EXHIBIT 10.70
SETTLEMENT AGREEMENT
This Settlement Agreement and Mutual Release ("Agreement") is entered into
as of April 3, 2002 by and between Xxxx Xxxxxxx Xxxxxxx, as executor of the Will
of Xxxxx X. Xxxxxxx; Xxxx Xxxxxxx Xxxxxxx and Xxxxxxxx Xxxxx, M.D., as the
trustees of the Xxxxx X. Xxxxxxx Living Trust dated December 23, 1986, as
amended; R&E Gaming Corp.; Elsinore Acquisition Sub, Inc.; Riviera Acquisition
Sub, Inc.; and Carlo Corporation (collectively, "Plaintiffs") on the one hand,
and Elsinore Corporation and Morgens, Waterfall, Vintiadis & Company, Inc.
(collectively, the "Settling Defendants"), on the other. Plaintiffs and Settling
Defendants as a group are hereinafter collectively referred to as the "Settling
Parties."
RECITALS
WHEREAS, on or about September 15, 1997, certain of the Plaintiffs entered
into written merger and option agreements with the Settling Defendants and
others, whereby such certain Plaintiffs were to acquire Riviera Holdings
Corporation ("RHC") and Elsinore Corporation ("Elsinore");
WHEREAS, disputes subsequently arose between Plaintiffs and/or their
predecessors on the one hand and the Settling Defendants and certain other
persons and entities on the other that related to or arose out of the merger and
option agreements for the acquisitions of RHC and Elsinore;
WHEREAS, on or about April 9, 1998, Xxxxx X. Xxxxxxx and several of his
affiliated entities filed their original complaint in the action entitled
Xxxxxxx et al. x. Xxxxxxxxx & Company, Inc. et al., pending in the United States
District Court for the Central District of California, Case No. 98-2644 FMC (the
"Action"), and filed their operative Fourth Amended Complaint (the "Complaint")
in or about December 1999;
WHEREAS, the Settling Defendants answered the Complaint and filed their
operative First Amended Counterclaims (the "Counterclaims") in May 2000;
WHEREAS, the Settling Defendants dispute the allegations set forth in the
Complaint, and deny any liability whatsoever for any allegations set forth in
the Complaint;
WHEREAS, Plaintiffs dispute the allegations set forth in the Counterclaims,
and deny any liability whatsoever for any allegations set forth in the
Counterclaims; and
WHEREAS, the Settling Parties have determined it is in their best interests
to forever settle and compromise all their disputes, including, but not limited
to, those arising out of, or related to, the allegations set forth in the
Complaint and Counterclaims.
NOW THEREFORE, the Settling Parties mutually agree as follows:
1. Payment of $1,100,000 to Plaintiffs. By or on June 1, 2002, and provided
that the Court has entered the Settlement Bar Order described in paragraph 3
below, the Settling Defendants shall pay to Plaintiffs the total sum of
$1,100,000.00. Said payment will be by wire transfer to the account of the Xxxxx
X. Xxxxxxx Living Trust, as follows: Account number 101-627888 at City National
Bank, ABA number 000000000FB0 Xxxxx X. Xxxxxxx Living Trust. The Settling
Parties agree that, after making the payment described above, the Settling
Defendants are not required to return any of the payments made to them pursuant
to the option or merger agreements (including, but not limited to, as a result
of draws under letters of credit or as interest) or otherwise.
2. Dismissal of the Action and Counterclaims. Within five (5) business days
after the Settlement Bar Order referenced in paragraph 3 below is entered,
Plaintiffs and the Settling Defendants shall cause to be filed with the Court a
joint request to dismiss all claims in the Action by Plaintiffs against the
Settling Defendants and by the Settling Defendants against Plaintiffs, with
prejudice, each party to bear his or its own costs and attorneys' fees.
3. Settlement Bar Order. Plaintiffs and the Settling Defendants shall
cooperate with one another to have the Court in the Action enter a Settlement
Bar Order and Final Judgment ("Bar Order") pursuant to 15 U.S.C. Section 78u-4
and Fed. R. Civ. Proc. Rule 54(c), in substantially the same form as the
Settlement Bar Order and Final Judgment entered by the Court with respect to
former defendants SunAmerica Life Insurance Company and Keyport Life Insurance
Company.
4. Release of Claims by Plaintiffs. Except for obligations, agreements or
undertakings under this Agreement, and effective on the Effective Date as
defined in paragraph 14 below, Plaintiffs, and each of them, hereby fully
release and discharge the Settling Defendants and each of their respective
present and former parents, predecessors, affiliates, subsidiaries, agents,
insurers, attorneys, accountants, servants, employees, representatives, assigns,
successors, officers, directors and shareholders, from any and all rights,
claims, demands, causes of action, obligations, damages and liabilities, known
and unknown, suspected and unsuspected, that Plaintiffs now own or hold, or have
at any time heretofore owned or held, including, but not limited to, those that
constitute, arise out of or relate to the matters alleged, or matters that could
have been alleged, in the Complaint or the Action.
This Agreement is made and given in accordance with the provisions of
California Civil Code Section 1542 which provides that:
"A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor."
In making this Agreement, each of the Plaintiffs expressly waives and
relinquishes all rights and benefits that he or it has, or may have, under said
Section 1542. Further, Plaintiffs acknowledge that Plaintiffs are aware that
they may hereafter discover facts different from, or in addition to, those that
they now know or believe to be true with respect to the claims, demands, debts,
liabilities, transactions, obligations and causes of action relating to the
Action. Notwithstanding any such different or additional facts, this Agreement
shall fully discharge the Settling Defendants, and each of them, from any and
all claims of any kind or character by Plaintiffs that now exist, including, but
not limited to, the matters alleged, or those that could have been alleged, in
the Action.
5. Release of Claims by Settling Defendants. Except for obligations,
agreements or undertakings under this Agreement, and effective on the Effective
Date as defined in paragraph 14 below, each of the Settling Defendants hereby
fully releases and discharges Plaintiffs and each of their respective and former
parents, predecessors, affiliates, subsidiaries, agents, insurers, attorneys,
accountants, servants, employees, representatives, assigns, successors,
officers, directors and shareholders from any and all rights, claims, demands,
causes of action, obligations, damages and liabilities, known and unknown,
suspected and unsuspected, that Settling Defendants now own or hold, or have at
any time heretofore owned or held, including, but not limited to, those that
constitute, arise out of or relate to the matters alleged, or matters that could
have been alleged, in the Counterclaims or the Action.
This Agreement is made and given in accordance with the provisions of
California Civil Code Section 1542 which provides that:
"A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor."
In making this Agreement, each of the Settling Defendants expressly waives
and relinquishes all rights and benefits that each of them has, or may have,
under said Section 1542. Further, Settling Defendants acknowledge that Settling
Defendants are aware that they may hereafter discover facts different from, or
in addition to, those that they now know or believe to be true with respect to
the claims, demands, debts, liabilities, transactions, obligations and causes of
action relating to the Action. Notwithstanding any such different or additional
facts, this Agreement shall fully discharge Plaintiffs, and each of them, from
any and all claims of any kind or character by the Settling Defendants that now
exist, including, but not limited to, the matters alleged, or those that could
have been alleged, in the Action.
6. Withdrawal of Creditors' Claims. Within five (5) business days after the
dismissals requested pursuant to paragraph 2 above are entered and the Bar Order
referenced in paragraph 3 has been issued, each of the Settling Defendants shall
formally withdraw its respective Creditor's Claim, filed in the Estate of Xxxxx
X. Xxxxxxx, by filing an appropriate withdrawal with the probate court.
7. Authority to Enter Into Agreement and Give Release. Each of the Settling
Parties represents and warrants that he or it has full authority and capacity to
enter into this Agreement and to bind such party to the terms and conditions
hereof. Each of the Settling Parties further represents and warrants that he or
it has not assigned or transferred any of the claims released herein.
8. Representation re: Trustees and Executors. Plaintiffs represent and
warrant to each of the Settling Defendants that each of the persons executing
this Agreement as a trustee of the Xxxxx X. Xxxxxxx Living Trust (the "Trust")
or as an executor of the Will of Xxxxx X. Xxxxxxx (the "Estate") has been duly
appointed as trustee or executor, as the case may be, and that no statute, court
rule or other provision requires any such signatory to obtain or seek approval
of any court either to enter into this Agreement or to take any of the actions
required of Plaintiffs under this Agreement.
9. Non-Admission of Liability or Wrongdoing. The fact that the Settling
Parties enter into this Agreement does not constitute an admission by any of the
Settling Parties of the truth of any of the allegations made in the Action or
otherwise. Nothing contained in this Agreement constitutes any admission or
concession by Plaintiffs or the Settling Defendants of any wrongdoing of any
kind or character or of any liability whatsoever, which liability is denied.
10. Each Party to Bear His or Its Own Attorney's Fees and Costs. The
Settling Parties shall each bear his or its own attorney's fees, costs, expenses
and taxes incurred with respect to the Action and in the negotiation, drafting
and implementation of this Agreement, except as provided for in paragraph 11
herein.
11. Arbitrability of Claims regarding Construction of Agreement. The
Settling Parties agree that any disputes between them relating to the
interpretation, enforceability or breach of this Agreement will be submitted to
arbitration in California before an arbitrator affiliated with the American
Arbitration Association. In the event that any action or arbitration is brought
to enforce, interpret or for breach of this Agreement, the prevailing party
shall be entitled to recover its costs, including reasonable attorney's fees.
12. Confidentiality. Neither this Agreement, nor any of its terms, shall be
disclosed to any person without the prior written consent of all Settling
Parties, except that this Agreement and its terms may be disclosed (1) in any
proceeding to interpret or enforce or for breach of the Agreement; (2) as is
reasonably necessary in connection with obtaining the Settlement Bar Order
described in paragraph 3 above or otherwise to implement the Agreement's terms;
(3) as is reasonably necessary to tax advisors, accountants and lawyers; (4) as
required by law upon the advice of counsel; and (5) as required by any court or
by governmental or regulatory authority.
13. Advice of Counsel. The Settling Parties, and each of them, represent
and warrant to each other that they have conferred with counsel of their own
choosing in negotiations for and the preparation of this Agreement, that they
have read this Agreement or have had the same read to them by their counsel, and
that they are fully aware of its contents and legal effect.
14. Effective Date: As used herein, the "Effective Date" means the date
that the Court has entered the Settlement Bar Order described in paragraph 3.
15. Paragraph Headings. The paragraph headings in this Agreement are solely
for the convenience of the Settling Parties, are not a part of this Agreement,
and shall not be used in the interpretation of, or in the determination of the
validity of, this Agreement or any provision hereof.
16. Entire Agreement. This Agreement constitutes the entire agreement
between the Settling Parties regarding the subject matter of this Agreement, and
it is expressly understood and agreed that this Agreement may not be amended or
modified in any respect, except by a writing duly executed by all of the
Settling Parties.
17. Execution in Counterparts. This Agreement may be executed in one or
more counterparts, all of which, taken together, shall constitute one and the
same instrument. Facsimile copies shall be deemed originals.
18. Governing Law. The Settling Parties agree that all issues concerning
the enforcement, interpretation, breach, termination or rescission of this
Agreement shall be governed by the law of the State of California.
IN WITNESS WHEREOF, the Settling Parties hereto have duly executed this
Agreement on the following dates, through their authorized representatives as
designated below.
Dated: May 17, 2002 XXXX XXXXXXX XXXXXXX, AS TRUSTEE
OF THE XXXXX X. XXXXXXX LIVING TRUST
DATED DECEMBER 23, 1986, AS AMENDED
/s/Xxxx Xxxxxxx Xxxxxxx
Dated: May 17, 2002 XXXX XXXXXXX XXXXXXX, AS EXECUTOR
OF THE WILL OF XXXXX X. XXXXXXX
/s/Xxxx Xxxxxxx Xxxxxxx
Dated: May 17, 2002 XXXXXXXX XXXXX, M.D., AS TRUSTEE OF THE
XXXXX X. XXXXXXX LIVING TRUST DATED
DECEMBER 23, 1986, AS AMENDED
/s/Xxxxxxxx Xxxxx, M.D.
Dated: May 17, 2002 R&E GAMING CORP.
By: /s/Xxxx Xxxxxxx Xxxxxxx
Its: President
Dated: May 17, 2002 ELSINORE ACQUISITION SUB, INC.
By: /s/Xxxx Xxxxxxx Xxxxxxx
Its: President
Dated: May 17, 2002 RIVIERA ACQUISITION SUB, INC.
By: /s/Xxxx Xxxxxxx Xxxxxxx
Its: President
Dated: May 17, 2002 CARLO CORPORATION
By: /s/Xxxx Xxxxxxx Xxxxxxx
Its: President
Dated: May 17, 2002 ELSINORE CORPORATION
By: /s/Xxxxxx X. Xxxxx
Its: President
Dated: May 15, 2002 MORGENS, WATERFALL, VINTIADIS & COMPANY, INC.
By: /s/Xxxxx XxXxxx
Its: Authorized Agent
APPROVED AS TO FORM AND CONTENT:
Dated: May 23, 2002 XXXXXX XXXXXX & XXXXXXX
/s/Xxxxxx Xxxxxx
By: Xxxxxx X. XxXxxx, Xx.
Attorneys for Xxxx Xxxxxxx Xxxxxxx as Executor
of the Will of Xxxxx X. Xxxxxxx, Xxxx Xxxxxxx
Xxxxxxx and Xxxxxxxx Xxxxx, M.D., as the
Trustees of the Xxxxx X. Xxxxxxx Living
Trust Dated December 23, 1986, as Amended,
R&E Gaming Corp., Elsinore Acquisition Sub,
Inc., Riviera Acquisition Sub, Inc. and
Carlo Corporation
Dated: May 23, 2002 XXXXXXXX & XXXXXXXX, LLP
/s/Xxxxxx X. Xxxxxxx
By: Xxxxxx X. Xxxxxxx
Attorneys for Elsinore Corporation and
Morgens, Waterfall, Vintiadis & Company, Inc.