STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
December 22, 2005, among Flag Luxury Riv, LLC, a Delaware limited liability
company ("Flag"), Rivacq LLC, a Delaware limited liability company, High Desert
Gaming LLC, a Delaware limited liability company (each individually, a "Buyer"
and collectively, the "Buyers"), Xxxxxxx X. Xxxxxxxxx ("Xxxxxxxxx") and The
Xxxxxxx X. Xxxxxxxxx 2004 Revocable Family Trust, a trust formed under the laws
of Nevada (the "Trust").
WHEREAS, Xxxxxxxxx beneficially owns an aggregate of 2,095,593
shares of common stock, par value $.001 per share ("Shares"), of Riviera
Holdings Corporation, a Nevada corporation (the "Company"), of which 2,091,471
Shares are held by the Trust (the "Family Trust Shares") and 4,122 Shares are
held by the trustee (the "ESOP Trustee") of the Company's Employee Stock
Ownership Plan (such 4,122 Shares together with any other Shares that may be
allocated to Xxxxxxxxx'x account with the ESOP Trustee being the "ESOP Shares"
and, together with the Family Trust Shares, the "Total Shares");
WHEREAS, the Trust wishes to sell to each of the Buyers, and
each of the Buyers wishes to purchase from the Trust, certain of the Shares held
by the Trust, all upon the terms and subject to the conditions set forth herein;
and
WHEREAS, the Trust, Xxxxxxxxx and the Buyers wish to enter
into certain other mutual understandings and arrangements with respect to the
Buyers' accumulation of Shares pursuant to this Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, and intending to be
legally bound, Xxxxxxxxx, the Trust and the Buyers hereby agree as follows:
ARTICLE I
FIRST PURCHASE AND SALE
Section 1.01 First Purchase and Sale. Upon the terms and subject to the
conditions of this Agreement, at the First Closing (as defined below), the Trust
shall (and Xxxxxxxxx shall cause the Trust to) sell, assign, transfer, convey
and deliver to each of the Buyers the number of Shares set forth opposite such
Buyer's name under the heading "Number of First Purchased Shares" on Schedule A
hereto (collectively, the "First Purchased Shares"), and each of the Buyers
shall purchase such Shares from the Trust at a price of $15.00 per Share,
subject to adjustment as provided in Section 1.02. The Buyers may, by notice to
Xxxxxxxxx prior to the First Closing, elect that the First Purchased Shares and
the consideration payable therefor pursuant to Section 1.02 be allocated among
the Buyers other than as set forth on Schedule A.
Section 1.02 First Purchase Price.(a) The aggregate purchase price for the First
Purchased Shares shall be $15,000,000 (the "First Purchase Price"), which,
subject to Section 1.01, shall be allocated among the Buyers as set forth on
Schedule A hereto. The First Purchase Price shall be adjusted in proportion to
any stock split, subdivision, reverse stock split or combination of the Shares
or similar event (each, an "Adjustment Event") occurring after the date hereof
but prior to the First Closing (as defined below).
Section 1.03 First Closing. The sale and purchase of the First Purchased Shares
shall take place at a closing (the "First Closing") to be held at the offices of
Cadwalader, Xxxxxxxxxx & Xxxx LLP at One World Financial Center, New York, New
York (the "CWT Offices") on a date to be mutually agreed among Xxxxxxxxx and the
Buyers that shall be no earlier than January 3, 2006 but no later than January
10, 2006 or at such other place or at such other time or on such other date as
Xxxxxxxxx and the Buyers may mutually agree upon in writing.
Section 1.04 First Closing Deliveries by the Trust. At the First Closing, the
Trust shall (and Xxxxxxxxx shall cause the Trust to) deliver or cause to be
delivered to the Buyers stock certificates evidencing the First Purchased Shares
duly endorsed in blank, or accompanied by stock powers duly executed in blank,
in form reasonably satisfactory to the Buyers and with all required stock
transfer tax stamps affixed, or such other instruments and documents as the
Buyers may reasonably deem necessary or desirable to effect the transfer and
assignment to the Buyers of the First Purchased Shares.
Section 1.05 First Closing Deliveries by the Buyers. At the First Closing, the
Buyers shall deliver to the Trust the First Purchase Price by wire transfer in
immediately available funds to the following bank account: US Bank, 0000 Xxxx
Xxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxx, XX 00000, ABA number 000000000, account
number 153750972454, account name Xxxxxxx X. Xxxxxxxxx (the "Trust Account").
ARTICLE II
SECOND PURCHASE AND SALE
Section 2.01 Second Purchase and Sale. Upon the terms and subject to the
conditions of this Agreement, at the Second Closing (as defined below), the
Trust shall (and Xxxxxxxxx shall cause the Trust to) sell, assign, transfer,
convey and deliver to each of the Buyers, the number of Shares set forth
opposite such Buyer's name under the heading "Number of Second Purchased Shares"
on Schedule A hereto (collectively, the "Second Purchased Shares"), and each of
the Buyers shall purchase such Shares from the Trust at a price of $15.00 per
Share, subject to adjustment as provided in Section 2.02. The Buyers may, by
notice to the Trust prior to the Second Closing, elect that the Second Purchased
Shares and the consideration payable therefor pursuant to Section 2.02 be
allocated among the Buyers other than as set forth on Schedule A.
Section 2.02 Second Purchase Price.(a) The aggregate purchase price for the
Second Purchased Shares shall be $9,750,000 (the "Second Purchase Price"),
which, subject to Section 2.01, shall be allocated among the Buyers as set forth
on Schedule A hereto. The Second Purchase Price shall be adjusted in proportion
to any Adjustment Event occurring after the date hereof but prior to the Second
Closing (as defined below).
Section 2.03 Second Closing. The sale and purchase of the Second Purchased
Shares shall take place at a closing (the "Second Closing") to be held at the
CWT Offices not later than five business days following the satisfaction or
waiver of each of the conditions set forth in Article VI, or at such other time
or on such other date as Xxxxxxxxx and the Buyers may mutually agree upon in
writing.
Section 2.04 Second Closing Deliveries by the Trust. At the Second Closing, the
Trust shall (and Xxxxxxxxx shall cause the Trust to) deliver or cause to be
delivered to the Buyers stock certificates evidencing the Second Purchased
Shares duly endorsed in blank, or accompanied by stock powers duly executed in
blank, in form reasonably satisfactory to the Buyers and with all required stock
transfer tax stamps affixed, or such other instruments and documents as the
Buyers may reasonably deem necessary or desirable to effect the transfer and
assignment to the Buyers of the Second Purchased Shares.
Section 2.05 Second Closing Deliveries by the Buyers. At the Second Closing, the
Buyers shall deliver to the Trust the Second Purchase Price by wire transfer in
immediately available funds to the Trust Account.
ARTICLE III
OPTION
Section 3.01 Grant of Option. Effective upon the issuance of the Board Approvals
(as defined below), the Trust hereby grants to each Buyer an irrevocable option
(the "Option") to purchase any or all of the number of Shares set forth opposite
such Buyer's name under the heading "Number of Option Shares" on Schedule A
hereto (collectively, the "Option Shares"), provided that no single exercise of
the Option by the Buyers collectively shall be for less than 20,000 Shares. In
the event that any of the Option Shares have been sold or otherwise transferred
by the Trust in a Permitted Disposition (as defined below), the number of Option
Shares each Buyer is entitled to purchase as set forth on Schedule A shall be
reduced pro rata to the allocation of Option Shares among the Buyers as
currently set forth on Schedule A. The Buyers may, by notice to the Trust prior
to the Option Closing, elect that the Option Shares be allocated among the
Buyers other than as set forth on Schedule A.
Section 3.02 Option Purchase Price.(a) The purchase price for the Option Shares
shall be $15 per Share (the "Option Purchase Price"). The Option Purchase Price
shall be adjusted in proportion to any Adjustment Event occurring after the date
hereof but prior to the applicable Option Closing (as defined below).
Section 3.03 Exercise of Option.(a) In the event that, from time to time, a
Buyer wishes to exercise the Option, it shall give written notice (an "Option
Notice") to the Trust (the date of such notice being the "Notice Date")
specifying (i) the number of Option Shares it wishes to purchase and (ii) a date
(not later than ten business days and not earlier than five business days
following the Notice Date) for closing such purchase. The closing of the
purchase and sale of Option Shares shall be held at the CWT Offices (the "Option
Closing"). Each Buyer may exercise the Option as many times as it wishes until
it has acquired all of the Option Shares it is entitled to purchase pursuant to
Section 3.01.
Section 3.04 Option Closing Deliveries by the Trust. At the Option Closing, the
Trust shall (and Xxxxxxxxx shall cause the Trust to) deliver or cause to be
delivered to each Buyer that delivered an Option Notice in accordance with
Section 3.03 stock certificates evidencing the number of Option Shares specified
in such Option Notice duly endorsed in blank, or accompanied by stock powers
duly executed in blank, in form reasonably satisfactory to such Buyer and with
all required stock transfer tax stamps affixed, or such other instruments and
documents as such Buyer may reasonably deem necessary or desirable to effect the
transfer and assignment to such Buyer of such Option Shares.
Section 3.05 Option Closing Deliveries by the Buyers. At the Option Closing, the
Buyer who provided to the Trust the applicable Option Notice shall deliver to
the Trust the Option Purchase Price with respect to the Option Shares specified
in the applicable Option Notice by wire transfer in immediately available funds
to the Trust Account.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF XXXXXXXXX AND THE TRUST
Subject to Section 10.13, as an inducement to the Buyers to
enter into this Agreement, each of Xxxxxxxxx and the Trust hereby represents and
warrants, jointly and severally, to the Buyers as follows:
Section 4.01 Formation and Authorization; Enforceability. The Trust is a trust
duly formed and validly existing under the laws of the State of Nevada and has
all necessary power and authority to enter into this Agreement, to carry out its
obligations hereunder and to consummate the transactions contemplated hereby.
Xxxxxxxxx is the sole trustee of the Trust. The execution and delivery by the
Trust of this Agreement, the performance by the Trust of its obligations
hereunder and the consummation by the Trust of the transactions contemplated
hereby have been duly authorized by all requisite action on the part of the
Trust. This Agreement has been duly executed and delivered by each of the Trust
and Xxxxxxxxx, and (assuming due authorization, execution and delivery by the
Buyers) this Agreement constitutes the legal, valid and binding obligation of
each of the Trust and Xxxxxxxxx, enforceable against them in accordance with its
terms.
Section 4.02 Total Shares. (a) The Family Trust Shares are owned of record by
the Trust free and clear of any security interest, pledge, lien, charge,
encumbrance or other restriction on the use, voting, transfer, receipt of income
or other exercise of any attribute of ownership (each, an "Encumbrance"). The
Trust has the sole power to vote and the full right, power and authority to
sell, transfer and deliver the Family Trust Shares. Xxxxxxxxx has the right to
direct the trustee of the ESOP to vote the ESOP Shares. Upon consummation of the
First Closing and registration of the First Purchased Shares in the name of the
Buyers in the stock records of the Company, the Buyers will own the First
Purchased Shares free and clear of all Encumbrances other than as may have been
created by or is attributable to the Buyers. Upon consummation of the Second
Closing and registration of the Second Purchased Shares in the name of the
Buyers in the stock records of the Company, the Buyers will own the Second
Purchased Shares free and clear of all Encumbrances other than as may have been
created by or is attributable to the Buyers. Subject to any Permitted
Disposition, upon consummation of the Option Closing and registration of the
Option Shares in the name of the Buyers in the stock records of the Company, the
Buyers will own the Option Shares free and clear of all Encumbrances other than
as may have been created by or is attributable to the Buyers. Except for this
Agreement and the Trust Agreement, dated February 13, 2004, between Xxxxxxxxx in
his personal capacity and Xxxxxxxxx in his capacity as trustee of the Trust (the
"Trust Agreement"), there are no options, voting trusts, stockholder agreements,
proxies or other agreements or understandings in effect with respect to the
voting or transfer of any of the Family Trust Shares.
(b) As of the date hereof, to the knowledge of Xxxxxxxxx, the
aggregate number of issued and outstanding Shares is 12,414,255.
Section 4.03 No Conflict. To the knowledge of Xxxxxxxxx, the execution, delivery
and performance of this Agreement by the Trust and Xxxxxxxxx do not and will not
(i) violate, conflict with or result in the breach of any provision of the
articles of incorporation or by-laws (or similar organizational documents) of
the Company or any subsidiary thereof, (ii) conflict with or violate any
statute, law, ordinance, regulation, rule, code, order, requirement or rule of
law (each, a "Law") or order, writ, judgment, injunction, decree, stipulation,
determination or award (each, an "Order") applicable to the Trust or Xxxxxxxxx
or any of their respective assets, properties or businesses or (iii) conflict
with, result in any breach of, constitute a default (or event which with the
giving of notice or lapse of time or both, would become a default) under,
require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the creation of any Encumbrance on any of the Total Shares pursuant to, any
note, bond, mortgage or indenture, contract, agreement, lease, sublease,
license, permit, franchise or other instrument to which Xxxxxxxxx or the Trust
is a party or by which any of the Total Shares is bound or affected, including,
without limitation, the Trust Agreement.
Section 4.04 Litigation. As of the date hereof, there are no actions,
proceedings, claims, suits, inquiries or investigations ("Actions") by or
against Xxxxxxxxx or the Trust pending before any government, regulatory or
administrative authority, agency, commission, court or tribunal (each, a
"Governmental Authority") (or, to the best knowledge of Xxxxxxxxx, threatened to
be brought by or before any Governmental Authority) which could affect the
legality, validity or enforceability of this Agreement or the consummation of
the transactions contemplated hereby.
Section 4.05 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Xxxxxxxxx or the Trust.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE BUYERS
As an inducement to Xxxxxxxxx and the Trust to enter into this
Agreement, each of the Buyers hereby represents and warrants, severally and not
jointly, to Xxxxxxxxx and the Trust as follows:
Section 5.01 Organization and Authority; Enforceability. Such Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of the jurisdiction of the State of Delaware and has all necessary
power and authority to enter into this Agreement, to carry out its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery by such Buyer of this Agreement, the performance by such Buyer of
its obligations hereunder and the consummation by such Buyer of the transactions
contemplated hereby have been duly authorized by all requisite action (corporate
or otherwise) on the part of such Buyer. This Agreement has been duly executed
and delivered by such Buyer, and (assuming due authorization, execution and
delivery by Xxxxxxxxx and the Trust) this Agreement constitutes the legal, valid
and binding obligation of such Buyer, enforceable against such Buyer in
accordance with its terms.
Section 5.02 No Conflict. The execution, delivery and performance of this
Agreement by such Buyer do not and will not (i) violate, conflict with or result
in the breach of any provision of the organizational documents of such Buyer,
(ii) conflict with or violate any Law or Order applicable to such Buyer or any
of its respective assets, properties or businesses or (iii) conflict with,
result in any breach of, constitute a default (or event which with the giving of
notice or lapse of time or both, would become a default) under, require any
consent under, or give to others any rights of termination, amendment,
acceleration, suspension, revocation or cancellation of, any note, bond,
mortgage or indenture, contract, agreement, lease, sublease, license, permit,
franchise or other instrument or arrangement to which such Buyer is a party,
which would adversely affect the ability of such Buyer to carry out its
obligations under, and to consummate the transactions contemplated by, this
Agreement.
Section 5.03 Litigation. As of the date hereof, there are no Actions
by or against such Buyer pending before any Governmental Authority (or, to the
best knowledge of such Buyer, threatened to be brought by or before any
Governmental Authority) which could affect the legality, validity or
enforceability of this Agreement or the consummation of the transactions
contemplated hereby.
Section 5.04 Investment Intent. (a) Such Buyer is capable
of evaluating the risk of its investment in the Shares which may be purchased by
it hereunder, has been advised by counsel as to the risk of such investment and
is able to bear the economic risk of such investment. Such Buyer is purchasing
Shares hereunder for its own account for investment and not with a present view
to any distribution thereof in violation of applicable securities laws;
provided, however, that such Buyer may transfer record and/or beneficial
ownership of such Shares to one or more Affiliates (as defined below), officers
or employees of Affiliates, in all cases in compliance with federal securities
laws. Such Buyer is an "accredited investor" as defined in Rule 501(a) under the
Securities Act of 1933, as amended (the "Securities Act").
(b) The Shares to be purchased by such Buyer hereunder
represent "restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, which cannot be resold unless (i) registered pursuant to Section
5 of the Securities Act or (ii) pursuant to an available exemption from such
registration requirement, and the certificates evidencing such Shares shall bear
the following restrictive legend:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE
SECURITIES ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
THE SECURITIES ACT AND THE TRANSFER OF SUCH SHARES IS SUBJECT
TO TERMS AND CONDITIONS SPECIFIED IN THE STOCK PURCHASE
AGREEMENT, DATED AS OF DECEMBER 21, 2005, AMONG FLAG LUXURY
RIV, LLC, RIVACQ LLC, HIGH DESERT GAMING, LLC, XXXXXXX X.
XXXXXXXXX AND THE XXXXXXX X. XXXXXXXXX 2004 REVOCABLE FAMILY
TRUST.
(c) Such Buyer acknowledges that Xxxxxxxxx may possess or may
have access to or the benefit of material non-public information regarding the
Company that has not been communicated to such Buyer and that such Buyer is
proceeding with the transactions contemplated by this Agreement knowingly and
voluntarily without access to or the benefit of such information and waives any
claims based thereon.
(d) "Affiliate" means, with respect to any specified person,
any other person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with,
such specified person.
(e) "control", with respect to the relationship between or
among two or more persons, means the possession, directly or indirectly or as
trustee, personal representative or executor, of the power to direct or cause
the direction of the affairs or management of a person, whether through the
ownership of voting securities, as trustee, personal representative or executor,
by contract, credit arrangement or otherwise.
Section 5.05 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Buyers.
ARTICLE VI
CONDITIONS TO CLOSINGS
Section 6.01 Conditions to Obligations of Xxxxxxxxx and the Trust. The
obligations of Xxxxxxxxx and the Trust to consummate the transactions
contemplated by this Agreement to be consummated at the First Closing, the
Second Closing and each Option Closing (each, a "Closing"), shall be subject to
the satisfaction or prior written waiver, at or prior to such Closing, of each
of the following conditions:
(a) (i) The representations and warranties of the Buyers
contained in this Agreement shall have been true and correct when made and shall
be true and correct as of such Closing, except to the extent such
representations and warranties are as of another date, in which case such
representations and warranties shall be correct as of that date, and (ii) the
covenants and agreements contained in this Agreement to be complied with by the
Buyers on or before such Closing shall have been complied with in all material
respects;
(b) No Order shall have been entered by or with any
Governmental Authority seeking to restrain or materially and adversely alter the
transactions contemplated by this Agreement to be consummated at such Closing;
and
(c) With respect to the Second Closing and any Option Closing,
the Nevada State Gaming Control Board, the Nevada Gaming Commission, the Xxxxx
County Liquor and Gaming Licensing Board and the City of Las Vegas (the "Nevada
Gaming Authorities") and any other licensing authority or Governmental Authority
having authority over casino and gaming activities and operations shall have
approved the acquisition by the Buyers of the Second Purchased Shares or the
Buyers shall have received such other assurances from the Nevada Gaming
Authorities or such other licensing authority or Governmental Authority as they
may deem necessary or desirable in connection with the acquisition of the Second
Purchased Shares (the "10% Nevada Gaming Approval"). Section 6.02 Conditions to
Obligations of the Buyers. The obligations of the Buyers to consummate the
transactions contemplated by this Agreement to be consummated at a Closing shall
be subject to the satisfaction or prior written waiver, at or prior to such
Closing, of each of the following conditions:
(a) (i) The representations and warranties of Xxxxxxxxx and
the Trust contained in this Agreement shall have been true and correct when made
and shall be true and correct as of such Closing, except to the extent such
representations and warranties are as of another date, in which case such
representations and warranties shall be correct as of that date, and (ii) the
covenants and agreements contained in this Agreement to be complied with by
Xxxxxxxxx and the Trust on or before such Closing shall have been complied with
in all material respects;
(b) No Order shall have been entered by or with any
Governmental Authority seeking to restrain or materially and adversely alter the
transactions contemplated by this Agreement to be consummated at such Closing;
(c) With respect to the Second Closing and any Option Closing,
the Board of Directors of the Company (the "Board") shall have (i) 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 Buyers and (ii) approved the sale of the Second
Purchased Shares and the Option Shares by the Trust to the Buyers in accordance
with the provisions of subsection 78.438(1) of Title 7 of the Nevada Revised
Statutes and (iii) approved the acquisition by the Buyers, whether by merger or
otherwise, of control of the Company (an "Acquisition Transaction") (clauses
(i), (ii) and (iii) being collectively, the "Board Approvals"), provided,
however, that the approval described in the foregoing clause (iii) is subject to
any decision of the Board to withdraw such approval;
(d) With respect to the Second Closing and any Option Closing,
neither the Articles nor the bylaws of the Company shall have been amended in a
manner that would prevent, restrain or otherwise adversely affect the
transactions contemplated by this Agreement to be consummated at such Closing;
and
(e) With respect to the Second Closing and any Option Closing,
the 10% Nevada Gaming Approval shall have been obtained.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.01 Assistance and Cooperation. (a) Subject to Section 10.3 and
to his fiduciary duties as an executive officer and director of the Company,
Xxxxxxxxx shall:
(i) assist and cooperate with the Buyers in obtaining (A) the
10% Nevada Gaming Approval and (B) such approvals of the Gaming
Authorities (as defined below) as are necessary to consummate an
Acquisition Transaction (the "Gaming Approvals"); and
(ii) propose to the Board that a vacancy be created on the
Board or that the Board be expanded and that and that a candidate
nominated by the Buyers be appointed to the Board.
(b) (i) "Gaming Authorities" means any or all of the Nevada
Gaming Authorities, Colorado Gaming Authorities and any other licensing
or regulatory authority or Governmental Authority whose consent,
approval, license, waiver, order, decree, determination of suitability
or other authorization is necessary or appropriate under the Gaming
Laws for the consummation of an Acquisition Transaction and any other
transactions contemplated by the related Acquisition Agreement (as
defined below).
(ii) "Colorado Gaming Authorities" means any or all of the
Colorado Commission, the Colorado Division of Gaming, the Colorado
Liquor Enforcement Division, the County of Xxxxxx and the Municipality
of Black Hawk.
(iii) "Gaming Laws" means, with respect to any person, any
federal, state or local statute, law, ordinance, rule, regulation,
permit, consent, approval, license, judgment, order, decree, injunction
or other authorization governing or relating to the current or
contemplated casino and gaming activities and operation of such person
and its subsidiaries, including the rules and regulations of the Nevada
Gaming Authorities and the Colorado Gaming Authorities.
Section 7.02 Grant of Proxy. Effective upon the issuance of the Board Approvals
(and subject to any withdrawal by the Board of its approval of an Acquisition
Transaction) and subject to any Permitted Disposition, Xxxxxxxxx and the Trust,
by this Agreement, with respect to any of the Total Shares not previously
transferred to the Buyers, hereby (a) subject to the issuance of the 10% Nevada
Gaming Approval, grant an irrevocable proxy to Flag or such other person as Flag
shall designate (and agrees to execute such documents or certificates evidencing
such proxy as the Buyers may reasonably request) to vote, or, in the case of the
ESOP Shares, to direct the ESOP Trustee to vote, at any meeting of the
stockholders of the Company, and in any action by written consent of the
stockholders of the Company, all of the Total Shares (i) in favor of the
approval of any Acquisition Transaction, the approval and adoption of any
agreement to be entered into by the Company in connection therewith (an
"Acquisition Agreement"), and the approval of all other transactions
contemplated by the foregoing, (ii) against any action, agreement or transaction
(other than any Acquisition Agreement or the transactions contemplated thereby)
or proposal that would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of the Company under an
Acquisition Agreement or that could reasonably be expected to result in any of
the conditions to the Company's obligations thereunder not being fulfilled and
(iii) in favor of any other matter necessary to the consummation of any
Acquisition Transaction and considered and voted upon by the stockholders of the
Company and (b) agree to cause any of the Total Shares not previously
transferred to the Buyers to be voted in accordance with the foregoing. THIS
PROXY IS IRREVOCABLE AND COUPLED WITH AN INTEREST. Notwithstanding the
foregoing, as to any Shares that are the subject of a Permitted Disposition, the
proxy granted hereunder shall automatically terminate upon such Permitted
Disposition.
Section 7.03 Restrictions on Transfer. (a) The Trust agrees that,
except as specifically permitted by this Agreement or an Acquisition Agreement,
it shall not, directly or indirectly, (i) sell, assign, transfer (including by
operation of law), xxxxx x xxxx upon, pledge, dispose of or otherwise encumber
any of the Family Trust Shares or otherwise agree to do any of the foregoing,
(ii) deposit any of the Family Trust Shares into a voting trust or enter into a
voting agreement or arrangement or grant any proxy or power of attorney with
respect thereto that is inconsistent with this Agreement or (iii) enter into any
contract, option or other arrangement or undertaking with respect to the direct
or indirect acquisition or sale, assignment, transfer (including by operation of
law) or other disposition of any of the Family Trust Shares.
(b) Notwithstanding anything to the contrary in this
Agreement, subsequent to the approval of an Acquisition Transaction by the
stockholders of the Company, the Trust shall be permitted to make charitable
donations of an aggregate of not more than 100,000 Shares to tax-exempt
organizations (a "Permitted Disposition").
Section 7.04 Further Action. (a) Each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all appropriate action, do or
cause to be done all things necessary, proper or advisable under applicable law,
and to execute and deliver such documents and other papers, as may be required
to carry out the provisions of this Agreement and consummate and make effective
the transactions contemplated hereby.
(b) In the event the Buyers enter into an Acquisition
Agreement, they will agree to a provision substantially as follows: Each of the
Buyers shall, and the Buyers shall cause any entity formed by the Buyers as an
acquisition vehicle in connection with an Acquisition Transaction ("Merger Sub")
to, (i) not later than a mutually agreed number of days following the execution
of an Acquisition Agreement, file with the applicable Gaming Authorities
applications for the Gaming Approvals, (ii) not later than 90 days following the
execution of an Acquisition Agreement, prepare in draft form and provide to
Nevada counsel for the Buyers a response to the anticipated information request
from the Gaming Authorities and (iii) withdraw the application to the Gaming
Authorities of any of the Buyers if it appears reasonably likely that the
application will not be approved or will delay the issuance of the Gaming
Approvals, and following such withdrawal, proceed with the applications of the
remaining Buyers and Merger Sub.
Section 7.05 Whole Company Transaction. The
Buyers' current intent is to enter into negotiations with the Board with the
objective of entering into an Acquisition Agreement as soon as practicable on
terms reasonably acceptable to the Buyers providing for an Acquisition
Transaction at a price of not less than $15.00 per Share in cash; provided,
however, that the Buyers and Xxxxxxxxx acknowledge that since the Company's
press release of November 8, 2005 announcing the Company's conclusion of its
strategic process, the Board has not considered any Acquisition Transaction and
there is no assurance that any such Acquisition Transaction can be negotiated.
ARTICLE VIII
INDEMNIFICATION
Section 8.01 Survival of Representations and Warranties. The representations and
warranties of the parties contained in this Agreement shall survive the First
Closing, the Second Closing and any Option Closing indefinitely.
Section 8.02 Indemnification by Xxxxxxxxx and the Trust. Xxxxxxxxx and the Trust
shall, jointly and severally, indemnify and hold harmless each of the Buyers and
its Affiliates, officers, directors, employees, agents, successors and assigns
(each, a "Buyer Indemnified Party") for and against any and all liabilities,
losses, damages, claims, costs and expenses, interest, awards, judgments and
penalties (including attorneys' and consultants' fees and expenses), but
excluding any diminution in value in or related to the Shares, actually suffered
or incurred by them (including any action brought or otherwise initiated by any
of them) (hereinafter a "Loss"), arising out of or resulting from the breach of
any representation, warranty, covenant or agreement made by Xxxxxxxxx or the
Trust contained in this Agreement. To the extent that Xxxxxxxxx'x or the Trust's
undertakings set forth in this Section 8.02 may be unenforceable, Xxxxxxxxx and
the Trust shall contribute the maximum amount that they are permitted to
contribute under applicable Law to the payment and satisfaction of the Losses
incurred by the Buyer Indemnified Parties.
Section 8.03 Indemnification by the Buyers. Each of the Buyers shall, severally
but not jointly, indemnify and hold harmless Xxxxxxxxx and the Trust for and
against any and all Losses arising out of or resulting from:
(a) the breach of any representation, warranty, covenant or agreement made by
such Buyer contained in this Agreement; or
(b) any Action brought by a third party against Xxxxxxxxx in his capacity as a
stockholder (but not as a director or executive officer) of the Company in
connection with this Agreement (but excluding any Losses resulting from
Xxxxxxxxx'x having been found to be in breach of his fiduciary duties to the
Company or its stockholders).
To the extent that a Buyer's undertakings set forth in this Section 8.03 may be
unenforceable, such Buyer shall contribute the maximum amount that it is
permitted to contribute under applicable Law to the payment and satisfaction of
the Losses incurred by Xxxxxxxxx and the Trust.
Section 8.04 Notice of Loss; Third Party Claims. (a) A party entitled to
indemnification under this Article VIII (an "Indemnified Party") shall give each
party against whom it wishes to seek indemnification under this Article VIII (an
"Indemnifying Party") notice of any matter that an Indemnified Party has
determined has given or could give rise to a right of indemnification under this
Agreement, within 60 days of such determination, stating the amount of the Loss,
if known, and method of computation thereof, and containing a reference to the
provisions of this Agreement in respect of which such right of indemnification
is claimed or arises.
(b) If an Indemnified Party shall receive notice of any Action, audit, demand or
assessment (each, a "Third Party Claim") against it or which may give rise to a
claim for a Loss under this Article VIII, within 30 days of the receipt of such
notice, the Indemnified Party shall give the Indemnifying Party notice of such
Third Party Claim; provided, however, that the failure to provide such notice
shall not release the Indemnifying Party from any of its obligations under this
Article VIII except to the extent that the Indemnifying Party is materially
prejudiced by such failure and shall not relieve the Indemnifying Party from any
other obligation or liability that it may have to any Indemnified Party
otherwise than under this Article VIII. If the Indemnifying Party acknowledges
in writing its obligation to indemnify the Indemnified Party hereunder against
any Losses that may result from such Third Party Claim, then the Indemnifying
Party shall be entitled to assume and control the defense of such Third Party
Claim at its expense and through counsel of its choice if it gives notice of its
intention to do so to the Indemnified Party within five days of the receipt of
notice from the Indemnified Party of such Third Party Claim; provided, however,
that if there exists or is reasonably likely to exist a conflict of interest
that would make it inappropriate in the judgment of the Indemnified Party in its
sole and absolute discretion for the same counsel to represent both the
Indemnified Party and the Indemnifying Party, then the Indemnified Party shall
be entitled to retain its own counsel in each jurisdiction for which the
Indemnified Party determines counsel is required, at the expense of the
Indemnifying Party. In the event that the Indemnifying Party exercises the right
to undertake any such defense against any such Third Party Claim as provided
above, the Indemnified Party shall cooperate with the Indemnifying Party in such
defense and make available to the Indemnifying Party, at the Indemnifying
Party's expense, all witnesses, pertinent records, materials and information in
the Indemnified Party's possession or under the Indemnified Party's control
relating thereto as is reasonably required by the Indemnifying Party. Similarly,
in the event the Indemnified Party is, directly or indirectly, conducting the
defense against any such Third Party Claim, the Indemnifying Party shall
cooperate with the Indemnified Party in such defense and make available to the
Indemnified Party, at the Indemnifying Party's expense, all such witnesses,
records, materials and information in the Indemnifying Party's possession or
under the Indemnifying Party's control relating thereto as is reasonably
required by the Indemnified Party. No such Third Party Claim may be settled by
the Indemnifying Party without the prior written consent of the Indemnified
Party.
ARTICLE IX
TERMINATION
Section 9.01 Termination. This Agreement shall terminate:
-----------
(a) upon notice by the Buyers to Xxxxxxxxx, if (i) any
representations and warranties of Xxxxxxxxx or the Trust contained in this
Agreement shall not have been true and correct when made, (ii) Xxxxxxxxx or the
Trust shall not have complied in all material respects with the covenants and
agreements contained in this Agreement to be complied with by it or him, as the
case may be, or (iii) Xxxxxxxxx shall make a general assignment for the benefit
of creditors, or any proceeding shall be instituted against Xxxxxxxxx seeking to
adjudicate him as bankrupt or insolvent;
(b) upon notice by Xxxxxxxxx to the Buyers, if (i) any
representations and warranties of the Buyers contained in this Agreement shall
not have been true and correct when made or (ii) the Buyers shall not have
complied in all material respects with the covenants and agreements contained in
this Agreement to be complied with by them;
(c) upon the earliest of: (i) the consummation of an
Acquisition Transaction, (ii) 6 months following the date hereof, in the event
an Acquisition Agreement has not been executed by such date and (iii) (A) in the
event that an Acquisition Agreement is entered into by the Company and is
terminated in circumstances where the Company is potentially required to pay to
the Buyers or an entity controlled by them a termination fee, "topping fee" or
similar fee, 12 months following the date of such Acquisition Agreement or (B)
in the event such Acquisition Agreement is terminated for any other reason, upon
such termination;
(v) upon notice by Xxxxxxxxx to the Buyers or by the Buyers to
Xxxxxxxxx, in the event that any Governmental Authority shall have issued an
Order or taken any other action restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement and such Order or other action
shall have become final and nonappealable; or
(vi) by the mutual written consent of Xxxxxxxxx and the Buyer.
Section 9.02 Effect of Termination. In the event of termination of this
Agreement as provided in Section 9.01, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto except (a)
as set forth in Sections 10.01 and 10.03, (b) that nothing shall relieve any
party hereto from liability for any breach of this Agreement and (c) the
provisions of Article VIII shall indefinitely survive any termination of this
Agreement. For the avoidance of doubt, the proxy granted pursuant to Section
7.02 shall expire upon any termination of this Agreement.
ARTICLE X
GENERAL PROVISIONS
Section 10.01 Expenses. Except as otherwise specified in this Agreement, all
costs and expenses, including fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such costs and expenses.
Section 10.02 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by an internationally recognized overnight courier service, by facsimile
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties hereto at the following addresses (or at such other
address for a party as shall be specified in a notice given in accordance with
this Section 10.02):
(a) if to Xxxxxxxxx or the Trust:
Xxxxxxx X. Xxxxxxxxx
0000 Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Facsimile: 000-000-0000
with a copy to:
Xxxxxx Kaempfer Xxxxxx Xxxxxxx & Xxxxxxxx
0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxx
(b) if to the Buyers:
Flag Luxury Riv, LLC
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx
and to:
Rivacq LLC
c/o Cadwalader, Xxxxxxxxxx & Xxxx LLP
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
and to:
High Desert Gaming, LLC
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxx
with a copy to:
Cadwalader, Xxxxxxxxxx & Xxxx LLP
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
Section 10.03 Public Announcements. Neither Xxxxxxxxx or the Trust, on the one
hand, nor the Buyers, on the other hand, shall make, or cause to be made, any
press release or public announcement in respect of this Agreement or the
transactions contemplated hereby or otherwise communicate with any news media
without the prior written consent of the other party unless otherwise required
by law or applicable stock exchange regulation, and the parties shall cooperate
as to the timing and contents of any such press release, public announcement or
communication.
Section 10.04 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any Law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect for so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to either party hereto. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
Section 10.05 Entire Agreement. This Agreement constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof and thereof and
supersedes all prior agreements and undertakings, both written and oral, among
the parties hereto with respect to the subject matter hereof.
Section 10.06 Headings. The headings in this Agreement are for reference
purposes only and do not affect in any way the meaning or interpretation of this
Agreement.
Section 10.07 Assignment. This Agreement may not be assigned by
operation of law or otherwise without the express written consent of Xxxxxxxxx,
the Trust and the Buyers (which consent may be granted or withheld in the sole
discretion of Xxxxxxxxx, the Trust or the Buyers) and any such assignment or
attempted assignment without such consent shall be void; provided, however, that
each of the Buyers may assign this Agreement to an Affiliate thereof and the
Buyers may assign this Agreement to Merger Sub.
Section 10.08 Amendment. This Agreement may not be amended or modified except
(a) by an instrument in writing signed by, or on behalf of, Xxxxxxxxx, the Trust
and the Buyers or (b) by a written waiver executed by the Buyers, on the one
hand, or by the Xxxxxxxxx and the Trust, on the other hand.
Section 10.09 No Third Party Beneficiaries. Except for the provisions of Article
VIII relating to indemnified parties, this Agreement shall be binding upon and
inure solely to the benefit of the parties hereto and their respective
successors and permitted assigns and nothing herein, express or implied, is
intended to or shall confer upon any other person any legal or equitable right,
benefit or remedy of any nature whatsoever.
Section 10.10 Specific Performance. Xxxxxxxxx and the Trust acknowledge and
agree that the Buyers would be irreparably damaged if any of the provisions of
this Agreement are not performed in accordance with their specific terms and
that any breach of this Agreement by Xxxxxxxxx or the Trust could not be
adequately compensated in all cases by monetary damages alone. Accordingly, in
addition to any other right or remedy to which the Buyers may be entitled, at
law or in equity, it shall be entitled to enforce any provision of this
Agreement by a decree of specific performance and to temporary, preliminary and
permanent injunctive relief to prevent breaches or threatened breaches of any of
the provisions of this Agreement, without posting any bond or other undertaking.
Section 10.11 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware. Each of the parties
hereto (a) consents to the personal jurisdiction of any federal court located in
the State of Delaware or any Delaware state court in the event of any action,
suit or proceeding to enforce or resolve disputes under this Agreement, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court and (c) agrees that it
will not bring any action relating to this Agreement or the transactions
contemplated hereby in any court other than any federal court located in the
State of Delaware or any Delaware state court.
Section 10.12 Waiver of Jury Trial. Each of the parties hereto hereby waives to
the fullest extent permitted by applicable Law any right it may have to a trial
by jury with respect to any litigation directly or indirectly arising out of,
under or in connection with this Agreement or the transactions contemplated
hereby. Each of the parties hereto hereby (a) certifies that no representative,
agent or attorney of the other party has represented, expressly or otherwise,
that such other party would not, in the event of litigation, seek to enforce the
foregoing waiver and (b) acknowledges that it has been induced to enter into
this Agreement and the transactions contemplated by this Agreement, as
applicable, by, among other things, the mutual waivers and certifications in
this Section 10.12.
Section 10.13 Xxxxxxxxx Acting Solely as Stockholder. Xxxxxxxxx does not make
(and shall not be deemed to have made) any representation, warranty, covenant,
agreement or understanding herein in his capacity as a director, officer or
representative of the Company or any subsidiary thereof. Without limiting the
generality of the foregoing, Xxxxxxxxx enters into this Agreement solely in his
capacity as beneficial owner of the Total Shares and nothing in this Agreement
shall limit or affect any actions taken by Xxxxxxxxx in his capacity as an
officer, director or representative of the Company or any subsidiary thereof or
require Xxxxxxxxx to take any action in his capacity as an officer, director or
representative of the Company or any subsidiary thereof.
Section 10.14 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, Xxxxxxxxx, the Trust and the Buyers have
caused this Agreement to be executed as of the date first written above.
FLAG LUXURY RIV, LLC
By: __________________________________________
Name: Xxxx Xxxxxxx
Title: President
RIVACQ LLC
By: __________________________________________
Name: Xxxx Xxx
Title: Member
HIGH DESERT GAMING, LLC
By: _________________________________________
Name: Xxxx Xxxxxx
Title: Manager
------------------------------------
Xxxxxxx X. Xxxxxxxxx
THE XXXXXXX X. XXXXXXXXX 2004 REVOCABLE FAMILY TRUST
By: _______________________________________________
Name: Xxxxxxx X. Xxxxxxxxx
Title: Trustee
SCHEDULE A
--------------------- ---------- ----------- ----------- ---------- ---------
Number of Number of Number
First First Second Second of
Purchased Purchase Purchased Purchase Option
Buyer Shares Price Shares Price Shares
--------------------- ---------- ----------- ----------- ---------- ---------
Flag Luxury Riv, LLC 400,000 $6,000,000 260,000 $3,900,000 176,588
--------------------- ---------- ----------- ----------- ---------- ---------
Rivacq LLC 300,000 $4,500,000 195,000 $2,925,000 132,442
--------------------- ---------- ----------- ----------- ---------- ---------
High Desert Gaming LLC 300,000 $4,500,000 195,000 $2,925,000 132,441
--------------------- ---------- ----------- ----------- ---------- ---------
