Exhibit B
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OPTION AGREEMENT
dated as of
July 10, 2002
between
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and
▇▇▇▇▇ Hotels & Casino Resorts Holdings, L.P.
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Purchase Option for Common Stock
of
Riviera Holdings Corporation
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1
OPTION AGREEMENT
THIS OPTION AGREEMENT (this "Option Agreement") is made and
entered into as of the 10th day of July 2002 between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Seller"),
and ▇▇▇▇▇ HOTELS & CASINO RESORTS, L.P., a Delaware limited partnership
("Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller has recently acquired 350,000 shares (the
"Option Shares") of Common Stock, par value $0.001 per share, of Riviera
Holdings Corporation ("Common Stock"), a Nevada corporation ("RHC"), and desires
that Buyer have an option to acquire the Option Shares on the terms hereinafter
set forth.
NOW, THEREFORE, for and in consideration of the premises, and
for other good and valuable consideration, the receipt and sufficiency of which
are acknowledged by the parties, Seller and Buyer agree as follows:
SECTION 1
GRANT OF OPTION
SECTION 1.1 Seller hereby grants and conveys to Buyer for the period
herein specified the irrevocable right and option (the "Option") to purchase
all, but not less than all, of the Option Shares from Seller at the Purchase
Price hereinafter specified, subject to the provisions of Section 5.4 hereof.
SECTION 2
OPTION PERIOD
SECTION 2.1 The Option may be exercised by Buyer, in the manner
specified in Section 3 hereof, at any time after the date hereof and prior to
5:00 p.m., New York City time, on July 9, 2003. Such expiration date of the
Option is referred to herein as the "Expiration Date" and the period from the
date hereof to the Expiration Date is referred to as the "Option Period." The
Option Period may be extended by mutual agreement of the parties hereto.
SECTION 2.2 If the Option has not been exercised by Buyer prior to the
Expiration Date, the Option shall automatically expire and be of no further
force or effect. The date of any exercise of the Option by Buyer, in the manner
specified in Section 3 hereof, is referred to in this Option Agreement as the
"Exercise Date."
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SECTION 3
EXERCISE OF THE OPTION
SECTION 3.1 Buyer shall exercise the Option by giving written notice
thereof to Buyer as specified in Section 6 hereof (the "Option Notice") to
Seller prior to the Expiration Date setting forth the date and time when the
closing of the purchase and sale of the Option Shares shall occur (the "Option
Closing"). The Option Closing shall occur in New York, New York on a business
date that occurs not earlier than five business days after nor later than ten
business days after the date that the Option Notice is given to Seller. The
Option Notice shall specify the date, time and place of the Option Closing in
accordance with the foregoing and the Purchase Price for the Option Shares
determined as provided in Section 4 hereof.
SECTION 4
SALE AND PURCHASE OF OPTION SHARES
SECTION 4.1 At the Option Closing Seller shall sell all, but not less
than all, of the Option Shares to Buyer, and Buyer shall purchase all, but not
less than all, of the Option Shares from Seller for a purchase price (the
"Purchase Price") payable in cash to Seller equal to the greater of (x)
$2,275,000 (the amount paid by Seller for the Option Shares) plus any brokerage
and/or other commissions and/or fees incurred by the Seller in acquiring the
Option Shares or (y) the Fair Market Value of the Option Shares on the date that
the Option Notice is delivered to Seller. For purposes hereof, the term "Fair
Market Value" shall mean the average of the closing sale price of RHC Common
Stock on the American Stock Exchange on each of the 20 trading days immediately
preceding the date of the Option Notice. If RCH Common Stock is not so listed,
then the Fair Market Value of the Option Shares shall be determined by other
equitable means agreed upon by the parties. At the Option Closing, Seller shall
deliver certificates representing the Option Shares duly endorsed to Buyer free
and clear of any liens or adverse claims thereto created by Seller. Buyer shall
pay applicable transfer taxes required by law in respect of the purchase of the
Option Shares at the Option Closing.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF BUYER AND SELLER; COVENANTS
AND AGREEMENTS OF BUYER AND SELLER
SECTION 5.1 Buyer represents and warrants to Seller that the execution
and delivery of this Option Agreement (a) does not require prior notice to or
authorization, consent or approval of, any courts, regulatory authorities,
creditors or indenture trustees or (b) has been approved by them.
SECTION 5.2 Seller represents and warrants to Buyer that the Seller
owns good, valid and clear title to the Option Shares, free and clear of any
pledge, security interest, restriction, lien, assessment or encumbrance.
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SECTION 5.3 Seller hereby further covenants and agrees that from and
after the date hereof until the Option Closing Date Seller shall not grant or
otherwise create or consent to or permit the creation of any pledge, security
interest, restriction, lien, assessment or encumbrance affecting the Option
Shares or any portion or portions thereof.
SECTION 5.4 (i) Notwithstanding the provisions of Section 5.3 hereof,
Seller may sell, assign, hypothecate or otherwise transfer, either directly or
indirectly ("Transfer"), all (but not less than all) of the Option Shares to a
third party prior to receiving the Option Notice; subject to the provisions of
clause (ii) below.
(ii) Right of First Refusal.
(A) Transfer Restriction. Seller shall not Transfer the Option
Shares unless Seller shall have first made an offer to sell the Option Shares to
the Buyer as contemplated in this Section 5.4(ii), and such offer shall not have
been accepted.
(B) Offer by Seller. Prior to offering to Transfer the Option
Shares to any third party, the Seller shall make an offer to the Buyer. Such
offer shall be in writing, stating the Seller's intention to Transfer the Option
Shares to a third party and the terms pursuant to which it is willing to make
such Transfer, including the purchase price. The purchase price specified must
be cash or cash equivalent.
(C) Acceptance Period. Buyer shall have a period of five
business days after the receipt of the offer described in Section 5.4(ii)(B) to
either accept or decline the offer (the "Acceptance Period"). If the Buyer does
not respond by the expiration of the Acceptance Period, Buyer shall be deemed to
have rejected the offer.
(D) Third-Party Sale. If the Buyer rejects the offer (or is
deemed to have rejected the offer pursuant to Section 5.4(ii)(C)), Seller may
Transfer the Option Shares on terms as set forth in the offer and such Transfer
shall terminate the Option. Any changes in the purchase price of the Option
Shares shall be deemed to be a new offer.
SECTION 6
NOTICES
SECTION 6.1 All communications, notices and disclosures required or
permitted by this Option Agreement shall be in writing and shall be deemed to
have been given at the earlier of the date when actually delivered to the other
party at the address below, or when deposited in the United States mail,
certified or registered mail, postage prepaid, return receipt requested by
personal delivery or with a nationally recognized overnight delivery service
with signed receipt, and addressed as follows, unless and until either of such
parties notifies the other in accordance with this Section of a change of
address:
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If to Seller: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Buyer: ▇▇▇▇▇ Hotels & Casino Resorts, Inc. (General Partner of
▇▇▇▇▇ Hotels & Casino Resorts Holdings, LP)
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ at ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Copy to: LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
SECTION 7
ASSIGNMENT AND BINDING EFFECT
Section 7.1 Buyer's rights, interests and obligations under this
Option Agreement may not be sold or assigned except with the prior written
consent of Seller, other than to ▇▇▇▇▇ Hotels & Casino Resorts, Inc., or to any
wholly-owned subsidiary of Buyer. The parties to this Option Agreement mutually
agree that it shall be binding upon and inure to the benefit of the parties
hereto, their successors and permitted assigns.
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SECTION 8
GENERAL PROVISIONS
Section 8.1 No failure of either party to exercise any power given
hereunder or to insist upon strict compliance with any obligation specified
herein, and no custom or practice at variance with the terms hereof, shall
constitute a waiver of any party's right to demand exact compliance with the
terms hereof. This Option Agreement contains the entire agreement of the parties
hereto, and no representations, inducements, promises or agreements, oral or
otherwise, among the parties not embodied herein shall be of any force or
effect. Any amendment to this Option Agreement shall not be binding upon any of
the parties hereto unless such amendment is in writing and executed by all
parties hereto. This Option Agreement may be executed in multiple counterparts,
each of which shall constitute an original, but all of which taken together
shall constitute one and the same agreement. Seller and Buyer agree that such
documents as may be legally necessary or otherwise appropriate to carry out the
terms of this Option Agreement shall be executed and delivered by each party at
the Option Closing.
SECTION 9
SEVERABILITY
Section 9.1 This Option Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations. If any provision of this Option Agreement or
the application thereof to any person or circumstance shall, for any reason and
to any extent, be invalid or unenforceable, the remainder of this Option
Agreement and the application of such provision to other persons or
circumstances shall not be affected thereby but rather shall be enforced to the
greatest extent permitted by law.
SECTION 10
GOVERNING LAW
Section 10.1 This Option Agreement shall be construed, interpreted
and enforced in accordance with the laws of the State of New York, without
regard to provisions governing conflicts of law.
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IN WITNESS WHEREOF, the parties hereto have caused this Option
Agreement to be duly executed and delivered as a sealed instrument as of the day
and year first above written.
SELLER:
/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
BUYER:
▇▇▇▇▇ HOTELS & CASINO RESORTS, LP
By: ▇▇▇▇▇ HOTELS & CASINO RESORTS,
INC., its General Partner
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President, Secretary
and General Counsel
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