Riviera Hotel & Casino
0000 Xxx Xxxxx Xxxx. So.
Las Vegas, NV 89109-1931
Xxxxxxx X. Xxxxxxxxx
Chairman of the Board
Chief Executive Officer
March 31, 1998
R&E Gaming Corporation
P.O. Box 9660
Rancho Santa Fe, CA 92067
Attention: Xxxxx X. Xxxxxxx
Gentlemen:
In your letter to us, dated March 20, 1998, you assert that the Agreement and
Plan of Merger between us ("Riviera"), dated as of September 15, 1998 (the
"Riviera Merger Agreement") is void and unenforceable. Riviera rejects your
claim that the Riviera Merger Agreement is void and unenforceable. Xxxxxxx also
rejects as categorically false each of the alleged breaches cited in your
letter.
All capitalized terms used herein have the same meanings as in the Riviera
Merger Agreement.
Your repudiation of your obligations under the Riviera Merger Agreement as set
forth in the March 20, 1998 letter constitutes a breach of your obligations
under the Riviera Merger Agreement.
Your failure to pay the March 15 Additional Consideration as contemplated by
Section 1.98(a) of the Riviera Merger Agreement also constitutes a breach of the
Riviera Merger Agreement.
You have breached your obligations under Sections 3.4 and 3.6 of the Riviera
Merger Agreement in that the information you supplied for inclusion in Riviera's
proxy material concerning fee arrangements with Xxxxxxxxx & Company, Inc. was
inaccurate in a material respect.
Furthermore, under Section 4.7 of the Riviera Merger Agreement you should have
advised Riviera of your claim that Riviera breached an obligation to you with
respect to Jefferies since your representatives were aware of the Jefferies fee
arrangements described in the Riviera proxy
R&E Gaming Corporation
March 31, 1998
Page 2
material for at least three and a half months (and perhaps a longer period),
prior to the mailing to Riviera stockholders on January 14, 1998 of the
definitive proxy material with respect to the Riviera Merger. Instead, you chose
to assert this as a breach by Xxxxxxx after "Xxxxxxx had lost his appetite" to
acquire Riviera.
You have breached your obligation under Section 3.7 of the Agreement; you have
ignored our repeated requests for information as to your financial capacity and
it is clear that on the Closing Date, scheduled for no later than April 1, 1998,
you will not have cash or immediately available funds in an amount not less than
the sum of (i) the aggregate amount of Merger consideration to be paid under the
Agreement and (ii) the aggregate amount to be paid at the Effective Time
pursuant to Section 1.10 of the Agreement.
You have breached your obligations under Section 3.2(b) and 4.4 of the Riviera
Merger Agreement. You have not obtained all necessary Gaming approvals required
by the Gaming Authorities. Your filings with the Gaming Authorities are
incomplete and contain inaccurate information, including that related to your
obligations vis-a'-vis Elsinore Corporation and its stockholders.
Under Section 6.2(c) of the Riviera Merger Agreement, Xx. Xxxxx X. Xxxxxxx has
not lived up to his obligation to pursue vigorously and give complete and prompt
attention to requests of Gaming Authorities for information and has done, or
failed to have done, things which have delayed receipt of all necessary Gaming
Authorities' approvals.
All of the foregoing entitle Riviera to terminate the Riviera Merger Agreement
pursuant to Section 6.1(e)(i) and (ii) of the Riviera Merger Agreement and under
Section 6.1(c) of the Riviera Merger Agreement since it is clear from your
repudiation and notice of intent to terminate that you do not intend to close by
April 1, 1998 (although Riviera remains ready, willing, and able to do so).
RIVIERA HOLDINGS CORPORATION
By:/s/ Xxxxxxx X. Xxxxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxxxx, Chairman
cc: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Fax: (000) 000-0000
Xxxxx X. XxXxxxxx, Esq.
