest Payment Date"), if the Company does
not have sufficient funds to make the required Fixed Interest Payment
on the Notes, the Company shall deliver to Riviera Holdings (with a
copy to the Trustee) a certificate stating:
(i) the amount of the Fixed Interest Payment required to be made;
(ii) the amount of funds the Company has available to make the
Fixed Interest Payment (after taking into account amounts on deposit
in the Interest Reserve Account); and
(iii) the amount of additional cash that is needed in order for
the Company to make the Fixed Interest Payment (the "Fixed Interest
Contribution Amount").
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Subject to Section 2.3 below, Riviera Holdings hereby unconditionally and
irrevocably agrees that, at least one business day prior to the relevant Fixed
Interest Payment Date, Riviera Holdings will make a capital contribution in cash
to the Company in an amount equal to any Fixed Interest Contribution Amount.
2.2. Cash Flow Commitment. Subject to Section 2.3 below, within
30 days after the end of each Operating Period, the Company shall
deliver to Riviera Holdings (with a copy to the Trustee) a certificate
stating:
(i) the amount of the Target Consolidated Cash Flow for such
Operating Period;
(ii) the Company's estimate, through its regular internal
accounting procedures, of its Consolidated Cash Flow for such
Operating Period (the "Applicable Consolidated Cash Flow"); and
(iii) the amount of the Target Consolidated Cash Flow for
such Operating Period less the Applicable Consolidated Cash Flow
for such period determined as set forth in clause (ii) above (the
"Cash Flow Contribution Amount").
Subject to Section 2.3 below, Riviera Holdings hereby unconditionally
and irrevocably agrees that, within 45 days of the end of each
Operating Period, if the Cash Flow Contribution Amount for such
Operating Period is a positive number, Riviera Holdings will make a
capital contribution in cash to the Company in an amount equal to such
Cash Flow Contribution Amount, less any amounts previously contributed
by Riviera Holdings to the Company during such Operating Period
pursuant to Section 2.1 hereof.
2.3. Contribution Limitations. Notwithstanding any other terms of
this Agreement to the contrary, (i) the aggregate amount that Riviera
Holdings shall be required to contribute to the Company in any
Operating Period pursuant to Section 2.1 hereof and with respect to
any such Operating Period pursuant to Section 2.2 hereof will not
exceed the applicable Contribution Limitation for such Operating
Period and (ii) the aggregate amount that Riviera Holdings shall be
required to contribute to the Company in and with respect to all
Operating Periods pursuant to Sections 2.1 and 2.2 hereof will not
exceed $10.0 million.
3. Cooperation. In connection with this Agreement, Riviera Holdings
agrees, at its sole cost and expense, to fully cooperate with the Company and to
timely provide such documents, agreements and information as may be required in
connection herewith.
4. Ability to Comply With This Agreement. Riviera Holdings shall, at
all times prior to the fulfillment of all of its obligations under this
Agreement, ensure that it has the ability to fulfill all of such obligations
under all other agreements to which it is a party, including the Indenture dated
as of August 13, 1997, among Riviera Holdings, the subsidiary guarantors
identified therein and Norwest Bank Minnesota, National Association, as trustee,
relating to the
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issuance of $175,000,000 principal amount of 10% First Mortgage Notes due 2004
of Riviera Holdings.
In addition, Riviera Holdings shall not, at any time prior to the
fulfillment of all of its obligations under this Agreement, permit any other
agreement to which it is a party to in any way prohibit or interfere with its
ability to fulfill its obligations under this Agreement.
5. Alteration of Obligations. Riviera Holdings acknowledges and agrees
that none of the following shall release, impair, reduce, diminish or otherwise
affect Riviera Holdings' obligations under this Agreement: (i) any alteration,
compromise, acceleration or extension of, or any change to, (a) the Company's
obligations to complete the development, construction and equipping of the
Riviera Black Hawk and to commence operation thereof or (b) the payment or
performance by the Company or any guarantor under any debt instrument or other
financing for the development, construction, equipping or operation of the
Riviera Black Hawk (the foregoing, collectively, the "Obligations"), in each
case in such manner, upon such terms and at such times as any Person (including,
without limitation, the Trustee or any Holder) (each such Person, an "Obligee")
deems best, and without notice to Riviera Holdings; (ii) the release of the
Company or any guarantor from any or all of the Obligations by acceptance of a
deed in lieu of foreclosure or otherwise, as to all or any portion of the
Obligations; (iii) the release, substitution or addition of any one or more
guarantors or endorsers of the Funding Amounts or the Obligations; (iv) the
acceptance of additional or substitute security for the Funding Amounts or the
Obligations; or (v) the release or subordination of any security for the Funding
Amounts or the Obligations. No exercise (including, without limitation,
foreclosure of the Property) or non-exercise of any right under any document
relating to the Obligations (collectively, the "Obligation Documents") by an
Obligee, no dealing by an Obligee hereunder or under any Obligation Document or
any other document with Riviera Holdings, the Company or any other guarantors or
any other Person, and no change, impairment or release of all or any portion of
the Funding Amounts or the Obligations or suspension of any right or remedy of
an Obligee against any other Person, including, without limitation, the Company
or any other such guarantor, endorser or other Person, shall in any way affect
any of the obligations of Riviera Holdings hereunder or any security furnished
by Riviera Holdings or give Riviera Holdings any recourse against an Obligee
(including, without limitation, the Trustee). If an Obligee has exculpated or
hereafter exculpates the Company from liability in whole or in part, or has
agreed or hereafter agrees to look solely to the Property or any other property
for the satisfaction of the Company's Obligations (including, without limitation
the Company's obligations under the Indenture, the Notes or any Collateral
Document), such exculpation and agreement shall not affect the obligations of
Riviera Holdings hereunder. Riviera Holdings further acknowledges that any such
exculpation or agreement that has been given or that is hereafter given to the
Company with respect to the Notes, the Indenture or any Collateral Document has
been given or is given in reliance upon the covenants of Riviera Holdings
contained herein.
6. Obligations Absolute; Waiver. The obligations of Riviera Holdings
hereunder shall be unconditional (in accordance with the terms hereof), absolute
and continuing and, without limiting the generality of the foregoing, shall not
be released, discharged or otherwise affected by, and shall survive, and Riviera
Holdings hereby waives and relinquishes all rights and remedies accorded by
applicable law to sureties or guarantors and agrees not to assert or take
advantage of
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any such rights or remedies, including, without limitation, (a) any right to
require any holder or recipient of the benefit of any of the Obligations
(including, without limitation, the Trustee or the Holders) (each a "Benefited
Party") to proceed against the Company or any other Person or entity or to
proceed against or exhaust any security held by a Benefited Party at any time or
to pursue any other remedy in the power of a Benefited Party before proceeding
against Riviera Holdings; (b) the defense of the statute of limitations in any
action hereunder or in any action for the collection or performance of the
Funding Amounts or the Obligations; (c) any defense that may arise by reason of
the incapacity, lack of authority, death or disability of any other Person or
the failure of a Benefited Party to file or enforce a claim against the estate
(in administration, bankruptcy or any other proceeding) of any other Person; (d)
appraisal, valuation, stay, extension, marshaling of assets, redemption,
exemption, diligence, demand, presentment, protest and notice of any kind,
including, without limitation, notice of the existence, creation or incurring of
any new or additional indebtedness or obligation or of any action, non-action,
performance or failure to perform on the part of a Benefited Party, the Company,
any endorser or creditor of the Company or Riviera Holdings or on the part of
any other Person under this or any other instrument in connection with any
obligation or evidence of indebtedness held by a Benefited Party as collateral
or in connection with the Funding Amounts or the Obligations; (e) any defense
based upon any exercise of remedies, including, without limitation, foreclosure
of the Property, or upon an election of remedies by a Benefited Party,
including, without limitation, an election to proceed by non-judicial rather
than judicial foreclosure, which destroys or otherwise impairs the subrogation
rights of Riviera Holdings, the right of Riviera Holdings to proceed against the
Company or any other person for reimbursement, or both; (f) any defense based
upon any statute or rule of law which provides that the obligation of a surety
must be neither larger in amount nor in other respects more burdensome than that
of the principal; (g) any duty on the part of a Benefited Party to disclose to
Riviera Holdings any facts a Benefited Party may now or hereafter know about the
Company or any other Person, regardless of whether a Benefited Party has reason
to believe that any such facts materially increase the risk beyond that which
Riviera Holdings intends to assume, or has reason to believe that such facts are
unknown to Riviera Holdings, or has a reasonable opportunity to communicate such
facts to Riviera Holdings, since Riviera Holdings acknowledges that Riviera
Holdings is fully responsible for being and keeping informed of the financial
condition of the Company or any other Person and of all circumstances bearing on
the risk of non-payment of any Funding Amounts; (h) any defense arising because
of the election of a Benefited Party, in any proceeding instituted under the
Federal Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal
Bankruptcy Code; (i) any defense based upon any borrowing or grant of a security
interest under Section 364 of the Federal Bankruptcy Code; (j) any claim or
other rights which it may now or hereafter acquire against the Company or any
other Person that arises from the existence or performance of Riviera Holdings'
obligations under this Agreement or any other Obligation Document, including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution, indemnification, any right to participate in any claim or remedy
by a Benefited Party against the Company or any collateral which a Benefited
Party now has or hereafter acquires, whether or not such claim, remedy or right
arises in equity or under contract, statute or common law, by any payment made
hereunder or otherwise, including, without limitation, the right to take or
receive from the Company or any other Person or entity, directly or indirectly,
in cash or other property or by set-off or in any other manner, payment or
security on account of such claim or other rights; (k) any rights which it may
acquire by way of contribution
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under this Agreement or any Obligation Document, by any payment made hereunder
or otherwise, including, without limitation, the right to take or receive from
any other Person, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such
contribution rights; (l) any defense based on one-action laws and any other
anti-deficiency protections granted to guarantors by applicable law; (m) any
merger or consolidation of the Company into or with any other Person, or any
sale, lease or transfer of any or all of the assets of the Company to any other
Person; (n) any circumstance which might constitute a defense available to, or a
discharge of, the Company, Riviera Holdings or a surety; (o) any lack of
genuiness, validity, regularity, enforceability or value of any Funding Amounts,
this Agreement or any Obligation Document; and (p) any other fact or
circumstance, including, without limitation, any fact or circumstance having an
impact on the cash flow of or the availability of funds to the Company. Any
proceeds of a foreclosure or similar sale may be applied first to any
obligations of the Company that do not also constitute Funding Amounts or
Obligations. Notwithstanding the foregoing, nothing in this Section 6 shall be
deemed to impair or modify the rights or obligations otherwise expressly given
to or agreed to by Riviera Holdings in any of the Loan Documents. Riviera
Holdings acknowledges and agrees that any nonrecourse or exculpation provided
for in any Obligation Document, or any other provision of an Obligation Document
limiting each respective Benefited Party's recourse to specific collateral or
limiting such Benefited Party's right to enforce a deficiency judgment against
the Company, shall have absolutely no application to Riviera Holdings's
liability under this Agreement. To the extent that any Benefited Party
(including, without limitation, the Trustee) collects or receives any sums or
payments from the Company or from any guarantor, endorser or other Person under
any Obligation Document or realized from any security, such Benefited Party
shall have the right, but not the obligation, to apply such amounts first to
that portion of the Company's indebtedness and obligations, if any, to such
Benefited Party that is not covered by this Agreement, regardless of the manner
in which any such payments or amounts are characterized by the Person making
payment.
7. Bankruptcy and Related Proceedings. The obligations of Riviera
Holdings under this Agreement shall not be altered, limited or affected by or as
a result of any action taken by the Company in any proceeding, voluntary or
involuntary, involving the bankruptcy, reorganization, insolvency, receivership,
or liquidation of the Company, or by any defense which the Company may have by
reason of any order, decree or decision of any court or administrative body
resulting from any such proceeding.
8. Interest. If Riviera Holdings fails to pay all or any portion of
the Funding Amounts in accordance with the provisions hereof, the amount of such
Funding Amounts and all other sums payable by Riviera Holdings hereunder shall
bear interest from the date of demand at the highest rate applicable to the
principal balance of the Notes or, if the Notes have been fully repaid, at the
highest rate that would be applicable if the Notes had not been fully repaid.
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9. Independent Obligations. The obligations of Riviera Holdings
hereunder are independent of the obligations of the Company or any other Person
and, in the event of any default hereunder, a separate action or actions may be
brought and prosecuted against Riviera Holdings, whether or not the Company or
such other Person is joined therein or a separate action or actions are brought
against the Company.
10. Notices. Whenever Riviera Holdings or the Company shall desire to
give or serve any notice, demand, request or other communication with respect to
this Agreement, each such notice shall be in writing and shall be effective only
if the same is delivered by hand-delivery, first-class mail (registered or
certified, return receipt requested), telecopier or air courier guaranteeing
overnight delivery, addressed as follows:
To Riviera Holdings:
Riviera Holdings Corporation
0000 Xxx Xxxxx Xxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Executive Vice President of Finance
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the Company:
Riviera Black Hawk, Inc.
000 Xxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxxx 00000
Attention: Executive Vice President of Finance
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and, in either case, with a copy to the Trustee at:
IBJ Whitehall Bank & Trust Company
Xxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any such notice delivered personally shall be deemed to have been received upon
delivery. Any such notice sent by telegram shall be presumed to have been
received by the addressee one business day after its acceptance for sending by
an authorized carrier thereof. Any such notice sent by mail shall be presumed to
have been received by the addressee three business days after posting in the
United States mail. Riviera Holdings or the Company may change its address by
giving the other and the Trustee a written notice of the new address as herein
provided.
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11. Successors and Assigns. This Agreement shall inure to the benefit
of the Company, its successors and assigns, and shall bind the successors and
assigns of Riviera Holdings.
12. No Guarantee. Nothing contained in this Agreement shall be deemed
to be a guarantee by Riviera Holdings of any obligations of the Company under
the Notes.
13. Miscellaneous Provisions.
13.1. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Riviera Holdings
hereby consents to the jurisdiction of the courts of the State of New
York and consents to service of process by any means authorized by New
York law in any action brought under or arising from this Agreement.
13.2. Riviera Holdings acknowledges that it is aware of the
Indenture entered into by the Company and the Trustee, the Notes
issues thereunder and the Collateral Documents executed in connection
therewith and is generally familiar with the terms and provisions
thereof.
13.3 This Agreement shall constitute the entire agreement of
Riviera Holdings with the Company with respect to the subject matter
hereof, and no representation, understanding, promise or condition
concerning the subject matter hereof shall be binding upon the Company
unless expressed herein.
13.4 Should any term, covenant, condition or provision of this
Agreement be determined to be illegal or unenforceable, all other
terms, covenants, conditions and provisions hereof shall nevertheless
remain in full force and effect.
13.5. When the context and construction so require, all words
used in the singular herein shall be deemed to include the plural, the
masculine shall include the feminine and neuter, and vice versa.
13.6. No provision of this Agreement or right granted to the
Company hereunder can be waived in whole or in part, nor can Riviera
Holdings be released from its obligations hereunder, except by a
writing duly executed by an authorized officer of the Company.
13.7. The headings of this Agreement are inserted for convenience
only and shall have no effect upon the construction or interpretation
hereof.
(Signature Page Follows)
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
RIVIERA HOLDINGS CORPORATION,
a Nevada corporation
By:
--------------------------------
Name:
Title:
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:
--------------------------------
Name:
Title:
[Signature Page to Keep-Well Agreement]
