AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of the 19th day of November,
2008 (the "Effective Date") by and between Riviera Holdings Corporation, a
Nevada corporation (the "Company"), and the investor set forth on the signature
Page affixed hereto (the "Investor").
WHEREAS, the Investor wishes to purchase from time to time (collectively,
the "Acquisition") from the Company or a seller or sellers other than the
Company such number of shares of the Company's common stock, par value $.001 per
share (the "Common Stock"), that would increase the Investor's total holdings of
Common Stock up to an amount that equals, but does not exceed, fifteen percent
(15%) of the Company's Outstanding Voting Securities;
WHEREAS, the Company wishes to grant certain waivers to the Investor in
order to permit the Acquisition pursuant to the terms and conditions set forth
in this Agreement; and
WHEREAS, as consideration for the granting of certain waivers to the
Investor to permit the Acquisition, the Investor agrees to certain limitations
on its ownership of Common Stock, as provided herein.
NOW, THEREFORE, in consideration of the mutual promises made herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Board Approvals. The board of directors of the Company (the "Board")
has, in connection with the Acquisition, (a) waived, in accordance with
subsection 7(g) of Article III of the Company's Articles of Incorporation (the
"Articles"), and by the requisite majority as provided therein, the voting
limitation set forth in subsection 7(b) of Article III of the Articles with
respect to the Investor Group, and (b) approved the Acquisition in accordance
with the provisions of subsection 78.438(1) of Title 7 of the Nevada Revised
Statutes.
2. Ownership Limitation. The Investor hereby agrees not to, and that no
member of the Investor Group will, and each will cause its Affiliates not to,
directly or indirectly, acquire (other than Equity Securities distributed or
issued, directly or indirectly, with respect to Equity Securities then held by
the Investor Group, or the exercise or conversion of any Equity Securities
described in this parenthetical) any Equity Securities, or otherwise become part
of a group (that would be deemed to be a "person" by Section 13(d)(3) of the
1934 Act, as in effect on the date hereof, with respect to securities of the
Company), if immediately after giving effect to such acquisition or group
formation, the Investor Group, or any group of which it is a part, would have
beneficial ownership (as defined in Rule 13d-3 of the Securities Exchange Act of
1934, as amended (the "1934 Act"), as in effect on the date hereof) of Voting
Securities in excess of fifteen percent (15%) (the "Maximum Limit") of the
Outstanding Voting Securities, unless specifically approved in writing by the
Board; provided, however, that the Investor Group will not be in violation of
this provision by virtue of (x) the expiration, termination or cancellation of
(i) Convertible Securities or (ii) Rights to Purchase Voting Securities; (y) a
share repurchase or other action taken by the Company to reduce, or which has
the effect of reducing, the number of shares of Outstanding Voting Securities or
votes per share of then-Outstanding Voting
Securities; or (z) the acquisition of any Voting Securities so long as such
acquisition would not trigger the voting limitations set forth in subsection 7
of Article III of the Articles (as such Articles are amended, amended and
restated or otherwise modified from time to time) assuming, for the purpose of
this clause (z), that the Investor Group had not obtained the waiver granted to
it in Section l(a) hereof.
3. Standstill. During the Standstill Period, the Investor hereby agrees
not to, and that no member of the Investor Group will, and each will cause its
Affiliates not to, directly or indirectly:
(a) solicit proxies or become a participant in a proxy
solicitation with respect to any securities of the Company; or
(b) submit a proposal for, or offer in respect of (with or without
conditions) any merger, consolidation, business combination,
tender or exchange offer, restructuring, liquidation,
recapitalization, dissolution or similar transactions or other
extraordinary transaction of or involving the Company or any
of its subsidiaries or its Equity Securities or assets (or
make any public announcement with respect to the foregoing)
unless such action (i) is specifically requested in writing by
the Board prior to the making of such announcement, proposal
or offer or (ii) is made to the Board on a confidential basis
and provides that (A) it may not be consummated unless it is
(1) approved by a majority of Outstanding Voting Securities
not beneficially owned by the Investor Group and (2)
determined by the independent directors of the Board to be
fair to the shareholders of the Company and (B) unless the
transaction is a tender offer for all shares of Common Stock
or an offer for the entire Company, it is accompanied by an
undertaking that, if the conditions in clause (A) are
satisfied, such person will offer to acquire all shares of
Common Stock still outstanding after completion of a
transaction, if any, at the same price per share paid in such
transaction.
4. Voting Limitation. The Investor hereby agrees at any meeting of the
stockholders of the Company (or any action by prior written consent) after the
date hereof and at which any member of the Investor Group is entitled to vote,
no member of the Investor Group shall, as of any record date for the
determination of stockholders of the Company entitled to vote on such matter,
have the right to vote, vote or cause the voting of shares of Voting Securities,
in person or by proxy or through any voting agreement, plan or other
arrangement, representing in the aggregate more than the maximum number of
Voting Securities permitted to be acquired by the Investor Group under Section 2
hereof.
5. Gaming Approvals.
(a) Investor shall apply for, obtain and maintain all regulatory
approvals required as a result of the transactions anticipated
by this Agreement including, but not limited to, any approvals
that may be required from the Nevada and Colorado gaming
authorities. Should Investor not so apply,
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obtain or maintain any such required approvals, or should the
Investor be found unsuitable by any such regulating body to
obtain and/or hold the Common Stock, Investor shall promptly
divest itself of its holdings of Common Stock acquired in the
Acquisition and the Maximum Limit shall be deemed to be 10%,
or to such lower level of ownership otherwise mandated or
recommended by any applicable gaming authorities.
Notwithstanding the foregoing, so long as Investor is
diligently pursuing such approvals in good faith, and has not
been found "unsuitable" or other similar designation or
finding by any gaming regulatory body, then, except as
required by applicable law, the limitations contained in this
Section 5 shall not be effective.
(b) The Investor hereby represents and warrants that neither it
nor any member of the Investor Group has ever been found
"unsuitable" or other similar designation or finding by any
gaming regulatory body.
6. Enforcement.
(a) Each party hereto acknowledges that the other party hereto
would not have an adequate remedy at law for money damages in
the event that any of the covenants or agreements of any of
the other party in this Agreement were not performed in
accordance with its terms, and it is therefore agreed that
each party hereto, in addition to and without limiting any
other remedy or right it may have, will have the right to an
injunction or other equitable relief in any court of competent
jurisdiction, enjoining any such actual or potential breach
and enforcing specifically the terms and provisions hereof,
and each of the Company and each party hereto hereby waives
(i) any and all defenses they may have on the ground of lack
of jurisdiction or competence of the court to grant such an
injunction or other equitable relief and (ii) the need to post
any bond that may be required in connection with the granting
of such an injunction or other equitable relief.
(b) All rights, powers and remedies provided under this Agreement
or otherwise available in respect hereof at law or in equity
shall be cumulative, including without limitation, the
provisions contained in Section 4 hereof, and not alternative,
and the exercise or beginning of the exercise of any thereof
by any party hereto shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by
such party. For purposes of clarity, the provisions of
Section 2 hereof shall be separately enforceable by the
Company irrespective of the provisions of Section 4 hereof.
7. Successors and Assigns. This Agreement may not be assigned without
the prior written consent of the Company and the Investor. The provisions of
this Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties hereto. Nothing in this
Agreement, express or implied, is intended to confer upon any
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party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
8. Counterparts; Faxes. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed via facsimile, which shall be deemed an original.
9. Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
10. Notices. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given as hereinafter described (i) if given by personal delivery, then such
notice shall be deemed given upon such delivery, (ii) if given by telex or
telecopier, then such notice shall be deemed given upon receipt of confirmation
of complete transmittal, (iii) if given by mail, then such notice shall be
deemed given upon the earlier of (A) receipt of such notice by the recipient or
(B) five days after such notice is deposited in first class mail, postage
prepaid, and (iv) if given by an internationally recognized overnight air
courier, then such notice shall be deemed given one business day after delivery
to such carrier. All notices shall be addressed to the party to be notified at
the address as follows, or at such other address as such party may designate by
ten days' advance written notice to the other party:
If to the Company:
Riviera Holdings Corporation
0000 Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Secretary and General Counsel
Fax: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
Park Avenue Tower, 00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
If to the Investor:
Desert Rock Enterprises LLC
0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Fax: (000) 000-0000
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With a copy to:
Xxxxx & Xxxxxx L.L.P.
0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Attention: P. Xxxxxxx Xxxxxxxx
Fax: (000) 000-0000
11. Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively) only with
the written consent of the Company and the Investor. Any amendment or waiver
effected in accordance with this Section 11 shall be binding upon the Company
and the Investor.
12. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof but shall be interpreted as if it were written so as
to be enforceable to the maximum extent permitted by applicable law, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereto hereby waive any provision of
law which renders any provision hereof prohibited or unenforceable in any
respect.
13. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of Nevada without regard to the choice of law principles
thereof. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of Nevada and any federal court sitting
in the State of Nevada for the purpose of any suit, action, proceeding or
judgment relating to or arising out of this Agreement and the transactions
contemplated hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this Agreement.
Each of the parties hereto irrevocably consents to the jurisdiction of any such
court in any such suit, action or proceeding and to the laying of venue in such
court. Each party hereto irrevocably waives any objection to the laying of venue
of any such suit, action or proceeding brought in such courts and irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO
WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO
THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO
THIS WAIVER.
14. Definitions. For purposes of this Agreement, the following terms
have the following meanings:
"Affiliate" has the meaning assigned in Rule 405 under the Securities Act
of 1933, as amended (the "1933 Act"), as in effect on the date hereof.
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"Control" has the meaning given to that term under Rule 405 under the 1933
Act, as in effect on the date hereof (and "Controlled" and "Controlling" shall
have correlative meanings); provided, however, that no Person shall be deemed to
Control another Person solely by his or her status as a director of such other
Person.
"Convertible Securities" means securities of the Company that are
convertible or exchangeable (whether presently convertible or exchangeable or
not) into Voting Securities.
"Equity Securities" means Voting Securities, Convertible Securities and
Rights to Purchase Voting Securities.
"Investor Group" means (i) the Investor, (ii) any Affiliate of the
Investor and (iii) any group (that would be deemed to be a "person" by Section
13(d)(3) of the 1934 Act, as in effect on the date hereof, with respect to
securities of the Company) of which the Investor or any Person directly or
indirectly Controlling or Controlled by the Investor is a member. Without
limiting the generality of the foregoing, Affiliate of the Investor shall
include any fund or holding company that may be formed for investment purposes
that is managed pursuant to a contractual arrangement to offer advice by Desert
Rock Enterprises LLC ("Desert Rock") or any separate account managed by Desert
Rock.
"Outstanding Voting Securities" means at any time the then-issued and
outstanding Voting Securities based on the latest information reported by the
Company in its filings with the Securities and Exchange Commission.
"Person" means any individual, corporation, partnership, trust or other
entity or group (within the meaning of Section 13(d)(3) of the 1934 Act, as in
effect on the date hereof).
"Rights to Purchase Voting Securities" means options, warrants and rights
issued by the Company (whether presently exercisable or not) to purchase Voting
Securities or Convertible Securities.
"Standstill Period" means the period beginning on the Effective Date and
ending on the first date to occur of: (i) the day following the completion of
the Company's 2010 regular Annual Meeting of Stockholders, (ii) September 1,
2010 and (iii) the ending of any period during which any other investor is
subject to a similar standstill as set forth in Section 3 hereof.
"Voting Securities" means the Common Stock and any other securities of the
Company of any kind or class having power generally to vote for the election of
directors.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused their duly authorized officers to execute this Agreement as of the date
first above written.
RIVIERA HOLDINGS CORPORATION DESERT ROCK ENTERPRISES LLC
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxxxx
--------------------- -----------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxxx Xxxxxxx
Title: Treasurer Title: Chief Executive Officer
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