GAMING PLEDGE AGREEMENT
THIS GAMING PLEDGE AGREEMENT (this "Pledge Agreement") is entered into
as of June 8, 2007, among RIVIERA HOLDINGS CORPORATION, a Nevada corporation
(the "Pledgor") and WACHOVIA BANK, NATIONAL ASSOCIATION, in its capacity as
Administrative Agent under the Credit Agreement referred to below (in such
capacity, the "Administrative Agent") for the several banks and other financial
institutions as may from time to time become parties to such Credit Agreement
(individually a "Lender" and collectively the "Lenders").
RECITALS
WHEREAS, pursuant to that certain Credit Agreement dated as of the date
hereof (as amended, modified, extended, restated, replaced, or supplemented from
time to time, the "Credit Agreement"), among the Pledgor, the Guarantors from
time to time party thereto, the Lenders party thereto and the Administrative
Agent, the Lenders have agreed to make Loans and to issue and/or acquire
participation interests in Letters of Credit upon the terms and subject to the
conditions set forth therein; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective Loans and
to issue and/or acquire participation interests in Letters of Credit under the
Credit Agreement that the Pledgor shall have executed and delivered this Pledge
Agreement to the Administrative Agent for the ratable benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Credit Agreement,
and the following terms that are defined in the Uniform Commercial Code from
time to time in effect in the State of New York (the "UCC") are used herein as
so defined: Certificated Security, Control, Entitlement Order, Financial Asset,
Investment Company Security, Securities Account, Security, Security Entitlement,
Securities Intermediary and Uncertificated Security. For purposes of this Pledge
Agreement, the term "Lender" shall include any Hedging Agreement Provider.
2. Pledge and Grant of Security Interest. To secure the prompt payment
and performance in full when due, whether by lapse of time or otherwise, of the
Secured Obligations (as defined in Section 3 hereof), the Pledgor hereby pledges
and grants to the Administrative Agent, for the ratable benefit of the Lenders,
a continuing security interest in any and all right, title and interest of the
Pledgor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (collectively, the "Pledged Collateral"):
(a) Pledged Equity Interest. 100% (or, if less, the full
amount owned by the Pledgor) of the issued and outstanding Equity
Interest owned by the Pledgor as set forth on Schedule 2(a) attached
hereto of Riviera Operating Corporation, a Nevada corporation ("ROC")
(collectively, together with the Equity Interest and other interests
described in clauses (y) and (z) and in Section 2(b) below, the
"Pledged Equity Interest"), including, but not limited to, the
following:
(y) all shares, securities, membership interests or
other equity interests representing a dividend on any of the
Pledged Equity Interest, or representing a distribution or
return of capital upon or in respect of the Pledged Equity
Interest, or resulting from a stock split, revision,
reclassification or other exchange therefor, and any
subscriptions, warrants, rights or options issued to the
holder of, or otherwise in respect of, the Pledged Equity
Interest; and
(z) without affecting the obligations of the Pledgor
under any provision prohibiting such action hereunder or under
the Credit Agreement, in the event of any consolidation or
merger involving the issuer of any Pledged Equity Interest and
in which such issuer is not the surviving entity, all shares
of each class of the Equity Interest of the successor entity
formed by or resulting from such consolidation or merger.
(b) Other Equity Interests. Any and all other Equity Interests
or other equity interests owned by the Pledgor in ROC.
(c) Proceeds. All proceeds and products of the foregoing,
however and whenever acquired and in whatever form.
Without limiting the generality of the foregoing, it is hereby
specifically understood and agreed that the Pledgor may from time to time
hereafter pledge and deliver additional shares of Equity Interest or other
interests to the Administrative Agent as collateral security for the Secured
Obligations. Upon such pledge and delivery to the Administrative Agent, such
additional shares of Equity Interest or other interests shall be deemed to be
part of the Pledged Collateral of the Pledgor and shall be subject to the terms
of this Pledge Agreement whether or not Schedule 2(a) is amended to refer to
such additional shares.
3. Security for Secured Obligations. The security interest created
hereby in the Pledged Collateral of the Pledgor constitutes continuing
collateral security for all of the following, whether now existing or hereafter
incurred (the "Secured Obligations"): (a) all of the Credit Party Obligations
(including obligations under Secured Hedging Agreements), howsoever evidenced,
created, incurred or acquired, whether primary, secondary, direct, contingent,
or joint and several and (b) all expenses and charges, legal and otherwise,
incurred by the Administrative Agent, the Lenders and/or the Hedging Agreement
Providers in collecting or enforcing any of the Credit Party Obligations or in
realizing on or protecting any security therefor, including without limitation,
the security granted hereunder.
4. Delivery of the Pledged Collateral; Perfection of Security Interest.
The Pledgor hereby agrees that:
(a) Delivery of Certificates and Instruments. Promptly, and in
any event within twenty (20) days, upon receipt of the Pledge Approval,
the Pledgor shall deliver as security to the Administrative Agent if
the Administrative Agent has an office in Nevada and otherwise to a
custodial agent of the Administrative Agent pursuant to the terms of
the Custodian Agreement, (i) all certificates representing the Pledged
Equity Interest owned by the Pledgor and (ii) all other certificates
and instruments constituting Pledged Collateral owned by the Pledgor.
All such certificates shall be delivered in suitable form for transfer
by delivery or shall be accompanied by duly executed instruments of
transfer or assignment in blank, substantially in the form provided in
Exhibit A attached hereto.
(b) Additional Securities. If the Pledgor shall receive by
virtue of its being or having been the owner of any Pledged Collateral,
any (i) certificate, including without limitation, any certificate
representing a dividend or distribution in connection with any increase
or reduction of capital, reclassification, merger, consolidation, sale
of assets, combination of shares of Equity Interest, stock splits,
spin-off or split-off, promissory notes or other instruments; (ii)
option or right, whether as an addition to, substitution for, or an
exchange for, any Pledged Collateral or otherwise; (iii) dividends
payable in Equity Interest; or (iv) distributions of Equity Interest or
other equity interests in connection with a partial or total
liquidation, dissolution or reduction of capital, capital surplus or
paid-in surplus, then the Pledgor shall receive such certificate,
instrument, option, right or distribution in trust for the benefit of
the Administrative Agent, shall segregate it from the Pledgor's other
property and shall deliver it forthwith to the Administrative Agent in
the exact form received accompanied by duly executed instruments of
transfer or assignment in blank, substantially in the form provided in
Exhibit A attached hereto, to be held by the Administrative Agent as
Pledged Collateral and as further collateral security for the Secured
Obligations.
(c) Financing Statements; Other Perfection Actions. The
Pledgor hereby authorizes the Administrative Agent to prepare and file
such financing statements (including continuation statements) or
amendments thereof or supplements thereto or other instruments as the
Administrative Agent may from time to time deem reasonably necessary or
appropriate in order to perfect and maintain the security interests
granted hereunder in accordance with the UCC, including, without
limitation, any financing statement that describes the Pledged
Collateral as "all personal property" or "all assets" of the Pledgor or
that describes the Pledged Collateral in some other manner as the
Administrative Agent deems necessary or advisable. The Pledgor shall
also execute and deliver to the Administrative Agent and/or file such
agreements, assignments or instruments (including affidavits, notices,
reaffirmations, amendments and restatements of existing documents, and
any documents as may be necessary if the law of any jurisdiction other
than New York becomes or is applicable to the Collateral or any portion
thereof, in each case as the Administrative Agent may reasonably
request) and do all such other things as the Administrative Agent may
reasonably deem necessary or appropriate (i) to assure to the
Administrative Agent its security interests hereunder are perfected,
including such financing statements (including continuation statements)
or amendments thereof or supplements thereto or other instruments as
the Administrative Agent may from time to time reasonably request in
order to perfect and maintain the security interests granted hereunder
in accordance with the UCC and any other personal property security
legislation in the appropriate jurisdictions, (ii) to consummate the
transactions contemplated hereby and (iii) to otherwise protect and
assure the Administrative Agent of its rights and interests hereunder.
The Pledgor agrees to xxxx its books and records (and to cause the
issuer of the Pledged Equity Interest of the Pledgor to xxxx its books
and records) to reflect the security interest of the Administrative
Agent in the Pledged Collateral.
(d) Provisions Relating to Uncertificated Securities, Security
Entitlements and Securities Accounts. The Pledgor shall promptly notify
the Administrative Agent of any Pledged Collateral consisting of an
Uncertificated Security or a Security Entitlement or any Pledged
Collateral held in a Securities Account. With respect to any such
Pledged Collateral, (a) the Pledgor and the applicable issuer of the
Uncertificated Security or the applicable Securities Intermediary shall
enter into, upon the request of the Administrative Agent, an agreement
with the Administrative Agent granting Control to the Administrative
Agent over such Pledged Collateral, such agreement to be in form and
substance reasonably satisfactory to the Administrative Agent and (b)
the Administrative Agent shall be entitled, upon the occurrence and
during the continuance of a Default or an Event of Default, to notify
the applicable issuer of the Uncertificated Security or the applicable
Securities Intermediary that it should follow the instructions or the
Entitlement Orders, respectively, of the Administrative Agent and no
longer follow the instructions or the Entitlement Orders, respectively,
of the Pledgor. Upon receipt by the Pledgor of notice from a Securities
Intermediary of its intent to terminate the Securities Account of the
Pledgor held by such Securities Intermediary, prior to the termination
of such Securities Account the Pledged Collateral in such Securities
Account shall be (i) transferred to a new Securities Account, upon the
request of the Administrative Agent, which shall be subject to a
control agreement as provided above or (ii) transferred to an account
held by the Administrative Agent (in which it will be held until a new
Securities Account is established).
5. Representations and Warranties. The Pledgor hereby represents and
warrants to the Administrative Agent, for the benefit of the Lenders, that so
long as any of the Secured Obligations (other than contingent indemnity
obligations that survive termination of the Credit Documents pursuant to the
stated terms thereof) remain outstanding, any Credit Document or Secured Hedging
Agreement is in effect, and until all of the Commitments shall have been
terminated:
(a) Authorization of Pledged Equity Interest. The Pledged
Equity Interest is duly authorized and validly issued, is fully paid
and nonassessable and is not subject to the preemptive rights of any
Person. All other shares of Equity Interest or other interests
constituting Pledged Collateral are duly authorized and validly issued,
fully paid and nonassessable and not subject to the preemptive rights
of any Person.
(b) Title. The Pledgor has good and indefeasible title to the
Pledged Collateral of the Pledgor and will at all times be the legal
and beneficial owner of such Pledged Collateral free and clear of any
Lien, other than Permitted Liens. There exists no "adverse claim"
within the meaning of Section 8-102 of the UCC with respect to the
Pledged Equity Interest of the Pledgor.
(c) Exercising of Rights. Other than necessary approvals from
the applicable Gaming Authorities, the exercise by the Administrative
Agent of its rights and remedies hereunder will not violate any law or
governmental regulation or any material contractual restriction binding
on or affecting the Pledgor or any of its property.
(d) Pledgor's Authority. Other than the Pledge Approval, no
authorization, approval or action by, and no notice or filing with any
Governmental Authority, the issuer of any Pledged Equity Interest or
third party is required either (i) for the pledge made by the Pledgor
or for the granting of the security interest by the Pledgor pursuant to
this Pledge Agreement or (ii) for the exercise by the Administrative
Agent or the Lenders of their rights and remedies hereunder (except (A)
as may be required by laws affecting the offering and sale of
securities and (B) for necessary approvals from the applicable Gaming
Authorities).
(e) Security Interest/Priority. Upon receipt of the Pledge
Approval, this Pledge Agreement will create a valid security interest
in favor of the Administrative Agent for the ratable benefit of the
Lenders, in the Pledged Collateral. When properly perfected by taking
possession by the Administrative Agent if the Administrative Agent has
an office in Nevada or otherwise by a custodial agent of the
Administrative Agent pursuant to the terms of the Custodian Agreement
of the certificates representing the Pledged Equity Interest and all
other certificates and instruments constituting Pledged Collateral the
Administrative Agent shall have a first priority security interest in
all certificated Pledged Equity Interest and such certificates and
instruments to the extent such Pledged Collateral can be perfected by
taking possession. When properly perfected by the filing of UCC
financing statements in the location of the Pledgor's state of
organization, the Administrative Agent shall have a first priority
perfected security interest in all uncertificated Pledged Equity
Interest consisting of partnership or limited liability company
interests that do not constitute a Security pursuant to Section
8-103(c) of the UCC to the extent such Pledged Collateral can be
perfected by the filing of a UCC financing statement. With respect to
any Pledged Collateral consisting of an Uncertificated Security or a
Security Entitlement or any Pledged Collateral held in a Securities
Account, when properly perfected by the execution and delivery by the
Pledgor, the Administrative Agent and the applicable Securities
Intermediary or the applicable issuer of the Uncertificated Security of
an agreement granting Control to the Administrative Agent over such
Pledged Collateral, the Administrative Agent shall have a first
priority perfected security interest in such Pledged Collateral to the
extent such Pledged Collateral can be perfected by Control.
(f) No Other Equity Interest. Except as set forth on Schedule
2(a) attached hereto (as updated or deemed updated from time to time in
accordance with the terms hereof and of the Credit Agreement), the
Pledgor does not own any other Equity Interest in ROC.
(g) Partnership and Limited Liability Company Interests. All
Pledged Equity Interest consisting of a partnership or limited
liability company interest constitutes a Security because the relevant
limited liability company agreement or partnership agreement expressly
provides that it is a Security pursuant to Section 8-103(c) of the UCC,
and each such Security is a Certificated Security.
6. Covenants. The Pledgor hereby covenants, that so long as any of the
Secured Obligations (other than contingent indemnity obligations that survive
termination of the Credit Documents pursuant to the stated terms thereof) remain
outstanding, any Credit Document or Secured Hedging Agreement is in effect, and
until all of the Commitments shall have been terminated, the Pledgor shall:
(a) Defense of Title. Warrant and defend title to and
ownership of the Pledged Collateral of the Pledgor at its own expense
against the claims and demands of all other parties claiming an
interest therein; keep the Pledged Collateral free from all Liens,
other than Permitted Liens; and not sell, exchange, transfer, assign,
lease or otherwise dispose of Pledged Collateral of the Pledgor or any
interest therein, except as permitted under the Credit Agreement and
the other Credit Documents.
(b) Further Assurances. Promptly execute and deliver at its
expense all further instruments and documents and take all further
action that may be necessary and desirable or that the Administrative
Agent may request in order to (i) perfect and protect the security
interest created hereby in the Pledged Collateral of the Pledgor
(including, without limitation, execution and delivery of one or more
control agreements reasonably acceptable to the Administrative Agent,
filing of UCC financing statements and any and all other actions
reasonably necessary to satisfy the Administrative Agent that the
Administrative Agent has obtained a first priority perfected security
interest in all Pledged Collateral); (ii) enable the Administrative
Agent to exercise and enforce its rights and remedies hereunder in
respect of the Pledged Collateral of the Pledgor; and (iii) otherwise
effect the purposes of this Pledge Agreement, including, without
limitation and if requested by the Administrative Agent, delivering to
the Administrative Agent irrevocable proxies in respect of the Pledged
Collateral of the Pledgor.
(c) Amendments. Not make or consent to any amendment or other
modification or waiver with respect to any of the Pledged Collateral of
the Pledgor or enter into any agreement or allow to exist any
restriction with respect to any of the Pledged Collateral of the
Pledgor other than pursuant hereto or as may be permitted under the
Credit Agreement.
(d) Compliance with Securities Laws. File all reports and
other information now or hereafter required to be filed by the Pledgor
with the United States Securities and Exchange Commission and any other
state, federal or foreign agency in connection with the ownership of
the Pledged Collateral of the Pledgor.
(e) Issuance or Acquisition of Equity Interest. Not without
executing and delivering, or causing to be executed and delivered, to
the Administrative Agent such agreements, documents and instruments as
the Administrative Agent may reasonably require, issue or acquire any
Equity Interest that consists of an interest in a partnership or a
limited liability company which (i) is dealt in or traded on a
securities exchange or in a securities market, (ii) by its terms
expressly provides that it is a Security governed by Article 8 of the
UCC, (iii) is an Investment Company Security, (iv) is held in a
Securities Account or (v) constitutes a Security or a Financial Asset.
7. Performance of Obligations; Advances by Administrative Agent. On
failure of the Pledgor to perform any of the covenants and agreements contained
herein, the Administrative Agent may, at its sole option and in its sole
discretion, perform or cause to be performed the same and in so doing may expend
such sums as the Administrative Agent may reasonably deem advisable in the
performance thereof, including, without limitation, the payment of any insurance
premiums, the payment of any taxes, a payment to obtain a release of a Lien or
potential Lien, expenditures made in defending against any adverse claim and all
other expenditures which the Administrative Agent may make for the protection of
the security interest hereof or may be compelled to make by operation of law.
All such sums and amounts so expended shall be repayable by the Pledgor promptly
upon timely notice thereof and demand therefor, shall constitute additional
Secured Obligations and shall bear interest from the date said amounts are
expended at the ABR Default Rate. No such performance of any covenant or
agreement by the Administrative Agent on behalf of the Pledgor, and no such
advance or expenditure therefor, shall relieve the Pledgor of any default under
the terms of this Pledge Agreement, the other Credit Documents or any Secured
Hedging Agreement. The Administrative Agent may make any payment hereby
authorized in accordance with any xxxx, statement or estimate procured from the
appropriate public office or holder of the claim to be discharged without
inquiry into the accuracy of such xxxx, statement or estimate or into the
validity of any tax assessment, sale, forfeiture, tax lien, title or claim
except to the extent such payment is being contested in good faith by the
Pledgor in appropriate proceedings and against which adequate reserves are being
maintained in accordance with GAAP.
8. Events of Default. The occurrence of an event which under the Credit
Agreement would constitute an Event of Default shall be an event of default
hereunder (an "Event of Default").
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event of
Default and during the continuation thereof, the Administrative Agent
shall have, in respect of the Pledged Collateral of the Pledgor, in
addition to the rights and remedies provided herein, in the other
Credit Documents, in any Secured Hedging Agreement or by law, the
rights and remedies of a secured party under the UCC or any other
applicable law.
(b) Sale of Pledged Collateral. Subject to necessary approvals
from the applicable Gaming Authorities and upon the occurrence of an
Event of Default and during the continuation thereof, without limiting
the generality of this Section and without notice, the Administrative
Agent may, in its sole discretion, sell or otherwise dispose of or
realize upon the Pledged Collateral, or any part thereof, in one or
more parcels, at public or private sales, at any exchange or broker's
board or elsewhere, at such price or prices and on such other terms as
the Administrative Agent may deem commercially reasonable, for cash,
credit or for future delivery or otherwise in accordance with
applicable law. To the extent permitted by law, any Lender may in such
event, bid for the purchase of such securities. The Pledgor agrees
that, to the extent notice of sale shall be required by law and has not
been waived by the Pledgor, any requirement of reasonable notice shall
be met if notice, specifying the place of any public sale or the time
after which any private sale is to be made, is personally served on or
mailed, postage prepaid, to the Pledgor, in accordance with the notice
provisions of Section 9.2 of the Credit Agreement at least ten (10)
days before the time of such sale. The Administrative Agent shall not
be obligated to make any sale of Pledged Collateral of the Pledgor
regardless of notice of sale having been given. The Administrative
Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was
so adjourned.
(c) Registration Rights. If the Administrative Agent shall
determine to exercise its right to sell all or any of the Pledged
Collateral, the Pledgor agrees that, subject to necessary approvals
from the applicable Gaming Authorities and upon request of the
Administrative Agent (which request may be made by the Administrative
Agent in its sole discretion), the Pledgor will, at its own expense:
(i) execute and deliver, and use its best efforts to
cause each issuer of the Pledged Collateral contemplated to be
sold and the directors and officers thereof to execute and
deliver, all such instruments and documents, and do or cause
to be done all such other acts and things, as may be necessary
or, in the opinion of the Administrative Agent, advisable to
file a registration statement covering such Pledged Collateral
under the provisions of the Securities Act of 1933 and to use
its best efforts to cause the registration statement relating
thereto to become effective and to remain effective for such
period as prospectuses are required by law to be furnished,
and to make all amendments and supplements thereto and to the
related prospectus which, in the opinion of the Administrative
Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act of 1933 and the rules and
regulations of the Securities and Exchange Commission
applicable thereto;
(ii) use its best efforts to qualify the Pledged
Collateral under all applicable state securities or "Blue Sky"
laws and to obtain all necessary governmental approvals for
the sale of the Pledged Collateral, as requested by the
Administrative Agent;
(iii) cause each issuer to make available to its
security holders, as soon as practicable, an earnings
statement which will satisfy the provisions of Section 11(a)
of the Securities Act of 1933;
(iv) use its best efforts to do or cause to be done
all such other acts and things as may be necessary to make
such sale of the Pledged Collateral or any part thereof valid
and binding and in compliance with applicable law; and
(v) bear all costs and expenses, including reasonable
attorneys' fees, of carrying out its obligations under this
Section 9.
The Pledgor further agrees that a breach of any of the covenants
contained in this Section 9(c) will cause irreparable injury to the
Administrative Agent, that Administrative Agent has no adequate remedy
at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 9(c) shall be specifically
enforceable against the Pledgor, and the Pledgor hereby waives and
agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no default has
occurred giving rise to the Secured Obligations becoming due and
payable prior to their stated maturities. Nothing in this Section 9(c)
shall in any way alter the other rights of the Administrative Agent
under this Pledge Agreement.
In the event of any public sale described in this Section 9(c), the
Pledgor agrees to indemnify and hold harmless the Administrative Agent
and the Lenders and each of their respective directors, officers,
employees and agents from and against any loss, fee, cost, expense,
damage, liability or claim, joint or several, to which any such persons
may become subject or for which any of them may be liable, under the
Securities Act of 1933 or otherwise, insofar as such losses, fees,
costs, expenses, damages, liabilities or claims (or any litigation
commenced or threatened in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, registration statement,
prospectus or other such document published or filed in connection with
such public sale, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading and will reimburse the Administrative
Agent and such other persons for any legal or other expenses reasonably
incurred by the Administrative Agent and such other persons in
connection with any litigation, of any nature whatsoever, commenced or
threatened in respect thereof (including all fees, costs and expenses
whatsoever reasonably incurred by the Administrative Agent and such
other persons and counsel for the Administrative Agent and such other
persons in investigating, preparing for, defending against or providing
evidence, producing documents or taking any other action in respect of,
any such commenced or threatened litigation or any claims asserted).
This indemnity shall be in addition to any liability which the Pledgor
may otherwise have and shall extend upon the same terms and conditions
to each person, if any, that controls the Administrative Agent or such
persons within the meaning of the Securities Act of 1933.
(d) Private Sale. Subject to necessary approvals from the
applicable Gaming Authorities and upon the occurrence of an Event of
Default and during the continuation thereof, the Pledgor recognizes
that the Administrative Agent may deem it impracticable to effect a
public sale of all or any part of the Pledged Collateral and that the
Administrative Agent may, therefore, determine to make one or more
private sales of any such Pledged Collateral to a restricted group of
purchasers who will be obligated to agree, among other things, to
acquire such Pledged Collateral for their own account, for investment
and not with a view to the distribution or resale thereof. The Pledgor
acknowledges that any such private sale may be at prices and on terms
less favorable to the seller than the prices and other terms which
might have been obtained at a public sale and, notwithstanding the
foregoing, agrees that such private sale shall be deemed to have been
made in a commercially reasonable manner and that the Administrative
Agent shall have no obligation to delay sale of any such Pledged
Collateral for the period of time necessary to permit the issuer of
such Pledged Collateral to register such Pledged Collateral for public
sale under the Securities Act of 1933. The Pledgor further acknowledges
and agrees that any offer to sell such Pledged Collateral which has
been (i) publicly advertised on a bona fide basis in a newspaper or
other publication of general circulation in the financial community of
New York, New York (to the extent that such offer may be advertised
without prior registration under the Securities Act of 1933), or (ii)
made privately in the manner described above shall be deemed to involve
a "public sale" under the UCC, notwithstanding that such sale may not
constitute a "public offering" under the Securities Act of 1933, and
the Administrative Agent may, in such event, bid for the purchase of
such Pledged Collateral.
(e) Retention of Pledged Collateral. In addition to the rights
and remedies hereunder, upon the occurrence of an Event of Default and
during the continuation thereof, the Administrative Agent may, after
providing the notices required by Sections 9-620 and 9-621 of the UCC
(or any successor sections of the UCC) or otherwise complying with the
notice requirements of applicable law of the relevant jurisdiction,
accept or retain all or any portion of the Pledged Collateral in
satisfaction of the Secured Obligations. Unless and until the
Administrative Agent shall have provided such notices, however, the
Administrative Agent shall not be deemed to have retained any Pledged
Collateral in satisfaction of any Secured Obligations for any reason.
(f) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which
the Administrative Agent or the Lenders are legally entitled, the
Pledgor shall be liable for the deficiency, together with interest
thereon at the ABR Default Rate together with the costs of collection
and the reasonable fees of any attorneys employed by the Administrative
Agent to collect such deficiency. Any surplus remaining after the full
payment and satisfaction of the Secured Obligations shall be returned
to the Pledgor or to whomsoever a court of competent jurisdiction shall
determine to be entitled thereto.
(g) Other Security. To the extent that any of the Secured
Obligations are now or hereafter secured by property other than the
Pledged Collateral (including, without limitation, real and other
personal property owned by the Pledgor), or by a guarantee, endorsement
or property of any other Person, then the Administrative Agent shall
have the right to proceed against such other property, guarantee or
endorsement upon the occurrence and during the continuation of any
Event of Default, and the Administrative Agent shall have the right, in
its sole discretion, to determine which rights, security, Liens,
security interests or remedies the Administrative Agent shall at any
time pursue, relinquish, subordinate, modify or take with respect
thereto, without in any way modifying or affecting any of them or any
of the Administrative Agent's rights or the Secured Obligations under
this Pledge Agreement, under any other of the Credit Documents or under
any Secured Hedging Agreement.
10. Rights of the Administrative Agent.
(a) Power of Attorney. Subject to any necessary consent or
approval by the applicable Gaming Authorities, the Pledgor hereby
designates and appoints the Administrative Agent, on behalf of the
Lenders, and each of its designees or agents as attorney-in-fact of the
Pledgor, irrevocably and with power of substitution, with authority to
take any or all of the following actions upon the occurrence and during
the continuation of an Event of Default:
(i) to demand, collect, settle, compromise, adjust
and give discharges and releases concerning the Pledged
Collateral of the Pledgor, all as the Administrative Agent may
reasonably determine in respect of such Pledged Collateral;
(ii) to commence and prosecute any actions at any
court for the purposes of collecting any of the Pledged
Collateral and enforcing any other right in respect thereof;
(iii) to defend, settle, adjust or compromise any
action, suit or proceeding brought with respect to the Pledged
Collateral and, in connection therewith, give such discharge
or release as the Administrative Agent may deem reasonably
appropriate;
(iv) to pay or discharge taxes, Liens, security
interests, or other encumbrances levied or placed on or
threatened against the Pledged Collateral;
(v) to direct any parties liable for any payment
under any of the Pledged Collateral to make payment of any and
all monies due and to become due thereunder directly to the
Administrative Agent or as the Administrative Agent shall
direct;
(vi) to receive payment of and receipt for any and
all monies, claims, and other amounts due and to become due at
any time in respect of or arising out of any Pledged
Collateral of the Pledgor;
(vii) to sign and endorse any drafts, assignments,
proxies, stock powers, verifications, notices and other
documents relating to the Pledged Collateral of the Pledgor;
(viii) to execute and deliver and/or file all
assignments, conveyances, statements, financing statements,
continuation statements, pledge agreements, affidavits,
notices and other agreements, instruments and documents that
the Administrative Agent may determine necessary in order to
perfect and maintain the security interests and Liens granted
in this Pledge Agreement and in order to fully consummate all
of the transactions contemplated herein;
(ix) to exchange any of the Pledged Collateral of the
Pledgor or other property upon any merger, consolidation,
reorganization, recapitalization or other readjustment of the
issuer thereof and, in connection therewith, deposit any of
the Pledged Collateral of the Pledgor with any committee,
depository, transfer agent, registrar or other designated
agency upon such terms as the Administrative Agent may
determine;
(x) to vote for a shareholder, partner or member
resolution, or to sign an instrument in writing, sanctioning
the transfer of any or all of the Pledged Collateral of the
Pledgor into the name of the Administrative Agent or into the
name of any transferee to whom the Pledged Collateral of the
Pledgor or any part thereof may be sold pursuant to Section 9
hereof; and
(xi) to do and perform all such other acts and things
as the Administrative Agent may reasonably deem to be
necessary, proper or convenient in connection with the Pledged
Collateral of the Pledgor.
This power of attorney is a power coupled with an interest and shall be
irrevocable for so long as any of the Secured Obligations (other than
contingent indemnity obligations that survive termination of the Credit
Documents pursuant to the stated terms thereof) remain outstanding, any
Credit Document or Secured Hedging Agreement is in effect, and until
all of the Commitments shall have been terminated. The Administrative
Agent shall be under no duty to exercise or withhold the exercise of
any of the rights, powers, privileges and options expressly or
implicitly granted to the Administrative Agent in this Pledge
Agreement, and shall not be liable for any failure to do so or any
delay in doing so. The Administrative Agent shall not be liable for any
act or omission or for any error of judgment or any mistake of fact or
law in its individual capacity or its capacity as attorney-in-fact
except acts or omissions resulting from its gross negligence or willful
misconduct. This power of attorney is conferred on the Administrative
Agent solely to perfect, protect, preserve and realize upon its
security interest in the Pledged Collateral.
(b) Assignment by the Administrative Agent. The Administrative
Agent may from time to time assign the Secured Obligations or any
portion thereof and/or the Pledged Collateral or any portion thereof to
a successor Administrative Agent, and the assignee shall be entitled to
all of the rights and remedies of the Administrative Agent under this
Pledge Agreement in relation thereto.
(c) The Administrative Agent's Duty of Care. Other than the
exercise of reasonable care to assure the safe custody of the Pledged
Collateral while being held by the Administrative Agent hereunder, the
Administrative Agent shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that the Pledgor
shall be responsible for preservation of all rights in the Pledged
Collateral of the Pledgor, and the Administrative Agent shall be
relieved of all responsibility for the Pledged Collateral upon
surrendering it or tendering the surrender of it to the Pledgor. The
Administrative Agent shall be deemed to have exercised reasonable care
in the custody and preservation of the Pledged Collateral in its
possession if such Pledged Collateral is accorded treatment
substantially equal to that which the Administrative Agent accords its
own property, which shall be no less than the treatment employed by a
reasonable and prudent agent in the industry, it being understood that
the Administrative Agent shall not have responsibility for (i)
ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relating to any Pledged
Collateral, whether or not the Administrative Agent has or is deemed to
have knowledge of such matters; or (ii) taking any necessary steps to
preserve rights against any parties with respect to any Pledged
Collateral.
(d) Voting Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have
occurred and be continuing, to the extent permitted by law,
the Pledgor may exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral of the
Pledgor or any part thereof for any purpose not inconsistent
with the terms of this Pledge Agreement or the Credit
Agreement; provided, however, that the Pledgor shall not
exercise or shall refrain from exercising any such right if
the Administrative Agent shall have notified the Pledgor that,
in the Administrative Agent's judgment, such action would have
a material adverse effect on the value of the Pledged
Collateral or any part thereof.
(ii) Subject to any necessary consent or approval by
the applicable Gaming Authorities and upon the occurrence and
during the continuance of a Default or an Event of Default,
all rights of the Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to
exercise pursuant to paragraph (i) of this subsection (d)
shall cease and all such rights shall thereupon become vested
in the Administrative Agent which shall then have the sole
right to exercise such voting and other consensual rights.
(e) Dividend and Distribution Rights in Respect of the Pledged
Collateral.
(i) So long as no Event of Default shall have
occurred and be continuing, the Pledgor may receive and retain
any and all dividends (other than dividends payable in the
form of Equity Interest and other dividends constituting
Pledged Collateral which are required to be delivered to the
Administrative Agent pursuant to Section 4 above),
distributions or interest paid in respect of the Pledged
Collateral to the extent they are allowed under the Credit
Agreement.
(ii) Upon the occurrence and during the continuation
of an Event of Default:
(A) all rights of the Pledgor to receive the
dividends, distributions and interest payments which
it would otherwise be authorized to receive and
retain pursuant to paragraph (i) of this subsection
(e) shall cease and all such rights shall thereupon
be vested in the Administrative Agent which shall
then have the sole right to receive and hold as
Pledged Collateral such dividends, distributions and
interest payments; and
(B) all dividends, distributions and
interest payments which are received by the Pledgor
contrary to the provisions of clause (A) of this
subsection (ii) shall be received in trust for the
benefit of the Administrative Agent, shall be
segregated from other property or funds of the
Pledgor, and shall be forthwith paid over to the
Administrative Agent as Pledged Collateral in the
exact form received, to be held by the Administrative
Agent as Pledged Collateral and as further collateral
security for the Secured Obligations.
(f) Release of Pledged Collateral. The Administrative Agent
may release any of the Pledged Collateral from this Pledge Agreement or
may substitute any of the Pledged Collateral for other Pledged
Collateral without altering, varying or diminishing in any way the
force, effect, Lien, pledge or security interest of this Pledge
Agreement as to any Pledged Collateral not expressly released or
substituted, and this Pledge Agreement shall, after receipt of the
Pledge Approval, continue as a first priority Lien on all Pledged
Collateral not expressly released or substituted.
11. Application of Proceeds. After the exercise of remedies by the
Administrative Agent or the Lenders pursuant to Section 7.2 of the Credit
Agreement (or after the Commitments shall automatically terminate and the Loans
(with accrued interest thereon) and all other amounts under the Credit Documents
shall automatically become due and payable in accordance with the terms of such
Section), any proceeds of the Pledged Collateral, when received by the
Administrative Agent, any of the Lenders or any Hedging Agreement Provider in
cash or its equivalent, will be applied in reduction of the Secured Obligations
in the order set forth in Section 2.11(b) of the Credit Agreement, and the
Pledgor irrevocably waives the right to direct the application of such payments
and proceeds and acknowledges and agrees that the Administrative Agent shall
have the continuing and exclusive right to apply and reapply any and all such
proceeds in the Administrative Agent's sole discretion, notwithstanding any
entry to the contrary upon any of its books and records.
12. Indemnification and Costs and Expenses. The Pledgor shall indemnify
the Administrative Agent and the Lenders and pay all costs and expenses of the
Administrative Agent and the Lenders in accordance with Section 9.5 of the
Credit Agreement.
13. Continuing Agreement.
(a) This Pledge Agreement shall be a continuing agreement in
every respect and shall remain in full force and effect so long as any
of the Secured Obligations (other than contingent indemnity obligations
that survive termination of the Credit Documents pursuant to the stated
terms thereof) remain outstanding, any Credit Document or Secured
Hedging Agreement is in effect, and until all of the Commitments shall
have been terminated. Upon such payment and termination, this Pledge
Agreement shall be automatically terminated and the Administrative
Agent and the Lenders shall, upon the request and at the expense of the
Pledgor, forthwith release all of the Liens and security interests
granted hereunder and shall deliver all UCC termination statements
and/or other documents reasonably requested by the Pledgor evidencing
such termination. Notwithstanding the foregoing, all releases and
indemnities provided hereunder shall survive termination of this Pledge
Agreement.
(b) This Pledge Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment,
in whole or in part, of any of the Secured Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or
any Lender as a preference, fraudulent conveyance or otherwise under
any bankruptcy, insolvency or similar law, all as though such payment
had not been made; provided that in the event payment of all or any
part of the Secured Obligations is rescinded or must be restored or
returned, all reasonable costs and expenses (including, without
limitation, any reasonable legal fees and disbursements) incurred by
the Administrative Agent or any Lender in defending and enforcing such
reinstatement shall be deemed to be included as a part of the Secured
Obligations.
14. Amendments; Waivers; Modifications. This Pledge Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in Section 9.1 of the Credit Agreement.
15. Successors in Interest. This Pledge Agreement shall create a
continuing security interest in the Pledged Collateral and shall be binding upon
the Pledgor, its successors and assigns and shall inure, together with the
rights and remedies of the Administrative Agent hereunder, to the benefit of the
Administrative Agent and the Lenders and their successors and permitted assigns;
provided, however, that the Pledgor may not assign its rights or delegate its
duties hereunder without the prior written consent of each Lender or the
Required Lenders, as required by the Credit Agreement. To the fullest extent
permitted by law, the Pledgor hereby releases the Administrative Agent and each
Lender, each of their respective officers, employees and agents and each of
their respective successors and assigns, from any liability for any act or
omission relating to this Pledge Agreement or the Pledged Collateral, except for
any liability arising from the gross negligence or willful misconduct of the
Administrative Agent or such Lender or their respective officers, employees and
agents, in each case as determined by a court of competent jurisdiction.
16. Notices. All notices required or permitted to be given under this
Pledge Agreement shall be in conformance with Section 9.2 of the Credit
Agreement.
17. Counterparts. This Pledge Agreement may be executed in any number
of counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Pledge Agreement to produce or
account for more than one such counterpart. Delivery of executed counterparts of
the Pledge Agreement by telecopy or other electronic means shall be effective as
an original and shall constitute a representation that an original shall be
delivered upon the request of the Administrative Agent.
18. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning,
construction or interpretation of any provision of this Pledge Agreement.
19. Governing Law; Submission to Jurisdiction and Service of Process;
Waiver of Jury Trial; Venue. THIS PLEDGE AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. The terms of
Sections 9.13 and 9.16 of the Credit Agreement are incorporated herein by
reference, mutatis mutandis, and the parties hereto agree to such terms.
20. Severability. If any provision of this Pledge Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
21. Entirety. This Pledge Agreement, the other Credit Documents and any
Secured Hedging Agreement represent the entire agreement of the parties hereto
and thereto, and supersede all prior agreements and understandings, oral or
written, if any, including any commitment letters or correspondence relating to
this Pledge Agreement, the other Credit Documents, any such Secured Hedging
Agreement or the transactions contemplated herein and therein.
22. Survival. All representations and warranties of the Pledgor
hereunder shall survive the execution and delivery of this Pledge Agreement, the
other Credit Documents and any Secured Hedging Agreement, the delivery of the
Notes and the making of the Loans and the issuance of the Letters of Credit
under the Credit Agreement.
23. Rights of Required Lenders. All rights of the Administrative Agent
hereunder, if not exercised by the Administrative Agent, may be exercised by the
Required Lenders.
24. Regulatory Requirements. Notwithstanding anything to the contrary
contained herein or in any of the other Credit Documents, the Administrative
Agent, on behalf of itself and the Lenders, expressly acknowledges and agrees
that the exercise of its rights and remedies under this Pledge Agreement is
subject to the mandatory provisions of the Gaming Laws. Specifically, the
Administrative Agent acknowledges and agrees that:
(a) This Pledge Agreement, the pledge of the Pledged
Collateral, and any restrictions on the transfer of and agreements not
to encumber the Pledged Collateral or other equity securities of any
corporation that is a licensee or registered holding company, contained
in this Pledge Agreement or in any other Credit Documents, are not
effective without the prior approval of the NGC upon the recommendation
of the NGCB. The approval of the pledge of the Pledged Collateral may
require amendment of this Pledge Agreement to include additional
references to regulatory requirements under the Gaming Laws. In
addition, no amendment of this Pledge Agreement shall be effective
until applicable approvals of the Nevada Gaming Authorities have been
obtained.
(b) In the event that the Administrative Agent exercises one
or more of the remedies set forth in this Pledge Agreement with respect
to any Pledged Collateral, including, without limitation, foreclosure
or transfer of any interest in the Pledged Collateral (except back to
the Pledgor), the exercise of voting and consensual rights, and any
other resort to or enforcement of the security interest in the Pledged
Collateral, such action shall require the separate and prior approval
of the Nevada Gaming Authorities and the licensing of Administrative
Agent, unless such licensing requirement is waived by the Nevada Gaming
Authorities.
(c) The Administrative Agent and any custodial agent of the
Administrative Agent in the State of Nevada shall be required to comply
with the conditions, if any, imposed by the Nevada Gaming Authorities
in connection with its approval of the pledge of the Pledged Collateral
granted hereunder by the Pledgor, including, without limitation, the
requirement that Administrative Agent or its custodial agent maintain
the certificates evidencing the Pledged Collateral at a location in
Nevada designated to the NGCB, and that Administrative Agent or its
custodial agent permit agents or employees of the NGCB to inspect such
certificates immediately upon request during normal business hours.
(d) Upon receipt of the approvals of the Nevada Gaming
Authorities set forth in Section 24(a) and delivery of the certificates
evidencing the Pledged Collateral to the Administrative Agent if the
Administrative Agent has an office in Nevada and otherwise to a
custodial agent of the Administrative Agent pursuant to the terms of
the Custodian Agreement, neither Administrative Agent nor any agent of
Administrative Agent shall surrender possession of such shares to any
Person other than the Pledgor without the prior approval of the Nevada
Gaming Authorities or as otherwise permitted by the Gaming Laws.
(e) The approval by the Nevada Gaming Authorities of this
Pledge Agreement, or any amendment hereto, is not, and shall not be
construed as, the approval, either express or implied, of the
Administrative Agent to take any actions provided for in this Pledge
Agreement for which approval by the Nevada Gaming Authorities is
required, without first obtaining such prior and separate approval, to
the extent required by the Gaming Laws.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Pledge Agreement
RIVIERA HOLDINGS CORPORATION
GAMING PLEDGE AGREEMENT
Each of the parties hereto has caused a counterpart of this Pledge
Agreement to be duly executed and delivered as of the date first above written.
PLEDGOR: RIVIERA HOLDINGS CORPORATION,
-------
a Nevada corporation
By:
------------------------------------
Name:
Title:
Accepted and agreed to as of the date first above written.
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent
By:
-----------------------------------------
Name:
Title:
SCHEDULE 2(A)
SCHEDULE 2(A)
PLEDGED EQUITY INTEREST
Pledgor: Riviera Holdings Corporation
Name of Subsidiary Number of Shares Certificate Number Percentage Ownership
------------------ ---------------- ------------------ --------------------
Riviera Operating
Corporation 1,000 1 100%
EXHIBIT A
Irrevocable Stock Power
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
to ________________________ [the following shares of capital stock of]
[all of the membership interests in] [_____________________], a
[____________] [corporation] [limited liability company]:
[No. of Shares Certificate No.]
and irrevocably appoints __________________________________ its agent and
attorney-in-fact to transfer all or any part of such capital stock or equity
interest and to take all necessary and appropriate action to effect any such
transfer. The agent and attorney-in-fact may substitute and appoint one or more
persons to act for him.
[---------------],
a [___________________]
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
