CREDIT PARTY PLEDGE AGREEMENT
THIS CREDIT PARTY PLEDGE AGREEMENT (this "Pledge Agreement") is entered
into as of June 8, 2007, among RIVIERA HOLDINGS CORPORATION, a Nevada
corporation (the "Borrower"), certain Domestic Subsidiaries of the Borrower from
time to time party hereto (individually a "Guarantor" and collectively the
"Guarantors"), RIVIERA GAMING MANAGEMENT, INC., a Nevada corporation (together
with the Guarantors and the Borrower, individually a "Pledgor" and collectively
the "Pledgors") and WACHOVIA BANK, NATIONAL ASSOCIATION, in its capacity as
Administrative Agent under the Credit Agreement referred to below (in such
capacity, the "Administrative Agent") for the several banks and other financial
institutions as may from time to time become parties to such Credit Agreement
(individually a "Lender" and collectively the "Lenders").
RECITALS
WHEREAS, pursuant to that certain Credit Agreement dated as of the date
hereof (as amended, modified, extended, restated, replaced, or supplemented from
time to time, the "Credit Agreement"), among the Borrower, the Guarantors, the
Lenders party thereto and the Administrative Agent, the Lenders have agreed to
make Loans and to issue and/or acquire participation interests in Letters of
Credit upon the terms and subject to the conditions set forth therein; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective Loans and
to issue and/or acquire participation interests in Letters of Credit under the
Credit Agreement that the Pledgors shall have executed and delivered this Pledge
Agreement to the Administrative Agent for the ratable benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Credit Agreement,
and the following terms that are defined in the Uniform Commercial Code from
time to time in effect in the State of New York (the "UCC") are used herein as
so defined: Certificated Security, Control, Entitlement Order, Financial Asset,
Investment Company Security, Securities Account, Security, Security Entitlement,
Securities Intermediary and Uncertificated Security. For purposes of this Pledge
Agreement, the term "Lender" shall include any Hedging Agreement Provider.
2. Pledge and Grant of Security Interest. To secure the prompt payment
and performance in full when due, whether by lapse of time or otherwise, of the
Secured Obligations (as defined in Section 3 hereof), each Pledgor hereby
pledges and grants to the Administrative Agent, for the ratable benefit of the
Lenders, a continuing security interest in any and all right, title and interest
of such Pledgor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (collectively, the "Pledged Collateral"):
(a) Pledged Equity Interest. (i) 100% (or, if less, the full
amount owned by such Pledgor) of the issued and outstanding Equity
Interest owned by such Pledgor of each Domestic Subsidiary set forth on
Schedule 2(a) attached hereto and (ii) 65% (or, if less, the full
amount owned by such Pledgor) of each class of the issued and
outstanding Equity Interest entitled to vote (within the meaning of
Treas. Reg. Section 1.956-2(c)(2)) ("Voting Equity") and 100% (or, if
less, the full amount owned by such Pledgor) of each class of the
issued and outstanding Equity Interest not entitled to vote (within the
meaning of Treas. Reg. Section 1.956-2(c)(2)) ("Non-Voting Equity")
owned by such Pledgor of each first-tier Foreign Subsidiary set forth
on Schedule 2(a) attached hereto (collectively, together with the
Equity Interest and other interests described in clauses (y) and (z)
and in Sections 2(b) and 2(c) below, the "Pledged Equity Interest"),
including, but not limited to, the following:
(y) subject to the percentage restrictions described
above and in Section 2(b) below, all shares, securities,
membership interests or other equity interests representing a
dividend on any of the Pledged Equity Interest, or
representing a distribution or return of capital upon or in
respect of the Pledged Equity Interest, or resulting from a
stock split, revision, reclassification or other exchange
therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the
Pledged Equity Interest; and
(z) subject to the percentage restrictions described
above and in Section 2(b) below and without affecting the
obligations of the Pledgors under any provision prohibiting
such action hereunder or under the Credit Agreement, in the
event of any consolidation or merger involving the issuer of
any Pledged Equity Interest and in which such issuer is not
the surviving entity, all shares of each class of the Equity
Interest of the successor entity formed by or resulting from
such consolidation or merger.
(b) Additional Interests. (i) 100% (or, if less, the full
amount owned by such Pledgor) of each class of the issued and
outstanding Equity Interest of any Person which hereafter becomes a
Domestic Subsidiary and (ii) 65% (or, if less, the full amount owned by
such Pledgor) of the Voting Equity and 100% (or, if less, the full
amount owned by such Pledgor) of the Non-Voting Equity of any Person
which hereafter becomes a first-tier Foreign Subsidiary, including,
without limitation, the certificates representing such Equity Interest.
(c) Other Equity Interests. Subject to the percentage
restrictions described above, any and all other Equity Interest or
other equity interests owned by the Pledgors in any Domestic Subsidiary
or any first-tier Foreign Subsidiary.
(d) Proceeds. All proceeds and products of the foregoing,
however and whenever acquired and in whatever form.
(e) Gaming Person. Notwithstanding anything herein to the
contrary, in the event that any Pledged Collateral hereafter acquired
by the Pledgors or any of them consists of Equity Interests in a Person
that is licensed by, or registered as a holding company with, any
Gaming Authority, this Pledge Agreement with respect to such Pledged
Collateral shall be subject to the mandatory provisions of the Gaming
Laws and, depending on the Gaming Authority, may not be effective as to
such Pledged Collateral until the prior approval of such Gaming
Authority is obtained.
Without limiting the generality of the foregoing, it is hereby
specifically understood and agreed that a Pledgor may from time to time
hereafter pledge and deliver additional shares of Equity Interest or other
interests to the Administrative Agent as collateral security for the Secured
Obligations. Upon such pledge and delivery to the Administrative Agent, such
additional shares of Equity Interest or other interests shall be deemed to be
part of the Pledged Collateral of such Pledgor and shall be subject to the terms
of this Pledge Agreement whether or not Schedule 2(a) is amended to refer to
such additional shares.
3. Security for Secured Obligations. The security interest created
hereby in the Pledged Collateral of each Pledgor constitutes continuing
collateral security for all of the following, whether now existing or hereafter
incurred (the "Secured Obligations"): (a) all of the Credit Party Obligations
(including obligations under Secured Hedging Agreements), howsoever evidenced,
created, incurred or acquired, whether primary, secondary, direct, contingent,
or joint and several and (b) all expenses and charges, legal and otherwise,
incurred by the Administrative Agent, the Lenders and/or the Hedging Agreement
Providers in collecting or enforcing any of the Credit Party Obligations or in
realizing on or protecting any security therefor, including without limitation,
the security granted hereunder.
4. Delivery of the Pledged Collateral; Perfection of Security Interest.
Each Pledgor hereby agrees that:
(a) Delivery of Certificates and Instruments. Each Pledgor
shall deliver as security to the Administrative Agent (or an agent of
the Administrative Agent) (i) simultaneously with or prior to the
execution and delivery of this Pledge Agreement, all certificates
representing the Pledged Equity Interest owned by such Pledgor and (ii)
promptly upon the receipt thereof by or on behalf of a Pledgor, all
other certificates and instruments constituting Pledged Collateral
owned by a Pledgor. Prior to delivery to the Administrative Agent, all
such certificates and instruments constituting Pledged Collateral of a
Pledgor shall be held in trust by such Pledgor for the benefit of the
Administrative Agent pursuant hereto. All such certificates shall be
delivered in suitable form for transfer by delivery or shall be
accompanied by duly executed instruments of transfer or assignment in
blank, substantially in the form provided in Exhibit A attached hereto.
(b) Additional Securities. Subject to the percentage
restrictions set forth in Section 2, if such Pledgor shall receive by
virtue of its being or having been the owner of any Pledged Collateral,
any (i) certificate, including without limitation, any certificate
representing a dividend or distribution in connection with any increase
or reduction of capital, reclassification, merger, consolidation, sale
of assets, combination of shares of Equity Interest, stock splits,
spin-off or split-off, promissory notes or other instruments; (ii)
option or right, whether as an addition to, substitution for, or an
exchange for, any Pledged Collateral or otherwise; (iii) dividends
payable in Equity Interest; or (iv) distributions of Equity Interest or
other equity interests in connection with a partial or total
liquidation, dissolution or reduction of capital, capital surplus or
paid-in surplus, then such Pledgor shall receive such certificate,
instrument, option, right or distribution in trust for the benefit of
the Administrative Agent, shall segregate it from such Pledgor's other
property and shall deliver it forthwith to the Administrative Agent in
the exact form received accompanied by duly executed instruments of
transfer or assignment in blank, substantially in the form provided in
Exhibit A attached hereto, to be held by the Administrative Agent as
Pledged Collateral and as further collateral security for the Secured
Obligations.
(c) Financing Statements; Other Perfection Actions. Each
Pledgor hereby authorizes the Administrative Agent to prepare and file
such financing statements (including continuation statements) or
amendments thereof or supplements thereto or other instruments as the
Administrative Agent may from time to time deem reasonably necessary or
appropriate in order to perfect and maintain the security interests
granted hereunder in accordance with the UCC, including, without
limitation, any financing statement that describes the Pledged
Collateral as "all personal property" or "all assets" of such Pledgor
or that describes the Pledged Collateral in some other manner as the
Administrative Agent deems necessary or advisable. Each Pledgor shall
also execute and deliver to the Administrative Agent and/or file such
agreements, assignments or instruments (including affidavits, notices,
reaffirmations, amendments and restatements of existing documents, and
any documents as may be necessary if the law of any jurisdiction other
than New York becomes or is applicable to the Collateral or any portion
thereof, in each case as the Administrative Agent may reasonably
request) and do all such other things as the Administrative Agent may
reasonably deem necessary or appropriate (i) to assure to the
Administrative Agent its security interests hereunder are perfected,
including such financing statements (including continuation statements)
or amendments thereof or supplements thereto or other instruments as
the Administrative Agent may from time to time reasonably request in
order to perfect and maintain the security interests granted hereunder
in accordance with the UCC and any other personal property security
legislation in the appropriate jurisdictions, (ii) to consummate the
transactions contemplated hereby and (iii) to otherwise protect and
assure the Administrative Agent of its rights and interests hereunder.
Each Pledgor agrees to mark its books and records (and to cause the
issuer of the Pledged Equity Interest of such Pledgor to mark its books
and records) to reflect the security interest of the Administrative
Agent in the Pledged Collateral.
(d) Provisions Relating to Uncertificated Securities, Security
Entitlements and Securities Accounts. The Pledgors shall promptly
notify the Administrative Agent of any Pledged Collateral consisting of
an Uncertificated Security or a Security Entitlement or any Pledged
Collateral held in a Securities Account. With respect to any such
Pledged Collateral, (a) the applicable Pledgor and the applicable
issuer of the Uncertificated Security or the applicable Securities
Intermediary shall enter into, upon the request of the Administrative
Agent, an agreement with the Administrative Agent granting Control to
the Administrative Agent over such Pledged Collateral, such agreement
to be in form and substance reasonably satisfactory to the
Administrative Agent and (b) the Administrative Agent shall be
entitled, upon the occurrence and during the continuance of a Default
or an Event of Default, to notify the applicable issuer of the
Uncertificated Security or the applicable Securities Intermediary that
it should follow the instructions or the Entitlement Orders,
respectively, of the Administrative Agent and no longer follow the
instructions or the Entitlement Orders, respectively, of the applicable
Pledgor. Upon receipt by a Pledgor of notice from a Securities
Intermediary of its intent to terminate the Securities Account of such
Pledgor held by such Securities Intermediary, prior to the termination
of such Securities Account the Pledged Collateral in such Securities
Account shall be (i) transferred to a new Securities Account, upon the
request of the Administrative Agent, which shall be subject to a
control agreement as provided above or (ii) transferred to an account
held by the Administrative Agent (in which it will be held until a new
Securities Account is established).
5. Representations and Warranties. Each Pledgor hereby represents and
warrants to the Administrative Agent, for the benefit of the Lenders, that so
long as any of the Secured Obligations (other than contingent indemnity
obligations that survive termination of the Credit Documents pursuant to the
stated terms thereof) remain outstanding, any Credit Document or Secured Hedging
Agreement is in effect, and until all of the Commitments shall have been
terminated:
(a) Authorization of Pledged Equity Interest. The Pledged
Equity Interest is duly authorized and validly issued, is fully paid
and nonassessable and is not subject to the preemptive rights of any
Person. All other shares of Equity Interest or other interests
constituting Pledged Collateral are duly authorized and validly issued,
fully paid and nonassessable and not subject to the preemptive rights
of any Person.
(b) Title. Each Pledgor has good and indefeasible title to the
Pledged Collateral of such Pledgor and will at all times be the legal
and beneficial owner of such Pledged Collateral free and clear of any
Lien, other than Permitted Liens. There exists no "adverse claim"
within the meaning of Section 8-102 of the UCC with respect to the
Pledged Equity Interest of such Pledgor.
(c) Exercising of Rights. Other than necessary approvals from
the applicable Gaming Authorities, the exercise by the Administrative
Agent of its rights and remedies hereunder will not violate any law or
governmental regulation or any material contractual restriction binding
on or affecting a Pledgor or any of its property.
(d) Pledgor's Authority. No authorization, approval or action
by, and no notice or filing with any Governmental Authority, the issuer
of any Pledged Equity Interest or third party is required (other than
any of the foregoing which have already been obtained or made and the
Colorado Gaming Notice) either (i) for the pledge made by a Pledgor or
for the granting of the security interest by a Pledgor pursuant to this
Pledge Agreement or (ii) for the exercise by the Administrative Agent
or the Lenders of their rights and remedies hereunder (except (A) as
may be required by laws affecting the offering and sale of securities
and (B) for necessary approvals from the applicable Gaming Authorities
(none of which have been obtained or made as of the Closing Date).
(e) Security Interest/Priority. This Pledge Agreement creates
a valid security interest in favor of the Administrative Agent for the
ratable benefit of the Lenders, in the Pledged Collateral. When
properly perfected by taking possession by the Administrative Agent (or
an agent of the Administrative Agent) of the certificates (if any)
representing the Pledged Equity Interest and all other certificates and
instruments constituting Pledged Collateral the Administrative Agent
shall have a first priority security interest in all certificated
Pledged Equity Interest and such certificates and instruments to the
extent such Pledged Collateral can be perfected by taking possession.
When properly perfected by the filing of UCC financing statements in
the location of each Pledgor's state of organization, the
Administrative Agent shall have a first priority perfected security
interest in all uncertificated Pledged Equity Interest consisting of
partnership or limited liability company interests that do not
constitute a Security pursuant to Section 8-103(c) of the UCC to the
extent such Pledged Collateral can be perfected by the filing of a UCC
financing statement. With respect to any Pledged Collateral consisting
of an Uncertificated Security or a Security Entitlement or any Pledged
Collateral held in a Securities Account, when properly perfected by the
execution and delivery by the applicable Pledgor, the Administrative
Agent and the applicable Securities Intermediary or the applicable
issuer of the Uncertificated Security of an agreement granting Control
to the Administrative Agent over such Pledged Collateral, the
Administrative Agent shall have a first priority perfected security
interest in such Pledged Collateral to the extent such Pledged
Collateral can be perfected by Control.
(f) No Other Equity Interest. Except as set forth on Schedule
2(a) attached hereto (as updated or deemed updated from time to time in
accordance with the terms hereof and of the Credit Agreement) and as
set forth on Schedule 2(a) to the Gaming Pledge Agreement (as updated
or deemed updated from time to time in accordance with the terms of the
Gaming Pledge Agreement and of the Credit Agreement), no Pledgor owns
any Equity Interest of the Borrower or any of its Domestic Subsidiaries
or any of its first-tier Foreign Subsidiaries.
(g) Partnership and Limited Liability Company Interests. All
Pledged Equity Interest consisting of a partnership or limited
liability company interest constitutes a Security because the relevant
limited liability company agreement or partnership agreement expressly
provides that it is a Security pursuant to Section 8-103(c) of the UCC,
and each such Security is a Certificated Security.
6. Covenants. Each Pledgor hereby covenants, that so long as any of the
Secured Obligations (other than contingent indemnity obligations that survive
termination of the Credit Documents pursuant to the stated terms thereof) remain
outstanding, any Credit Document or Secured Hedging Agreement is in effect, and
until all of the Commitments shall have been terminated, such Pledgor shall:
(a) Defense of Title. Warrant and defend title to and
ownership of the Pledged Collateral of such Pledgor at its own expense
against the claims and demands of all other parties claiming an
interest therein; keep the Pledged Collateral free from all Liens,
other than Permitted Liens; and not sell, exchange, transfer, assign,
lease or otherwise dispose of Pledged Collateral of such Pledgor or any
interest therein, except as permitted under the Credit Agreement and
the other Credit Documents.
(b) Further Assurances. Promptly execute and deliver at its
expense all further instruments and documents and take all further
action that may be necessary and desirable or that the Administrative
Agent may request in order to (i) perfect and protect the security
interest created hereby in the Pledged Collateral of such Pledgor
(including, without limitation, execution and delivery of one or more
control agreements reasonably acceptable to the Administrative Agent,
filing of UCC financing statements and any and all other actions
reasonably necessary to satisfy the Administrative Agent that the
Administrative Agent has obtained a first priority perfected security
interest in all Pledged Collateral); (ii) enable the Administrative
Agent to exercise and enforce its rights and remedies hereunder in
respect of the Pledged Collateral of such Pledgor; and (iii) otherwise
effect the purposes of this Pledge Agreement, including, without
limitation and if requested by the Administrative Agent, delivering to
the Administrative Agent irrevocable proxies in respect of the Pledged
Collateral of such Pledgor.
(c) Amendments. Not make or consent to any amendment or other
modification or waiver with respect to any of the Pledged Collateral of
such Pledgor or enter into any agreement or allow to exist any
restriction with respect to any of the Pledged Collateral of such
Pledgor other than pursuant hereto or as may be permitted under the
Credit Agreement.
(d) Compliance with Securities Laws. File all reports and
other information now or hereafter required to be filed by such Pledgor
with the United States Securities and Exchange Commission and any other
state, federal or foreign agency in connection with the ownership of
the Pledged Collateral of such Pledgor.
(e) Issuance or Acquisition of Equity Interest. Not without
executing and delivering, or causing to be executed and delivered, to
the Administrative Agent such agreements, documents and instruments as
the Administrative Agent may reasonably require, issue or acquire any
Equity Interest that consists of an interest in a partnership or a
limited liability company which (i) is dealt in or traded on a
securities exchange or in a securities market, (ii) by its terms
expressly provides that it is a Security governed by Article 8 of the
UCC, (iii) is an Investment Company Security, (iv) is held in a
Securities Account or (v) constitutes a Security or a Financial Asset.
7. Performance of Obligations; Advances by Administrative Agent. On
failure of any Pledgor to perform any of the covenants and agreements contained
herein, the Administrative Agent may, at its sole option and in its sole
discretion, perform or cause to be performed the same and in so doing may expend
such sums as the Administrative Agent may reasonably deem advisable in the
performance thereof, including, without limitation, the payment of any insurance
premiums, the payment of any taxes, a payment to obtain a release of a Lien or
potential Lien, expenditures made in defending against any adverse claim and all
other expenditures which the Administrative Agent may make for the protection of
the security interest hereof or may be compelled to make by operation of law.
All such sums and amounts so expended shall be repayable by the Pledgors on a
joint and several basis promptly upon timely notice thereof and demand therefor,
shall constitute additional Secured Obligations and shall bear interest from the
date said amounts are expended at the ABR Default Rate. No such performance of
any covenant or agreement by the Administrative Agent on behalf of any Pledgor,
and no such advance or expenditure therefor, shall relieve the Pledgors of any
default under the terms of this Pledge Agreement, the other Credit Documents or
any Secured Hedging Agreement. The Administrative Agent may make any payment
hereby authorized in accordance with any bill, statement or estimate procured
from the appropriate public office or holder of the claim to be discharged
without inquiry into the accuracy of such bill, statement or estimate or into
the validity of any tax assessment, sale, forfeiture, tax lien, title or claim
except to the extent such payment is being contested in good faith by a Pledgor
in appropriate proceedings and against which adequate reserves are being
maintained in accordance with GAAP.
8. Events of Default. The occurrence of an event which under the Credit
Agreement would constitute an Event of Default shall be an event of default
hereunder (an "Event of Default").
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event of
Default and during the continuation thereof, the Administrative Agent
shall have, in respect of the Pledged Collateral of any Pledgor, in
addition to the rights and remedies provided herein, in the other
Credit Documents, in any Secured Hedging Agreement or by law, the
rights and remedies of a secured party under the UCC or any other
applicable law.
(b) Sale of Pledged Collateral. Subject to necessary approvals
from the applicable Gaming Authorities and upon the occurrence of an
Event of Default and during the continuation thereof, without limiting
the generality of this Section and without notice, the Administrative
Agent may, in its sole discretion, sell or otherwise dispose of or
realize upon the Pledged Collateral, or any part thereof, in one or
more parcels, at public or private sales, at any exchange or broker's
board or elsewhere, at such price or prices and on such other terms as
the Administrative Agent may deem commercially reasonable, for cash,
credit or for future delivery or otherwise in accordance with
applicable law. To the extent permitted by law, any Lender may in such
event, bid for the purchase of such securities. Each Pledgor agrees
that, to the extent notice of sale shall be required by law and has not
been waived by such Pledgor, any requirement of reasonable notice shall
be met if notice, specifying the place of any public sale or the time
after which any private sale is to be made, is personally served on or
mailed, postage prepaid, to such Pledgor, in accordance with the notice
provisions of Section 9.2 of the Credit Agreement at least ten (10)
days before the time of such sale. The Administrative Agent shall not
be obligated to make any sale of Pledged Collateral of such Pledgor
regardless of notice of sale having been given. The Administrative
Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was
so adjourned.
(c) Registration Rights. If the Administrative Agent shall
determine to exercise its right to sell all or any of the Pledged
Collateral, each Pledgor agrees that, subject to necessary approvals
from the applicable Gaming Authorities and upon request of the
Administrative Agent (which request may be made by the Administrative
Agent in its sole discretion), such Pledgor will, at its own expense:
(i) execute and deliver, and use its best efforts to
cause each issuer of the Pledged Collateral contemplated to be
sold and the directors and officers thereof to execute and
deliver, all such instruments and documents, and do or cause
to be done all such other acts and things, as may be necessary
or, in the opinion of the Administrative Agent, advisable to
file a registration statement covering such Pledged Collateral
under the provisions of the Securities Act of 1933 and to use
its best efforts to cause the registration statement relating
thereto to become effective and to remain effective for such
period as prospectuses are required by law to be furnished,
and to make all amendments and supplements thereto and to the
related prospectus which, in the opinion of the Administrative
Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act of 1933 and the rules and
regulations of the Securities and Exchange Commission
applicable thereto;
(ii) use its best efforts to qualify the Pledged
Collateral under all applicable state securities or "Blue Sky"
laws and to obtain all necessary governmental approvals for
the sale of the Pledged Collateral, as requested by the
Administrative Agent;
(iii) cause each issuer to make available to its
security holders, as soon as practicable, an earnings
statement which will satisfy the provisions of Section 11(a)
of the Securities Act of 1933;
(iv) use its best efforts to do or cause to be done
all such other acts and things as may be necessary to make
such sale of the Pledged Collateral or any part thereof valid
and binding and in compliance with applicable law; and
(v) bear all costs and expenses, including reasonable
attorneys' fees, of carrying out its obligations under this
Section 9.
Each Pledgor further agrees that a breach of any of the covenants
contained in this Section 9(c) will cause irreparable injury to the
Administrative Agent, that Administrative Agent has no adequate remedy
at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 9(c) shall be specifically
enforceable against such Pledgor, and such Pledgor hereby waives and
agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no default has
occurred giving rise to the Secured Obligations becoming due and
payable prior to their stated maturities. Nothing in this Section 9(c)
shall in any way alter the other rights of the Administrative Agent
under this Pledge Agreement.
In the event of any public sale described in this Section 9(c), each
Pledgor agrees to indemnify and hold harmless the Administrative Agent
and the Lenders and each of their respective directors, officers,
employees and agents from and against any loss, fee, cost, expense,
damage, liability or claim, joint or several, to which any such persons
may become subject or for which any of them may be liable, under the
Securities Act of 1933 or otherwise, insofar as such losses, fees,
costs, expenses, damages, liabilities or claims (or any litigation
commenced or threatened in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, registration statement,
prospectus or other such document published or filed in connection with
such public sale, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading and will reimburse the Administrative
Agent and such other persons for any legal or other expenses reasonably
incurred by the Administrative Agent and such other persons in
connection with any litigation, of any nature whatsoever, commenced or
threatened in respect thereof (including all fees, costs and expenses
whatsoever reasonably incurred by the Administrative Agent and such
other persons and counsel for the Administrative Agent and such other
persons in investigating, preparing for, defending against or providing
evidence, producing documents or taking any other action in respect of,
any such commenced or threatened litigation or any claims asserted).
This indemnity shall be in addition to any liability which any Pledgor
may otherwise have and shall extend upon the same terms and conditions
to each person, if any, that controls the Administrative Agent or such
persons within the meaning of the Securities Act of 1933.
(d) Private Sale. Subject to necessary approvals from the
applicable Gaming Authorities and upon the occurrence of an Event of
Default and during the continuation thereof, the Pledgors recognize
that the Administrative Agent may deem it impracticable to effect a
public sale of all or any part of the Pledged Collateral and that the
Administrative Agent may, therefore, determine to make one or more
private sales of any such Pledged Collateral to a restricted group of
purchasers who will be obligated to agree, among other things, to
acquire such Pledged Collateral for their own account, for investment
and not with a view to the distribution or resale thereof. Each Pledgor
acknowledges that any such private sale may be at prices and on terms
less favorable to the seller than the prices and other terms which
might have been obtained at a public sale and, notwithstanding the
foregoing, agrees that such private sale shall be deemed to have been
made in a commercially reasonable manner and that the Administrative
Agent shall have no obligation to delay sale of any such Pledged
Collateral for the period of time necessary to permit the issuer of
such Pledged Collateral to register such Pledged Collateral for public
sale under the Securities Act of 1933. Each Pledgor further
acknowledges and agrees that any offer to sell such Pledged Collateral
which has been (i) publicly advertised on a bona fide basis in a
newspaper or other publication of general circulation in the financial
community of New York, New York (to the extent that such offer may be
advertised without prior registration under the Securities Act of
1933), or (ii) made privately in the manner described above shall be
deemed to involve a "public sale" under the UCC, notwithstanding that
such sale may not constitute a "public offering" under the Securities
Act of 1933, and the Administrative Agent may, in such event, bid for
the purchase of such Pledged Collateral.
(e) Retention of Pledged Collateral. In addition to the rights
and remedies hereunder, upon the occurrence of an Event of Default and
during the continuation thereof, the Administrative Agent may, after
providing the notices required by Sections 9-620 and 9-621 of the UCC
(or any successor sections of the UCC) or otherwise complying with the
notice requirements of applicable law of the relevant jurisdiction,
accept or retain all or any portion of the Pledged Collateral in
satisfaction of the Secured Obligations. Unless and until the
Administrative Agent shall have provided such notices, however, the
Administrative Agent shall not be deemed to have retained any Pledged
Collateral in satisfaction of any Secured Obligations for any reason.
(f) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which
the Administrative Agent or the Lenders are legally entitled, the
Pledgors shall be jointly and severally liable for the deficiency,
together with interest thereon at the ABR Default Rate together with
the costs of collection and the reasonable fees of any attorneys
employed by the Administrative Agent to collect such deficiency. Any
surplus remaining after the full payment and satisfaction of the
Secured Obligations shall be returned to the Pledgors or to whomsoever
a court of competent jurisdiction shall determine to be entitled
thereto.
(g) Other Security. To the extent that any of the Secured
Obligations are now or hereafter secured by property other than the
Pledged Collateral (including, without limitation, real and other
personal property owned by a Pledgor), or by a guarantee, endorsement
or property of any other Person, then the Administrative Agent shall
have the right to proceed against such other property, guarantee or
endorsement upon the occurrence and during the continuation of any
Event of Default, and the Administrative Agent shall have the right, in
its sole discretion, to determine which rights, security, Liens,
security interests or remedies the Administrative Agent shall at any
time pursue, relinquish, subordinate, modify or take with respect
thereto, without in any way modifying or affecting any of them or any
of the Administrative Agent's rights or the Secured Obligations under
this Pledge Agreement, under any other of the Credit Documents or under
any Secured Hedging Agreement.
10. Rights of the Administrative Agent.
(a) Power of Attorney. Subject to any necessary consent or
approval by the applicable Gaming Authorities, each Pledgor hereby
designates and appoints the Administrative Agent, on behalf of the
Lenders, and each of its designees or agents as attorney-in-fact of
such Pledgor, irrevocably and with power of substitution, with
authority to take any or all of the following actions upon the
occurrence and during the continuation of an Event of Default:
(i) to demand, collect, settle, compromise, adjust
and give discharges and releases concerning the Pledged
Collateral of such Pledgor, all as the Administrative Agent
may reasonably determine in respect of such Pledged
Collateral;
(ii) to commence and prosecute any actions at any
court for the purposes of collecting any of the Pledged
Collateral and enforcing any other right in respect thereof;
(iii) to defend, settle, adjust or compromise any
action, suit or proceeding brought with respect to the Pledged
Collateral and, in connection therewith, give such discharge
or release as the Administrative Agent may deem reasonably
appropriate;
(iv) to pay or discharge taxes, Liens, security
interests, or other encumbrances levied or placed on or
threatened against the Pledged Collateral;
(v) to direct any parties liable for any payment
under any of the Pledged Collateral to make payment of any and
all monies due and to become due thereunder directly to the
Administrative Agent or as the Administrative Agent shall
direct;
(vi) to receive payment of and receipt for any and
all monies, claims, and other amounts due and to become due at
any time in respect of or arising out of any Pledged
Collateral of such Pledgor;
(vii) to sign and endorse any drafts, assignments,
proxies, stock powers, verifications, notices and other
documents relating to the Pledged Collateral of such Pledgor;
(viii) to execute and deliver and/or file all
assignments, conveyances, statements, financing statements,
continuation statements, pledge agreements, affidavits,
notices and other agreements, instruments and documents that
the Administrative Agent may determine necessary in order to
perfect and maintain the security interests and Liens granted
in this Pledge Agreement and in order to fully consummate all
of the transactions contemplated herein;
(ix) to exchange any of the Pledged Collateral of
such Pledgor or other property upon any merger, consolidation,
reorganization, recapitalization or other readjustment of the
issuer thereof and, in connection therewith, deposit any of
the Pledged Collateral of such Pledgor with any committee,
depository, transfer agent, registrar or other designated
agency upon such terms as the Administrative Agent may
determine;
(x) to vote for a shareholder, partner or member
resolution, or to sign an instrument in writing, sanctioning
the transfer of any or all of the Pledged Collateral of such
Pledgor into the name of the Administrative Agent or into the
name of any transferee to whom the Pledged Collateral of such
Pledgor or any part thereof may be sold pursuant to Section 9
hereof; and
(xi) to do and perform all such other acts and things
as the Administrative Agent may reasonably deem to be
necessary, proper or convenient in connection with the Pledged
Collateral of such Pledgor.
This power of attorney is a power coupled with an interest and shall be
irrevocable for so long as any of the Secured Obligations (other than
contingent indemnity obligations that survive termination of the Credit
Documents pursuant to the stated terms thereof) remain outstanding, any
Credit Document or Secured Hedging Agreement is in effect, and until
all of the Commitments shall have been terminated. The Administrative
Agent shall be under no duty to exercise or withhold the exercise of
any of the rights, powers, privileges and options expressly or
implicitly granted to the Administrative Agent in this Pledge
Agreement, and shall not be liable for any failure to do so or any
delay in doing so. The Administrative Agent shall not be liable for any
act or omission or for any error of judgment or any mistake of fact or
law in its individual capacity or its capacity as attorney-in-fact
except acts or omissions resulting from its gross negligence or willful
misconduct. This power of attorney is conferred on the Administrative
Agent solely to perfect, protect, preserve and realize upon its
security interest in the Pledged Collateral.
(b) Assignment by the Administrative Agent. The Administrative
Agent may from time to time assign the Secured Obligations or any
portion thereof and/or the Pledged Collateral or any portion thereof to
a successor Administrative Agent, and the assignee shall be entitled to
all of the rights and remedies of the Administrative Agent under this
Pledge Agreement in relation thereto.
(c) The Administrative Agent's Duty of Care. Other than the
exercise of reasonable care to assure the safe custody of the Pledged
Collateral while being held by the Administrative Agent hereunder, the
Administrative Agent shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that Pledgors shall
be responsible for preservation of all rights in the Pledged Collateral
of such Pledgor, and the Administrative Agent shall be relieved of all
responsibility for the Pledged Collateral upon surrendering it or
tendering the surrender of it to the Pledgors. The Administrative Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if such
Pledged Collateral is accorded treatment substantially equal to that
which the Administrative Agent accords its own property, which shall be
no less than the treatment employed by a reasonable and prudent agent
in the industry, it being understood that the Administrative Agent
shall not have responsibility for (i) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or
other matters relating to any Pledged Collateral, whether or not the
Administrative Agent has or is deemed to have knowledge of such
matters; or (ii) taking any necessary steps to preserve rights against
any parties with respect to any Pledged Collateral.
(d) Voting Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have
occurred and be continuing, to the extent permitted by law,
each Pledgor may exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral of such
Pledgor or any part thereof for any purpose not inconsistent
with the terms of this Pledge Agreement or the Credit
Agreement; provided, however, that Pledgor shall not exercise
or shall refrain from exercising any such right if the
Administrative Agent shall have notified the Pledgor that, in
the Administrative Agent's judgment, such action would have a
material adverse effect on the value of the Pledged Collateral
or any part thereof.
(ii) Subject to any necessary consent or approval by
the applicable Gaming Authorities and upon the occurrence and
during the continuance of a Default or an Event of Default,
all rights of a Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to
exercise pursuant to paragraph (i) of this subsection (d)
shall cease and all such rights shall thereupon become vested
in the Administrative Agent which shall then have the sole
right to exercise such voting and other consensual rights.
(e) Dividend and Distribution Rights in Respect of the Pledged
Collateral.
(i) So long as no Event of Default shall have
occurred and be continuing, each Pledgor may receive and
retain any and all dividends (other than dividends payable in
the form of Equity Interest and other dividends constituting
Pledged Collateral which are required to be delivered to the
Administrative Agent pursuant to Section 4 above),
distributions or interest paid in respect of the Pledged
Collateral to the extent they are allowed under the Credit
Agreement.
(ii) Upon the occurrence and during the continuation
of an Event of Default:
(A) all rights of a Pledgor to receive the
dividends, distributions and interest payments which
it would otherwise be authorized to receive and
retain pursuant to paragraph (i) of this subsection
(e) shall cease and all such rights shall thereupon
be vested in the Administrative Agent which shall
then have the sole right to receive and hold as
Pledged Collateral such dividends, distributions and
interest payments; and
(B) all dividends, distributions and
interest payments which are received by a Pledgor
contrary to the provisions of clause (A) of this
subsection (ii) shall be received in trust for the
benefit of the Administrative Agent, shall be
segregated from other property or funds of such
Pledgor, and shall be forthwith paid over to the
Administrative Agent as Pledged Collateral in the
exact form received, to be held by the Administrative
Agent as Pledged Collateral and as further collateral
security for the Secured Obligations.
(f) Release of Pledged Collateral. The Administrative Agent
may release any of the Pledged Collateral from this Pledge Agreement or
may substitute any of the Pledged Collateral for other Pledged
Collateral without altering, varying or diminishing in any way the
force, effect, Lien, pledge or security interest of this Pledge
Agreement as to any Pledged Collateral not expressly released or
substituted, and this Pledge Agreement shall continue as a first
priority Lien on all Pledged Collateral not expressly released or
substituted.
11. Application of Proceeds. After the exercise of remedies by the
Administrative Agent or the Lenders pursuant to Section 7.2 of the Credit
Agreement (or after the Commitments shall automatically terminate and the Loans
(with accrued interest thereon) and all other amounts under the Credit Documents
shall automatically become due and payable in accordance with the terms of such
Section), any proceeds of the Pledged Collateral, when received by the
Administrative Agent, any of the Lenders or any Hedging Agreement Provider in
cash or its equivalent, will be applied in reduction of the Secured Obligations
in the order set forth in Section 2.11(b) of the Credit Agreement, and each
Pledgor irrevocably waives the right to direct the application of such payments
and proceeds and acknowledges and agrees that the Administrative Agent shall
have the continuing and exclusive right to apply and reapply any and all such
proceeds in the Administrative Agent's sole discretion, notwithstanding any
entry to the contrary upon any of its books and records.
12. Indemnification and Costs and Expenses. The Pledgors shall
indemnify the Administrative Agent and the Lenders and pay all costs and
expenses of the Administrative Agent and the Lenders in accordance with Section
9.5 of the Credit Agreement.
13. Continuing Agreement.
(a) This Pledge Agreement shall be a continuing agreement in
every respect and shall remain in full force and effect so long as any
of the Secured Obligations (other than contingent indemnity obligations
that survive termination of the Credit Documents pursuant to the stated
terms thereof) remain outstanding, any Credit Document or Secured
Hedging Agreement is in effect, and until all of the Commitments shall
have been terminated. Upon such payment and termination, this Pledge
Agreement shall be automatically terminated and the Administrative
Agent and the Lenders shall, upon the request and at the expense of the
Pledgors, forthwith release all of the Liens and security interests
granted hereunder and shall deliver all UCC termination statements
and/or other documents reasonably requested by the Pledgors evidencing
such termination. Notwithstanding the foregoing, all releases and
indemnities provided hereunder shall survive termination of this Pledge
Agreement.
(b) This Pledge Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment,
in whole or in part, of any of the Secured Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or
any Lender as a preference, fraudulent conveyance or otherwise under
any bankruptcy, insolvency or similar law, all as though such payment
had not been made; provided that in the event payment of all or any
part of the Secured Obligations is rescinded or must be restored or
returned, all reasonable costs and expenses (including, without
limitation, any reasonable legal fees and disbursements) incurred by
the Administrative Agent or any Lender in defending and enforcing such
reinstatement shall be deemed to be included as a part of the Secured
Obligations.
14. Amendments; Waivers; Modifications. This Pledge Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in Section 9.1 of the Credit Agreement.
15. Successors in Interest. This Pledge Agreement shall create a
continuing security interest in the Pledged Collateral and shall be binding upon
each Pledgor, its successors and assigns and shall inure, together with the
rights and remedies of the Administrative Agent hereunder, to the benefit of the
Administrative Agent and the Lenders and their successors and permitted assigns;
provided, however, that none of the Pledgors may assign its rights or delegate
its duties hereunder without the prior written consent of each Lender or the
Required Lenders, as required by the Credit Agreement. To the fullest extent
permitted by law, each Pledgor hereby releases the Administrative Agent and each
Lender, each of their respective officers, employees and agents and each of
their respective successors and assigns, from any liability for any act or
omission relating to this Pledge Agreement or the Pledged Collateral, except for
any liability arising from the gross negligence or willful misconduct of the
Administrative Agent or such Lender or their respective officers, employees and
agents, in each case as determined by a court of competent jurisdiction.
16. Notices. All notices required or permitted to be given under this
Pledge Agreement shall be in conformance with Section 9.2 of the Credit
Agreement.
17. Counterparts. This Pledge Agreement may be executed in any number
of counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Pledge Agreement to produce or
account for more than one such counterpart. Delivery of executed counterparts of
the Pledge Agreement by telecopy or other electronic means shall be effective as
an original and shall constitute a representation that an original shall be
delivered upon the request of the Administrative Agent.
18. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning,
construction or interpretation of any provision of this Pledge Agreement.
19. Governing Law; Submission to Jurisdiction and Service of Process;
Waiver of Jury Trial; Venue. THIS PLEDGE AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. The terms of
Sections 9.13 and 9.16 of the Credit Agreement are incorporated herein by
reference, mutatis mutandis, and the parties hereto agree to such terms.
20. Severability. If any provision of this Pledge Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
21. Entirety. This Pledge Agreement, the other Credit Documents and any
Secured Hedging Agreement represent the entire agreement of the parties hereto
and thereto, and supersede all prior agreements and understandings, oral or
written, if any, including any commitment letters or correspondence relating to
this Pledge Agreement, the other Credit Documents, any such Secured Hedging
Agreement or the transactions contemplated herein and therein.
22. Survival. All representations and warranties of the Pledgors
hereunder shall survive the execution and delivery of this Pledge Agreement, the
other Credit Documents and any Secured Hedging Agreement, the delivery of the
Notes and the making of the Loans and the issuance of the Letters of Credit
under the Credit Agreement.
23. Joint and Several Obligations of Pledgors.
(a) Each of the Pledgors is accepting joint and several
liability hereunder in consideration of the financial accommodations to
be provided by the Lenders under the Credit Agreement, for the mutual
benefit, directly and indirectly, of each of the Pledgors and in
consideration of the undertakings of each of the Pledgors to accept
joint and several liability for the obligations of each of them.
(b) Each of the Pledgors, jointly and severally hereby
irrevocably and unconditionally accepts, not merely as a surety but
also as a co-debtor, joint and several liability with the other
Pledgors with respect to the payment and performance of all of the
Secured Obligations arising under this Pledge Agreement, the other
Credit Documents and any Hedging Agreement, it being the intention of
the parties hereto that all the Secured Obligations shall be the joint
and several obligations of each of the Pledgors without preferences or
distinction among them.
(c) Notwithstanding any provision to the contrary contained
herein, in any other of the Credit Documents or in any Secured Hedging
Agreement, to the extent the obligations of a Pledgor shall be
adjudicated to be invalid or unenforceable for any reason (including,
without limitation, because of any applicable state or federal law
relating to fraudulent conveyances or transfers) then the obligations
of such Pledgor hereunder shall be limited to the maximum amount that
is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).
24. Rights of Required Lenders. All rights of the Administrative Agent
hereunder, if not exercised by the Administrative Agent, may be exercised by the
Required Lenders.
25. Regulatory Requirements. Notwithstanding anything to the contrary
contained herein or in any of the other Credit Documents, the Administrative
Agent, on behalf of itself and the Lenders, expressly acknowledges and agrees
that the exercise of its rights and remedies under this Pledge Agreement with
respect to the Pledged Collateral issued by and with respect to Riviera Black
Hawk, Inc., a Colorado corporation (the "Pledged Gaming Collateral"), is subject
to the mandatory provisions of the Gaming Laws. Specifically, Administrative
Agent acknowledges and agrees that:
(a) In the event that the Administrative Agent exercises one
or more of the remedies set forth in this Pledge Agreement with respect
to any Pledged Gaming Collateral, including, without limitation,
foreclosure or transfer of any interest in the Pledged Gaming
Collateral (except back to the applicable Pledgor), the exercise of
voting and consensual rights, and any other resort to or enforcement of
the security interest in the Pledged Gaming Collateral, such action
shall require the separate and prior approval of the Colorado Gaming
Authorities and the licensing of the Administrative Agent, unless such
licensing requirement is waived by the Colorado Gaming Authorities.
(b) The approval by the Colorado Gaming Authorities of this
Pledge Agreement, or any amendment hereto, is not, and shall not be
construed as, the approval, either express or implied, of the
Administrative Agent to take any actions provided for in this Pledge
Agreement for which approval by the Colorado Gaming Authorities is
required, without first obtaining such prior and separate approval, to
the extent required by the Gaming Laws.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Pledge Agreement
RIVIERA HOLDINGS CORPORATION
CREDIT PARTY PLEDGE AGREEMENT
Each of the parties hereto has caused a counterpart of this Pledge
Agreement to be duly executed and delivered as of the date first above written.
PLEDGORS: RIVIERA HOLDINGS CORPORATION,
- --------
a Nevada corporation
By:
------------------------------------
Name:
Title:
RIVIERA OPERATING CORPORATION,
a Nevada corporation
By:
------------------------------------
Name:
Title:
RIVIERA BLACK HAWK, INC.,
a Colorado corporation
By:
------------------------------------
Name:
Title:
RIVIERA GAMING MANAGEMENT OF COLORADO, INC., a Colorado
corporation
By:
------------------------------------
Name:
Title:
RIVIERA GAMING MANAGEMENT, INC., a Nevada corporation
By:
------------------------------------
Name:
Title:
Accepted and agreed to as of the date first above written.
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent
By:
-----------------------------------------
Name:
Title:
CHAR1\991007v9
CHAR1\991007v9
SCHEDULE 2(A)
PLEDGED EQUITY INTEREST
Pledgor: Riviera Gaming Management, Inc.
Name of Subsidiary Number of Shares Certificate Number Percentage Ownership
- ------------------ ---------------- ------------------ --------------------
Riviera Gaming
Management of Colorado, Inc. 1,000 1 100%
Pledgor: Riviera Operating Corporation
Name of Subsidiary Number of Shares Certificate Number Percentage Ownership
- ------------------ ---------------- ------------------ --------------------
Riviera Black Hawk, Inc. 1,000 1 100%
EXHIBIT A
Irrevocable Stock Power
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
to ________________________ [the following shares of capital stock of]
[all of the membership interests in] [_____________________], a
[____________] [corporation] [limited liability company]:
[No. of Shares Certificate No.]
and irrevocably appoints __________________________________ its agent and
attorney-in-fact to transfer all or any part of such capital stock or equity
interest and to take all necessary and appropriate action to effect any such
transfer. The agent and attorney-in-fact may substitute and appoint one or more
persons to act for him.
[---------------],
a [___________________]
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------