SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period
ended March 31, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period from
to
Commission File Number 1-7831
ELSINORE CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 88 0117544
(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
202 FREMONT STREET, LAS VEGAS, NEVADA 89101
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number (Including Area Code): 702/385-4011
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past ninety (90) days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
TITLE OF STOCK NUMBER OF SHARES
CLASS DATE OUTSTANDING
Common May 13, 1997 4,929,313
Elsinore Corporation and Subsidiaries
Form 10-Q
For the Quarter Ended March 31, 1997
INDEX
PART I. FINANCIAL INFORMATION: PAGE
Item 1. Consolidated Financial Statements:
Independent Auditors' Review Report 3-4
Balance Sheets at March 31, 1997 (Reorganized
Company) (Unaudited) and December 31, 1996
(Predecessor Company) 5-6
Statements of Operations for the One Month Ended March 31, 1997
(Reorganized Company); Two Months Ended February 28,
1997 (Predecessor Company) and Three Months Ended
March 31, 1996 (Predecessor Company); Combined
Reorganized and Predecessor Company for the Three
Months Ended March 31, 1997
(Unaudited) 7-8
Statements of Cash Flows for the One Month Ended March 31, 1997
(Reorganized Company); Two Months Ended February 28,
1997 (Predecessor Company) and Three Months Ended
March 31, 1996 (Predecessor Company); Combined
Reorganized and Predecessor Company for the Three
Months Ended
March 31, 1997 (Unaudited) 9-10
Notes to Financial Statements 11-20
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 20-25
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 26
Item 2. Changes in Securities 26
Item 5. Other Information 26
Item 6. Exhibits and Reports on Form 8-K 26-
SIGNATURES ?
INDEPENDENT AUDITORS' REVIEW REPORT
The Board of Directors and Shareholders
Elsinore Corporation:
We have reviewed the consolidated balance sheet of Elsinore Corporation and
subsidiaries (Reorganized Company) as of March 31, 1997, and the related
consolidated statements of operations and cash flows for the period from March
1, 1997 through March 31, 1997 and the related consolidated statements of
operations and cash flows of Elsinore Corporation and subsidiaries,
Debtor-In-Possession (Predecessor Company) for the period January 1, 1997
through February 28, 1997. These consolidated financial statements are the
responsibility of the Reorganized and Predecessor Companys' management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Elsinore Corporation and
subsidiaries, Debtor-In-Possession as of December 31, 1996 and the related
consolidated statements of operations, shareholders' equity (deficit) and cash
flows for the year then ended (not presented herein); and in our report dated
February 19, 1997, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying consolidated balance sheet as of December 31, 1996, is fairly
stated, in all material respects, in relation to the consolidated balance sheet
from which it has been derived.
Our report dated February 19, 1997, on the consolidated financial statements of
Elsinore Corporation and subsidiaries, Debtor-In-Possession as of and for the
year ended December 31, 1996, contains an explanatory paragraph that states that
on October 31, 1995, the Company filed a voluntary petition seeking to
reorganize under Chapter 11 of the United States Bankruptcy code. The Company is
currently operating as a Debtor-In-Possession under the jurisdiction of the
Bankruptcy Court and this event and circumstances relating to this event raise
substantial doubt about the entity's ability to continue as a going concern. The
consolidated balance sheet as of December 31, 1996, does not include any
adjustments that might result from the outcome of that uncertainty.
As discussed in Note 2 to the consolidated financial statements, on February 28,
1997, Elsinore Corporation emerged from bankruptcy. The consolidated financial
statements of the Reorganized Company reflect the impact of adjustments to
reflect the fair value of assets and liabilities under fresh start reporting. As
a result, the financial statements of the Reorganized Company are presented on a
different basis of accounting than those of the Predecessor Company and,
therefore, are not comparable in all respects.
Las Vegas, Nevada
May 12, 1997
PART 1. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Elsinore Corporation and Subsidiaries
Consolidated Balance Sheets
March 31, 1997 and December 31, 1996
(Dollars in Thousands)
<TABLE>
Reorganized Predecessor
Company Company
March 31, December 31,
1997 1996
------------------- --------------------
(Unaudited)
Assets
<S> <C> <C>
Current Assets:
Cash and cash equivalents 11,542 7,208
Accounts receivable, less allowance for
doubtful accounts of $327 and $347,
respectively 450 815
Inventories 361 354
Prepaid expenses 1,515 1,177
------------------- --------------------
Total current assets 13,868 9,554
------------------- --------------------
Cash and cash equivalents, restricted - 4,445
Property and equipment, net 36,391 23,544
Leasehold acquisition costs, net - 1,941
Investment in Fremont Street Experience LLC 2,400
Reorganization value in excess of amounts allocable to 384 -
identifiable assets
Restricted cash available for principal payments of long-term debt
353
Other assets 737 743
------------------- --------------------
Total assets 51,733 42,627
------------------- ====================
</TABLE>
See accompanying notes to consolidated financial statements.
Elsinore Corporation and Subsidiaries
Consolidated Balance Sheets
March 31, 1997 and December 31, 1996
(Dollars in Thousands)
<TABLE>
Reorganized Predecessor
Company Company
March 31, December 31,
1997 1996
------------------ -----------------
(Unaudited)
<S> <C> <C>
Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
Accounts payable 1,187 1065
Accrued interest 375 2,137
Accrued expenses 6,343 6,176
Current portion of long-term debt 909 50
------------------ -----------------
Total current liabilities 8,814 9,428
------------------ -----------------
Estimated liabilities subject to Chapter 11
proceedings - 73,909
Long-term debt, less current portion 37,367 -
------------------ -----------------
Total liabilities 46,181 83,337
------------------ -----------------
Commitments and contingencies
Shareholders' equity (deficit):
Common stock, $.001 par value per share.
Authorized 100,000,000 shares. Issued
and outstanding 15,891,793 shares,
Predecessor company - 16
Common stock, $.001 par value per share.
Authorized 100,000,000 shares. Issued
and outstanding 4,929,313 shares,
Reorganized company 5 -
Additional paid-in capital 4,995 69,901
Retained earnings (accumulated deficit) 552 (110,327)
------------------ -----------------
Total shareholders' equity (deficit) 5,552 (40,710)
------------------ -----------------
Total liabilities and shareholders'
equity (deficit) 51,733 42,627
------------------ =================
</TABLE>
See accompanying notes to consolidated financial statements.
Elsinore Corporation and Subsidiaries
Consolidated Statements of Operations
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
Combined
Reorganized
and
Reorganized Predecessor
Company Predecessor Company Company
------------------- ------------------- ------------------- -------------------
Period from Period from Period from Three Months
March 1 January 1 to January 1 to Ended
to February 28 March 31 March 31
March 31 1997 1996 1997
1997
------------------- ------------------- ------------------- -------------------
Revenues, net:
<S> <C> <C> <C> <C>
Casino 3,549 6,922 11,174 10,471
Hotel 864 1,736 2,996 2,600
Food and beverage 895 1,745 3,501 2,640
Other 162 153 171 315
Promotional allowances (320) (760) (1,956) (1,080)
------------------- ------------------- ------------------- -------------------
Total revenues, net 5,150 9,796 15,886 14,946
Costs and expenses:
Casino 1,164 2,710 4,862 3,874
Hotel 694 1,410 1,878 2,104
Food and beverage 547 1,105 1,756 1,652
Taxes and licenses 507 980 1,811 1,487
Selling, general and
administrative 789 1,808 2,450 2,597
Rents 335 673 1,017 1,008
Depreciation and
amortization 169 529 970 698
Interest 393 772 264 1,165
------------------- ------------------- ------------------- -------------------
Total costs and
expenses 4,598 9,987 15,008 14,585
------------------- ------------------- -------------------
===================
Income (loss) before
reorganization items
and extraordinary
gain on elimination
of debt 552 (191) 878 361
===================
Reorganization items - - 534
Extraordinary gain on
elimination of debt - 35,977 -
------------------- ------------------- -------------------
Net income (loss) 552 35,786 344
Retained earnings (deficit) at
beginning of period
- (110,327) (108,772)
Fresh start adjustments - 74,541 -
------------------- ------------------- -------------------
Retained earnings
(deficit) at end of period
552 - (108,428)
------------------- =================== -------------------
</TABLE>
<PAGE>
Elsinore Corporation and Subsidiaries
Consolidated Statements of Operations
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
Reorganized
Company Predecessor Company
------------------ ------------------ -- ------------------
Period from Period from Period from
March 1 January 1 to January 1 to
to February 28 March 31
March 31 1997 1996
1997
------------------ ------------------ ------------------
<S> <C> <C> <C>
Income (Loss) Per Share:
Income (loss) before
extraordinary gain on
elimination of debt $0.11 $(0.01) $0.06
Extraordinary gain on
elimination of debt - $2.26 -
------------------ ================== ------------------
Net income (loss) $0.11 $2.25 $0.06
------------------ ================== ------------------
Weighted average number of common
shares outstanding
5,000,000 15,891,793 15,891,793
------------------ ================== ------------------
</TABLE>
Elsinore Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
<TABLE>
Combined
Reorganized and
Reorganized Predecessor
Company Predecessor Company Company
---------------------------------------------------------------------------
Period from Period from Period from Three Months
March 1 January 1 to January 1 to Ended
to February 28 March 31 March 31
March 31 1997 1996 1997
1997
---------------------------------------------------------------------------
Cash flows from operating activities:
<S> <C> <C> <C> <C>
Net income (loss) $552 $(191) $344 $361
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation and
amortization 172 529 970 701
Accretion of discount on
long-term debt - - 53 -
Reorganization items - - 534 -
Accrued expenses (424) 591 1,365 167
Change in other assets and
liabilities, net (2,041) 608 (481) (1,433)
Liabilities subject to
compromise:
Accounts payable 130 (464) 130
---------------------------------------------------------------------------
Net cash provided by (used
in) operating activities (1,741) 1,667 2,321 (74)
---------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures (239) (141) (257) (380)
---------------------------------------------------------------------------
Net cash used in investing
activities (239) (141) (257) (380)
---------------------------------------------------------------------------
Cash flows from financing activities:
Repayment of debt (5) (12) (13) (17)
Proceeds from issuance of
common stock and
subscription rights - 713 - 713
---------------------------------------------------------------------------
Net cash provided by (used
in) financing activities (5) 701 (13) 696
---------------------------------------------------------------------------
</TABLE>
Elsinore Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
<TABLE>
Combined
Reorganized
Reorganized and
Company Predecessor Company Predecessor
Company
---------------------------------------------------------------------------
Period from Period from Period from Three Months
March 1 January 1 to January 1 to Ended
to February 28 March 31 March 31
March 31 1997 1996 1997
1997
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net increase (decrease) in
cash and cash equivalents (1,985) 2,227 2,051 242
---------------------------------------------------------------------------
Cash and cash equivalents at
beginning of period,
including restricted cash 13,880 11,653 3,572 11,653
---------------------------------------------------------------------------
Cash and cash equivalents at
end of period, including
restricted cash $11,895 $13,880 $5,623 $11,895
-------------------===================------------------===================
</TABLE>
See accompanying notes to financial statements.
Elsinore Corporation and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 1997
On October 31, 1995, Elsinore Corporation, D. I. P. (the "Predecessor Company")
filed a voluntary petition to reorganize under Chapter 11 of the Federal
Bankruptcy Code. On August 12, 1996, the Plan of Reorganization filed by the
Predecessor Company (the "Plan") was confirmed and became effective following
the close of business on February 28, 1997 (the "Effective Date"). Upon the
effectiveness of the Plan, Elsinore Corporation (the "Reorganized Company" or
the "Company") adopted fresh start reporting in accordance with Statement of
Position 90-7, "Financial Reporting by Entities in Reorganization under the
Bankruptcy Code" ("SOP 90-7") of the American Institute of Certified Public
Accountants. Accordingly, the Company's post-reorganization balance sheet and
statement of operations have not been prepared on a consistent basis with such
pre-reorganization financial statements. For accounting purposes, the inception
date of the Reorganized Company is deemed to be March 1, 1997. A vertical black
line is shown in the financial statements to separate the Reorganized Company
from the Predecessor Company since they have not been prepared on a consistent
basis of accounting.
The Company has prepared the accompanying financial statements without audit,
pursuant to rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. In the
opinion of management, the accompanying unaudited financial statements contain
all adjustments necessary to present fairly its financial position as of March
31, 1997 and the results of its operations and its cash flows for the periods
ended March 31 and February 28, 1997 and March 31, 1996.
1. Chapter 11 Reorganization
On August 12, 1996 (the "Confirmation Date"), the United States
Bankruptcy Court for the District of Nevada (the "Bankruptcy Court")
confirmed the Plan. The Plan became effective on the Effective Date.
Pursuant to the Plan, the following occurred upon the Effective Date:
The old common stock interests in the Predecessor Company were
canceled and the Reorganized Company issued 4,929,313 shares of
new common stock (the "New Common Stock"). The New Common Stock
was distributed to the following classes of creditors and equity
holders:
12.5% First Mortgage noteholders 3,750,000
7.5% Convertible Subordinated noteholders 68,234
Internal Revenue Service 38,373
Old common stockholders 72,706
------
Total 3,929,313
The Reorganized Company issued 1 million of those shares through a
rights offering which raised $5 million to assist in funding the
Plan. These shares were subscribed for by members of the following
classes of creditors and equity holders:
12.5% First Mortgage noteholders 995,280
Old common stockholders 4,720
Total 1,000,000
The Plan also calls for the Reorganized Company to issue the
following additional shares of New Common Stock to the following
creditor groups as soon as disputed claims within those groups are
resolved:
Unsecured Creditors of Four Queens, Inc. 50,491
Unsecured Creditors of Elsinore Corporation 20,196
Total 70,687
After giving effect to this issuance of additional shares, the
Reorganized Company will have 5 million issued and outstanding
shares of New Common Stock.
The proceeds from the rights offering were held in a separate bank
account and use was restricted until the Effective Date.
Riviera Gaming Management Corp. - Elsinore, Inc. holds a
warrant to purchase 1,125,000 shares of new common stock for
$1 per share.
The 1994 Mortgage Notes were amended and restated to include the
original principal amount of $3,000,000, accrued interest at 20%
through the confirmation date in the amount of $725,363, and
attorneys fees and disbursements through the Effective Date of
$130,377, resulting in a new principal amount of $3,855,739. On
the Effective Date, each 1994 Mortgage Note holder received its
prorata share of restated mortgage notes (the "New First Mortgage
Notes"). The New First Mortgage Notes bear interest at 11.5%,
payable quarterly commencing on the fourth month following the
confirmation date and are due four years from the Confirmation
Date. These noteholders retained their lien interests as
collateral for repayment.
The 1993 First Mortgage Notes were amended and restated to reduce
the principal amount of $57,000,000 to $30,000,000 which
represented the secured portion of the claim. On the Effective
Date, each 1993 First Mortgage Note holder received their prorata
share of restated mortgage notes (the "New Second Mortgage
Notes"). The New Second Mortgage Notes bear interest at 13.5%,
payable semi-annually and are due five years from the Confirmation
Date. The unsecured portion of their claim, approximately
$4,000,000, (representing accrued interest through the filing date
at 12.5%)was exchanged for shares of New Common Stock as described
above.
The Convertible Notes with the principal amount of $1,425,000 were
exchanged for shares of New Common Stock on a prorata basis.
The general unsecured creditors with claims in the amount of
approximately $3,510,000 received a prorata share of $1,400,000
and are entitled 70,687 shares of New Common Stock. The stock
distribution will take place once certain litigation has been
settled which will determine the number of shares to which each
individual unsecured creditor is entitled.
The Internal Revenue Service ("IRS") has tentatively agreed to a
note payable in the amount of $629,000 in settlement of an
unsecured claim to be fixed in the amount of $1,892,994 which was
calculated based on the percentage of the allowed claim compared
to the total general unsecured claims. The note is to be
non-interest bearing and is to be payable in semi-annual payments
beginning August 1997. Additionally, the IRS received a note
payable in the amount of $1,087,000 and 38,373 shares of New
Common Stock in settlement of its secured claim. The note will
accrue interest at 8% per annum and is due four years from the
Effective Date. Finally, the IRS has an unsecured priority claim
in the amount of $5,000 which was paid.
The Company's Board of Directors was reconstituted to include five
members, of which four were designated by the Bondholders
Committee and one was appointed by the Equity Committee in the
Bankruptcy Case.
Reorganization expense is comprised of items incurred by the Company as
a result of reorganization under Chapter 11 of the Bankruptcy Code.
Reorganization expenses, consisting primarily of accrued professional
fees and executive severance expenses was $0, $0 and $534,000 for the
one month ended March 31, 1997, the two months ended February 28, 1997
and the three months ended March 31, 1996, respectively.
2. Fresh Start Reporting
In connection with its emergence from bankruptcy on February 28, 1997,
the Company adopted fresh start reporting in accordance with SOP 90-7.
The fresh start reporting common equity value of $5.0 million was
determined by the Company. The significant factors used in the
determination of this value were analyses of industry, economic and
overall market conditions, historical and estimated performance of the
Company as well as of the gaming industry, discussions with various
potential investors and certain financial analyses.
Under fresh start reporting, the reorganization value of the entity has
been allocated to the Reorganized Company's assets and liabilities on a
basis substantially consistent with purchase accounting. The portion of
reorganization value not attributable to specific tangible assets has
been reflected as "Reorganization Value in Excess of Amounts Allocable
to Identifiable Assets" in the accompanying balance sheet as of March
1, 1997. The fresh start reporting adjustments, primarily related to
the adjustment of the Company's assets and liabilities to estimated
fair market value, will have a significant effect on the Company's
future statements of operations. The more significant of these
adjustments relate to reduced depreciation expense on property and
equipment, increased amortization expense relating to reorganization
value in excess of amounts allocable to identifiable assets and
increased interest expense.
The effects of the Plan and fresh start reporting on the balance
sheet at February 28, 1997 are as follows:
<TABLE>
Predecessor (a) (b) (c) Reorganized
Company Debt Issue of Fresh Start Company
February 28, Discharge Stock Adjustments March 1,
1997 1997
----------------------------------- -------------- ----------------- --------------------------
<S> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents 13,527 13,527
Accounts recievable, net 546 546
Inventories 348 348
Prepaid Expenses 1,288 1,288
------------------- --------------- -------------- ------------------ --------------------
Total current assets 15,709 15,709
Property and equipment, net 23,191 13,130 36,321
Leasehold acquisition costs, net 1,907 (1,907)
Reorganizational value in excess of
amounts allocable to identifiable assets
387 387
Investment in Fremont Street 2,400 (2,400)
Restricted cash available for 353 353
payment on long-term debt
Other assets 741 741
------------------- --------------- -------------- ------------------ --------------------
Total assets $44,300 $ - $ - $9,210 $53,510
=================== =============== ============== ================== ====================
Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
Current maturities of long term debt 41 873 914
Accounts payable 757 344 1,102
Accrued expenses 6,766 6,766
Accrued interest 2,886 (525) 2,361
------------------- --------------- -------------- ------------------ --------------------
Total current liabilities 10,451 (181) 873 11,143
Estimated liabilities subject to Chapter 11
procedings 72,552 (72,552)
Long-term debt, less current 1,484 36,756 (873) 37,367
maturities
------------------- --------------- -------------- ------------------ --------------------
Total Liabilities 84,487 (35,977) 48,510
------------------- --------------- -------------- ------------------ --------------------
Shareholders' equity (deficiency)
Common stock, Predecessor Company 16 (16)
Common stock, Reorganized Company 4 1 5
Additional paid in capital 70,315 (4) (65,316) 4,995
Accumulated deficit (110,518) 35,977 74,541
------------------- --------------- -------------- ------------------ --------------------
Total Shareholders' equity (deficiency) (40,187) 35,977 9,210 5,000
------------------- --------------- -------------- ------------------ --------------------
Total liabilities and shareholders' equity
(deficiency) $44,300 $ - $ - $9,210 $53,510
=================== =============== ============== ================== ====================
(a) To record the discharge of prepetition obligations pursuant to the Plan of
Reorganiation.
(b) To record the issuance of 3,929,313 shares of new common stock.
(c) To record adjustments to reflect assets and liabilities at fair market
values and to record reorganization value in excess of amounts allocable
to identifiable assets.
</TABLE>
3. Significant Accounting Policies
A. Reorganization Value in Excess of Amounts Allocable to
identifiable Assets
Reorganization value in excess of amounts allocable to
identifiable assets is amortized on a straight line basis over
15 years. Accumulated amortization at March 31, 1997 is
approximately $2,000. The Company will continue to assess the
recoverability of this asset based upon expected future
undiscounted cash flows and other relevant information.
B. Reclassification
Certain prior period reclassifications have been made in the
Predecessor Company's financial statements to conform to the
Reorganized Company's presentation.
4. Per Share Data
In February, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings Per
Share, (Statement 128) which establishes standards for computing and
presenting earnings per share (EPS). It replaces the presentation of
primary and fully diluted EPS with a presentation of basic and diluted
EPS. Statement 128 is effective for financial statements for both
interim and annual periods ending after December 15, 1997. Earlier
application is not permitted. After adoption, all prior period EPS data
should be restated to conform to Statement 128.
The Company will adopt Statement 128 in the fourth quarter of 1997. The
pro forma impact of Statement 128 on the one month ended March 31, 1997
and the two months ended February 28, 1997 is basic EPS would have been
$0.11 and $(0.01) per share, respectively and diluted EPS would have
been $0.11 and $(0.01) per share, respectively.
Earnings per share for the two months ended February 28, 1997 and the
three months ended March 31, 1996 are based upon the weighted average
number of shares of common stock outstanding as there were no common
stock equivalents outstanding during the period.
5. Long-Term Debt
The New First Mortgage Notes, with an outstanding principal balance of
$3.9 million at March 31, 1997, bear interest at 11.5% payable on March
1, June 1, September 1, and December 1 of each year. Principal is due
on August 20, 2000. The New First Mortgage Notes are redeemable at any
time at 102% of par. The Company is required to make an offer to
purchase all New First Mortgage Notes at 101% upon any "Change of
Control" as defined in the Amended and Restated Note Agreement ("Note
Agreement"). The Company is also required to offer to purchase a
portion of the New First Mortgage Notes in the amount of any proceeds
received on the Palm Springs East Limited Partnership Note. The New
First Mortgage Notes are collateralized by a first priority deed of
trust on and pledge of substantially all assets of Elsinore
Corporation, Elsub Management Corporation, Four Queens, Inc., and Palm
Springs East Limited Partnership. The New First Mortgage Notes are
guaranteed by certain wholly owned subsidiaries of the Company.
The Note Agreement, among other things, places significant restrictions
on the incurrence of additional indebtedness by the Company, the
creation of additional liens on the collateral securing the New First
Mortgage Notes, transactions with affiliates and payment of certain
restricted payments (as defined). In order for the Company to incur
additional indebtedness or make a restricted payment, the Company must,
among other things, meet a specified fixed charge coverage ratio and
have earned $1 million in EBITDA. The Company must also maintain a
minimum amount of consolidated net worth (as defined).
The New Second Mortgage Notes, with an outstanding principal balance of
$30 million at March 31, 1997, bear interest at 13.5%, payable on
February 28 and August 31 of each year. Principal is due on August 20,
2001. The New Second Mortgage Notes are redeemable by the Company at
any time at 100% of par, without premium. The Company is required to
make an offer to purchase all New Second Mortgage Notes at 101% upon
any "Change of Control" as defined in the Indenture. The New Second
Mortgage Notes are guaranteed by Elsub Management Corporation, Four
Queens, Inc. and Palm Springs East Limited Partnership and are
collateralized by a second deed of trust on and pledge of substantially
all the assets of the Company and the Guarantors. The New Second
Mortgage Notes have substantially the same restrictions and covenants
as the New First Mortgage Notes.
6. Income Taxes
The Company follows the Statement of Financial Accounting Standards No.
109, Accounting for Income Taxes (SFAS 109). The Predecessor Company
also followed SFAS 109. Under SFAS 109, deferred tax assets (subject to
a possible valuation allowance) and liabilities are recognized for the
expected future tax consequences of events that are reflected in the
Company's financial statements or tax returns.
Income tax expense:
For the periods shown below, the Company recorded income tax expense as
follows:
Period from Period from
March 1, 1997 through January 1, 1997 through
March 31, 1997 February 28, 1997
Current taxes $ 0 $ 0
=== ===
Deferred taxes $ 0 $ 0
=== ===
For the period beginning January 1, 1997 and ending February 28, 1997,
income tax expense pertains solely to income from continuing
operations. No income tax expense was recognized with respect to the
extraordinary gain resulting from the cancellation of indebtedness that
occurred in connection with the effectiveness of the Plan as such gain
is offset without limitation by the net operating loss carryover.
With respect to the period beginning March 1, 1997 and ending March 31,
1997, income tax expense pertains both to income from continuing
operations as well as certain adjustments necessitated by the
effectiveness of the Plan and the resultant "Fresh Start" adjustments
to the Company's financial statements. A reconciliation of taxes at the
federal statutory rate ("expected taxes") to those reflected in the
financial statements (the "effective rate") is as follows:
Period from Period from
March 1, 1997 January 1, 1997
through through
March 31, 1997 February 28, 1997
Taxes at U.S. Statutory Rate 187,340 (64,940)
Amortization of Reorganization Value
in excess of amounts allocable to
identifiable assets 730 0
Unrealized/(Realized) net operating
loss carryforward (188,070) 64,940
------- ------
Total 0 0
========== ===========
As of March 31, 1997, the Company has available net operating loss,
business tax credit and alternative minimum tax credit carryforwards
for Federal income tax purposes of approximately $103,332,000, $640,000
and $312,000, respectively. The net operating loss carryforwards expire
during the years 1999 through 2010 and have not been reduced by the
cancellation of indebtedness income of $35,977,000 resulting from the
bankruptcy. However, such carryforwards are not fully available to
offset federal alternative minimum taxable income. Further, as a result
of a statutory "ownership change" (as defined for purposes of (beta)382
of the Internal Revenue Code) that occurred as a result of the
effectiveness of the Plan, the Company's ability to utilize its net
operating loss and business tax credit carryforwards may be restricted.
The restriction is not only one of timing based on section 382, but may
be restricted to a de minimis amount. The alternative minimum tax
credit may be carried forward without expiration and is available to
offset future income tax payable. The Company is currently reviewing
its alternatives and opportunities under section 382 in connection with
the determination of any limitation on the utilization of the net
operating loss.
Composition of Deferred Tax Items:
The Company has not recognized any net deferred tax items for the
periods ended February 28, 1997 and March 31, 1997, respectively.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company's deferred tax assets
and liabilities are a result of the temporary differences related to
the items described as follows:
<TABLE>
Net Deferred Items
(dollars in thousands)
March 31, 1997 February 28, 1997
Deferred income tax liabilities:
Property and equipment, principally
depreciation and "fresh start"
<S> <C> <C>
differences (9,010) (9,010)
Other (694) (631)
----- -----
Total deferred income tax liabilities (9,704) (9,641)
------ ------
Deferred tax assets:
Reorganization expenses 3,723 3,723
Net operating loss carryforward 22,900 22,808
Tax credit carryforwards 952 952
Reserve for notes receivable 7,573 7,573
Investments 1,188 1,188
Other 1,154 1,187
------- -------
Total deferred income tax assets 37,490 37,431
Valuation allowance (27,786) (27,790)
------- -------
Net deferred tax assets 9,704 9,641
--------- ---------
Net deferred tax items 0 0
=========== ===========
</TABLE>
SFAS 109 requires a "more likely than not" criterion be applied when
evaluating the realizability of a deferred tax asset. Given the
Company's history of losses for income tax purposes, the volatility of
the industry within which the Company operates and certain other
factors, the Company has established a valuation allowance principally
for the portion of its net operating loss and other carryforwards that
may not be available due to expirations or other limitations after
consideration of net reversals of future taxable and deductible
amounts. After application of the valuation allowance, the Company's
net deferred tax assets and liabilities are zero. If the Company, in
future tax periods, were to recognize additional tax benefits related
to the net operating loss and other carryforwards of the Predecessor
Company, any such benefit would be applied to reduce reorganization
value in excess of amounts allocable to identifiable assets to zero.
7. Commitments and Contingencies
WARN Act Litigation
The Company is a defendant in two consolidated lawsuits pending in the
federal court for the District of New Jersey, alleging violation by the
Company and certain of its subsidiaries and affiliates of the Worker
Adjustment and Retraining Notification Act (WARN Act) and breach of
contract.
The plaintiffs filed three proof of claims in both the Company's, as
well as Four Queens, Inc.'s, bankruptcy proceedings. Two of the proof
of claims, one for the union employees and one for the non-union
employees, totaled $14,000,000 and allege liability under the WARN Act
for failure to properly notify employees in advance of cessation of
operations of Elsinore Shore Associates. The third proof of claim in
the amount of $800,000 was based upon retroactive wage agreements
executed by Elsinore Shore Associates promising to pay its employees
deferred compensation if the employees remain with Elsinore Shore
Associates during its reorganization. The proof of claims were filed as
priority claims, not general unsecured claims.
Based upon the Order for Verdict Upon Liability Issues issued by the
presiding judge in New Jersey, as well as the Bankruptcy Code, the
Bondholders' Committee filed an objection to the WARN Act proofs of
claims. The Bankruptcy Court tentatively approved the objection and
disallowed the claims pending entry of the final order from the New
Jersey court. A second objection was filed on behalf of the
Bondholders' Committee to the $800,000 proofs of claim regarding the
retroactive wage benefits. Because the New Jersey court had found the
Company to be liable on these obligations together with Elsinore Shore
Associates, the objection filed by the Bondholders' Committee did not
dispute the allowability of the proof of claim to participate with the
other unsecured creditors in the Company's bankruptcy proceedings.
However, the Bondholders' Committee objected to the claim of priority
status in the Company's proceedings. The Bondholders' Committee
objected to the claim in its entirety in the Four Queens, Inc.'s
proceeding. The Bankruptcy Court granted the objections and ruled that
the proof of claim for retroactive wage benefits would be an allowed
unsecured claim against the Company to be treated in Class 10 of the
Plan with final determination of the actual amount of the claim to be
made by the New Jersey District Court. No final appealable order has
been entered as of yet by the Bankruptcy Court.
At March 31, 1997, the Company and its subsidiaries were parties to
various other claims and lawsuits arising in the normal course of
business. Management is of the opinion that all pending legal matters
are either covered by insurance or, if not insured, will not have a
material effect on the financial position of the Company.
8. Subsequent Event
It was reported in Amendment No. 1 to Schedule 13D filed with the
Securities and Exchange Commission on April 11, 1997 by John C. "Bruce"
Waterfall and related parties that beneficially own 4,646,440 shares of
New Common Stock (collectively, the "Reporting Persons"), constituting
94.3% of the total shares outstanding on an undiluted basis, that the
Reporting Persons were willing to grant an option (the "Option")
entitling a third party to purchase the Reporting Persons' New Common
Stock at $3.10 per share, subject to adjustment. Concurrently with that
third party's ongoing negotiations with the Reporting Persons for the
Option, he has expressed an intention to commence discussions with the
Company for the acquisition of the entire equity interest in the
Company, at a per share price equal to the Option price. Exercise of
the Option (if it is granted) and consummation of the acquisition (if
the parties approve it) would be subject to, among other things, prior
approval by the Nevada Gaming Commission. There can be no assurance at
this time that any such transaction will occur.
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operation
This discussion and analysis should be read in conjunction with the consolidated
financial statements and notes thereto set forth elsewhere herein.
The following table sets forth certain operating information for the Company for
the three months ended March 31, 1997 and 1996. Revenues and promotional
allowances are shown as a percentage of net revenues. Departmental costs are
shown as a percentage of departmental revenues. All other percentages are based
on net revenues.
<TABLE>
Three Months Ended Three Months Ended
March 31, 1997 March 31, 1996
-------------------------------- ---------------------------------------
(000's) % (000's) %
---------------- ----------- ------------------- ----------------
Revenues, net:
<S> <C> <C> <C> <C>
Casino 10,471 70.1% 11,174 70.3%
Hotel 2,600 17.4% 2,996 18.9%
Food & beverage 2,640 17.7% 3,501 22.0%
Other 315 2.1% 171 1.1%
----------------- ------------ ------------------- ----------------
Gross revenue 16,026 107.2% 17,842 112.3%
Less promotional allowances (1,080) (7.2%) (1,956) (12.3%)
----------------- ------------ ------------------- ----------------
Revenues, net 14,946 100.0% 15,886 100.0%
----------------- ------------ ------------------- ----------------
Costs and expenses:
Casino 3,874 37.0% 4,862 43.5%
Hotel 2,104 80.9% 1,878 62.7%
Food and beverage 1,652 62.6% 1,756 50.2%
Taxes and licenses 1,487 10.0% 1,811 11.4%
Selling, general and 15.4%
administrative 2,597 17.4% 2,450
Rents 1,008 6.7% 1,017 6.4%
----------------- ------------ ------------------- ----------------
Total costs and expenses 12,722 85.1% 13,774 86.7%
-----------------
------------ ------------------- ----------------
Earnings before interest, taxes,
depreciation and amortization
(EBIDTA) 2,224 14.9% 2,112 13.3%
----------------- ------------ ------------------- ----------------
Depreciation and amortization 698 5.4% 970 6.1%
Interest 1,165 7.9% 264 1.7%
================= ============ =================== ================
Income (loss) before
reorganization items 361 2.4% 878 5.5%
================= ============ =================== ================
</TABLE>
THREE MONTHS ENDED MARCH 31, 1997 COMPARED
TO THREE MONTHS ENDED MARCH 31, 1996
================================================================================
REVENUES
Net revenues decreased by approximately $940,000 or 5.9%, from $15,886,000 for
the three months ended March 31, 1996 to $14,946,000 for the three months ended
March 31, 1997.
Casino revenues decreased by approximately $703,000, or 6.3%, from $11,174,000
during the 1996 period to $10,471,000 during the 1997 period due primarily to a
$591,000, or 3.1% decrease in table games revenues. Management has eliminated
certain unprofitable marketing programs which generated significant volume in
the first quarter of 1996. During the first quarter of 1997 table games drop
decreased $8,754,000 or 35.4%. The decrease in volume was partially offset by a
2.7% increase in win percentage.
Hotel revenues decreased by approximately $396,000, or 13.2%, from $2,996,000
during the 1996 period to $2,600,000 during the 1997 period due primarily to a
decrease in complimentary room revenues of $539,000 resulting from the
elimination of the unprofitable marketing programs. The majority of the
complimentary rooms were replaced with cash paying customers at lower room
rates.
Food and beverage revenues decreased approximately $861,000, or 24.6%, from
$3,501,000 during the 1996 period to $2,640,000 during the 1997 period due to a
decrease in complimentary revenues of $473,000 resulting from the elimination of
the unprofitable marketing programs and the closure of two unprofitable food
outlets which were replaced by profitable leased Burger King and Pizza Hut
franchises.
Other revenues increased by approximately $144,000, or 85.4%, from $171,000
during the 1996 period to $315,000 during the 1997 period, due primarily to a
refund of $83,000 from prior year's insurance premiums on the Company's health
and welfare plan and an increase in interest income due to increased cash
balances.
Promotional allowances decreased by approximately $876,000, or 44.8%, from
$1,956,000 during the 1996 period to $1,080,000 during the 1997 period due to a
decrease in complimentary rooms, food and beverage resulting from the
elimination of the unprofitable marketing programs.
DIRECT COSTS AND EXPENSES OF OPERATING DEPARTMENTS
Total direct costs and expenses of operating departments (including taxes and
licenses) decreased by approximately $1,190,000, or 11.6%, from $10,307,000 for
the three months ended March 31, 1996 to $9,117,000 for the three months ended
March 31, 1997.
Casino expense decreased by approximately $988,000, or 20.3%, from $4,862,000
during the 1996 period to $3,874,000 during the 1997 period due to a decrease in
payroll and complimentary expenses. Casino expenses as a percentage of revenues
decreased from 43.5% to 37.0% due to management's redirection of the Company's
marketing efforts from table games to slots.
Hotel expense increased by approximately $226,000, or 12.0%, from $1,878,000
during the 1996 period to $2,104,000 during the 1997 period, and costs as a
percentage of revenues increased from 62.7% to 80.9%, due to the reduction in
cost of comps transferred to the casino department.
Food and beverage costs and expenses decreased by approximately $104,000, or
5.9%, from $1,756,000 during the 1996 period to $1,652,000 during the 1997
period resulting from a corresponding decrease in revenues.
Tax and license expenses decreased by approximately $324,000, or 17.9%, from
$1,811,000 to $1,487,000 due to the decrease in casino revenues.
OTHER OPERATING EXPENSES
Selling, general and administrative expenses increased by approximately
$147,000, or 6.0%, from $2,450,000 for the three months ended March 31, 1996 to
$2,597,000 for the three months ended March 31, 1997 due to an increase in
general marketing expenses. As a percentage of total net revenues, selling,
general and administrative expenses increased from 15.4% during the 1996 period
to 17.4% during the 1997 period.
EBITDA
EBITDA increased by approximately $120,000, or 5.4%, from $2,112,000 during the
three months ended March 31, 1996 to $2,225,000 during the three months ended
March 31, 1997. Management's redirection of the Company's marketing efforts was
responsible for the increase while the majority of its competitors in downtown
Las Vegas were experiencing lower operating profits.
OTHER EXPENSES
Depreciation and amortization decreased by approximately $272,000, or 28.0%,
from $970,000 during the 1996 period to $698,000 during the 1997 period due to
revaluation of property and equipment as a result of Fresh Start Accounting.
Interest expense increased by approximately $901,000, or 341.7%, from $264,000
during the three months ended March 31, 1996 to $1,165,000 for the three months
ended March 31, 1997, due to the restatement of notes as a result of the
bankruptcy reorganization plan. These notes began accruing interest as of August
12, 1996, the date of plan confirmation.
Reorganization items decreased $534,000 from the 1996 period. Reorganization
items incurred in 1996 were items incurred by the Company as a result of
reorganization under Chapter 11 of the Bankruptcy Code. These expenses consisted
primarily of accrued professional fees. During the 1997 period there were no
reorganization items.
NET INCOME
As a result of the factors discussed above, net income increased by
approximately $17,000, or 4.9%, from $344,000 during the three months ended
March 31, 1996 to $361,000 during the three months ended March 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents (including restricted amounts) of
$11.9 million at March 31, 1997, which was an increase of $242,000 from the
balances at December 31, 1996. Significant debt service on the Restated First
Mortgage Notes and other debt issued pursuant to the Plan is paid in August and
February and should be considered in evaluating cash increases in the second and
fourth quarters. Pursuant to the Subscription Rights Agreement provided for in
the Plan of Reorganization, $5,000,000 in cash was received by the company as of
February 28, 1997.
For the quarter ended March 31, 1997, the Company's net cash provided by
operating activities was $2.3 million compared to $89,000 used by operating
activities in the first quarter of 1996. EBITDA for first quarters of 1997 and
1996 was $2.2 million and $2.1 million, respectively. For the year ended
December 31, 1996, the Company's net cash provided by operating activities was
$4.8 million compared to net cash used in operating activities of $(.7) million
for 1995. EBITDA for 1996 and 1995 was $7 million and $1.4 million,
respectively, which is adequate to cover the Company's debt service. Management
believes that sufficient cash flow will be available to cover the Company's debt
service and enable investment in budgeted capital expenditures of approximately
$7 million for the next 12 months.
Scheduled interest payments on the New Second Mortgage Notes and other
indebtedness are $4.3 million in 1997 declining to $3.9 million in 2001. Cash
flow from operations is not expected to be sufficient to pay 100% of the
principal of the New Second Mortgage Notes at maturity on August 20, 2001.
Accordingly, the ability of the Company to repay the New Second Mortgage Notes
at maturity will be dependent upon its ability to refinance the New Second
Mortgage Notes. There can be no assurance that the Company will be able to
refinance the principal amount of the New Second Mortgage Notes at maturity. The
New Second Mortgage Notes are redeemable at the option of the Company at 100% at
any time without premium.
The New Second Mortgage Note Indenture provides for mandatory redemption by the
Company upon the order of the Nevada Gaming Authorities. The indenture also
provides that, in certain circumstances, the Company must offer to repurchase
the New Second Mortgage Notes upon the occurrence of a change of control or
certain other events at 101%. In the event of such mandatory redemption or
repurchase prior to maturity, the Company would be unable to pay the principal
amount of the New Second Mortgage Notes without a refinancing.
Management considers it important to the competitive position of the Four Queens
Hotel/Casino that expenditures be made to upgrade the property. Management has
budgeted approximately $7 million for capital expenditures in 1997. The Company
expects to finance such capital expenditures from cash on hand, cash flow and
slot lease financing. Uses of cash during the period included capital
expenditures of $380,000. Based upon current operating results and cash on hand,
the Company has sufficient operating capital to fund its operation and capital
expenditures for the next 12 months.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain forward-looking statements. Certain matters discussed in this filing
could be characterized as forward-looking statements such as statements relating
to plans for future expansion, as well as other capital spending, financing
sources and effects of regulation and competition. Such forward-looking
statements involve important risks and uncertainties that could cause actual
results to differ materially from those anticipated in such forward-looking
statements. Readers should not place undue reliance on forward-looking
statements, which reflect management's' view only as of the date of this filing.
The Company undertakes no obligation to revise publicly these forward-looking
statements to reflect subsequent events or circumstances.
Elsinore Corporation and Subsidiaries
Other Information
PART II. OTHER INFORMATION
Item 1. Legal Proceedings:
See Note 7 to Financial Statements in Part I, Item 1
of this report, which is incorporated herein be reference.
Item 2. (a) Not applicable.
(b) Not applicable.
(c) See the Reorganized Company's Current Report on Form
8-K, Item 1, filed with the Securities and Exchange Commission on March
14, 1997, which is incorporated herein by reference. The shares of New
Common Stock reported therein were issued pursuant to the exemption
from registration under the Securities Act of 1933, as amended,
provided by 11 U.S.C.
section 1145(a)(1).
Item 5. Other Information:
See Note 8 to Financial Statement in Part I, Item 1 of this
report, which isincorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K
<TABLE>
<S> <C>
(a) Exhibits:
2.1* First Amended Plan of Reorganization [2.1] (5)
2.2* Order Confirming First Amended Plan of Reorganization [2.2] (5)
2.3* Bankruptcy Court Order Approving Plan Documentation [2.3] (6)
3.1 Amended and Restated Articles of Incorporation of Elsinore Corporation
3.2 Amended and Restated Bylaws of Elsinore Corporation
10.1* Sublease, dated May 26, 1964, by and between A.W. Ham, Jr. and Four Queens, Inc. [10.1] (1)
10.2* Amendment of Sublease, dated June 15, 1964, by and between A.W. Ham, Jr. and Four Queens, Inc.
[10.2] (1)
10.3* Amendment of Sublease, dated February 25, 1965, by and between A.W. Ham, Jr. and Four Queens,
Inc. [10.3] (1)
10.4* Amendment of Sublease, dated January 29, 1973, by and between A.W. Ham, Jr. and Four Queens,
Inc. [10.4] (1)
10.5* Supplemental Lease, dated January 29, 1973, by and between A.W. Ham, Jr. and Four Queens, Inc.
[10.5] (1)
10.6* Lease Agreement, dated April 25, 1972, by and between Bank of Nevada and Leon H. Rockwell, Jr.,
as Trustees of Four Queens, Inc. [10.6] (1)
10.7* Lease, dated January 1, 1978, between Finley Company and Elsinore Corporation [10.7] (1)
10.8* Ground Lease, dated October 25, 1983, between Julia E. Albers, Otto J. Westlake, Guardian, and
Four Queens, Inc. [10.8] (1)
10.9* Ground Lease, dated October 25, 1983 between Katherine M. Purkiss and Four Queens, Inc. [10.9]
(1)
10.10* Ground Lease, dated October 25, 1983, between Otto J. Westlake and Four Queens, Inc. [10.10] (2)
10.11* Indenture of Lease, dated March 28, 1984, by and between the City of Las Vegas and Four Queens,
Inc. [10.11] (1)
10.12* Lease Indenture, dated May 1, 1970, by and between Thomas L. Carroll, et al. and Four Queens,
Inc. [10.12] (1)
10.13* Memorandum of Lease, dated January 26, 1973, between President and Board of Trustees of Santa
Clara College and Four Queens, Inc. [10.13] (1)
10.14 Indemnification Agreement, dated August 8, 1996, by and between Elsinore Corporation and Frank
L. Burrell, Jr.
10.15 Indemnification Agreement, dated August 8, 1996, by and between Elsinore Corporation and Howard
Carlson.
10.16 Indemnification Agreement, dated August 8, 1996, by and between Elsinore Corporation and Robert
A. McKerroll.
10.17 Indemnification Agreement, dated August 8, 1996, by and between Elsinore Corporation and Thomas
E. Martin.
10.18* Agreement, dated April 28, 1992, by and among Four Queens, Inc., Jeanne Hood, Edward M. Fasulo
and Richard A. LeVasseur. [10.28] (1)
10.19 Settlement Agreement, dated March 29, 1996, by and between Palm Springs East Limited
Partnership and the 29 Palms Band of Mission Indians
10.20* Loan Agreement, dated November 12, 1993, by and between The Jamestown S'Klallam Tribe and JKT
Gaming, Inc. [10.31] (3)
10.21* First Amendment to Loan Agreement, dated January 28, 1994, by and between The Jamestown
S'Klallam Tribe and JKT Gaming, Inc. [10.32] (3)
10.22 Form of 13 1/2% Second Mortgage Note Due 2001
10.23 Amended and Restated Indenture, dated as of March 3, 1997, by
and among Elsinore Corporation, the Guarantors named therein and
First Trust National Association, as Trustee
10.24* Pledge Agreement, dated as of October 8, 1993, from Elsinore
Corporation and ELSUB Management Corporation to First Trust National
Association [10.7] (2)
10.25 Amendment of 1993 Pledge Agreement, dated March 3, 1997
10.26* Deed of Trust, Assignment of Rents and Security Agreement, dated as of October 8, 1993, by and
among Four Queens, Inc., Land Title of Nevada, Inc. and First Trust National Association [10.8] (2)
10.27 Modification of Subordinated Deed of Trust, dated March 3, 1997, by and between Four Queens,
Inc. and First Trust National Association
10.28 Agreement, dated May 14, 1997, by Elsinore Corporation to file
with the Securities and Exchange Commission copies of instruments
defining the rights of holders of 11.5% First Mortgage Notes Due 2000
10.29* Assignment of Operating Agreements, dated as of October 8, 1993, by Palm Springs East Limited
Partnership to First Trust National Association [10.9] (2)
10.30* Assignment of Operating Agreements, dated as of October 8, 1993, by Olympia Gaming Corporation
to First Trust National Association. [10.10] (2)
10.31 Common Stock Registration Rights Agreement, dated as of
February 28, 1997, among Elsinore Corporation and the Holders of
Registrable Shares referred to therein (incorporated by reference
herein and filed as Exhibit B to Schedule 13D, dated March 10, 1997,
by Morgens Waterfall Income Partners, L.P.; Restart Partners, L.P.;
Restart Partners II, L.P.; Restart Partners III, L.P.; Restart
Partners IV, L.P.; Restart Partners V, L.P.; The Common Fund for
Non-Profit Organizations; MWV Employee Retirement Plan Group Trust;
Betje Partners; Phoenix Partners, L.P.; Morgens, Waterfall, Vintiadis
& Company, Inc.; MW Capital, L.L.C.; Prime Group, L.P.; Prime Group
II, L.P.; Prime Group III, L.P.; Prime Group IV, L.P.; Prime Group V,
L.P.; Prime, Inc.; MW Management, L.L.C.; John C. "Bruce" Waterfall;
and Edwin H. Morgens, with respect to the New Common Stock)
15.1 KPMG Peat Marwick LLP letter re unaudited interim financial information
27.1 Financial Data Schedules
99.1* Voluntary Petition for Bankruptcy Pursuant to Chapter 11 of the Bankruptcy Code dated October
31, 1995. [99.2] (4)
99.2* Olympia Gaming Corporation Voluntary Petition for Bankruptcy Pursuant to Chapter 11 of the
Bankruptcy Code dated October 31, 1995 [99] (4)
99.3* Press Release of Elsinore Corporation dated March 14, 1997 [99] (6)
(b) Reports on Form 8-K:
During the first quarter of 1997, Elsinore Corporation filed
the following Current Report on Form 8-K:
Form 8-K dated March 14, 1997 (regarding change in control,
status of stock exchange listings and re-evaluation of Elsinore
Corporation's position regarding its subsidiary's agreement with the
S'Klallam Tribe).
* Previously filed with the Securities and Exchange Commission as an exhibit
to the document shown below under the Exhibit Number indicated in brackets
and incorporated herein by reference and made a part of hereof:
(1) Annual Report on Form 10-K for the year ended December 31, 1992
(2) Current Report on Form 8-K dated October 19, 1993
(3) Annual Report on Form 10-K for the year ended December 31, 1993
(4) Current Report on Form 8-K dated November 7, 1995
(5) Current Report on Form 8-K dated August 8, 1996
(6) Current Report on Form 8-K dated March 14, 1997
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto authorized.
ELSINORE CORPORATION
(Registrant)
By: /s/ Jeffrey Leeds
JEFFREY LEEDS, President
and Chief Executive Officer
By: /s/ S. Barton Jacka
S. BARTON JACKA, Secretary
and Treasurer and Principal
Accounting Officer
Dated: May 15, 1997
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
ELSINORE CORPORATION
The undersigned hereby certifies under penalty of perjury as
follows:
1. The United States Bankruptcy Court for the District of Nevada (the
"Court") in Case Nos. 95-24685 RCJ, 95-24686 RCJ, 95-24687 RCJ, 95-24688 RCJ,
95-24689 RCJ, and 95-24839 RCJ, has confirmed a plan of reorganization (the
"Plan") for Elsinore Corporation, a Nevada corporation (the "Corporation"),
pursuant to Chapter 11 of Title 11 of the United States Code.
2. A certified copy of the Plan is being filed with the Secretary of
State of the State of Nevada (the "Secretary") together with this Certificate.
3. Pursuant to the Plan and this filing of a certified copy of the Plan
with the Secretary, the Corporation's Articles of Incorporation are amended and
restated to read as follows:
ARTICLE I: NAME
The name of the corporation shall be ELSINORE CORPORATION.
ARTICLE II: REGISTERED OFFICE
The name of the resident agent and the street address of
the registered office in the State of Nevada where process may be
served upon the corporation is Cynthia A. Fremont, 202 Fremont Street,
Las Vegas, Nevada 89101. The corporation may, from time to time, in the
manner provided by law, change the resident agent and the registered
office within the State of Nevada. The corporation may also maintain an
office or offices for the conduct of its business, either within or
without the State of Nevada. Corporate business of every kind and
nature may be conducted, and meetings of directors and stockholders
held, outside the State of Nevada, the same as in the State of Nevada.
ARTICLE III: CORPORATE PURPOSES
The nature of the business and object and purposes
proposed to be transacted, promoted, or carried on by the corporation
are: (a) to engage in any lawful activity; and (b) to conduct gaming in
the State of Nevada in accordance with the laws of the State of Nevada
and the United States of America.
ARTICLE IV: CAPITAL STOCK
Section 1. Authorized Shares. The corporation is
authorized to issue two (2) classes of shares of stock. One class of
shares shall be designated "Common Stock," with $0.001 par value per
share. The total number of shares of Common Stock which this
Corporation is authorized to issue is one hundred million
(100,000,000). Common Stock may be issued by the Corporation from time
to time by resolution of the Board of Directors, except as otherwise
provided in this Section. The shares of authorized Common Stock shall
be identical in all respects and shall have equal rights and privileges
and shall be entitled to one (1) vote each on all matters submitted to
a vote of the stockholders.
The other class of shares which the corporation is authorized to issue
shall be designated "Preferred Stock," with $0.001 par value per share.
The total number of shares of Preferred Stock which the corporation is
authorized to issue fifty million (50,000,000). Preferred Stock may be
issued by the corporation from time to time by resolution of the Board
of Directors in one or more series with such voting powers,
distinguishing designations, preferences, limitations, restrictions and
relative rights as the Board of Directors determines by resolution,
except as otherwise provided in this Section.
If the Board of Directors determines by resolution that the
Preferred Stock shall have a preference over any other class of equity
securities with respect to dividends, such resolution shall also make
adequate provisions for the election of directors representing the
holders of such Preferred Stock in the event of default in the payment
of such dividends.
The corporation shall not issue nonvoting
equity securities.
The corporation shall not issue any
stock or other securities except in accordance with the provisions of
the Nevada Gaming Control Act and the regulations thereunder. The
issuance of any stock or other securities in violation thereof shall
be ineffective and such stock or other securities shall be deemed not
to be issued and outstanding until (i) the corporation shall cease to
be subject to the jurisdiction of the Nevada Gaming Commission
("Commission"), or (ii) the Commission shall,by affirmative action,
validate said issuance or waive any defect in issuance.
No stock or other securities issued by the
corporation and no interest, claim or charge therein or thereto shall
be transferred in any manner whatsoever except in accordance with the
provisions of the Nevada Gaming Control Act and the regulations
thereunder. Any transfer in violation thereof shall be ineffective
until (i) the corporation shall cease to be subject to the jurisdiction
of the Commission, or (ii) the Commission shall, by affirmative action,
validate said transfer or waive any defect in said transfer.
If the Commission at any time determines
that a holder of stock or other securities of this corporation is
unsuitable to hold such securities, then until such securities are
owned by persons found by the Commission to be suitable to own them,
(a) the corporation shall not be required or permitted to pay any
dividend or interest with regard to the securities, (b) the holder of
such securities shall not be entitled to vote on any matter as the
holder of the securities and such securities shall not for any
purposes be included in the securities of the corporation entitled
to vote, and (c) the corporation shall not pay any remuneration in any
form to the holder of the securities.
Section 2. Consideration for Shares. The capital
stock authorized by Section 1 of this Article shall be issued for such
consideration as shall be fixed, from time to time, by the Board of
Directors.
Section 3. Assessment of Stock. The capital stock of
the corporation, after the amount of the subscription price has been
fully paid in, shall not be assessable for any purpose, and no stock
issued as fully paid shall ever be assessable or assessed. No
stockholder of the corporation is individually liable for the debts or
liabilities of the corporation.
Section 4. Cumulative Voting For Directors. At all
elections of directors of the corporation, each holder of stock
possessing voting power is entitled to as many votes as equal the
number of his or her shares of stock multiplied by the number of
directors to be elected, and he or she may cast all of his or her votes
for a single director or may distribute them among the number to be
voted for or any two or more of them, as he or she sees fit.
Section 5. Preemptive Rights. No stockholder of
the corporation shall have any preemptive rights.
DIRECTORS AND OFFICERS
Section 1. Number of Directors. The members of the
governing board of the corporation are styled as directors. The number
of directors may be fixed and changed from time to time in such manner
as shall be provided in the bylaws of the corporation; provided,
however, the number of directors shall be not less than three (3).
Section 2. Current Directors. The names and
post office addresses of the current Board of Directors, which consists of
five (5) members, are:
NAME ADDRESS
Edward M. Nigro 4545 Spring Mountain Road #105
Las Vegas, NV 89102
Jeffrey T. Leeds 200 Park Avenue
58th Floor
New York, NY 10166
John C. "Bruce" Waterfall 10 East 50th Street
26th Floor
New York, NY 10020
Harry C. Hagerty, III Deutsche, Morgan, Grenfell
31 W. 52nd Street
25th Floor
New York, NY 10019
S. Barton Jacka 14660 South Quiet Meadow Drive
Reno, NV 89511
Vacancies on the Board of Directors shall be filled, and elections
of directors shall be held, in accordance with the Bylaws.
Section 3. Limitation of Personal Liability. No
director or officer of the corporation shall be liable to the
corporation or its stockholders for damages for breach of fiduciary
duty as a director or officer. This provision shall not eliminate or
limit the liability of a director or officer for acts or omissions
which involve intentional misconduct, fraud, a knowing violation of
law, or the payment of distributions in violation of Nevada Revised
Statutes ss. 78.300. If the Nevada Revised Statutes are hereafter
amended or interpreted to eliminate or limit further the personal
liability of directors or officers, then the liability of all directors
and officers shall be eliminated or limited to the full extent then so
permitted.
Section 4. Payment of Expenses. All expenses incurred
by officers or directors in defending a civil or criminal action, suit,
or proceeding must be paid by the corporation as they are incurred in
advance of a final disposition of the action, suit or proceeding, upon
receipt of an undertaking by or on behalf of a director or officer to
repay the amount if it is ultimately determined by a court of competent
jurisdiction that (i) he or she did not act in good faith, and in the
manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation or (ii) with respect to any criminal
action or proceedings, he or she had reasonable cause to believe his or
her conduct was unlawful.
Section 5. Repeal and Conflicts. Any repeal or
amendments of Section 3 or 4 of this Article or the adoption of any
provision of these Articles of Incorporation inconsistent with Section
3 or 4 of this Article shall be prospective only and shall not
eliminate or reduce the effect of Sections 3 or 4 of this Article in
respect of any act or omission that occurred prior to such repeal,
amendment or adoption of an inconsistent provision. In the event of any
conflict between Sections 3 or 4 of this Article and any other Article
of the corporation's Articles of Incorporation, the terms and
provisions of Section 3 or 4 of this Article, as the case may be, shall
control.
Section 6. Compliance with Gaming Control Act. All of
the directors of the corporation shall be subject to, and the
composition of the Board of Directors shall be in compliance with, the
requirements and qualifications imposed by the Nevada Gaming Control
Act (Nevada Revised Statutes ss. 463.010 et seq., as amended from time
to time), or any successor provision of Nevada law, and the regulations
promulgated thereunder, and the rules and regulations of any
governmental agency responsible for the licensing and regulation of
gaming operations, including without limitation, the Nevada State
Gaming Control Board, the Nevada State Gaming Commission and the Clark
County Liquor and Gaming Licensing Board.
ARTICLE VI: PERPETUAL EXISTENCE
The corporation shall have perpetual existence.
ARTICLE VII: MISCELLANEOUS
The corporation shall not be governed by the provisions
of Nevada Revised Statutes Sections 78.378 to 78.3793, inclusive, or
Sections 78.411 to 78.444, inclusive.
ARTICLE VIII: AMENDMENT OF ARTICLES OF INCORPORATION
Section 1. General. Except as provided in Section 2.
of this ARTICLE VIII., these Articles of Incorporation may be amended,
modified, altered or repealed only with the affirmative vote of the
holders of a majority of the voting power of all the shares of stock of
the corporation entitled to vote generally in the election of
directors, voting together as a single class.
Section 2. Amendment of Certain Provisions.
Notwithstanding anything contained in these Articles of Incorporation
to the contrary, ARTICLE VII. hereof shall not be altered, amended or
repealed and no provision inconsistent therewith shall be adopted
without the affirmative vote of the holders of at least eighty percent
(80%) of the voting power of all the shares of stock of the corporation
entitled to vote generally in the election of directors, voting
together as a single class. Notwithstanding anything contained in these
Articles of Incorporation to the contrary, the affirmative vote of the
holders of at least eighty percent (80%) of the voting power of all the
shares of stock of the corporation entitled to vote generally in the
election of directors, voting together as a single class, shall be
required to amend or adopt any provision inconsistent with, or to alter
or repeal this Section 2 of ARTICLE VIII.
4. The undersigned has been authorized by the Court to file this
Certificate with the Secretary in accordance with the Court's order of
reorganization pursuant to the Plan.
Executed this day of , 1997.
Jeffrey T. Leeds
STATE OF ____________ )
) ss.
COUNTY OF __________ )
This instrument was acknowledged before me on ____________ , 1997
by Jeffrey T. Leeds, as President of Elsinore Corporation.
Notary Public
1.AMENDED AND RESTATED
BYLAWS
OF
ELSINORE CORPORATION
ARTICLE I: OFFICES AND BOOKS
Section 1.1. Offices. The principal office of the corporation in Nevada
shall be at 202 Fremont Street, Las Vegas, Nevada and the company may have
offices at such other places both within and without the State of Nevada as the
Board of Directors may from time to time determine or the business of the
corporation may require.
Section 1.2. Location of Books and Records. The books and records of the
corporation may be kept within or without the State of Nevada as the Board of
Directors may from time to time determine or the business of the corporation may
require.
<PAGE>
ARTICLE II: STOCKHOLDERS
Section 2.1 Annual Meeting. An annual meeting of the stockholders of
the corporation shall be held such place (within or outside the state of Nevada)
as shall be determined by the Board of Directors, for the purpose of electing
directors of the corporation to serve during the ensuing year and for the
transaction of such other business as may properly come before the meeting. If
the election of the directors is not held on the day designated herein for any
annual meeting of the stockholders, or at any adjournment thereof, the President
shall cause the election to be held at a special meeting of the stockholders as
soon thereafter as is convenient.
Section 2.2 Special Meeting.
(a) Special meetings of the stockholders may be called by the
Chairman of the Board, the President or the Board of Directors and shall be
called by the Chairman of the Board, the President or the Board of Directors at
the written request of the holders of not less than one-third (1/3) of the
voting power of any class of the corporation's stock entitled to vote for the
election of directors or for the matters relating to the purposes for which such
meeting is being called.
(b) No business shall be acted upon at a special meeting
except as set forth in the notice calling the meeting, unless one of the
conditions for the holding of a meeting without notice set forth in Section 2.5
shall be satisfied, in which case any business may be transacted and the meeting
shall be valid for all purposes.
Section 2.3 Place of Meeting. Any meeting of the stockholders of
the corporation may be held at such place within or outside the state of Nevada
as the Board of Directors may designate or as may be designated by an instrument
in writing signed by the holders of not less than a majority of the
corporation's outstanding stock entitled to vote for the election of directors
or for the matters relating to the purposes for which such meeting is called.
Section 2.4 Notice of Meeting.
(a) The President, a Vice President, the Secretary, an
Assistant Secretary or any other individual designated by the Board of Directors
shall sign and deliver written notice of any meeting at least ten (10) days, but
not more than sixty (60) days, before the date of such meeting. The notice shall
state the place, date and time of the meeting and the purpose or purposes for
which the meeting is called.
(b) In the case of an annual meeting, any proper business may
be presented for action, except that action on any of the following items shall
be taken only if the general nature of the proposal is stated in the notice:
(1) Action with respect to any contract or transaction between the
corporation and one or more of its directors or officers or between the
corporation and any corporation, firm or association in which one or more of the
corporation's directors or officers is a director or officer or is financially
interested;
(2) Adoption of amendments to the Articles of Incorporation; or
(3) Action with respect to a merger, share exchange, reorganization,
consolidation, partial or complete liquidation, or dissolution of the
corporation.
(c) A copy of the notice shall be personally delivered or
mailed postage prepaid to each stockholder of record entitled to vote at the
meeting at the address appearing on the records of the corporation, and the
notice shall be deemed delivered the date the same is deposited in the United
States mail for transmission to such stockholder. If the address of any
stockholder does not appear upon the records of the corporation, it will be
sufficient to address any notice to such stockholder at the registered office of
the corporation.
(d) The written certificate of the individual signing a
notice of meeting, setting forth the substance of the notice or having a copy
thereof attached, the date the notice was mailed or personally delivered to the
stockholders and the addresses to which the notice was mailed, shall be prima
facie evidence of the manner and fact of giving such notice.
(e) Any stockholder may waive notice of any meeting by a signed writing,
either before or after the meeting.
Section 2.5 Meeting Without Notice.
(a) Whenever all persons entitled to vote at any meeting
consent, either by:
(1) A writing on the records of the meeting or
filed with the secretary; or
(2) Presence at such meeting and oral consent
entered on the minutes; or
(3) Taking part in the deliberations at such
meeting without objection;
the doings of such meeting shall be as valid as if had at a
meeting regularly called and noticed.
(b) At such meeting any business may be transacted which is
not excepted from the written consent or to the consideration of which no
objection for want of notice is made at the time.
(c) If any meeting be irregular for want of notice or of such
consent, provided a quorum was present at such meeting, the proceedings of the
meeting may be ratified and approved and rendered likewise valid and the
irregularity or defect therein waived by a writing signed by all parties having
the right to vote at such meeting.
(d) Such consent or approval may be by proxy or attorney, but
all such proxies and powers of attorney must be in writing.
Section 2.6 Determination of Stockholders of Record.
(a) For the purpose of determining the stockholders entitled
to notice of and to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a meeting
or entitled to receive payment of any distribution or the allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion,
or exchange of stock or for the purpose of any other lawful action, the
directors may fix, in advance, a record date which shall not be more than sixty
(60) days nor less than ten (10) days before the date of such meeting, nor more
than sixty (60) days prior to any other action.
(b) If no record date is fixed, the record date for
determining stockholders: (i) entitled to notice of and to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; (ii) entitled to
express consent to corporate action in writing without a meeting shall be the
day on which the first written consent is expressed; and (iii) for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote an any meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
Section 2.7 Quorum: Adjourned Meeting.
(a) Unless the Articles of Incorporation or these Bylaws
provide for a different proportion, stockholders holding at least a majority of
the voting power of the corporation's stock, represented in person or by proxy,
are necessary to constitute a quorum for the transaction of business at any
meeting. If, on any issue, voting by classes is required by the laws of the
State of Nevada, the Articles of Incorporation or these Bylaws, at least a
majority of the voting power within each such class is necessary to constitute a
quorum of each such class, unless the Articles of Incorporation provide for a
different proportion.
(b) If a quorum is not represented, a majority of the voting
power so represented may adjourn the meeting from time to time until holders of
the voting power required to constitute a quorum shall be represented. At any
such adjourned meeting at which a quorum shall be represented, any business may
be transacted which might have been transacted as originally called. When a
stockholders' meeting is adjourned to another time or place hereunder, notice
need not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. The stockholders
present at a duly convened meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave less
than a quorum of the voting power.
Section 2.8 Voting.
(a) Unless otherwise provided in the Articles of
Incorporation, or in the resolution providing for the issuance of the stock
adopted by the Board of Directors pursuant to authority expressly vested in it
by the provisions of the Articles of Incorporation, each stockholder of record,
or such stockholders duly authorized proxy or attorney-in-fact, shall be
entitled to one (1) vote for each share of stock entitled to vote on such matter
standing registered in such stockholders name on the record date.
(b) Except as otherwise provided herein, all votes with
respect to shares standing in the name of an individual on the record date
(including pledged shares) shall be cast only by that individual or such
individual's duly authorized proxy, attorney-in-fact or voting trustee(s)
pursuant to a voting trust. With respect to shares held by a representative of
the estate of a deceased stockholder, guardian, conservator, custodian or
trustee, votes may be cast by such holder upon proof of capacity, even though
the shares do not stand in the name of such holder. In the case of shares under
the control of a receiver, the receiver may cast votes carried by such shares
even though the shares do not stand in the name of the receiver; provided, that
the order of the court of competent jurisdiction which appoints the receiver
contains the authority to cast votes carried by such shares. If shares stand in
the name of a minor, votes may be cast only by the duly appointed guardian of
the estate of such minor if such guardian has provided the corporation with
written proof of such appointment.
(c) With respect to shares standing in the name of another
corporation, partnership, limited liability company or other legal entity on the
record date, votes may be cast: (i) in the case of a corporation, by such
individual as the bylaws of such other corporation prescribe, by such individual
as may be appointed by resolution of the Board of Directors of such other
corporation or by such individual (including the officer making the
authorization) authorized in writing to do so by the chairman of the Board of
Directors, President or any Vice-President of such corporation and (ii) in the
case of a partnership, limited liability company or other legal entity, by an
individual representing such stockholder upon presentation to the corporation of
satisfactory evidence of his authority to do so.
(d) Notwithstanding anything to the contrary herein
contained, no votes may be cast for shares owned by this corporation or its
subsidiaries, if any. If shares are held by this corporation or its
subsidiaries, if any, in a fiduciary capacity, no votes shall be cast with
respect thereto on any matter except to the extent that the beneficial owner
thereof possesses and exercises either a right to vote or to give the
corporation holding the same binding instructions on how to vote.
(e) Any holder of shares entitled to vote on any matter may
cast a portion of the votes in favor of such matter and refrain from casting the
remaining votes or cast the same against the proposal, except in the case of
elections of directors. If such holder entitled to vote falls to specify the
number of affirmative votes, it will be conclusively presumed that the holder is
casting affirmative votes with respect to all shares held.
(f) With respect to shares standing in the name of two or
more persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, husband and wife as community property, tenants by the
entirety, voting trustees, persons entitled to vote under a stockholder voting
agreement or otherwise and shares held by two or more persons (including proxy
holders) having the same fiduciary relationship in respect to the same shares,
votes may be cast in the following manner:
(1) If only one person votes, the vote of such
person binds all.
(2) If more than one person casts votes, the
act of the majority so voting binds all.
(3) If more than one person casts votes, but the
vote is evenly split on a particular matter,
the votes shall be deemed cast
proportionately, as split.
(g) If a quorum is present, unless the Articles of
Incorporation or these Bylaws provide for a different proportion, the
affirmative vote of holders of at least a majority of the voting power
represented at the meeting and entitled to vote on any matter shall be the act
of the stockholders, unless voting by classes is required for any action of the
stockholders by the laws of the State of Nevada, the Articles of Incorporation
or these Bylaws, in which case the affirmative vote of holders of a least a
majority of the voting power of each such class shall be required.
Section 2.9 Proxies. At any meeting of stockholders, any holder of
shares entitled to vote may designate, in a manner permitted by the laws of the
State of Nevada, another person or persons to act as a proxy or proxies. No
proxy is valid after the expiration of six (6) months from the date of its
creation, unless it is coupled with an interest or unless otherwise specified in
the proxy. In no event shall the term of a proxy exceed seven (7) years from the
date of its creation. Every proxy shall continue in full force and effect until
its expiration or revocation in a manner permitted by the laws of the State of
Nevada.
Section 2.10 Order of Business. At the annual stockholders' meeting,
the regular order of business shall be as follows:
(1) Determination of stockholders present and
existence of a quorum, in person or by proxy;
(2) Reading and approval of the minutes of the
previous meeting or meetings;
(3) Reports of the Board of Directors, and, if any,
the president, treasurer and secretary of the
corporation;
(4) Reports of committees;
(5) Election of directors;
(6) Unfinished business;
(7) New business;
(8) Adjournment.
Section 2.11 Absentees' Consent to Meeting. Transactions of any
meeting of the stockholders are as valid as though had at a meeting duly held
after regular call and notice if a quorum is represented, either in person or by
proxy, and if, either before or after the meeting, each of the persons entitled
to vote, not represented in person or by proxy (and those who, although present,
either object at the beginning of the meeting to the transaction of any business
because the meeting has not been lawfully called or convened or expressly object
at the meeting to the consideration of matters not included in the notice which
are legally required to be included therein), signs a written waiver of notice
and/or consent to the holding of the meeting or an approval of the minutes
thereof. All such waivers, consents, and approvals shall be filed with the
corporate records and made a part of the minutes of the meeting. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person objects at the beginning of the meeting to the transaction of
any business because the meeting is not lawfully called or convened and except
that attendance at a meeting is not a waiver of any right to object to the
consideration of matters not properly included in the notice if such objection
is expressly made at the time any such matters are presented at the meeting.
Neither the business to be transacted at nor the purpose of any regular or
special meeting of stockholders need be specified in any written waiver of
notice or consent, except as otherwise provided in Sections 2.4(a) and (b) of
these Bylaws.
Section 2.12 Telephonic Meeting. Stockholders may participate in a
meeting of the stockholders by means of a telephone conference or similar method
of communication by which all individuals participating in the meeting can hear
each other. Participation in a meeting pursuant to this Section 2.12 constitutes
presence in person at the meeting.
Section 2.13 Action Without Meeting. Any action required or
permitted to be taken at a meeting of the stockholders may be taken without a
meeting if a written consent thereto is signed by the holders of the greater of
(i) sixty percent (60%) of the voting power of the shares of stock of the
corporation that are entitled to vote on the matter at issue or (ii) the voting
power of the shares of stock of the corporation that would be required at a
meeting to constitute the act of the stockholders with respect to the matter at
issue. Whenever action is taken by written consent, a meeting of stockholders
need not be called or notice given. The written consent may be signed in
counterparts and must be filed with the minutes of the proceedings of the
stockholders. Such action shall be deemed effective on the date when the
signatures of holders of the requisite number of shares approving the matter
have been obtained.
Section 2.14 Stockholder Proposals. At the annual meeting of
stockholders only such business shall be conducted, and only such proposals
shall be acted upon, as shall have been brought before such annual meeting (i)
by, or at the direction of, the Board of Directors or (ii) by any stockholder of
the corporation who complies with the notice procedures set forth in this
Section of these By-laws. For a proposal to be properly brought before an annual
meeting of stockholders by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the corporation. To be timely, a
stockholder's notice must be delivered to, or mailed and received at, the
registered office of the corporation not less than sixty (60) days nor more than
ninety (90) days prior to the scheduled annual meeting, without regard to any
postponements, deferrals or adjournments of that meeting to a later date;
provided, however, that if less than seventy (70) days' notice or prior public
disclosure of the date of the scheduled annual meeting is given or made, notice
by the stockholder to be timely must be so delivered or mailed and received, as
specified above, not later than the close of business on the tenth (10th) day
following the earlier of the day on which such notice of the date of the
scheduled annual meeting was mailed or the day on which such public disclosure
was made. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (i) a brief
description of the proposal desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and address, as they appear on the corporation's books, of the stockholder
proposing such business and any other stockholders known by such stockholder to
be supporting such proposal, (iii) the class and number of shares of the
corporation's stock which are beneficially owned by the stockholder on the date
of such stockholder notice and by any other stockholder known by such
stockholder to be supporting such proposal on the date of such stockholder
notice, and (iv) any financial interest of the stockholder in such proposal.
If the presiding officer of the annual meeting determines
that a stockholder proposal was not made in accordance with terms of this
Section, he or she shall so declare at the annual meeting and any such proposal
shall not be acted upon at the annual meeting.
This Section shall not prevent the consideration and approval
or disapproval at the annual meeting of reports of officers, directors and
committees of the Board of Directors, but, in connection with such reports, no
business shall be acted upon at such annual meeting unless stated, filed and
received as herein provided.
<PAGE>
3. ARTICLE III: DIRECTORS
Section 3.1. Number, Tenure, and Qualifications. Until changed in
the manner provided herein, the authorized number of directors shall be such
number, not more than five (5) individuals, as shall be fixed in accordance with
the Plan of Reorganization (the "Plan") for the corporation, as confirmed by the
United States Bankruptcy Court for the District of Nevada (the "Court") in Case
Nos. 95-24685 RCJ, 95-24886 RCJ, 95-24687 RCJ, 95-24688 RCJ, 95-24689 RCJ, and
95-24839 RCJ. All directors shall hold office for one (1) year or until his or
her successor or successors are elected and qualify, except as otherwise
provided in the Plan, which provides that the "Equity Nominee" (as defined in
the Plan) will hold office at least for the two (2) year period following the
Court's confirmation of the Plan, subject to approval of "Gaming Authorities"
(as defined in the Plan). A director need not be a stockholder of the
corporation.
Section 3.2. Change In Number. Subject to any limitations in the laws of
the State of Nevada, the Plan, the Articles of Incorporation, or these Bylaws,
the authorized number of directors may be changed from time to time by
resolution of the Board of Directors, without the need to amend these Bylaws or
the Articles of Incorporation.
Section 3.3. Reduction In Number. No reduction of the number of
directors shall have the effect of removing any director prior to the expiration
of his or her term of office.
Section 3.4. Resignation. Any director may resign effective upon
giving written notice to the Chairman of the Board of Directors, the President,
the Secretary, or in the absence of all of them, any other officer, unless the
notice specifies a later time for effectiveness of such resignation. Unless
otherwise specified in the Articles of Incorporation, a majority of the
remaining directors, though less than a quorum, may appoint a successor to take
office when the resignation becomes effective, each director so appointed to
hold office during the remainder of the term of office of the resigning
director.
Section 3.5. Removal.
(a) The Board of Directors of the corporation, by majority
vote, may declare vacant the office of a director who has been declared
incompetent by an order of a court of competent jurisdiction or convicted of a
felony.
Any director may be removed from office by the vote or written
consent of stockholders representing not less than two-thirds of the voting
power of the issued and outstanding stock entitled to vote for the election of
directors, except as otherwise provided in the Plan.
Section 3.6. Vacancies.
(a) Unless it is otherwise provided in the Articles of
Incorporation, all vacancies, including those caused by an increase in the
number of directors, may be filled by a majority of the remaining directors,
though less than a quorum unless, in the case of removal of one or more
directors, the stockholders by a majority of voting power entitled to vote for
election of directors shall have appointed a successor to the removed director.
Subject to the provisions of Subsection (b) below, (i) in the case of the
replacement of a director, the appointed director shall hold office during the
remainder of the term of office of the replaced director, and (ii) in the case
of an increase in the number of directors, the appointed director shall hold
office until the next meeting of stockholders at which directors are elected.
(b) If, after the filling of any vacancy by the directors,
the directors then in office who have been elected by the stockholders shall
constitute less than a majority of the directors then in office, any holder or
holders of an aggregate of five percent (5%) or more of the total voting power
entitled to vote for the election of directors may call a special meeting of the
stockholders to elect the entire Board of Directors.
Section 3.7. Annual and Regular Meetings. Immediately following the
adjournment of, and at the same place as the annual or any special meeting of
the stockholders at which directors are elected other than pursuant to Section
3.6 of this Article, the Board of Directors, including directors newly elected,
shall hold its annual meeting without notice, other than this provision, to
elect officers and to transact such further business as may be necessary or
appropriate. The Board of Directors may provide by resolution the place, date,
and hour for holding regular meetings between annual meetings.
Section 3.8. Special Meetings. Special meetings of the Board of
Directors may be called by the President or Secretary and shall be called by the
President or the Secretary upon the request of any two (2) directors or by the
sole director if the corporation has only one (1) director. If both the
President and Secretary refuse or neglect to call such special meeting, a
special meeting may be called by notice signed by any two (2) directors or by
the sole director if the corporation has only one (1) director.
Section 3.9. Place of Meetings. Any regular or special meeting of the
directors of the corporation may be held at such place as the Board of
Directors, or in the absence of such designation, as the notice calling such
meeting, may designate. A waiver of notice signed by directors may designate any
place for the holding of such meeting.
Section 3.10. Notice of Meetings. Except as otherwise provided in
Section 3.7, there shall be delivered to all directors, at least forty-eight
(48) hours before the time of such meeting, a copy of a written notice of any
meeting by delivery of such notice personally, by mailing such notice postage
prepaid or by telegram or facsimile. Such notice shall be addressed in the
manner provided for notice to stockholders in Section 2.4(c). If mailed, the
notice shall be deemed delivered two (2) business days following the date the
same is deposited in the United States mail, postage prepaid. Any director may
waive notice of any meeting, and the attendance of a director at a meeting and
oral consent entered on the minutes of the meeting or taking part in
deliberations of the meeting without objection shall constitute a waiver of
notice of such meeting. Attendance for the express purpose of objecting to the
transaction of business thereat because the meeting is not properly called or
convened shall not constitute presence nor a waiver of notice for purposes
hereof.
Section 3.11. Quorum: Adjourned Meetings.
(a) A majority of the directors in office, at a
meeting duly assembled, is necessary to constitute a quorum for the transaction
of business.
(b) At any meeting of the Board of Directors where a quorum
is not present, a majority of those present may adjourn, from time to time,
until a quorum is present, and no notice of such adjournment shall be required.
At any adjourned meeting where a quorum is present, any business may be
transacted which could have been transacted at the meeting originally called.
Section 3.12. Board of Directors' Decisions. Subject to the Articles of
Incorporation, the affirmative vote of a majority of the directors present at a
meeting at which a quorum is present is the act of the Board of Directors.
Section 3.13. Telephonic Meetings. Members of the Board of Directors or
of any committee designated by the Board of Directors may participate in a
meeting of the Board of Directors or committee by means of a telephone
conference or similar method of communication by which all persons participating
in such meeting can hear each other. Participation in a meeting pursuant to this
Section 3.13 constitutes presence in person at the meeting.
Section 3.14. Action Without Meeting. Any action required or
permitted to be taken at a meeting of the Board of Directors or of a committee
thereof may be taken without a meeting if, before or after the action, a written
consent thereto is signed by all of the members of the Board of Directors or the
committee. The written consent may be signed in counterparts and must be filed
with the minutes of the proceedings of the Board of Directors or committee.
Section 3.15. Powers and Duties.
(a) Except as otherwise restricted in the laws of the State
of Nevada, the Articles of Incorporation or these Bylaws, the Board of Directors
has full control over the affairs of the corporation. The Board of Directors may
delegate any of its authority to manage, control or conduct the business of the
corporation to any standing or special committee or to any officer or agent and
to appoint any persons to be agents of the corporation with such powers,
including the power to subdelegate and upon such terms as may be deemed fit.
(b) The Board of Directors may present to the stockholders at
annual meetings of the stockholders, and when called for by a majority vote of
the stockholders at an annual meeting or a special meeting of the stockholders
shall so present, a full and clear report of the condition of the corporation.
(c) The Board of Directors, in its discretion, may submit any
contract or act for approval or ratification at any annual meeting of the
stockholders or any special meeting properly called for the purpose of
considering any such contract or act, provided a quorum is present.
Section 3.16. Compensation. The directors and members of committees
shall be allowed and paid all necessary expenses incurred in attending any
meetings of the Board of Directors or committees. Directors shall also receive
reasonable compensation for their services as directors, in such amounts and at
such times as may be determined by the Board of Directors from time to time.
Section 3.17. Order of Business. The order of business at any meeting of
the Board of Directors shall be as follows:
(1) Determination of members present and existence of quorum;
(2) Reading and approval of the minutes of any previous meeting or meetings;
(3) Reports of officers and committee members;
(4) Election of officers (annual meeting);
(5) Unfinished business;
(6) New business;
(7) Adjournment.
<PAGE>
4. ARTICLE IV: OFFICERS
Section 4.1. Election. The Board of Directors, at its annual
meeting, shall elect a Chairman of the Board, a President, a Secretary and a
Treasurer to hold office for a term of one (1) year or until their successors
are chosen and qualify. Any individual may hold two or more offices. The Board
of Directors may, from time to time, by resolution, elect one or more
Vice-Presidents, Assistant Secretaries and Assistant Treasurers and appoint
agents of the corporation, prescribe their duties and fix their compensation.
Section 4.2. Removal: Resignation. Any officer or agent elected or
appointed by the Board of Directors may be removed by it with or without cause.
Any officer may resign at any time upon written notice to the corporation. Any
such removal or resignation shall be subject to the rights, if any, of the
respective parties under any contract between the corporation and such officer
or agent.
Section 4.3. Vacancies. Any vacancy in any office because of death,
resignation, removal or otherwise may be filled by the Board of Directors for
the unexpired portion of the term of such office.
Section 4.4. President. The President shall be the Chief Executive
Officer of the corporation and shall have duty of supervision, control, and
management of the day-to-day operation of the corporation, subject only to
directions from the Board of Directors with regard to the affairs of the
corporation. The President shall further have the full power to execute any and
all documents for and on behalf of the corporation, other than as specifically
limited by the Board of Directors of the corporation, including, but not limited
to, the power to enter into leases of real property, equipment, furniture,
furnishings, to hire and fire all personnel, to set and establish operational
manuals and policies, to enter into contracts as may be necessary for the
day-to-day operations, to establish lines of credit for the corporation, and to
establish accounts payable thereof. The President shall be a member of the Board
of Directors, and shall be a member and the Chairman of any Executive Committee
of the Board that may be established. The President shall preside at all
meetings of the Board of Directors and at all meetings of the stockholders and
shall sign the certificates of stock issued by the corporation; further, the
President shall perform any and all other duties as shall be prescribed by the
Board of Directors.
Section 4.5. Vice-Presidents. The Board of Directors may elect one or
more Vice-Presidents who shall be vested with all the powers and perform all the
duties of the President whenever the President is absent or unable to act and
such other duties as shall be prescribed by the Board of Directors or the
President.
Section 4.6. Secretary. The Secretary shall keep, or cause to be
kept, the minutes of proceedings of the stockholders and the Board of Directors
in books provided for that purpose, and shall perform like duties for standing
and special committees when required. The Secretary shall attend to the giving
and service of all notices of the corporation, may sign with the President in
the name of the corporation all contracts in which the corporation is authorized
to enter, shall have the custody or designate control of the corporate seal,
shall affix the corporate seal to all certificates of stock duly issued by the
corporation, shall have charge or designate control of stock certificate books,
transfer books and stock ledgers, and such other books and papers as the Board
of Directors or appropriate committee may direct, and shall, in general, perform
all duties incident to the office of the Secretary.
Section 4.7. Assistant Secretaries. The Board of Directors may appoint
one or more Assistant Secretaries who shall have such powers and perform such
duties as may be prescribed by the Board of Directors or the Secretary.
Section 4.8. Treasurer.
(a) The Treasurer shall be the Chief Financial Officer of the
corporation, subject to the supervision and control of the Board of Directors,
and shall have custody of all the funds and securities of the corporation. When
necessary or proper, the Treasurer shall endorse on behalf of the corporation
for collection checks, notes, and other obligations, and shall deposit all
monies to the credit of the corporation in such bank or banks or other
depository as the Board of Directors may designate, and shall sign all receipts
and vouchers for payments made by the corporation. Unless otherwise specified by
the Board of Directors, the Treasurer may sign with the President all bills of
exchange and promissory notes of the corporation, shall also have the care and
custody of the stocks, bonds, certificates, vouchers, evidence of debts,
securities, and such other property belonging to the corporation as the Board of
Directors shall designate and shall sign all papers required by law, by these
Bylaws, or by the Board of Directors to be signed by the Treasurer. The
Treasurer shall enter, or cause to be entered, regularly in the financial
records of the corporation, to be kept for that purpose full and accurate
accounts of all monies received and paid on account of the corporation and,
whenever required by the Board of Directors, the Treasurer shall render a
statement of any or all accounts. The Treasurer shall at all reasonable times
exhibit the books of account to any director of the corporation and shall
perform all acts incident to the position of Treasurer subject to the control of
the Board of Directors.
(b) The Treasurer shall, if required by the Board of
Directors, give bond to the corporation in such sum and with such security as
shall be approved by the Board of Directors for the faithful performance of all
the duties of Treasurer and for restoration to the corporation, in the event of
the Treasurer's death, resignation, retirement or removal from office, of all
books, records, papers, vouchers, money and other property in the Treasurer's
custody or control and belonging to the corporation. The expense of such bond
shall be borne by the corporation.
Section 4.9. Assistant Treasurers. The Board of Directors may
appoint one or more Assistant Treasurers who shall have such powers and perform
such duties as may be prescribed by the Board of Directors or the Treasurer. The
Board of Directors may prescribe an Assistant Treasurer to give a bond to the
corporation in such sum and with such security as it may approve, for the
faithful performance of the duties of Assistant Treasurer, and for restoration
to the corporation, in the event of the Assistant Treasurer's death,
resignation, retirement or removal from office, of all books, records, papers,
vouchers, money and other property in the Assistant Treasurer's custody or
control and belonging to the corporation. The expense of such bond shall be
borne by the corporation.
<PAGE>
5. ARTICLE V: CAPITAL STOCK
Section 5.1. Issuance. Shares of the corporation's authorized stock
shall, subject to any provisions or limitations of the laws of the State of
Nevada, the Articles of Incorporation or any contracts or agreements to which
the corporation may be a party, be issued in such manner, at such times, upon
such conditions and for such consideration as shall be prescribed by the Board
of Directors.
Section 5.2. Certificates. Ownership in the corporation shall be
evidenced by certificates for shares of stock in such form as shall be
prescribed by the Board of Directors, shall be under- the seal of the
corporation and shall be manually signed by the President or a Vice-President
and also by the Secretary, an Assistant Secretary, the Treasurer or an Assistant
Treasurer; provided, however, whenever any certificate is countersigned or
otherwise authenticated by a transfer agent or transfer clerk, and by a
registrar, then a facsimile of the signatures of said officers of the
corporation may be printed or lithographed upon the certificate in lieu of the
actual signatures. If the corporation uses facsimile signatures of its officers
on its stock certificates, it shall not act as registrar of its own stock, but
its transfer agent and registrar may be identical if the institution acting in
those dual capacities countersigns any stock certificates in both capacities.
Each certificate shall contain the name of the record holder, the number,
designation, if any, class or series of shares represented, a statement or
summary of any applicable rights, preferences, privileges or restrictions
thereon, and a statement, if applicable, that the shares are assessable. All
certificates shall be consecutively numbered. If provided by the stockholder,
the name, address and federal tax identification number of the stockholder, the
number of shares, and the date of issue shall be entered in the stock transfer
records of the corporation.
Section 5.3. Surrendered, Lost or Destroyed Certificates. All
certificates surrendered to the corporation, except those representing shares of
treasury stock, shall be canceled and no new certificate shall be issued until
the former certificate for a like number of shares shall have been canceled,
except that in case of a lost, stolen, destroyed or mutilated certificate, a new
one may be issued therefor. However, any stockholder applying for the issuance
of a stock certificate in lieu of one alleged to have been lost, stolen,
destroyed or mutilated shall, prior to the issuance of a replacement, provide
the corporation with his, her or its affidavit of the facts surrounding the
loss, theft, destruction or mutilation and, if required by the Board of
Directors, an indemnity bond in an amount not less than twice the current market
value of the stock, and upon such terms as the Treasurer or the Board of
Directors shall require which shall indemnify the corporation against any loss,
damage, cost or inconvenience arising as a consequence of the issuance of a
replacement certificate.
Section 5.4. Replacement Certificate. When the Articles of
Incorporation are amended in any way affecting the statements contained in the
certificates for outstanding shares of capital stock of the corporation or it
becomes desirable for any reason, in the discretion of the Board of Directors,
including, without limitation, following the merger of the corporation with
another corporation or the reorganization of the corporation, to cancel any
outstanding certificate for shares and issue a new certificate therefor
conforming to the rights of the holder, the Board of Directors may order any
holders of outstanding certificates for shares to surrender and exchange the
same for new certificates within a reasonable time to be fixed by the Board of
Directors. The order may provide that a holder of any certificate(s) ordered to
be surrendered shall not be entitled to vote, receive distributions or exercise
any other rights of stockholders of record until the holder has complied with
the order, but the order operates to suspend such rights only after notice and
until compliance.
Section 5.5. Transfer of Shares. No transfer of stock shall be
valid as against the corporation except on surrender and cancellation of the
certificates therefor accompanied by an assignment or transfer by the registered
owner made either in person or under assignment. Whenever any transfer shall be
expressly made for collateral security and not absolutely, the collateral nature
of the transfer shall be reflected in the entry of transfer in the records of
the corporation.
Section 5.6. Transfer Agent; Registrars. The Board of Directors may
appoint one or more transfer agents, transfer clerks and registrars of transfer
and may require all certificates for shares of stock to bear the signatures of
such transfer agent, transfer clerk and/or registrar of transfer.
Section 5.7. Stock Transfer Records. The stock transfer records
shall be closed for a period of at least ten (10) days prior to all meetings of
the stockholders and. shall be closed for the payment of distributions as
provided in Article VI hereof and during such periods as, from time to time, may
be fixed by the Board of Directors, and, during such periods, no stock shall be
transferable for purposes of Article VI and no voting rights shall be deemed
transferred during such periods. Subject to the forgoing limitations, nothing
contained herein shall cause transfers during such periods to be void or
voidable.
Section 5.8. Miscellaneous. The Board of Directors shall have the power
and authority to make such rules and regulations not inconsistent herewith as it
may deem expedient concerning the issue, transfer, and registration of
certificates for shares of the corporation's stock.
<PAGE>
ARTICLE VI: DISTRIBUTIONS
Distributions may be declared, subject to the provisions of the
laws of the State of Nevada and the Articles of Incorporation, by the Board of
Directors at any regular or special meeting and may be paid in cash, property,
shares of corporate stock, or any other medium. The Board of Directors may fix
in advance a record date, as provided in Section 2.6, prior to the distribution
for the purpose of determining stockholders entitled to receive any
distribution. The Board of Directors may close the stock transfer books for such
purpose for a period of not more than ten (10) days prior to the date of such
distribution.
<PAGE>
ARTICLE VII: RECORDS; REPORTS; SEAL; AND FINANCIAL MATTERS
Section 7.1 Records. All original records of the corporation shall be
kept by or under the direction of the Secretary or at such places as may be
prescribed by the Board of Directors.
Section 7.2 Directors' and Officers' Right of Inspection. Every
director and officer shall have the absolute right at any reasonable time for a
purpose reasonably related to the exercise of such individual's duties to
inspect and copy all of the corporation's books, records, and documents of every
kind and to inspect the physical properties of the corporation and/or its
subsidiary corporations. Such inspection may be made in person or by agent or
attorney.
Section 7.3 Corporate Seal. The Board of Directors may, by
resolution, authorize a seal, and the seal may be used by causing it, or a
facsimile, to be impressed or affixed or reproduced or otherwise. Except when
otherwise specifically provided herein, any officer of the corporation shall
have the authority to affix the seal to any document requiring it.
Section 7.4 Fiscal Year-End. The fiscal year-end of the corporation
shall be such date as may be fixed from time to time by resolution of the Board
of Directors.
Section 7.5 Reserves. The Board of Directors may create, by
resolution, such reserves in accordance with generally accepted accounting
principles, consistently applied, as the directors may, from time to time, in
their discretion, think proper to provide for contingencies, or to equalize
distributions or to repair or maintain any property of the corporation, or for
such other purpose as the Board of Directors may deem beneficial to the
corporation, and the directors may modify or abolish any such reserves in the
manner in which they were created.
<PAGE>
8. ARTICLE VIII:INDEMNIFICATION OF CORPORATE AGENTS;
PURCHASE OF LIABILITY INSURANCE
Section 8.1 Indemnification of Agents of the Corporation;
Purchase of Liability Insurance.
(a) The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative, except an action by or in the right of the corporation, by
reason of the fact that he or she is or was a director, officer, employee, or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee, or agent of another corporation, partnership,
joint venture, limited liability company, trust, or other enterprise, against
expenses, including attorney fees, judgments, fines, and amounts paid in
settlement, actually and reasonably incurred by him or her in connection with
the action, suit, or proceeding, if he or she acted in good faith and in a
manner which he or she reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The termination of any action, suit, or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent does
not, of itself, create a presumption that the person did not act in good faith
and in a manner which he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and that, with respect to any criminal
action or proceeding, he or she had reasonable cause to believe that his or her
conduct was unlawful.
(b) The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, limited liability company, trust, or
other enterprise, against expenses, including amounts paid in settlement and
attorney fees, actually and reasonably incurred by him or her in connection with
the defense or settlement of the action or suit, if he or she acted in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the corporation. However, indemnification shall
not be made for any claim, issue, or matter as to which such a person has been
adjudged by a court of competent jurisdiction, after exhaustion of all appeals
therefrom, to be liable to the corporation or for amounts paid in settlement to
the corporation, unless and only to the extent that the court in which the
action or suit was brought or other court of competent jurisdiction determines
upon application that in view of all the circumstances of the case, the person
is fairly and reasonably entitled to indemnity for such expenses as the court
deems proper.
(c) To the extent that a director, officer, employee, or agent
of the corporation has been successful on the merits or otherwise in defense of
any action, suit, or proceeding referred to in subsection (a) or (b), or in
defense of any claim, issue, or matter therein, he or she shall be indemnified
by the corporation against expenses, including attorney fees, actually and
reasonably incurred by him or her in connection with the defense.
(d) Any indemnification under subsection (a) or (b), unless
ordered by a court or advanced pursuant to subsection (e), shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee, or agent is proper in the
circumstances. The determination shall be made: (i) by the stockholders; (ii) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to the action, suit, or proceeding; or (iii) if a majority
vote of a quorum consisting of directors who were not parties to the action,
suit or proceeding cannot be obtained, by independent legal counsel in a written
opinion.
(e) The expenses of officers and directors incurred in
defending a civil or criminal action, suit, or proceeding shall be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit, or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he or she is not entitled to be indemnified
by the corporation. The provisions of this subsection (e) do not affect any
rights to advancement of expenses to which corporate personnel other than
directors or officers may be entitled under any contract or otherwise by law.
(f) The indemnification and advancement of expenses authorized
in or ordered by a court pursuant to this ARTICLE VIII (i) does not exclude any
other rights to which a person seeking indemnification or advancement of
expenses may be entitled under the Articles of Incorporation, the Bylaws, or any
agreement, vote of stockholders or disinterested directors or otherwise, for
either an action in his or her official capacity or an action in another
capacity while holding his or her office, except that indemnification, unless
ordered by a court pursuant to subsection (b) or for the advancement of expenses
made pursuant to subsection (e), shall not be made to or on behalf of any
director or officer if a final adjudication establishes that his or her acts or
omissions involved intentional misconduct, fraud, or a knowing violation of the
law and were material to the cause of action and (ii) continues for a person who
has ceased to be a director, officer, employee, or agent and inures to the
benefit of the heirs, executors, and administrators of such a person.
(g) The corporation may purchase and maintain insurance or
make other financial arrangements on behalf of any person who is or was a
director, officer, employee, or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, limited liability company,
trust, or other enterprise, for any liability asserted against him or her and
liability and expenses incurred by him or her in his or her capacity as a
director, officer, employee, or agent, or arising out of his or her status as
such, whether or not the corporation has the authority to indemnify him or her
against such liability and expenses. The other financial arrangements made by
the corporation may include any now or hereafter permitted by applicable law.
(h) In the event that the laws of the State of Nevada shall
hereafter permit or authorize indemnification by the corporation of the
directors, officers, employees, or agents of the corporation for any reason or
purpose or in any manner not otherwise provided for in this ARTICLE VIII, then
such directors, officers, employees, and agents shall be entitled to such
indemnification by making written demand therefor upon the corporation, it being
the intention of this ARTICLE VIII at all times to provide the most
comprehensive indemnification coverage to the corporation's directors, officers,
employees, and agents as may now or hereafter be permitted by the laws of the
State of Nevada.
(i) The foregoing indemnification provisions shall inure to
the benefit of all present and future directors, officers, employees, and agents
of the corporation and all persons now or hereafter serving at the request of
the corporation as directors, officers, employees, or agents of another
corporation, partnership, joint venture, limited liability company, trust, or
other enterprise and their heirs, executors, and administrators, and shall be
applicable to all acts or omissions to act of any such persons, whether such
acts or omissions to act are alleged to have or actually occurred prior to or
subsequent to the adoption of this ARTICLE VIII.
(j) Any insurance or other financial arrangement made on
behalf of a person pursuant to this Section may be provided by the corporation
or any other person approved by the Board of Directors, even if all or part of
the other person's stock or other securities is owned by the corporation. In the
absence of fraud:
(1) the decision of the Board of Directors as to
the propriety of the terms and conditions of
any insurance or other financial arrangement
made pursuant to this Section and the choice
of the person to provide the insurance or
other financial arrangement is conclusive;
and
(2) the insurance or other financial arrangement:
(i) is not void or voidable; and
(ii) does not subject any director
approving it to personal liability
for his action,
even if a director approving the insurance or other financial
arrangement is a beneficiary of the insurance or other financial arrangement.
Section 8.2 Vested Rights. Neither the amendment nor repeal of this
ARTICLE VIII, nor the adoption of any provision of the Articles of Incorporation
or the Bylaws or of any statute inconsistent with this ARTICLE VIII, shall
adversely affect any right or protection of a director, officer, employee, or
agent of the corporation existing at the time of such amendment, repeal, or
adoption of such inconsistent provision.
ARTICLE IX: AMENDMENT OR REPEAL
Except as otherwise restricted in the Articles of
Incorporation, the Plan, or these Bylaws:
(a) Any provision of these Bylaws may be altered, amended or
repealed at the annual or any regular meeting of the Board of Directors without
prior notice, or at any special meeting of the Board of Directors if notice of
such alteration, amendment or repeal be contained in the notice of such special
meeting.
(b) These Bylaws may also be altered, amended, or repealed at
a duly convened meeting of the stockholders by the affirmative vote of the
holders of a majority of the voting power of the issued and outstanding stock of
the corporation entitled to vote. The stockholders may provide by resolution
that any Bylaw provision repealed, amended, adopted or altered by the them may
not be repealed, amended, adopted or altered by the Board of Directors.
CERTIFICATION
The undersigned duly elected Secretary of the corporation does hereby
certify the foregoing Bylaws were adopted by the filing with the Nevada
Secretary of State on ___________________, 1997, pursuant to Nevada Revised
Statutes Section 78.622 of a certified copy of the Plan of Reorganization for
the corporation, as confirmed by the United States Bankruptcy Court for the
District of Nevada in Case Nos. 95-24685 RCJ, 95-24686 RCJ, 95-24687 RCJ,
95-24688 RCJ, 95-24689, and 95-24839 RCJ, pursuant to Chapter 11 of Title 11 of
the United States Code, which Plan provides for the adoption of these Bylaws.
S. Barton Jacka, Secretary
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered into
effective on the 8th day of August, 1996, by and between ELSINORE CORPORATION, a
Nevada corporation (the "Company"), and FRANK L. BURRELL, JR. (the
"Indemnitee").
In consideration of the mutual promises in this Agreement, and
intending to be legally bound, the Company and Indemnitee hereby covenant and
agree as follows:
Section 1. Indemnification. In consideration for Indemnitee's
continuing service on behalf of the Company and as Indemnitee's contract right,
the Company agrees to indemnify Indemnitee to the fullest extent permitted by
the Nevada General Corporation Law, as amended (the "Nevada Law"), and the
Articles of Incorporation and By-Laws of the Company, as they are in effect on
the date hereof or as they may from time to time be amended (but, in the case of
amendment, only to the extent amendment permits the Company to provide broader
indemnification rights than the Company was permitted to provide before the
amendment). Notwithstanding the generality of the foregoing, the Company agrees
to pay to Indemnitee any Expenses which he or she actually or reasonably incurs
as a party to or witness in any Proceeding by reason of the fact that he or she
is or was a director or officer of the Company or serves or served at the
request of the Company as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of anything
done or not done by him or her in that capacity.
"Expenses" shall be broadly construed and shall include, without
limitation, (i) all direct and indirect costs incurred, paid or accrued, of
investigation, defense and appeal of any Proceeding, (ii) all attorneys' fees,
retainers, court costs, transcripts, fees of experts, witness fees, travel
expenses, duplicating and printing costs, telephone and delivery charges, costs
of attachment of similar bonds, (iii) all other disbursements and out-of-pocket
expenses and (iv) amounts paid in settlement or for fines or judgments, to the
extent permitted by Nevada Law, actually and reasonably incurred in connection
with either the appearance at or investigation, defense, settlement or appeal of
a Proceeding or establishing or enforcing a right to indemnification under this
Agreement or applicable law or otherwise. "Expenses" will not include any
judgments or fines or excise taxes or penalties imposed under the Employee
Retirement Income Security Act of 1974, as amended, or other similar excise
taxes or penalties.
"Proceeding" means any pending, threatened or completed action,
hearing, suit or any other proceeding, whether civil, criminal, arbitrative,
administrative or investigative, or any alternative dispute resolution
mechanism, including without limitation any such Proceeding brought by or in the
right of the Company or any Proceeding brought to enforce Indemnitee's rights
under this Agreement.
<PAGE>
Section 2. Advancement of Expenses. The Company shall advance to
Indemnitee all Expenses incurred by or on behalf of Indemnitee within 20 days
after the receipt by the Company of a written request for such advance that
reasonably describes the Expenses (unless there has been a final determination
by a court of competent jurisdiction that Indemnitee is not entitled to be
indemnified for such Expenses). If required by law at the time of such advance,
Indemnitee hereby agrees to repay the amounts advanced if it is ultimately
determined that Indemnitee is not entitled to be indemnified pursuant to the
terms of this Agreement.
Section 3. Procedures for Determination of Entitlement to
Indemnification.
(a) Whenever Indemnitee believes that he or she is entitled to
indemnification pursuant to this Agreement, Indemnitee shall deliver a written
request for indemnification to the Company. This request must include
documentation or information reasonably available to the Indemnitee which
supports his or her claim. Determination of Indemnitee's entitlement to
indemnification shall be made not later than 90 days after receipt of the
request in a forum selected by the Company from the following alternatives:
(i) The stockholders of the Company;
(ii) A quorum of the Board of Directors of the
Company (the "Board") consisting of directors who are not parties to the matter
for which indemnification is sought;
(iii) Independent counsel which has not represented
the Company or the Indemnitee in the past or any party in the matter in which
indemnification is sought, as selected by Indemnitee and reasonably approved
by the Board, which counsel shall make its determination in a written opinion;
or
(iv) A panel of three arbitrators, one of whom is
selected by the Company, another of whom is selected by Indemnitee and the last
of whom is selected by the first two arbitrators.
(b) In the determination of entitlement to indemnification,
Indemnitee shall be presumed to be entitled to indemnification and the Company
has the burden of proof to overcome that presumption. If the Company fails to
notify Indemnitee of the determination within 90 days after the indemnification
request, the Indemnitee shall be absolutely entitled to indemnification, except
as provided in Section 5. The termination of any Proceeding by judgment, order,
settlement, or arbitration, or upon a plea of nolo contendere or its equivalent,
shall not of itself adversely affect the rights of Indemnitee to
indemnification, create a presumption that Indemnitee did not act in good faith
and in a manner which he or she reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal action or
proceeding, create a presumption that Indemnitee had reasonable cause to believe
that his or her conduct was unlawful.
<PAGE>
Section 4. Remedies of Indemnitee in Cases of Determination Not to
Indemnify or to Advance Expenses.
(a) In the event that (i) an initial determination is made
that Indemnitee is not entitled to indemnification, (ii) advances for Expenses
are not made when and as required by this Agreement, (iii) payment has not been
timely made following a determination of entitlement to indemnification pursuant
to this Agreement or (iv) Indemnitee otherwise seeks enforcement of this
Agreement, Indemnitee shall be entitled to a final adjudication in an
appropriate court. Alternatively, Indemnitee at his or her option may seek
arbitration pursuant to the commercial arbitration rules of the American
Arbitration Association now in effect, the arbitration to be completed within 90
days following the filing of the demand for arbitration. In any proceeding or
arbitration Indemnitee shall be presumed to be entitled to indemnification and
the Company shall have the burden of proof to overcome that presumption. The
Company agrees to stipulate in court or arbitration that the Company is bound by
all the provisions of this Agreement.
(b) If an initial determination is made or deemed to have been made
pursuant to the terms of this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in the absence
of a misrepresentation of a material fact by Indemnitee in the request for
indemnification or a specific finding in a final judgment by a court of
competent jurisdiction that all or any part of such indemnification is expressly
prohibited by law.
(c) In the event an initial determination has been made, in whole or in
part, that Indemnitee is not entitled to indemnification, the decision in the
judicial proceeding or arbitration shall be made de novo the Indemnitee shall be
prejudiced by reason of any prior determination that he or she is not entitled
to indemnification.
Section 5. Limitations on Indemnification. No indemnification shall
be paid or Expenses advanced:
(a) Insurance. To the extent that Indemnitee has been
reimbursed by insurance coverage. Notwithstanding the availability of insurance,
Indemnitee also may claim indemnification from the Company pursuant to this
Agreement by assigning to the Company his or her rights to insurance.
(b) Section 16(b). To the extent of any wholly or partially
successful claim against Indemnitee pursuant to the provisions of section 16(b)
of the Securities Exchange Act of 1934, as amended, or similar provisions of any
federal, state or local law.
(c) Indemnitee's Proceedings. In connection with all or any
part of a Proceeding which is initiated or maintained by or on behalf of
Indemnitee, or any Proceeding by Indemnitee against the Company or its
directors, officers, employees or other agents, unless (i) such indemnification
is expressly required to be made by Nevada Law or this Agreement, (ii) the
Proceeding was authorized by the Board of Directors of the Company or (iii) such
indemnification is provided by the Company, in its sole discretion, pursuant to
the powers vested in the Company under Nevada Law.
<PAGE>
Section 6. Duration and Scope of Agreement; Binding Effect. This
Agreement shall continue so long as Indemnitee is subject to any possible
Proceeding for acts or omissions occurring before or after execution of this
Agreement. This Agreement is binding upon the Company and its successors and
assigns and is for the benefit of Indemnitee and his or her spouse, assigns,
heirs, devisees, executors, administrators and other legal representatives.
Section 7. Miscellaneous.
(a) Severability; Partial Indemnity. If any provision or
provisions of this Agreement is held to be invalid, illegal or unenforceable for
any reason whatever: (a) the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby; and (b) to the fullest extent possible, the provisions of this
Agreement shall be construed to give effect to the intent of the provision held
invalid, illegal or unenforceable. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for only a portion of any
Expenses, the Company shall indemnify Indemnitee for the portion to which
Indemnitee is entitled.
(b) Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by the
Company and Indemnitee. No Waiver of any provision of this Agreement will be
deemed to constitute a waiver of any other provision hereof (whether or not
similar) nor will such waiver constitute a continuing waiver.
(c) Notice by Indemnitee and Defense of Proceedings.
Indemnitee shall give the Company notice in writing, as soon as practicable, of
any claim made or Proceeding for which indemnity will or could be sought under
this Agreement, and the Indemnitee agrees not to make any statement or effect
any settlement with respect to any Proceeding without the Company's consent.
However, the Company may not deny indemnification for failure of Indemnitee to
provide prompt notification unless the Company has been adversely affected by
the delay.
With respect to any Proceeding as to which Indemnitee has notified the
Company:
(i) The Company shall be entitled to participate therein at
its own expense; and
(ii) The Company jointly with any other indemnifying party
similarly notified shall be entitled to assume the defense thereof, with counsel
reasonably satisfactory to Indemnitee; provided, however, that the Company shall
not be entitled to assume the defense of any Proceeding if Indemnitee reasonably
concludes that there may be a conflict of interest between the Company and
Indemnitee with respect to such Proceeding. After notice from the Company to
Indemnitee of its election to assume the defense thereof, the Company will not
be liable to Indemnitee under this Agreement for any Expenses subsequently
incurred by Indemnitee in
<PAGE>
connection with the defense thereof, other than reasonable costs of
investigation or as otherwise provided below. Indemnitee shall have the right to
employ its own counsel in such Proceeding but the fees and expenses of such
counsel incurred after notice from the Company of its assumption of the defense
thereof shall be at the expense of Indemnitee unless:
A. The employment of counsel by Indemnitee has been
authorized by the Company;
B. Indemnitee shall have reasonably concluded that counsel
engaged by the Company may not adequately represent Indemnitee;
C. The Company shall not in fact have employed counsel to
assume the defense in such Proceeding or shall not in fact have assumed such
defense and be acting in connection therewith with reasonable diligence;
in each of which cases the fees and expenses of such counsel shall be at the
expense of the Company.
The Company shall further have the right, in its sole
discretion, to settle any Proceeding, provided that no settlement may be made
without Indemnitee's prior consent if it will adversely affect Indemnitee.
Indemnitee agrees to give the Company such information and cooperation as it may
reasonably require to defend or settle any Proceeding.
(d) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand to the addressee, (ii) received by facsimile
transmission if such transmission is thereafter confirmed or acknowledged in
writing or (iii) mailed by certified or registered mail with postage prepaid, on
the third business day after the date on which it is so mailed:
(a) If to Indemnitee, to:
Frank L. Burrell, Jr.
c/o Elsinore Corporation
202 East Fremont Street
Las Vegas, Nevada 89101
(b) If to the Company, to
Elsinore Corporation
202 East Fremont Street
Las Vegas, Nevada 89101
Attention: Corporate Secretary
<PAGE>
or to such other address as may have been furnished by the parties.
(e) Governing Law. The parties agree that this Agreement will
be governed by, and construed and enforced in accordance with, the laws of the
State of Nevada, as applied to contracts between Nevada residents entered into
and to be performed entirely within Nevada.
(f) Subrogation. In the event of any payment under this
Agreement, the Company will be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who agrees to execute all papers
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.
(g) Prior Agreements. This Agreement supersedes any prior
indemnification agreement between the Indemnitee and the Company, which shall be
of no further force and effect whatsoever.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
ELSINORE CORPORATION
By _________________________________
Title:
Indemnitee
_________________________________
FRANK L. BURRELL, JR.
ATTEST:
By____________________________
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into effective on the 8th day of August, 1996, by and between ELSINORE
CORPORATION, a Nevada corporation (the "Company"), and HOWARD R. CARLSON (the
"Indemnitee").
In consideration of the mutual promises in this Agreement, and
intending to be legally bound, the Company and Indemnitee hereby covenant and
agree as follows:
Section 1. Indemnification. In consideration for Indemnitee's
continuing service on behalf of the Company and as Indemnitee's contract right,
the Company agrees to indemnify Indemnitee to the fullest extent permitted by
the Nevada General Corporation Law, as amended (the "Nevada Law"), and the
Articles of Incorporation and By-Laws of the Company, as they are in effect on
the date hereof or as they may from time to time be amended (but, in the case of
amendment, only to the extent amendment permits the Company to provide broader
indemnification rights than the Company was permitted to provide before the
amendment). Notwithstanding the generality of the foregoing, the Company agrees
to pay to Indemnitee any Expenses which he or she actually or reasonably incurs
as a party to or witness in any Proceeding by reason of the fact that he or she
is or was a director or officer of the Company or serves or served at the
request of the Company as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of anything
done or not done by him or her in that capacity.
"Expenses" shall be broadly construed and shall include, without
limitation, (i) all direct and indirect costs incurred, paid or accrued, of
investigation, defense and appeal of any Proceeding, (ii) all attorneys' fees,
retainers, court costs, transcripts, fees of experts, witness fees, travel
expenses, duplicating and printing costs, telephone and delivery charges, costs
of attachment of similar bonds, (iii) all other disbursements and out-of-pocket
expenses and (iv) amounts paid in settlement or for fines or judgments, to the
extent permitted by Nevada Law, actually and reasonably incurred in connection
with either the appearance at or investigation, defense, settlement or appeal of
a Proceeding or establishing or enforcing a right to indemnification under this
Agreement or applicable law or otherwise. "Expenses" will not include any
judgments or fines or excise taxes or penalties imposed under the Employee
Retirement Income Security Act of 1974, as amended, or other similar excise
taxes or penalties.
"Proceeding" means any pending, threatened or completed action,
hearing, suit or any other proceeding, whether civil, criminal, arbitrative,
administrative or investigative, or any alternative dispute resolution
mechanism, including without limitation any such Proceeding brought by or in the
right of the Company or any Proceeding brought to enforce Indemnitee's rights
under this Agreement.
<PAGE>
Section 2. Advancement of Expenses. The Company shall advance to
Indemnitee all Expenses incurred by or on behalf of Indemnitee within 20 days
after the receipt by the Company of a written request for such advance that
reasonably describes the Expenses (unless there has been a final determination
by a court of competent jurisdiction that Indemnitee is not entitled to be
indemnified for such Expenses). If required by law at the time of such advance,
Indemnitee hereby agrees to repay the amounts advanced if it is ultimately
determined that Indemnitee is not entitled to be indemnified pursuant to the
terms of this Agreement.
Section 3. Procedures for Determination of Entitlement to
Indemnification.
(a) Whenever Indemnitee believes that he or she is entitled to
indemnification pursuant to this Agreement, Indemnitee shall deliver a written
request for indemnification to the Company. This request must include
documentation or information reasonably available to the Indemnitee which
supports his or her claim. Determination of Indemnitee's entitlement to
indemnification shall be made not later than 90 days after receipt of the
request in a forum selected by the Company from the following alternatives:
(i) The stockholders of the Company;
(ii) A quorum of the Board of Directors of the
Company (the "Board") consisting of directors who are not parties to the matter
for which indemnification is sought;
(iii) Independent counsel which has not represented
the Company or the Indemnitee in the past or any party in the matter in which
indemnification is sought, as selected by Indemnitee and reasonably approved
by the Board, which counsel shall make its determination in a written opinion;
or
(iv) A panel of three arbitrators, one of whom is
selected by the Company, another of whom is selected by Indemnitee and the last
of whom is selected by the first two arbitrators.
(b) In the determination of entitlement to indemnification,
Indemnitee shall be presumed to be entitled to indemnification and the Company
has the burden of proof to overcome that presumption. If the Company fails to
notify Indemnitee of the determination within 90 days after the indemnification
request, the Indemnitee shall be absolutely entitled to indemnification, except
as provided in Section 5. The termination of any Proceeding by judgment, order,
settlement, or arbitration, or upon a plea of nolo contendere or its equivalent,
shall not of itself adversely affect the rights of Indemnitee to
indemnification, create a presumption that Indemnitee did not act in good faith
and in a manner which he or she reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal action or
proceeding, create a presumption that Indemnitee had reasonable cause to believe
that his or her conduct was unlawful.
<PAGE>
Section 4. Remedies of Indemnitee in Cases of Determination Not to
Indemnify or to Advance Expenses.
(a) In the event that (i) an initial determination is made
that Indemnitee is not entitled to indemnification, (ii) advances for Expenses
are not made when and as required by this Agreement, (iii) payment has not been
timely made following a determination of entitlement to indemnification pursuant
to this Agreement or (iv) Indemnitee otherwise seeks enforcement of this
Agreement, Indemnitee shall be entitled to a final adjudication in an
appropriate court. Alternatively, Indemnitee at his or her option may seek
arbitration pursuant to the commercial arbitration rules of the American
Arbitration Association now in effect, the arbitration to be completed within 90
days following the filing of the demand for arbitration. In any proceeding or
arbitration Indemnitee shall be presumed to be entitled to indemnification and
the Company shall have the burden of proof to overcome that presumption. The
Company agrees to stipulate in court or arbitration that the Company is bound by
all the provisions of this Agreement.
(b) If an initial determination is made or deemed to have been made
pursuant to the terms of this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in the absence
of a misrepresentation of a material fact by Indemnitee in the request for
indemnification or a specific finding in a final judgment by a court of
competent jurisdiction that all or any part of such indemnification is expressly
prohibited by law.
(c) In the event an initial determination has been made, in whole or in
part, that Indemnitee is not entitled to indemnification, the decision in the
judicial proceeding or arbitration shall be made de novo the Indemnitee shall be
prejudiced by reason of any prior determination that he or she is not entitled
to indemnification.
Section 5. Limitations on Indemnification. No indemnification shall
be paid or Expenses advanced:
(a) Insurance. To the extent that Indemnitee has been
reimbursed by insurance coverage. Notwithstanding the availability of insurance,
Indemnitee also may claim indemnification from the Company pursuant to this
Agreement by assigning to the Company his or her rights to insurance.
(b) Section 16(b). To the extent of any wholly or partially
successful claim against Indemnitee pursuant to the provisions of section 16(b)
of the Securities Exchange Act of 1934, as amended, or similar provisions of any
federal, state or local law.
(c) Indemnitee's Proceedings. In connection with all or any
part of a Proceeding which is initiated or maintained by or on behalf of
Indemnitee, or any Proceeding by Indemnitee against the Company or its
directors, officers, employees or other agents, unless (i) such indemnification
is expressly required to be made by Nevada Law or this Agreement, (ii) the
Proceeding was authorized by the Board of Directors of the Company or (iii) such
<PAGE>
indemnification is provided by the Company, in its sole discretion, pursuant to
the powers vested in the Company under Nevada Law.
Section 6. Duration and Scope of Agreement; Binding Effect. This
Agreement shall continue so long as Indemnitee is subject to any possible
Proceeding for acts or omissions occurring before or after execution of this
Agreement. This Agreement is binding upon the Company and its successors and
assigns and is for the benefit of Indemnitee and his or her spouse, assigns,
heirs, devisees, executors, administrators and other legal representatives.
Section 7. Miscellaneous.
(a) Severability; Partial Indemnity. If any provision or
provisions of this Agreement is held to be invalid, illegal or unenforceable for
any reason whatever: (a) the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby; and (b) to the fullest extent possible, the provisions of this
Agreement shall be construed to give effect to the intent of the provision held
invalid, illegal or unenforceable. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for only a portion of any
Expenses, the Company shall indemnify Indemnitee for the portion to which
Indemnitee is entitled.
(b) Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by the
Company and Indemnitee. No Waiver of any provision of this Agreement will be
deemed to constitute a waiver of any other provision hereof (whether or not
similar) nor will such waiver constitute a continuing waiver.
(c) Notice by Indemnitee and Defense of Proceedings.
Indemnitee shall give the Company notice in writing, as soon as practicable, of
any claim made or Proceeding for which indemnity will or could be sought under
this Agreement, and the Indemnitee agrees not to make any statement or effect
any settlement with respect to any Proceeding without the Company's consent.
However, the Company may not deny indemnification for failure of Indemnitee to
provide prompt notification unless the Company has been adversely affected by
the delay.
With respect to any Proceeding as to which Indemnitee has notified the
Company:
(i) The Company shall be entitled to participate therein at
its own expense; and
(ii) The Company jointly with any other indemnifying party
similarly notified shall be entitled to assume the defense thereof, with counsel
reasonably satisfactory to Indemnitee; provided, however, that the Company shall
not be entitled to assume the defense of any Proceeding if Indemnitee reasonably
concludes that there may be a conflict of interest between the Company and
Indemnitee with respect to such Proceeding. After notice from the Company to
Indemnitee of its election to assume the defense thereof, the Company will not
be liable to Indemnitee under this Agreement for any Expenses subsequently
incurred by Indemnitee in
<PAGE>
connection with the defense thereof, other than reasonable costs of
investigation or as otherwise provided below. Indemnitee shall have the right to
employ its own counsel in such Proceeding but the fees and expenses of such
counsel incurred after notice from the Company of its assumption of the defense
thereof shall be at the expense of Indemnitee unless:
A. The employment of counsel by Indemnitee has been
authorized by the Company;
B. Indemnitee shall have reasonably concluded that counsel
engaged by the Company may not adequately represent Indemnitee;
C. The Company shall not in fact have employed counsel to
assume the defense in such Proceeding or shall not in fact have assumed such
defense and be acting in connection therewith with reasonable diligence;
in each of which cases the fees and expenses of such counsel shall be at the
expense of the Company.
The Company shall further have the right, in its sole
discretion, to settle any Proceeding, provided that no settlement may be made
without Indemnitee's prior consent if it will adversely affect Indemnitee.
Indemnitee agrees to give the Company such information and cooperation as it may
reasonably require to defend or settle any Proceeding.
(d) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand to the addressee, (ii) received by facsimile
transmission if such transmission is thereafter confirmed or acknowledged in
writing or (iii) mailed by certified or registered mail with postage prepaid, on
the third business day after the date on which it is so mailed:
(a) If to Indemnitee, to:
Howard R. Carlson
c/o Elsinore Corporation
202 East Fremont Street
Las Vegas, Nevada 89101
(b) If to the Company, to
Elsinore Corporation
202 East Fremont Street
Las Vegas, Nevada 89101
Attention: Corporate Secretary
<PAGE>
or to such other address as may have been furnished by the parties.
(e) Governing Law. The parties agree that this Agreement will
be governed by, and construed and enforced in accordance with, the laws of the
State of Nevada, as applied to contracts between Nevada residents entered into
and to be performed entirely within Nevada.
(f) Subrogation. In the event of any payment under this
Agreement, the Company will be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who agrees to execute all papers
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.
(g) Prior Agreements. This Agreement supersedes any prior
indemnification agreement between the Indemnitee and the Company, which shall
be of no further force and effect whatsoever.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
ELSINORE CORPORATION
By_________________________________
FRANK L. BURRELL, JR.
Title: Chairman of the Board of Directors
Indemnitee
------------------------------------
HOWARD R. CARLSON
ATTEST:
By____________________________
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into effective on the 8th day of August, 1996, by and between ELSINORE
CORPORATION, a Nevada corporation (the "Company"), and ROBERT A. MCKERROLL (the
"Indemnitee").
In consideration of the mutual promises in this Agreement, and
intending to be legally bound, the Company and Indemnitee hereby covenant and
agree as follows:
Section 1. Indemnification. In consideration for Indemnitee's
continuing service on behalf of the Company and as Indemnitee's contract right,
the Company agrees to indemnify Indemnitee to the fullest extent permitted by
the Nevada General Corporation Law, as amended (the "Nevada Law"), and the
Articles of Incorporation and By-Laws of the Company, as they are in effect on
the date hereof or as they may from time to time be amended (but, in the case of
amendment, only to the extent amendment permits the Company to provide broader
indemnification rights than the Company was permitted to provide before the
amendment). Notwithstanding the generality of the foregoing, the Company agrees
to pay to Indemnitee any Expenses which he or she actually or reasonably incurs
as a party to or witness in any Proceeding by reason of the fact that he or she
is or was a director or officer of the Company or serves or served at the
request of the Company as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of anything
done or not done by him or her in that capacity.
"Expenses" shall be broadly construed and shall include, without
limitation, (i) all direct and indirect costs incurred, paid or accrued, of
investigation, defense and appeal of any Proceeding, (ii) all attorneys' fees,
retainers, court costs, transcripts, fees of experts, witness fees, travel
expenses, duplicating and printing costs, telephone and delivery charges, costs
of attachment of similar bonds, (iii) all other disbursements and out-of-pocket
expenses and (iv) amounts paid in settlement or for fines or judgments, to the
extent permitted by Nevada Law, actually and reasonably incurred in connection
with either the appearance at or investigation, defense, settlement or appeal of
a Proceeding or establishing or enforcing a right to indemnification under this
Agreement or applicable law or otherwise. "Expenses" will not include any
judgments or fines or excise taxes or penalties imposed under the Employee
Retirement Income Security Act of 1974, as amended, or other similar excise
taxes or penalties.
"Proceeding" means any pending, threatened or completed action,
hearing, suit or any other proceeding, whether civil, criminal, arbitrative,
administrative or investigative, or any alternative dispute resolution
mechanism, including without limitation any such Proceeding brought by or in the
right of the Company or any Proceeding brought to enforce Indemnitee's rights
under this Agreement.
<PAGE>
Section 2. Advancement of Expenses. The Company shall advance to
Indemnitee all Expenses incurred by or on behalf of Indemnitee within 20 days
after the receipt by the Company of a written request for such advance that
reasonably describes the Expenses (unless there has been a final determination
by a court of competent jurisdiction that Indemnitee is not entitled to be
indemnified for such Expenses). If required by law at the time of such advance,
Indemnitee hereby agrees to repay the amounts advanced if it is ultimately
determined that Indemnitee is not entitled to be indemnified pursuant to the
terms of this Agreement.
Section 3. Procedures for Determination of Entitlement to
Indemnification.
(a) Whenever Indemnitee believes that he or she is entitled to
indemnification pursuant to this Agreement, Indemnitee shall deliver a written
request for indemnification to the Company. This request must include
documentation or information reasonably available to the Indemnitee which
supports his or her claim. Determination of Indemnitee's entitlement to
indemnification shall be made not later than 90 days after receipt of the
request in a forum selected by the Company from the following alternatives:
(i) The stockholders of the Company;
(ii) A quorum of the Board of Directors of the
Company (the "Board") consisting of directors who are not parties to the matter
for which indemnification is sought;
(iii) Independent counsel which has not represented
the Company or the Indemnitee in the past or any party in the matter in which
indemnification is sought, as selected by Indemnitee and reasonably approved
by the Board, which counsel shall make its determination in a written opinion;
or
(iv) A panel of three arbitrators, one of whom is
selected by the Company, another of whom is selected by Indemnitee and the last
of whom is selected by the first two arbitrators.
(b) In the determination of entitlement to indemnification,
Indemnitee shall be presumed to be entitled to indemnification and the Company
has the burden of proof to overcome that presumption. If the Company fails to
notify Indemnitee of the determination within 90 days after the indemnification
request, the Indemnitee shall be absolutely entitled to indemnification, except
as provided in Section 5. The termination of any Proceeding by judgment, order,
settlement, or arbitration, or upon a plea of nolo contendere or its equivalent,
shall not of itself adversely affect the rights of Indemnitee to
indemnification, create a presumption that Indemnitee did not act in good faith
and in a manner which he or she reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal action or
proceeding, create a presumption that Indemnitee had reasonable cause to believe
that his or her conduct was unlawful.
<PAGE>
Section 4. Remedies of Indemnitee in Cases of Determination Not to
Indemnify or to Advance Expenses.
(a) In the event that (i) an initial determination is made
that Indemnitee is not entitled to indemnification, (ii) advances for Expenses
are not made when and as required by this Agreement, (iii) payment has not been
timely made following a determination of entitlement to indemnification pursuant
to this Agreement or (iv) Indemnitee otherwise seeks enforcement of this
Agreement, Indemnitee shall be entitled to a final adjudication in an
appropriate court. Alternatively, Indemnitee at his or her option may seek
arbitration pursuant to the commercial arbitration rules of the American
Arbitration Association now in effect, the arbitration to be completed within 90
days following the filing of the demand for arbitration. In any proceeding or
arbitration Indemnitee shall be presumed to be entitled to indemnification and
the Company shall have the burden of proof to overcome that presumption. The
Company agrees to stipulate in court or arbitration that the Company is bound by
all the provisions of this Agreement.
(b) If an initial determination is made or deemed to have been made
pursuant to the terms of this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in the absence
of a misrepresentation of a material fact by Indemnitee in the request for
indemnification or a specific finding in a final judgment by a court of
competent jurisdiction that all or any part of such indemnification is expressly
prohibited by law.
(c) In the event an initial determination has been made, in whole or in
part, that Indemnitee is not entitled to indemnification, the decision in the
judicial proceeding or arbitration shall be made de novo the Indemnitee shall be
prejudiced by reason of any prior determination that he or she is not entitled
to indemnification.
Section 5. Limitations on Indemnification. No indemnification shall
be paid or Expenses advanced:
(a) Insurance. To the extent that Indemnitee has been
reimbursed by insurance coverage. Notwithstanding the availability of insurance,
Indemnitee also may claim indemnification from the Company pursuant to this
Agreement by assigning to the Company his or her rights to insurance.
(b) Section 16(b). To the extent of any wholly or partially
successful claim against Indemnitee pursuant to the provisions of section 16(b)
of the Securities Exchange Act of 1934, as amended, or similar provisions of any
federal, state or local law.
(c) Indemnitee's Proceedings. In connection with all or any
part of a Proceeding which is initiated or maintained by or on behalf of
Indemnitee, or any Proceeding by Indemnitee against the Company or its
directors, officers, employees or other agents, unless (i) such indemnification
is expressly required to be made by Nevada Law or this Agreement, (ii) the
Proceeding was authorized by the Board of Directors of the Company or (iii) such
<PAGE>
indemnification is provided by the Company, in its sole discretion, pursuant to
the powers vested in the Company under Nevada Law.
Section 6. Duration and Scope of Agreement; Binding Effect. This
Agreement shall continue so long as Indemnitee is subject to any possible
Proceeding for acts or omissions occurring before or after execution of this
Agreement. This Agreement is binding upon the Company and its successors and
assigns and is for the benefit of Indemnitee and his or her spouse, assigns,
heirs, devisees, executors, administrators and other legal representatives.
Section 7. Miscellaneous.
(a) Severability; Partial Indemnity. If any provision or
provisions of this Agreement is held to be invalid, illegal or unenforceable for
any reason whatever: (a) the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby; and (b) to the fullest extent possible, the provisions of this
Agreement shall be construed to give effect to the intent of the provision held
invalid, illegal or unenforceable. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for only a portion of any
Expenses, the Company shall indemnify Indemnitee for the portion to which
Indemnitee is entitled.
(b) Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by the
Company and Indemnitee. No Waiver of any provision of this Agreement will be
deemed to constitute a waiver of any other provision hereof (whether or not
similar) nor will such waiver constitute a continuing waiver.
(c) Notice by Indemnitee and Defense of Proceedings.
Indemnitee shall give the Company notice in writing, as soon as practicable, of
any claim made or Proceeding for which indemnity will or could be sought under
this Agreement, and the Indemnitee agrees not to make any statement or effect
any settlement with respect to any Proceeding without the Company's consent.
However, the Company may not deny indemnification for failure of Indemnitee to
provide prompt notification unless the Company has been adversely affected by
the delay.
With respect to any Proceeding as to which Indemnitee has notified the
Company:
(i) The Company shall be entitled to participate therein at
its own expense; and
(ii) The Company jointly with any other indemnifying party
similarly notified shall be entitled to assume the defense thereof, with counsel
reasonably satisfactory to Indemnitee; provided, however, that the Company shall
not be entitled to assume the defense of any Proceeding if Indemnitee reasonably
concludes that there may be a conflict of interest between the Company and
Indemnitee with respect to such Proceeding. After notice from the Company to
Indemnitee of its election to assume the defense thereof, the Company will not
be liable to Indemnitee under this Agreement for any Expenses subsequently
incurred by Indemnitee in
<PAGE>
connection with the defense thereof, other than reasonable costs of
investigation or as otherwise provided below. Indemnitee shall have the right to
employ its own counsel in such Proceeding but the fees and expenses of such
counsel incurred after notice from the Company of its assumption of the defense
thereof shall be at the expense of Indemnitee unless:
A. The employment of counsel by Indemnitee has been
authorized by the Company;
B. Indemnitee shall have reasonably concluded that counsel
engaged by the Company may not adequately represent Indemnitee;
C. The Company shall not in fact have employed counsel to
assume the defense in such Proceeding or shall not in fact have assumed such
defense and be acting in connection therewith with reasonable diligence;
in each of which cases the fees and expenses of such counsel shall be at the
expense of the Company.
The Company shall further have the right, in its sole
discretion, to settle any Proceeding, provided that no settlement may be made
without Indemnitee's prior consent if it will adversely affect Indemnitee.
Indemnitee agrees to give the Company such information and cooperation as it may
reasonably require to defend or settle any Proceeding.
(d) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand to the addressee, (ii) received by facsimile
transmission if such transmission is thereafter confirmed or acknowledged in
writing or (iii) mailed by certified or registered mail with postage prepaid, on
the third business day after the date on which it is so mailed:
(a) If to Indemnitee, to:
Robert A. McKerroll
c/o Elsinore Corporation
202 East Fremont Street
Las Vegas, Nevada 89101
(b) If to the Company, to
Elsinore Corporation
202 East Fremont Street
Las Vegas, Nevada 89101
Attention: Corporate Secretary
<PAGE>
or to such other address as may have been furnished by the parties.
(e) Governing Law. The parties agree that this Agreement will
be governed by, and construed and enforced in accordance with, the laws of the
State of Nevada, as applied to contracts between Nevada residents entered into
and to be performed entirely within Nevada.
(f) Subrogation. In the event of any payment under this
Agreement, the Company will be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who agrees to execute all papers
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.
(g) Prior Agreements. This Agreement supersedes any prior
indemnification agreement between the Indemnitee and the Company, which shall be
of no further force and effect whatsoever.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
ELSINORE CORPORATION
By_________________________________
FRANK L. BURRELL, JR.
Title: Chairman of the Board of Directors
Indemnitee
------------------------------------
ROBERT A. MCKERROLL
ATTEST:
By____________________________
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into effective on the 8th day of August, 1996, by and between ELSINORE
CORPORATION, a Nevada corporation (the "Company"), and THOMAS E. MARTIN (the
"Indemnitee").
In consideration of the mutual promises in this Agreement, and
intending to be legally bound, the Company and Indemnitee hereby covenant and
agree as follows:
Section 1. Indemnification. In consideration for Indemnitee's
continuing service on behalf of the Company and as Indemnitee's contract right,
the Company agrees to indemnify Indemnitee to the fullest extent permitted by
the Nevada General Corporation Law, as amended (the "Nevada Law"), and the
Articles of Incorporation and By-Laws of the Company, as they are in effect on
the date hereof or as they may from time to time be amended (but, in the case of
amendment, only to the extent amendment permits the Company to provide broader
indemnification rights than the Company was permitted to provide before the
amendment). Notwithstanding the generality of the foregoing, the Company agrees
to pay to Indemnitee any Expenses which he or she actually or reasonably incurs
as a party to or witness in any Proceeding by reason of the fact that he or she
is or was a director or officer of the Company or serves or served at the
request of the Company as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of anything
done or not done by him or her in that capacity.
"Expenses" shall be broadly construed and shall include, without
limitation, (i) all direct and indirect costs incurred, paid or accrued, of
investigation, defense and appeal of any Proceeding, (ii) all attorneys' fees,
retainers, court costs, transcripts, fees of experts, witness fees, travel
expenses, duplicating and printing costs, telephone and delivery charges, costs
of attachment of similar bonds, (iii) all other disbursements and out-of-pocket
expenses and (iv) amounts paid in settlement or for fines or judgments, to the
extent permitted by Nevada Law, actually and reasonably incurred in connection
with either the appearance at or investigation, defense, settlement or appeal of
a Proceeding or establishing or enforcing a right to indemnification under this
Agreement or applicable law or otherwise. "Expenses" will not include any
judgments or fines or excise taxes or penalties imposed under the Employee
Retirement Income Security Act of 1974, as amended, or other similar excise
taxes or penalties.
"Proceeding" means any pending, threatened or completed action,
hearing, suit or any other proceeding, whether civil, criminal, arbitrative,
administrative or investigative, or any alternative dispute resolution
mechanism, including without limitation any such Proceeding brought by or in the
right of the Company or any Proceeding brought to enforce Indemnitee's rights
under this Agreement.
<PAGE>
Section 2. Advancement of Expenses. The Company shall advance to
Indemnitee all Expenses incurred by or on behalf of Indemnitee within 20 days
after the receipt by the Company of a written request for such advance that
reasonably describes the Expenses (unless there has been a final determination
by a court of competent jurisdiction that Indemnitee is not entitled to be
indemnified for such Expenses). If required by law at the time of such advance,
Indemnitee hereby agrees to repay the amounts advanced if it is ultimately
determined that Indemnitee is not entitled to be indemnified pursuant to the
terms of this Agreement.
Section 3. Procedures for Determination of Entitlement to
Indemnification.
(a) Whenever Indemnitee believes that he or she is entitled to
indemnification pursuant to this Agreement, Indemnitee shall deliver a written
request for indemnification to the Company. This request must include
documentation or information reasonably available to the Indemnitee which
supports his or her claim. Determination of Indemnitee's entitlement to
indemnification shall be made not later than 90 days after receipt of the
request in a forum selected by the Company from the following alternatives:
(i) The stockholders of the Company;
(ii) A quorum of the Board of Directors of the
Company (the "Board") consisting of directors who are not parties to the matter
for which indemnification is sought;
(iii) Independent counsel which has not represented
the Company or the Indemnitee in the past or any party in the matter in which
indemnification is sought, as selected by Indemnitee and reasonably approved
by the Board, which counsel shall make its determination in a written opinion;
or
(iv) A panel of three arbitrators, one of whom is
selected by the Company, another of whom is selected by Indemnitee and the last
of whom is selected by the first two arbitrators.
(b) In the determination of entitlement to indemnification,
Indemnitee shall be presumed to be entitled to indemnification and the Company
has the burden of proof to overcome that presumption. If the Company fails to
notify Indemnitee of the determination within 90 days after the indemnification
request, the Indemnitee shall be absolutely entitled to indemnification, except
as provided in Section 5. The termination of any Proceeding by judgment, order,
settlement, or arbitration, or upon a plea of nolo contendere or its equivalent,
shall not of itself adversely affect the rights of Indemnitee to
indemnification, create a presumption that Indemnitee did not act in good faith
and in a manner which he or she reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal action or
proceeding, create a presumption that Indemnitee had reasonable cause to believe
that his or her conduct was unlawful.
<PAGE>
Section 4. Remedies of Indemnitee in Cases of Determination Not to
Indemnify or to Advance Expenses.
(a) In the event that (i) an initial determination is made
that Indemnitee is not entitled to indemnification, (ii) advances for Expenses
are not made when and as required by this Agreement, (iii) payment has not been
timely made following a determination of entitlement to indemnification pursuant
to this Agreement or (iv) Indemnitee otherwise seeks enforcement of this
Agreement, Indemnitee shall be entitled to a final adjudication in an
appropriate court. Alternatively, Indemnitee at his or her option may seek
arbitration pursuant to the commercial arbitration rules of the American
Arbitration Association now in effect, the arbitration to be completed within 90
days following the filing of the demand for arbitration. In any proceeding or
arbitration Indemnitee shall be presumed to be entitled to indemnification and
the Company shall have the burden of proof to overcome that presumption. The
Company agrees to stipulate in court or arbitration that the Company is bound by
all the provisions of this Agreement.
(b) If an initial determination is made or deemed to have been made
pursuant to the terms of this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in the absence
of a misrepresentation of a material fact by Indemnitee in the request for
indemnification or a specific finding in a final judgment by a court of
competent jurisdiction that all or any part of such indemnification is expressly
prohibited by law.
(c) In the event an initial determination has been made, in whole or in
part, that Indemnitee is not entitled to indemnification, the decision in the
judicial proceeding or arbitration shall be made de novo the Indemnitee shall be
prejudiced by reason of any prior determination that he or she is not entitled
to indemnification.
Section 5. Limitations on Indemnification. No indemnification shall
be paid or Expenses advanced:
(a) Insurance. To the extent that Indemnitee has been
reimbursed by insurance coverage. Notwithstanding the availability of insurance,
Indemnitee also may claim indemnification from the Company pursuant to this
Agreement by assigning to the Company his or her rights to insurance.
(b) Section 16(b). To the extent of any wholly or partially
successful claim against Indemnitee pursuant to the provisions of section 16(b)
of the Securities Exchange Act of 1934, as amended, or similar provisions of any
federal, state or local law.
(c) Indemnitee's Proceedings. In connection with all or any
part of a Proceeding which is initiated or maintained by or on behalf of
Indemnitee, or any Proceeding by Indemnitee against the Company or its
directors, officers, employees or other agents, unless (i) such indemnification
is expressly required to be made by Nevada Law or this Agreement, (ii) the
Proceeding was authorized by the Board of Directors of the Company or (iii) such
<PAGE>
indemnification is provided by the Company, in its sole discretion, pursuant to
the powers vested in the Company under Nevada Law.
Section 6. Duration and Scope of Agreement; Binding Effect. This
Agreement shall continue so long as Indemnitee is subject to any possible
Proceeding for acts or omissions occurring before or after execution of this
Agreement. This Agreement is binding upon the Company and its successors and
assigns and is for the benefit of Indemnitee and his or her spouse, assigns,
heirs, devisees, executors, administrators and other legal representatives.
Section 7. Miscellaneous.
(a) Severability; Partial Indemnity. If any provision or
provisions of this Agreement is held to be invalid, illegal or unenforceable for
any reason whatever: (a) the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby; and (b) to the fullest extent possible, the provisions of this
Agreement shall be construed to give effect to the intent of the provision held
invalid, illegal or unenforceable. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for only a portion of any
Expenses, the Company shall indemnify Indemnitee for the portion to which
Indemnitee is entitled.
(b) Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by the
Company and Indemnitee. No Waiver of any provision of this Agreement will be
deemed to constitute a waiver of any other provision hereof (whether or not
similar) nor will such waiver constitute a continuing waiver.
(c) Notice by Indemnitee and Defense of Proceedings.
Indemnitee shall give the Company notice in writing, as soon as practicable, of
any claim made or Proceeding for which indemnity will or could be sought under
this Agreement, and the Indemnitee agrees not to make any statement or effect
any settlement with respect to any Proceeding without the Company's consent.
However, the Company may not deny indemnification for failure of Indemnitee to
provide prompt notification unless the Company has been adversely affected by
the delay.
With respect to any Proceeding as to which Indemnitee has notified the
Company:
(i) The Company shall be entitled to participate therein at
its own expense; and
(ii) The Company jointly with any other indemnifying party
similarly notified shall be entitled to assume the defense thereof, with counsel
reasonably satisfactory to Indemnitee; provided, however, that the Company shall
not be entitled to assume the defense of any Proceeding if Indemnitee reasonably
concludes that there may be a conflict of interest between the Company and
Indemnitee with respect to such Proceeding. After notice from the Company to
Indemnitee of its election to assume the defense thereof, the Company will not
be liable to Indemnitee under this Agreement for any Expenses subsequently
incurred by Indemnitee in
<PAGE>
connection with the defense thereof, other than reasonable costs of
investigation or as otherwise provided below. Indemnitee shall have the right to
employ its own counsel in such Proceeding but the fees and expenses of such
counsel incurred after notice from the Company of its assumption of the defense
thereof shall be at the expense of Indemnitee unless:
A. The employment of counsel by Indemnitee has been
authorized by the Company;
B. Indemnitee shall have reasonably concluded that counsel
engaged by the Company may not adequately represent Indemnitee;
C. The Company shall not in fact have employed counsel to
assume the defense in such Proceeding or shall not in fact have assumed such
defense and be acting in connection therewith with reasonable diligence;
in each of which cases the fees and expenses of such counsel shall be at the
expense of the Company.
The Company shall further have the right, in its sole
discretion, to settle any Proceeding, provided that no settlement may be made
without Indemnitee's prior consent if it will adversely affect Indemnitee.
Indemnitee agrees to give the Company such information and cooperation as it may
reasonably require to defend or settle any Proceeding.
(d) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand to the addressee, (ii) received by facsimile
transmission if such transmission is thereafter confirmed or acknowledged in
writing or (iii) mailed by certified or registered mail with postage prepaid, on
the third business day after the date on which it is so mailed:
(a) If to Indemnitee, to:
Thomas E. Martin
c/o Elsinore Corporation
202 East Fremont Street
Las Vegas, Nevada 89101
(b) If to the Company, to
Elsinore Corporation
202 East Fremont Street
Las Vegas, Nevada 89101
Attention: Corporate Secretary
<PAGE>
or to such other address as may have been furnished by the parties.
(e) Governing Law. The parties agree that this Agreement will
be governed by, and construed and enforced in accordance with, the laws of the
State of Nevada, as applied to contracts between Nevada residents entered into
and to be performed entirely within Nevada.
(f) Subrogation. In the event of any payment under this
Agreement, the Company will be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who agrees to execute all papers
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.
(g) Prior Agreements. This Agreement supersedes any prior
indemnification agreement between the Indemnitee and the Company, which shall be
of no further force and effect whatsoever.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
ELSINORE CORPORATION
By_________________________________
Frank L. Burrell, Jr.
Title: Chairman of the Board of Directors
Indemnitee
------------------------------------
THOMAS E. MARTIN
ATTEST:
By____________________________
SETTLEMENT AGREEMENT
THIS AGREEMENT, entered as of day of March, 1996, by and between PALM
SPRINGS EAST LIMITED PARTNERSHIP, a Nevada limited partnership, in all
capacities, including its capacity as debtor and debtor-in-possession in the
PSELP Bankruptcy Case defined below ("PSELP"), and the 29 PALMS BAND OF MISSION
INDIANS (the "Tribe"), a federally recognized Indian tribe. For good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, PSELP and the Tribe confirm and agree as follow:
W I T N E S S E T H:
A. The Tribe is a band of Native Americans recognized as possessing the
powers of self governance; and
B. PSELP is an affiliated entity of Elsinore Corporation, a publicly traded
corporation regulated by the Nevada Gaming Commission; and
C. PSELP and the Tribe entered into a Management Agreement, dated November
11, 1993, and amended on January 25, 1994 (the "Management Agreement"), for the
management of Class II gaming and such Class III gaming as authorized during the
term of the Management Agreement in accordance with the Indian Gaming Regulatory
Act, the controlling Gaming Ordinance of the Tribe, and such Tribal-State
Compact between the Tribe and the State of California as may be entered into, at
the Spotlight 29 Casino (the "Casino"), located in the county of Riverside,
state of California; and
D. PSELP and the Tribe entered into a Loan Agreement, dated November 11,
1993 (the "Loan Agreement") in the amount of Ten Million Dollars ($10,000,000),
to fund the development, construction and operation of the Casino; and
E. Effective July 29, 1994, the National Indian Gaming Commission (the
"NIGC"), approved the Management Agreement and Loan Agreement, and thereafter
PSELP completed the design and construction of the Casino, which was opened to
the public on January 14, 1995; and
F. Pursuant to the Management Agreement, PSELP has provided periodically to
the Tribe working capital advances to permit the continued operation of the
Casino; and
G. With accrued interest, the funds advanced by PSELP pursuant to the Loan
Agreement and the working capital contributions total an aggregate amount which
exceeds $13 million; and
H. On or about February 15, 1995, the Tribe determined that the Casino
could not compete effectively with other casinos in the area without the
addition of video "pull-tab" gaming devices; and
I. On March 3, 1995, the Tribe installed and now operates video "pull-tab"
gaming devices at the Casino; and
J. Disputes have arisen between PSELP and the Tribe with respect to the
rights of the parties under the Management Agreement and under the Loan
Agreement; and
K. On March 27, 1995, PSELP, its general partner Elsub Corporation, and
Elsinore Corporation initiated legal action (the "Legal Action") against the
Tribe in connection with the Management Agreement and moved for a preliminary
injunction requiring the removal of the "pull-tab" devices on the grounds that
the Tribe did not yet have authority from the State of California to operate
"pull-tab" devices at the Casino; and
L. On or about April 13, 1995, and in the midst of legal action at an
impasse in negotiations, PSELP withdrew from the onsite management of the Casino
and PSELP discontinued funding operating shortfalls of the Casino; and
M. On May 16, 1995, PSELP and the other plaintiffs dismissed without
prejudice the Legal Action that had been commenced against the Tribe; and
N. On May 16, 1995, the Tribe delivered to PSELP notice of claimed breaches
under the Management Agreement; and, as part of the notice, the Tribe threatened
to terminate the Management Agreement; and
O. Effective June 16, 1995, the Tribe declared that the Management
Agreement with PSELP was terminated; and
P. Since approximately April 15, 1995, the Tribe has performed the
management duties that had been performed previously by PSELP under the
Management Agreement; and
Q. In order to resolve all known and unknown outstanding disputes between
PSELP and the Tribe, and to avoid costly and protracted litigation, and to avoid
costly and protracted litigation, PSELP and the Tribe desire to resolve their
disputes by compliance with the terms and conditions of this Agreement.
NOW, THEREFORE, for good and valuable consideration, receipt and
sufficiency of which is hereby acknowledged by the respective parties hereto, it
is agreed as follows:
<PAGE>
1 SECTION
Definitions
"Act" means the Indian Gaming Regulatory Act, 102 Stat. 2467,
25 U.S.C. 2701, et seq.
"Class II Gaming" has the meaning given that phrase by the Act.
"Class III Gaming" has the meaning given that phrase by the Act.
"Closing Date" has the meaning given in Section 7 of this Agreement.
"Compact" means such Tribal-State Compact for the Conduct of Class III
Gaming as may be entered into between the Tribe and the State of California
pursuant to the Act.
"Event of Default" has the meaning given in Section 10 of this
Agreement.
"Facility" means the gaming center constructed and operating at the
Site and shall include any room or rooms therewith and all equipment therein, in
which gaming is conducted, and shall further include patron food, beverage and
service facilities, and any other related income producing property or
activities on the Site.
"GAAP" means Generally Accepted Accounting Principles as promulgated by
the American Institute of Certified Public Accountants.
"Gross Receipts" means all revenue of any kind resulting from the
operation of the Facility.
"Income" means, consistent with GAAP and determined on an accrual
basis, all Gross Receipts, including, but not limited to, royalties, earnings,
income, interest, proceeds, products, rents, revenues and other payments which
may now or hereafter be received or become receivable from the operation of the
Facility, net of all expenses necessary or proper for the maintenance,
operation, and repair of the Facility (the "Operating Expenses"), including, but
not limited to, costs of goods, gaming equipment, services, prizes, employee
wages, taxes relating to employee wages, advertising, promotion, bus and
coordinator costs, auto and travel expense, bad debt expense, uniforms, office
expense, printing, supplies, utilities, rent, insurance, maintenance, legal
services, costs of regulations, accounting and miscellaneous and other expenses;
provided, however, that legal and other expenses relating to the dispute between
PSELP and Tribe, interest and principal repayment on the Restated Note and
depreciation on the Facility shall not be Operating Expenses for purposes of
this definition.
"Loan Agreement" means that certain Loan Agreement between PSELP and
the Tribe, dated November 11, 1993.
"Management Agreement" means that certain Management Agreement between
PSELP and the Tribe dated November 11, 1993, and the addendum thereto dated
January 23, 1994.
"Obligations" means all obligations owing under this Agreement and
under the Restated Note.
"Party" or "Parties" means PSELP, and its affiliate Elsinore
Corporation, or the Tribe, or both, as required by the context of the usage of
the term in this Agreement.
"PSELP Bankruptcy Case" means the Chapter 11 case of PSELP commenced on
October 31, 1995, and pending in the United States Bankruptcy Court for the
District of Nevada, Case No. 95-24688 RCJ.
"Reservation" means the lands near the city of Indio, county of
Riverside, state of California recognized by the United States of America as the
Reservation of the Tribe.
"Restated Note" means the Restated Commercial Promissory Note in the
form of Exhibit "B" to this Agreement which the Tribe will execute and deliver
to PSELP on the Closing Date, pursuant to Section 3.2 of this Agreement.
"Site" means the approximate 55-acre parcel of Reservation land
described in Exhibit "A" to this Agreement.
"Tribal Council" means the 29 Palms Band of Mission Indians Tribal
Council, the duly elected governing body of the Tribe as authorized by Article 3
of the Tribal Articles of Association.
2 SECTION
Termination of Management Agreement
PSELP and the Tribe agree that the Management Agreement shall be and
hereby is terminated effective June 16, 1995.
3 SECTION
Replacement of Development Loan Agreement
3.1 The Loan Agreement between the Tribe and PSELP is replaced by the terms
of this Agreement.
In this regard:
(a) As of January 1, 1996, the principal sum of the indebtedness owing from
the Tribe to PSELP shall be $9 million (the "Restated Principal").
(b) The annual rate of interest payable on the Restated Principal shall be
adjusted quarterly on June 30, September 30, December 31 and March 31, of any
applicable year, to an amount equal to the then maximum allowable interest rate
permitted under California law, which interest rate in no event shall be less
than 10.0 percent or more than 12.0 percent.
(c) The Restated Principal will be repaid in accordance with the terms of
the Restated Note which is attached hereto as Exhibit "B".
3.2 On the Closing Date, the Tribe will execute and deliver the Restated
Note to PSELP.
4 SECTION
Mutual Releases
4.1 Effective on the Closing Date, the Tribe does hereby unconditionally
and irrevocably release, quit and absolutely discharge PSELP and its
predecessors, successors, assigns, officers, directors, partners, employees,
agents, affiliates, and subsidiaries of and from any and all rights, claims,
obligations, actions, causes of action, suits, debts, liens, contracts,
liabilities, demands, costs, expenses (including, but not limited to attorneys'
fees), whether known, unknown, fixed, contingent, accrued, inchoate, or
otherwise, which now exist or may hereafter arise pursuant to statute, contract,
tort, or equity, and which are based on the Management Agreement, or on any
other matters which have occurred before the execution of this Agreement.
Pursuant to this general release of all claims, the Tribe expressly waives the
protections and benefits of California Civil Code Section 1542 which states:
A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement
with the debtor.
At closing, the Tribe will deliver to PSELP a Release in the form of Exhibit "C"
to this Agreement.
4.2 Effective on the Closing Date, PSELP does hereby unconditionally and
irrevocably release, quit and absolutely discharge Tribe and its predecessors,
successors, assigns, officers, directors, partners, employees, agents,
affiliates, and subsidiaries of and from any and all rights, claims,
obligations, actions, causes of action, suits, debts, liens, contracts,
liabilities, demands, costs, expenses (including, but not limited to attorneys'
fees), whether known, unknown, fixed, contingent, accrued, inchoate, or
otherwise (collectively, the "Claims"), which now exist or may hereafter arise
pursuant to statute, contract, tort, or equity, and which are based on the
Management Agreement, or on any other matters which have occurred before the
execution of this Agreement. Notwithstanding any other provision hereof, this
Release shall not release the Tribe or other released parties from any
liability, lien, security interest or other Claim whatsoever in conjunction
with, or resulting from any breach or violation of, the Agreement, the Restated
Note, the Loan Agreement as modified by this Agreement, or related loan and
security documents. Pursuant to this general release of all of all claims, PSELP
expressly waives the protections and benefits of California Civil Code Section
1542 which states:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have
materially affected his settlement with the debtor.
At closing, PSELP will deliver to the Tribe a Release in the form of Exhibit "D"
to this Agreement.
4.3 By entering into this Agreement, neither PSELP nor the Tribe expressly
or implicitly admits to or acknowledges any past liability or obligation to the
other under any contract, agreement, instrument or arrangement.
5 SECTION
No Encumbrances
The Tribe will not encumber the assets and Income of the Facility without
the express written consent of PSELP, which consent will not be unreasonably
withheld. Nothing in this Agreement authorizes either party to encumber any real
property owned by the Tribe.
6 SECTION
Representations and Warranties
6.1 Representations and Warranties of PSELP. In addition to the other
covenants, promises and warranties contained in other parts of this Agreement,
PSELP represents and warrants for the benefit and reliance of the Tribe as
follows:
(a) PSELP is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Nevada, with all requisite
partnership power and authority to enter into and carry out its obligations
under this Agreement, subject to the approval of the Bankruptcy Court in the
PSELP Bankruptcy Case as provided below.
(b) Subject to the approval of the Bankruptcy Court in the PSELP Bankruptcy
Case as provided below, the execution, delivery, and performance of this
Agreement by the persons (including Elsub Management, Inc.) executing the same
on behalf of PSELP have been duly and validly authorized (and by their execution
hereof such persons individually represent and warrant that they are so
authorized) and this Agreement and the other agreements and instruments
contemplated hereby constitute legal, valid and binding obligations of PSELP,
enforceable in accordance with their respective terms.
(c) To the knowledge of PSELP, the execution, delivery or performance of
this Agreement will not, with or without the giving of notice and/or the passage
oftime (1) violate any provision of law applicable to PSELP or the Facility
whichwould prevent the consummation of the transactions contemplated by this
Agreement; or, (2) conflict with any judgment, order, injunction, decree or
ruling of any court or governmental authority, or other agreement or instrument
by which PSELP or the Facility are bound, or to which any of them are subject,
or which would prevent the consummation of the transactions contemplated by this
Agreement, except that the Agreement is subject to the approval of the
Bankruptcy Court in the PSELP Bankruptcy Case as provided below.
(d) The execution and delivery of this Agreement by PSELP and the
consummation of the transactions contemplated hereunder will not result in any
obligation or liability (with respect to accrued benefits or otherwise) to any
employee benefit plan or to any employee or former employee of PSELP.
(e) PSELP has not made any untrue statement of material fact in this
Agreement or in any document to be furnished to the Tribe under this Agreement,
and PSELP has not omitted any material fact in this Agreement or in any document
to be furnished to the Tribe which would cause any of the statements made herein
or in any documents furnished to the Tribe to be misleading.
6.2 Representations and Warranties of Tribe. In addition to the other
covenants, promises and warranties contained in other parts of this Agreement,
the Tribe hereby represents and warrants for the benefit of PSELP as follows:
(a) The Tribe is an Indian tribe duly organized, validly existing and in
good standing under the laws of the United States of America, with all requisite
tribal powerand authority to enter into and carry out its obligations under this
Agreement.
(b) The execution, delivery, and performance of this Agreement by the
persons executing the same on behalf of the Tribe have been duly and validly
authorized (and by their execution hereof such persons individually represent
and warrant that they are so authorized) and this Agreement and the other
agreements and instruments contemplated hereby constitute legal, valid and
binding obligations of the Tribe, enforceable in accordance with their
respective terms.
(c) Except for approvals from the National Indian Gaming Commission, the
Tribe will not assert that any other consent, license, permit, order, approval
or authorization of any governmental authority or private party is required in
connection with the execution, delivery, and performance of this Agreement and
the Restated Note by the Tribe.
(d) The execution, delivery or performance of this Agreement will not, with
or without the giving of notice and/or the passage of time (1) violate any
provision of law applicable to the Tribe or the Facility or which would prevent
the consummation of the transactions contemplated by this Agreement; or, (2)
conflict with or result in the breach or termination of, or constitute a default
under or pursuant to any indenture, mortgage, deed of trust or any judgment,
order, injunction, decree or ruling of any court or governmental authority, or
other agreement or instrument by which the Tribe or the Facility are bound, or
to which any of them are subject, or which would prevent the consummation of the
transactions contemplated by this Agreement; or, (3) result in the creation of
any lien, charge or encumbrance upon the Facility except as provided in Section
5 of this Agreement.
(e) The Tribe has good and marketable title to the Facility except as
specifically stated herein or as described on Schedule 1 attached hereto.
(f) All debts, arising by contract or otherwise affecting the Facility that
have been incurred prior to the Closing Date and are obligations of the Tribe,
which have been or will be fully paid by the Tribe.
(g) There are no actions, claims, suits or proceedings pending directly
against the Tribe or the Facility in any court or before any administrative
agency which would prevent the Tribe from completing the transactions provided
for herein.
(h) The Tribe has not made any untrue statement of material fact in this
Agreement or in any document to be furnished to the PSELP under this Agreement,
and the Tribe has not omitted any material fact in this Agreement or in any
document to be furnished to the PSELP which would cause any of the statements
made herein or in any documents furnished to the Tribe to be misleading.
6.3 No Limitation. No specific warranty or representation contained herein
shall be deemed to modify or limit any general warranty or representation.
6.4 Reliance on Warranties. The representations and warranties of PSELP and
the Tribe contained herein are made with the knowledge and expectations that the
other party is placing complete reliance thereon.
6.5 Continued Validity. The representations and warranties contained herein
shall be true and correct as of the date of the execution hereof, or such other
date as specified herein, and as of the Closing Date and shall survive the
Closing Date and investigation at any time made by or on behalf of the Tribe or
PSELP.
7 SECTION
Closing
7.1 The closing shall be as provided in this Section 7 and shall occur at
the offices of PSELP, 202 Fremont Street, Las Vegas, Nevada.
7.2 At the closing, PSELP shall deliver to the Tribe:
(a) A form of Order which will be submitted to the Bankruptcy Court for
purposes of obtaining judicial approval of this Agreement; and
(b) A release pursuant to Section 4 above substantially in the form of
Exhibit "D" to this Agreement.
7.3 At the closing, the Tribe shall deliver to PSELP the following:
(a) A fully executed Restated Note in the form of Exhibit B to this
Agreement;
(b) A release pursuant to Section 4 substantially in the form of Exhibit
"C" to this Agreement;
(c) The legal opinion of general counsel of the Tribe in substantially the
form as Exhibit "E" to this Agreement; and
(d) A fully executed and duly certified resolution of the Tribal Council,
in substantially the form of Exhibit "F" to this Agreement, unconditionally and
specifically: (1)approving this Agreement and all schedules, exhibits and
related documents and instruments entered into between PSELP and the Tribe in
connection herewith; and (2) waiving the sovereign immunity of the Tribe in
accordance with Sections 5 and 12 of this Agreement and acknowledging that no
action of the Tribal Council or Tribal Gaming Commission of the 29 Palms Band of
Mission Indians shall operate to excuse the Tribe's obligations to perform the
terms of this Agreement.
7.4 At the closing, PSELP and the Tribe shall execute such documents and
instruments not in conflict with the terms hereof as any of them may require to
fully effectuate the terms, covenants and conditions hereof.
7.5 PSELP and the Tribe shall pay their own respective costs, fees and
expenses, including attorney fees and costs, incurred in connection with the
negotiation, documentation, and closing of this Agreement.
7.6 The terms, covenants and conditions hereof shall not merge with any
documents or instrument executed or delivered at closing or in connection with
the consummation of the transactions contemplated by this Agreement, and shall
survive the closing and shall continue in full force and effect until such time,
if any, as provided herein.
8 SECTION
Tribe's Reporting and Inspection Obligations
8.1 Until the Tribe satisfies in full all of the Obligations, the Tribe
shall furnish PSELP within sixty (60) days after the end of each of the Tribe's
fiscal years, audited financial statements covering the operations of the
Facility for such fiscal year by delivering to PSELP an accurate and complete
copy of such financial reports as must be submitted to the NIGC. Said statements
shall include, but need not be limited to, a balance sheet and a statement of
profit and loss satisfactorily certified by an accounting firm deemed
satisfactory by the NIGC. The Tribe's fiscal year ends September 28. The
above-required statements shall segregate income and expense attributable to the
Facility and shall include the gross sales figures of any tenant paying
percentage or other rental with respect thereto.
8.2 The Tribe shall keep and maintain at an office located in the Facility
complete, accurate and customary records and books of account with respect to
all of the Tribe's business transactions with respect to the Facility and shall
retain the same intact until the Tribe fully satisfies the Obligations. PSELP or
its representatives shall be entitled at all reasonable times to inspect and
make copies and extracts of all such records and books of account.
8.3 PSELP may make or cause to be made reasonable entries upon and
inspection of the Facility until the Tribe fully satisfies the Obligations.
8.4 The Tribe agrees at any time, and from time to time, during the term
hereof and within ten (10) days after demand therefor from PSELP, to execute and
deliver to PSELP, or any party designated by PSELP, a certificate in recordable
form certifying the amount then due pursuant to this Agreement and the
Obligations secured hereby, the terms of payment thereof, the dates to which
payments have been paid, that this Agreement and all instruments and Obligations
secured hereby are in full force and effect and that there are no defenses or
offsets thereto, or specifying in what regards this Agreement or such
Obligations are not in full force and effect and the nature of any defense or
offsets thereto, together with such other information as PSELP may request.
8.5 PSELP will not disclose voluntarily any financial information obtained
from the Tribe pursuant to this Agreement without first obtaining the consent of
the Tribe. PSELP will promptly notify the Tribe of any subpoena which requires
the Tribe to disclose financial information received from the Tribe pursuant to
this Agreement. The Tribe, at its own expense, may elect to contest such a
subpoena. If the Tribe does not elect to contest the subpoena within five days
of the return date on the subpoena, then PSELP is authorized to abide by the
subpoena and produce any financial information requested by the subpoena. Upon
satisfaction of the Tribe's Obligations under this Agreement, PSELP will return
any financial information pertaining to the Tribe which is still in the
possession of PSELP.
9 SECTION
Insurance
9.1 The Tribe shall obtain and maintain insurance coverage of the following
types in amount mutually agreeable to the Tribe and PSELP through policies
exclusively devoted to the Facility and the business activity conducted thereon:
casualty other than earthquake insurance, and earthquake insurance.
9.2 PSELP shall be named as additional insured and mortgagee/loss payee on
all policies. Within ten (10) days from the date hereof, the Tribe will deliver
to PSELP certificates of insurance documenting the Tribe's compliance with the
requirements of Section 10.1 of this Agreement. The policies shall provide that
the insurer shall not assert the Tribe's immunity from suit for claims within
the policy limits. The Tribe shall not be liable beyond those limits.
9.3 In the event the Facility is substantially destroyed and the Tribe
decides not to rebuild, the insurance proceeds shall be used first to repay the
Obligations to PSELP, any remaining proceeds shall be paid to the Tribe.
9.4 If the Tribe elects to utilize such insurance proceeds to rebuild the
Facility, in such event, the Tribe's Obligations pursuant to this Agreement
shall automatically be extended for the length of time equal to the elapsed time
the Facility was unavailable for complete operation due to the destruction of
Facility.
10 SECTION
Default
10.1 Any default in the performance of any term, covenant or condition
contained herein or in any instrument or obligation secured hereby shall be an
Event of Default hereunder. PSELP will provide written notice of any default to
the Tribe, and the Tribe will have ten (10) days following receipt of notice to
cure the default. In the event that the Tribe fails to cure its default within
ten (10) days of receipt of written notice from PSELP, then PSELP will be free
to exercise all of its rights and remedies under this Agreement. The failure of
PSELP to exercise its rights with respect to any particular default will not
constitute a waiver of that default or a waiver of any subsequent default.
10.2 The waiver or release by PSELP of any default or of any of the
provisions, covenants and conditions hereof on the part of the Tribe to be kept
and performed shall not be a waiver or release of any preceding or subsequent
breach of the same or any other provision, covenant or condition contained
herein. The subsequent acceptance of any sum in payment of any indebtedness
secured hereby or any other payment hereunder by the Tribe to PSELP shall not be
construed to be a waiver or release of any preceding breach by the Tribe of any
provision, covenant or condition of this Agreement other than the failure of the
Tribe to pay the particular sum so accepted, regardless of PSELP's knowledge of
such preceding breach at the time of acceptance of such payment. No payment by
the Tribe or receipt by PSELP of a lesser amount than the amount therein
provided shall be deemed to be other than on account of the earliest sums due
and payable hereunder, nor shall any endorsement or statement on any check or
any letter or document accompanying any check or payment be deemed an accord and
satisfaction, and PSELP may accept any check or payment without prejudice to
PSELP's right to recover the balance of such sum or pursue any other remedy
provided in this Agreement. The consent by PSELP to any matter or event
requiring such consent shall not constitute a waiver of the necessity for such
consent or any subsequent matter or event.
10.3 PSELP shall give the Tribe prompt notice of the occurrence of any
Event of Default hereunder.
11 SECTION
Dispute Resolution Procedures
11.1 Meet and Confer; No Arbitration. Whenever during the term of this
Agreement, any disagreement or dispute arises between the Parties as to the
interpretation of this Agreement or any rights or obligations arising
thereunder, such matters shall be resolved whenever possible by meeting and
conferring. Any Party may request such a meeting by giving notice to the other,
in which case such other Parties shall make themselves available within seven
(7) days thereafter. If such matters cannot be so resolved within ten (10) days
from the date of such meeting, and involve any claim of breach of default under
this Agreement, either Party may enforce the provisions of this Agreement by
commencing a civil action in a Court of competent jurisdiction as provided in
Section 12.2 and 12.3 of this Agreement. The Parties shall have no legal or
equitable obligation to consent to arbitration under this Agreement.
11.2 Judicial Enforcement. Either Party may obtain an interpretation of, or
enforce any provision, right or obligation provided for in, this Agreement, the
Restated Note, the Loan Agreement as modified herein, and related loan and
security documents by commencing a civil action in the United States District
Court for the Central District of California. If and only if the United States
District Court lacks jurisdiction, then and only then does the Tribe consent to
be sued in the Superior Court of the State of California in Riverside County,
with appeals as appropriate to the California Court of Appeals and the
California State Supreme Court. Neither the Tribe nor PSELP may challenge the
jurisdiction of a Court to hear and consider a civil complaint filed pursuant to
Section 12 of this Agreement. The Tribe expressly waives its sovereign immunity
for this purpose in accordance with the provision of Section 12.3 of this
Agreement.
11.3 Tribe's Limited Waiver of Sovereign Immunity.
(a) Jurisdiction and Venue. The Tribe hereby waives, limits, or modifies
its sovereign immunity from unconsented suit only as provided in this Section
11. The Tribe expressly waives its sovereign immunity from suit or action for
any breach of, or default on, the Tribe's representations, warranties and
Obligations under this Agreement and under the Restated Commercial Promissory
Note executed by the Tribe in accordance with this Agreement. The Tribe consents
to be sued in the United States District Court for the Central District of
California. If and only if the United States District Court lacks jurisdiction,
then and only then does the Tribe consent to be sued in the Superior Court of
the State of California in Riverside County, with appeals as appropriate to the
California Court of Appeals and the California State Supreme Court. Neither the
Tribe nor PSELP may challenge the jurisdiction of a Court to hear and consider a
civil complaint filed pursuant to Section 11 of this Agreement.
(b) Monetary Damages. The Courts described in Section 11.2 and 11.3(a),
above shall have authority to enforce an award of monetary damages set forth in
any judgement or order of the court. In no case shall a Party be entitled to
punitive damages. NOTWITHSTANDING THE FOREGOING, IT IS UNDERSTOOD AND AGREED BY
THE PARTIES HERETO THAT RECOURSE FOR THE RECOVERY OF ANY INDEBTEDNESS REFERENCED
HEREIN IS LIMITED TO THE INCOME OF THE FACILITY AS DEFINED IN THIS AGREEMENT.
(c) Injunctive or Declaratory Relief. The Court may utilize its powers,
including its equity powers, as it deems necessary and appropriate.
11.4 Notice Requirements. Before any suit is filed, the complaining party
will submit to the responding party a written notice of each claim as to which
suit is contemplated, and the basis for the claim.
11.5 Limitation Periods.
(a) No action for damages may be commenced against the Tribe until the same
has been presented to the Tribe and thirty (30) days have elapsed since the date
of presentation without settlement of the amounts claimed.
(b) No action for damages may be commenced against PSELP until the same has
been presented to PSELP and thirty (30) days have elapsed since the date of
presentation without settlement of the amounts claimed.
11.6 Attorney's Fees. If action is brought by any Party to enforce the
provisions of this Agreement or to pursue any remedy permitted under this
Agreement, the losing Party shall pay reasonable attorney's fees of the
prevailing Party, to be fixed by the Court as a part of the costs in any such
action.
12 SECTION
Effective Date of Agreement
12.1 Approval of National Indian Gaming Commission. This Agreement shall
not be effective unless and until it is approved by the Chairman of the National
Indian Gaming Commission, unless the Chairman advises in writing that approval
of this Agreement by the National Indian Gaming Commission is not required for
the Agreement to be enforceable against the Tribe.
13.2 Approval of Tribal Council. This Agreement shall not be effective
unless and until it is approved and accepted by the Tribal Council for the
Tribe.
13.3 Approval of Court in PSELP Bankruptcy Case. This Agreement is subject
to approval by order of the Bankruptcy Court in the PSELP Bankruptcy Case, and
will be presented for such approval by counsel for PSELP. In this approval
process, this Agreement will be noticed to the Nevada Gaming Commission which
will have the opportunity to object to the Agreement and be heard in the
Bankruptcy Court proceedings with respect to this Agreement. In the event this
Agreement is not approved by the Bankruptcy Court, then this Agreement shall be
null and void and of no further force or effect.
<PAGE>
13 SECTION
Amendment
The provisions of this Agreement may be modified at any time by written
agreement signed by PSELP and the Tribe, and subject to approval by the Chairman
of the National Indian Gaming Commission, and the Bankruptcy Court in the PSELP
Bankruptcy Case (if necessary).
14 SECTION
Waiver
Any of the terms or conditions of this Agreement may be waived by the
written consent of PSELP and the Tribe at any time by the Party entitled to the
benefit thereof, but no such waiver shall affect or impair the right of the
waiving Party to require observance, performance or satisfaction either of that
term or condition as it applied on a subsequent occasion or of any other term or
condition of this Agreement.
15 SECTION
Facility Ownership and Encumbrances
Except as reflected on Schedule 1 to this Agreement, the Tribe is the
exclusive owner of the Facility, including but not limited to physical premises
of the Casino and any personal property located thereon such as the video or
other gaming machines and equipment, inventory, equipment, supplies and working
capital. The Tribe specifically warrants and represents that it shall not
directly or indirectly hypothecate or encumber the Income or the Facility
without PSELP's prior written consent.
16 SECTION
Notices
Any notice under this Agreement shall be in writing, and any written
notice or other document shall be deemed to have been duly given on the date of
personal service on the parties or service by telecopy transmittal at the
addresses or telecopy numbers set forth below or at the most recent address or
telecopy number specified by the addresses through written notice under this
provision.
Palm Springs East Limited Partnership 202 Fremont Street
Attn: Thomas E. Martin, President Las Vegas, NV 89101
Elsub Management Corporation Telecopy: (702) 387-5142
with a copy to:
Streich Lang 2 North Central Avenue
Attn: John R. Clemency Phoenix, AZ 85004
Telecopy: (602) 229-5690
Twenty-Nine Palms Band of Mission c/o Spotlight 29 Casino
Indians P. O. Box 128
Attn: Dean Mike Coachella, CA 92236
Telecopy: (619) 775-4639
With a copy to: c/o Spotlight 29 Casino
Attn: Gene Gambale, General Counsel P. O. Box 128
Coachella, CA 92236
Telecopy: (619) 775-4639
17 SECTION
Payments to Members of the Government of the Tribe Prohibited
No payments have been made nor shall be made to any elected member of
the government of the Tribe or any relative of any elected member of the
government of the Tribe for the purpose of obtaining this Agreement or for any
privilege for PSELP.
18 SECTION
Compliance with Tribal Codes
The Tribe will not alter, amend or repeal its Ordinances relating to
gambling operations in a way that has a materially adverse economic effect on
PSELP or the Facility. The Tribe will impose no tribal taxes either on PSELP or
the Facility until such date as the Tribe has fully satisfied all Obligations
owing to PSELP under this Agreement, the Restated Note and related loan and
security documents.
19 SECTION
Federal Approval
This Agreement may be subject to approval of the NIGC under the Act.
The Tribe and PSELP shall take all steps necessary to promptly secure any
required approval and to comply with applicable federal law.
20 SECTION
Tribal Approval
Whenever in this Agreement the approval of the Tribe is required such
approval shall be expressed by a written resolution duly adopted and certified
by the Tribal Council.
21 SECTION
Miscellaneous
21.1 Time of Essence. Time is of the essence in the
performance of this Agreement and all of the terms, provisions, covenants and
conditions hereof.
21.2 Captions. The captions appearing at the commencement of
the Sections of this Agreement are descriptive only and for convenience in
reference to this Agreement and in no way whatsoever define, limit or describe
the scope or intent of this Agreement, nor in any way affect this Agreement.
21.3 Pronouns. Personal pronouns shall be construed to comport
with the gender and number required by the context, and the singular shall
include the plural and the plural shall include singular as may be required by
the context.
21.4 No Party Deemed Drafter. The Parties agree that neither
Party shall be deemed to be the drafter of this Agreement and that in the event
this Agreement is ever construed by a court of law or equity, such court shall
not construe this Agreement or any provision hereof against either Party as the
drafter of the Agreement. PSELP and the Tribe, and each of them, acknowledge
that both Parties hereto have contributed substantially and materially to the
preparation hereof.
21.5 Counterparts. This Agreement may be executed in any
number of counterparts, each of which when executed and delivered shall be an
original, but all such counterpart shall constitute one and the same Agreement.
Any signature page of this Agreement may be detached from any counterpart
without impairing the legal effect of any signatures thereon, and may be
attached to another counterpart, identical in form thereto, but having attached
to it one or more additional signature pages.
21.6 Severability. If any provisions of this Agreement are
held by a court of competent jurisdiction to be invalid or unenforceable, the
remainder of the Agreement shall continue in full force and effect and shall in
no way be impaired or invalidated.
21.7 Governing Law. The rights and obligations of the
parties and the interpretation and performance of this Agreement shall be
governed by California law and by applicable federal laws and regulations.
21.8 Entire Agreement. This Agreement constitutes the entire
agreement between PSELP and the Tribe and supersedes all prior representations
and agreements. Other than as stated herein, there are no representations,
warranties, agreements, arrangements, or understandings, oral or written,
between or among the parties which further amends or supplements the terms of
this Agreement.
IN WITNESS WHEREOF, PSELP and the Tribe have executed this Agreement
the day and year first above written.
PALM SPRINGS EAST LIMITED 29 PALMS BAND OF MISSION INDIANS
PARTNERSHIP
By By
Thomas E. Martin, President Dean Mike, Chairman
Elsub Management Corporation
General Partner of Palm Springs
East Limited Partnership
<PAGE>
EXHIBIT "B"
RESTATED COMMERCIAL PROMISSORY NOTE
U.S. $9,000,000 March __, 1996
FOR VALUE RECEIVED, the undersigned 29 Palms Band of Mission Indians
Tribe ("Tribe"), promises to pay Palm Springs East, L.P. ("PSELP") the principal
sum of $9,000,000 as provided herein, with interest on the unpaid principal
balance hereunder from the date hereof until paid in full, at an annual rate of
10% or the maximum allowable interest rate permitted under California law, not
to exceed 12%. Principal, interest, and other amounts (if any) owing hereunder
from the Tribe shall be due and payable to PSELP, at 202 Fremont Street, Las
Vegas, Nevada 89101, or such other place as PSELP may designate, in monthly
payments (except as provided below), with the first payment due on the fifteenth
day of the month following the date hereof. Payments shall be made solely from
Income as defined in that certain Settlement Agreement dated March __, 1996
between PSELP and the Tribe (the "Settlement Agreement"). Up to twenty percent
(20%) of the Income from the Facility (defined in the Settlement Agreement) will
be used by the Tribe to make the payments due to PSELP under this Note. Subject
to the twenty percent (20%) Income limitation, the Tribe will make payments of
$290,405 to PSELP, adjusted quarterly to reflect changes in the applicable
interest rate. Payments made by the Tribe under this Note shall be applied first
to accrued interest, then to principal, then to any other amounts owing under
this Note. Any shortfall shall be carried forward to the next succeeding month
as a current payable for that month. The entire remaining indebtedness, if not
sooner paid, shall be due and payable on February 15, 1999, provided, however,
in the event that Income is not adequate to pay the entire indebtedness
hereunder by February 15, 1999, then this Note shall be automatically renewed
and extended until February 15, 2001, upon showing by the Tribe (in accordance
with generally accepted accounting principles) that Income was inadequate to pay
said indebtedness as provided herein. If extended, all remaining indebtedness
owing from the Tribe under this Note is due on February 15, 2001. In the event
that the Income is not adequate to pay all of the Indebtedness owing under this
Note by February 15, 2001, then the Tribe and PSELP will petition the National
Indian Gaming Commission (the "NIGC") for permission to extend further the
maturity of this Note until no later than February 15, 2003. In the event that
the NIGC refuses to permit an extension of this Note beyond February 15, 2001,
or, if extended, in the event that Income is not adequate to pay all of the
Indebtedness by February 15, 2003, then all Obligations owing from the Tribe to
PSELP under this Note and under the Settlement Agreement will be deemed to be
satisfied.
As stated above, payments under the Note are required monthly, except
that, the Tribe may elect to not make payments during the months of June, July,
and August. In the event that the Tribe elects to not make a payment in June,
then the Tribe will include in the following January's monthly payment of Income
to PSELP an additional payment of $35,000. In the event that the Tribe elects to
not make a payment in July, then the Tribe will include in the following
February's monthly payment of Income to PSELP an additional payment of $35,000.
In the event that the Tribe elects to not make a payment in August, then the
Tribe will include in the following March's monthly payment of Income to PSELP
an additional payment of $35,000.
Failure by the Tribe to make the payment(s) required under this Note
will constitute a default. Upon a default by the Tribe, PSELP shall be entitled,
subject to the notice provisions required by the Settlement Agreement, to
proceed with full recourse in accordance with law, including the right to
recover all reasonable costs and expenses of collection, including reasonable
attorneys' fees. Any failure of PSELP to exercise its recourse in the event of
such default shall not constitute a forbearance or waiver of such rights of
recourse; provided, however, it is expressly understood and agreed by the
parties hereto that recourse for recovery of any indebtedness referenced herein
is limited to the Income as defined in the Settlement Agreement.
If the Settlement Agreement between the Tribe and PSELP is terminated
for any reason, the total amount of outstanding principal and interest owing
under this Note shall, at the option of PSELP, immediately become due and
payable by the Tribe to PSELP, notwithstanding anything contained herein or in
the Settlement Agreement to the contrary; provided, however, that the Tribe
shall have no obligation to make payments to PSELP if this Note is deemed
satisfied as set forth above.
Presentment, notice of dishonor and protest are hereby waived by all
makers, sureties, guarantors, and endorsers hereof. This Note shall be the joint
and several obligation of all makers, sureties, guarantors, and endorsers and
shall be binding upon them and their successors and assigns.
To the extent the Tribe promises to pay the indebtedness referenced
herein and to the extent of PSELP's and/or note holders' rights to seek recourse
in accordance with law for collection of Tribe's liability hereunder, the Tribe
hereby waives its defense of sovereign immunity. Approval of this instrument of
indebtedness by Tribe shall be confirmed by a Tribal Resolution accordingly.
It is expressly understood and agreed that PSELP may proceed in the
first instance against the Tribe to collect the indebtedness evidenced by this
Note, without first proceeding against guarantor or any other person, firm, or
corporation, and without first resorting to any property given at any time to
PSELP as collateral security.
It is expressly understood and agreed that any obligation of the Tribe
hereunder is strictly limited to the repayment of the indebtedness incurred
pursuant hereto, and nothing herein contained shall obligate Tribe to PSELP in
any other respect nor shall PSELP be entitled to any participation, favorite
treatment, or any authority over Tribe, which would constitute a usurpation of
their respective jurisdictions or authority.
If any provision of this Note is null and void, the nullity shall not
effect any other provision of this Note which can be given effect without the
void provision and to this end, the provisions of this Note are severable.
This instrument of indebtedness, as well as any other documents and
agreements executed in conjunction herewith, shall be governed by and construed
in accordance with laws of the State of California. Provisions in the Settlement
Agreement pertaining to venue, jurisdiction, and waiver of sovereign immunity
are incorporated by reference into the terms and conditions of this Note.
The parties hereto agree that execution of a facsimile of this
Agreement shall have the same force and effect as an executed original and shall
be binding upon the parties hereto.
IN WITNESS WHEREOF, the undersigned Tribe sets its hand of
this ___________ day of ___________, 1996.
<PAGE>
29 PALMS BAND OF MISSION INDIANS
By:
Dean Mike, Chairman
<PAGE>
EXHIBIT "C"
FULL AND FINAL RELEASE OF ALL CLAIMS
(Tribe to PSELP)
This Release is made pursuant to that certain Settlement Agreement,
dated as of March ___, 1996 (the "Settlement Agreement"), executed by and
between PALM SPRINGS EAST LIMITED PARTNERSHIP, a Nevada limited partnership
("PSELP"), and the 29 PALMS BAND OF MISSION INDIANS (the "Tribe"), a federally
recognized Indian tribe, in conjunction with that certain Settlement Agreement,
and as part of the closing that is provided for in the Settlement Agreement.
Terms used herein with their initial letters capitalized that are defined in the
Settlement Agreement shall have the meaning given them in the Settlement
Agreement unless otherwise defined herein.
In consideration of the mutual promises set forth in the Settlement
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Tribe, voluntarily, knowingly,
and unconditionally, with specific and express intent, and on behalf of itself
and its agents, accountants, attorneys, affiliates, predecessors, successors and
assigns (collectively, the "Releasing Parties"), hereby fully releases, acquits,
and forever discharges PSELP and its successors, assigns, partners, affiliates,
subsidiaries, parent companies, principals, directors, officers, employees,
agents, accountants, insurers, attorneys, and any other party who may be
responsible or liable for the acts or omissions of PSELP (collectively, the
"Released Parties"), of and from any and all actions, causes of action, suits,
debts, disputes, damages, claims, obligations, liabilities, costs, expenses and
demands of any kind whatsoever, at law or in equity, whether matured, or
unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate,
known or unknown (collectively, "Claims") that the Releasing Parties (or any of
them) had, now has, or hereafter can, shall, or may have (to the extent such
future Claims arise in whole or in part out of acts or omissions prior to the
date of the execution of this Release) against the Released Parties or any of
them for, upon, or by reason of any matter, cause, or thing whatsoever directly
or indirectly arising in connection with or related to: (i) the Management
Agreement; or (ii) any other matters which have occurred on or before the date
of this Release.
Notwithstanding any other provision hereof, this Release shall not
release the Released Parties from any liability in conjunction with, or
resulting from any breach or violation of, the Settlement Agreement.
Each Released Party who is not a party to the Settlement Agreement is
nevertheless an express and intended third-party beneficiary of both the
Settlement Agreement and this Release.
The Tribe hereby agrees that it will not assert, and that it is
estopped from asserting, against the Released Parties, or any of them, any Claim
that it has released in this Release. In addition, the Tribe hereby agrees that
it will not commence, join in, prosecute or participate in any suit or other
proceeding in a position that is adverse to any of the Released Parties arising
directly or indirectly from any Claim that it has released in this Release.
No waiver or amendment of this Release, or the promises, obligations or
conditions herein, shall be valid unless set forth in writing and signed by the
party against whom such waiver or amendment is to be enforced, and no evidence
of any waiver or amendment of this Release shall be offered or received in
evidence in any proceeding, arbitration or litigation between the Releasing
Parties (or any of them) and the Released Parties (or any of them) arising out
of or affecting this Release unless such waiver or amendment is in writing and
signed as stated above.
The Tribe hereby represents and warrants that it has not assigned,
pledged, or transferred in any manner to any person or entity any Claim that is
the subject of this Release. The Tribe shall indemnify the Released Parties and
each of them from and against all Claims that are the subject of this Release
that are asserted by any person or entity by or through any Releasing Parties or
as a result of any assignment, pledge, or transfer that caused the foregoing
representation to be false.
The Tribe hereby agrees, represents and warrants that it has had advice
of counsel of its own choosing in negotiations for and the preparation of this
Release, that it has read this Release or has had the same read to it by its
counsel, that it has had this Release fully explained by such counsel, and that
it is fully aware of its contents and legal effect.
This Release shall be binding upon the successors and assigns of the
Tribe, and shall inure to the benefit of the successors and assigns of PSELP.
This Release shall be governed by and construed in accordance with the
laws of the State of California. By executing this Release, the undersigned
consents to the transaction evidenced hereby. Pursuant to this general release
of all claims, the Tribe expressly waives the protections and benefits of
California Civil Code Section 1542 which states:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have
materially affected his settlement with the debtor.
The provisions of this Release shall be specifically enforceable.
Executed as of March , 1996.
<PAGE>
29 PALMS BAND OF MISSION INDIANS
By
Dean Mike, Chairman
<PAGE>
EXHIBIT "D"
FULL AND FINAL RELEASE OF ALL CLAIMS
(PSELP to Tribe)
This Release is made pursuant to that certain Settlement Agreement,
dated as of March 29, 1996 (the "Settlement Agreement"), executed by and between
PALM SPRINGS EAST LIMITED PARTNERSHIP, a Nevada limited partnership ("PSELP"),
and the 29 PALMS BAND OF MISSION INDIANS (the "Tribe"), a federally recognized
Indian tribe, in conjunction with that certain Settlement Agreement, and as part
of the closing that is provided for in the Settlement Agreement. Terms used
herein with their initial letters capitalized that are defined in the Settlement
Agreement shall have the meaning given them in the Settlement Agreement unless
otherwise defined herein.
In consideration of the mutual promises set forth in the Settlement
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, PSELP, voluntarily, knowingly, and
unconditionally, with specific and express intent, and on behalf of itself and
its agents, accountants, attorneys, affiliates, predecessors, successors and
assigns (collectively, the "Releasing Parties"), hereby fully releases, acquits,
and forever discharges the Tribe and its successors, assigns, partners,
affiliates, subsidiaries, parent companies, principals, directors, officers,
employees, agents, accountants, insurers, attorneys, and any other party who may
be responsible or liable for the acts or omissions of the Tribe (collectively,
the "Released Parties"), of and from any and all actions, causes of action,
suits, debts, disputes, damages, claims, obligations, liabilities, costs,
expenses and demands of any kind whatsoever, at law or in equity, whether
matured, or unmatured, liquidated or unliquidated, vested or contingent, choate
or inchoate, known or unknown (collectively, "Claims") that the Releasing
Parties (or any of them) had, now has, or hereafter can, shall, or may have (to
the extent such future Claims arise in whole or in part out of acts or omissions
prior to the date of the execution of this Release) against the Released Parties
or any of them for, upon, or by reason of any matter, cause, or thing whatsoever
directly or indirectly arising in connection with or related to: (i) the
Management Settlement Agreement; or (ii) any other matters which have occurred
on or before the date of this Release except for any such Claims relating to the
funds under the Loan Agreement which are owing by the Tribe as stated in the
Settlement Agreement, and all liens, security interests or other interests
securing such advances.
Notwithstanding any other provision hereof, this Release shall not
release the Released Parties from any liability, lien, security interest or
other Claims whatsoever related to or in conjunction with, or resulting from any
breach or violation of, the Settlement Agreement, the Restated Note, or related
loan and security documents.
Each Released Party who is not a party to the Settlement Agreement is
nevertheless an express and intended third-party beneficiary of both the
Settlement Agreement and this Release.
PSELP hereby agrees that it will not assert, and that it is estopped
from asserting, against the Released Parties, or any of them, any Claim that it
has released in this Release. In addition, PSELP hereby agrees that it will not
commence, join in, prosecute or participate in any suit or other proceeding in a
position that is adverse to any of the Released Parties arising directly or
indirectly from any Claim that it has released in this Release.
No waiver or amendment of this Release, or the promises, obligations or
conditions herein, shall be valid unless set forth in writing and signed by the
party against whom such waiver or amendment is to be enforced, and no evidence
of any waiver or amendment of this Release shall be offered or received in
evidence in any proceeding, arbitration or litigation between the Releasing
Parties (or any of them) and the Released Parties (or any of them) arising out
of or affecting this Release unless such waiver or amendment is in writing and
signed as stated above.
PSELP hereby represents and warrants that it has not assigned, pledged,
or transferred in any manner to any person or entity any Claim that is the
subject of this Release, except as expressly provided in the Settlement
Agreement. PSELP shall indemnify the Released Parties and each of them from and
against all Claims that are the subject of this Release that are asserted by any
person or entity by or through any Releasing Parties or as a result of any
assignment, pledge, or transfer that caused the foregoing representation to be
false.
PSELP hereby agrees, represents and warrants that it has had advice of
counsel of its own choosing in negotiations for and the preparation of this
Release, that it has read this Release or has had the same read to it by its
counsel, that it has had this Release fully explained by such counsel, and that
it is fully aware of its contents and legal effect.
This Release shall be binding upon the successors and assigns of PSELP
and shall inure to the benefit of the successors and assigns of the Tribe.
This Release shall be governed by and construed in accordance with the
laws of the State of California. By executing this Release, the undersigned
consents to the transaction evidenced hereby. Pursuant to this general release
of all claims, PSELP expressly waives the protections and benefits of California
Civil Code Section 1542 which states:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have
materially affected his settlement with the debtor.
The provisions of this Release shall be specifically enforceable.
Executed as of ______________, 1996.
<PAGE>
PALM SPRINGS EAST LIMITED PARTNERSHIP
By
Thomas E. Martin, President
Elsub Management Corporation
General Partner of Palm Springs
East Limited Partnership
<PAGE>
EXHIBIT "E"
Gene R. Gambale
SPOTLIGHT 29 CASINO
46-200 Harrison Street
Coachella, California 92236
Palm Springs East, Limited Partnership
c/o Thomas E. Martin
202 Fremont Street
Las Vegas, Nevada 89109
I am general counsel to the 29 PALMS BAND OF MISSION INDIANS
(the "Tribe"), a federally recognized Indian tribe. In connection with my
representation of the Tribe, I observed the Tribe execute and acknowledge that
certain Settlement Agreement dated as of February ___, 1996 (the "Settlement
Agreement"), executed by and between PALM SPRINGS EAST LIMITED PARTNERSHIP, a
Nevada limited partnership ("PSELP"), and the Tribe, and certain related
documents identified in the Settlement Agreement, including, without limitation,
the Restated Note as defined in the Settlement Agreement and the Release
referenced in Section 4 of the Settlement Agreement (the "Release"). (The
Settlement Agreement, the Restated Note, the Release, the Loan Agreement as
modified by the Settlement Agreement, and the other documents relating to the
Settlement Agreement will be referred to herein collectively as the
"Documents"). In addition, I have reviewed such other documents, certificates,
laws, instruments and agreements as in my judgment are necessary or appropriate
to enable me to render this opinion, including, without limitation, the
Constitution, Charter documents and organizational documents and resolutions
promulgated by or on behalf of the Tribe. In addition, I have conducted such
other inquiries and examinations as I deem necessary and appropriate for
rendering this opinion.
Based on the foregoing, it is my opinion that:
(a) The Tribe is a federally recognized Indian tribe
with full right, power and authority to carry out and
consummate the transactions contemplated by the Settlement
Agreement, and has duly taken all actions
<PAGE>
necessary to carry out and consummate the transactions
contemplated to be performed on its part by the Settlement
Agreement and other Documents.
(b) The laws of the State of California will govern
and control: (i) the rights and remedies of PSELP under the
Settlement Agreement and other Documents; and (ii) the rights
and remedies of the parties to the Settlement Agreement and
other Documents.
(c) The provisions, covenants, and waivers contained
in the Documents executed by the Tribe relating to the waiver
of sovereign immunity by the Tribe and the submittal to
jurisdiction of the Tribe to the United States District Court
for the Central District of California, or if the United
States District Court lacks jurisdiction, the Superior Court
of the State of California in Riverside County, with appeals
as appropriate to the California Court of Appeals and the
California State Supreme Court, including, without limitation,
Section 11.3 of the Settlement Agreement, are valid and
enforceable.
(d) To the best of my knowledge, no further consent,
approval, order, authorization, registration, resolution,
declaration or designation of or filing with any governmental
authority of the United States (except only the consent of the
National Indian Gaming Commission and possibly the consent of
the Bureau of Indian Affairs) or the Tribe or any subdivision
thereof is required in connection with the authorization,
execution, delivery or performance by the Tribe of the
Settlement Agreement and other Documents.
<PAGE>
(e) The Tribe has duly authorized, executed and
delivered the Settlement Agreement and other Documents
executed by the Tribe, and duly consented to all of the
Documents.
(f) The Tribe has taken all necessary tribal action
to authorize the execution and delivery of the Settlement
Agreement and other Documents, and the persons who executed
the Settlement Agreement and other Documents on behalf of the
Tribe were duly authorized to do so. The Settlement Agreement
and other Documents are in full force and effect and
constitute the legal, valid and binding obligations of the
Tribe, enforceable against the Tribe in accordance with their
terms.
(g) The Tribe's Articles of Association do not
prohibit the Tribe from entering into the Settlement Agreement
and other Documents. A true and complete copy of the Tribe's
resolution certified by the Tribe's secretary authorizing the
execution, delivery and performance of the Settlement
Agreement and other Documents is attached as Exhibit "1"
hereto. The Tribe's resolution is in full force and effect and
has not been amended, abrogated, or terminated.
Sincerely,
Gene R. Gambale
General Counsel to the Tribe
<PAGE>
EXHIBIT "F"
TWENTY-NINE PALMS BAND OF MISSION INDIANS
GENERAL COUNCIL RESOLUTION REGARDING SETTLEMENT AGREEMENT
WHEREAS, the Twenty-Nine Palms Tribe of Mission Indians (the "Tribe")
has authorized its Chairman, Dean Mike (the "Chairman") to negotiate that
certain Settlement Agreement (the "Settlement Agreement"), with PALM SPRINGS
EAST LIMITED PARTNERSHIP, a Nevada limited partnership ("PSELP"), as well as
certain related documents identified in the Settlement Agreement, including,
without limitation, the Restated Note as defined in the Settlement Agreement and
the Release referenced in Section 3 of the Settlement Agreement (the "Release");
and
WHEREAS, after due consideration, the General Council has determined
that it is in the best interests of the Tribe for the Tribe to execute and
deliver to PSELP the Settlement Agreement and the related documents, including
the Restated Note and the Release (collectively the "Documents");
NOW, THEREFORE, BE IT RESOLVED, that the Settlement Agreement and all
schedules, exhibits and related Documents (including, but not limited to,
delivery of the "Restated Commercial Promissory Note" dated _______, 1996) are
hereby approved by the General Council, subject to review and, if necessary,
approval of the National Indian Gaming Commission ("NIGC");
RESOLVED, FURTHER, that the Chairman is hereby authorized to execute
and deliver to PSELP the Settlement Agreement and other Documents;
RESOLVED, FURTHER, that once the Settlement Agreement and related
Documents have been reviewed and (if deemed necessary by NIGC) approved by NIGC,
the General Council specifically agrees:
(a) Under the Settlement Agreement, the Tribe waives its
sovereign immunity as provided in Section 11.3 of the Settlement
Agreement, and any lawsuits related to the Settlement Agreement or the
other Documents will be determined in the courts of the United States
or
<PAGE>
California as stated in the Settlement Agreement; and
(b) No subsequent action by the General Council, the Tribe's
gaming commission or any other governing body of the Tribe, or any
tribal court, shall operate to excuse the Tribe's obligations under the
Settlement Agreement and the other Documents.
RESOLVED, FURTHER, that the Tribe's counsel, Gene R. Gambale, is
authorized to present copies of the Settlement Agreement and the other
Documents, and all other appropriate material to NIGC, and to meet with NIGC and
perform all other acts reasonably necessary on behalf of the Tribe to secure
NIGC's approval of the Settlement Agreement and other Documents, provided,
however, that counsel shall not agree to any changes in the economic or other
material terms of the Settlement Agreement or other Documents without prior
approval by the General Council.
Certification
I, _________________, the duly authorized secretary/custodian of
records for the Tribe, certify that the foregoing resolution was approved and
adopted at a duly noticed and constituted meeting of the Tribal Council
conducted on ________ ___, 1996.
DATED this ___ day of ___________, 1996.
(Print Name)
Secretary/Custodian of Records for
the Tribal Council of the 29 Palms
Band of Mission Indians
<PAGE>
ELSINORE CORPORATION
13 1/2% SECOND MORTGAGE NOTE
DUE 2001
No. $________________
ELSINORE CORPORATION, a Nevada corporation (hereinafter called the
"Company," which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
________________________________________________________________________________
or registered assigns, the principal sum of ____________________________________
Dollars, on August 20, 2001.
Interest Payment Dates: February 28 and August 31.
Record Dates: February 15 and August 15.
Reference is made to the further provisions of this Security on the
attached pages, which will, for all purposes, have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed under its corporate seal.
Dated:
ELSINORE CORPORATION
By: __________________________
Jeffrey T. Leeds
President
Attest:
__________________________
Barton Jacka, Secretary
This is one of the Securities described in the within-mentioned
Indenture.
FIRST TRUST NATIONAL ASSOCIATION, as Trustee
By: ___________________________
Authorized Signatory
Dated:
<PAGE>
ELSINORE CORPORATION
13 1/2% Second Mortgage Note
due 2001
1. Interest.
Elsinore Corporation, a Nevada corporation (the "Company"), promises
to pay interest on the principal amount of this Security at a rate of 13 1/2%
per annum. To the extent it is lawful, the Company promises to pay interest on
any interest payment due but unpaid on such principal amount at a rate of 13.5%
per annum compounded semi-annually.
The Company will pay interest semi-annually on February 28 and August
31 of each year (each, an "Interest Payment Date"), commencing February 28,
1997. Interest on the Securities will accrue from August 20, 1996. Interest will
be computed on the basis of a 360-day year consisting of twelve 30-day months.
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. Except as
provided below, the Company shall pay principal and interest in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for payment of public and private debts ("U.S. Legal Tender").
However, the Company may pay principal and interest by wire transfer of Federal
funds, or interest by its check payable in such U.S. Legal Tender. The Company
may deliver any such interest payment to the Paying Agent or the Company may
mail any such interest payment to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, First Trust National Association (the "Trustee") will act
as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or Co-registrar without notice to the Holders. The Company or any of
its Subsidiaries may, subject to certain exceptions, act as Paying Agent,
Registrar or Co-registrar.
4. Indenture.
The Company issued the Securities under an Amended and Restated
Indenture, dated as of March 3, 1997 (the "Indenture"), between the Company, the
Guarantors named therein and the Trustee. Capitalized terms herein are used as
defined in the Indenture unless otherwise defined herein. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act, as in effect on the date of
the Indenture. The Securities are subject to all such terms, and Holders of
Securities are referred to the Indenture and said Act for a statement of them.
The Securities are senior, secured obligations of the Company limited in
aggregate principal amount to $30,000,000.
5. Redemption.
The Securities are redeemable in whole or from time to time in part at
any time, at the option of the Company, upon full payment of principal of the
Securities, without premium, together with any accrued but unpaid interest to
the Redemption Date.
The Securities may also be redeemed at any time pursuant to, and in
accordance with, any order of any Gaming Authority with appropriate jurisdiction
and authority to the extent necessary in the reasonable, good faith judgment of
the Board of Directors of the Company to prevent the loss or material impairment
or secure the reinstatement of any Gaming License or to prevent such Gaming
Authority from taking any other action, which if lost, impaired, not reinstated
or taken, as the case may be, would have a material adverse effect on the
Company or any Subsidiary or where such redemption or acquisition is required
because the Holder or beneficial owner of the Securities is required to qualify,
be found suitable or become licensed as such under such Gaming Laws and does not
so qualify, obtain a finding of suitability or become licensed.
Any redemption of the Notes shall comply with Article Three of the
Indenture.
6. Notice of Redemption.
Notice of redemption will be mailed by first class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Securities called for redemption shall
have been deposited with the Paying Agent on such Redemption Date, the
Securities called for redemption will cease to bear interest and the only right
of the Holders of such Securities will be to receive payment of the Redemption
Price, including any accrued and unpaid interest to the Redemption Date.
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of, or exchange Securities in accordance with, the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption.
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the owner of it
for all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Company at its written request. After that, all liability of the Trustee and
such Paying Agent(s) with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
If the Company at any time deposits into an irrevocable trust with the
Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay the
principal of and interest on the Securities to redemption or maturity and
complies with the other provisions of the Indenture relating thereto, the
Company will be discharged from certain provisions of the Indenture and the
Securities (including the financial covenants, but excluding its obligation to
pay the principal of and interest on the Securities).
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the written consent of the Holders of a majority,
and in certain cases at least two-thirds, in aggregate principal amount of the
Securities then outstanding, and any existing Default or Event of Default or
compliance with any provision may be waived with the consent of the Holders of a
majority in aggregate principal amount of the Securities then outstanding.
Without notice to or consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Securities to, among other things, cure any
ambiguity, defect or inconsistency, provide for uncertificated Securities in
addition to or in place of certificated Securities, comply with an order of any
Gaming Authority or make any other change that does not adversely affect the
rights of any Holder of a Security.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its Subsidiaries to, among other things, incur additional
Indebtedness, make payments in respect of its Capital Stock, enter into
transactions with Affiliates, incur Liens, sell assets, merge or consolidate
with any other person and sell, lease, transfer or otherwise dispose of
substantially all of its properties or assets. The limitations are subject to a
number of important qualifications and exceptions. The Company must annually
report to the Trustee on compliance with such limitations.
13. Change of Control.
In the event there shall occur any Change of Control, each Holder of
Securities shall have the right, at such Holder's option but subject to the
limitations, and conditions set forth in the Indenture, to require the Company
to purchase on the Change of Control Payment Date in the manner specified in the
Indenture, all or any part (in integral multiples of $1,000) of such Holder's
Securities at a Change of Control Purchase Price equal to 101% of the principal
amount thereof, together with accrued and unpaid interest, if any, to the Change
of Control Payment Date.
14. Security.
In order to secure the obligations under the Indenture, the Company,
the Guarantors and the Trustee have entered into certain security agreements in
order to create security interests in certain assets and properties of the
Company, the Guarantors and their respective Subsidiaries.
15. Gaming Law.
The rights of the Holder of this Security and any owner of any
beneficial interest in this Security are subject to the Gaming Laws and the
jurisdiction and requirements of the Gaming Authorities and the further
limitations and requirements set forth in the Indenture.
16. Successors.
When a successor assumes all the obligations of its predecessor under
the Securities and the Indenture, the predecessor will be released from those
obligations.
17. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Securities. Subject to certain limitations,
Holders of a majority in aggregate principal amount of the Securities then
outstanding may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Securities notice of any continuing Default
or Event of Default (except a Default in payment of principal or interest), if
it determines that withholding notice is in their interest.
18. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
19. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator, as such,
past, present or future, of the Company or any successor corporation shall have
any liability for any obligation of the Company under the Securities or the
Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder of a Security by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Securities.
20. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Security.
21. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
22. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
<PAGE>
[FORM OF ASSIGNMENT]
I or we assign this Security to
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee
__________________ and irrevocably appoint __________________________ agent to
transfer this Security on the books of the Company. The agent may substitute
another to act for him.
Dated: _____________ Signed: _______________________________
(Sign exactly as name appears on the other side of this Security)
<PAGE>
GUARANTY
For value received, each of the undersigned (the "Guarantors") hereby
unconditionally guarantees to the Holder of the Security upon which this
Guaranty is endorsed the due and punctual payment, as set forth in the Indenture
pursuant to which such Security and this Guaranty were issued, of the principal
of, premium (if any) and interest on such Security when and as the same shall
become due and payable for any reason according to the terms of such Security
and Article XIII of the Indenture. The Guaranty of the Security upon which this
Guaranty is endorsed will not become effective until the Trustee signs the
certificate of authentication on such Security.
ELSUB MANAGEMENT CORPORATION
Attest: ________________________ By: ______________________________
Edward M. Nigro Name: Edward M. Nigro
Secretary Title: President
FOUR QUEENS, INC.
Attest: ________________________ By: ______________________________
William L. Westerman Name: William L. Westerman
Secretary Title: President
PALM SPRINGS EAST, LIMITED
PARTNERSHIP
BY: ELSUB MANAGEMENT CORPORATION,
its general partner
Attest: ________________________ By: ______________________________
Edward M. Nigro Name: Edward M. Nigro
Secretary Title: President
ELSINORE CORPORATION,
Issuer
and
THE GUARANTORS NAMED HEREIN
and
FIRST TRUST NATIONAL ASSOCIATION
Trustee
-----------------------
AMENDED AND RESTATED
INDENTURE
Dated as of March 3, 1997
-----------------------
$30,000,000
13 1/2% Second Mortgage Notes due 2001
<PAGE>
2.AMENDED AND RESTATED INDENTURE, dated as of March 3, 1997,
between ELSINORE CORPORATION, a Nevada corporation (the "Company"), the
GUARANTORS referred to below and FIRST TRUST NATIONAL ASSOCIATION, a national
association, as Trustee (individually a "Party" and collectively the "Parties").
Factual Background
A. The Parties entered into that certain Indenture dated as of October
8, 1993 as amended by Supplemental Indenture No. 1 dated as of April 21, 1994
and Supplemental Indenture No. 2 dated as of December 14, 1994 (the "Original
Indenture") pursuant to which the Company issued the Original Notes (as defined
below) in the aggregate principal amount of $60,000,000. The Original Notes bore
interest at 12 1/2% with a stated maturity date of October 1, 2000.
B. On or about October 14, 1994, the Company entered into a certain
Note and Stock Purchase Agreement with the Senior Noteholders (as defined below)
whereby the Company issued the Senior Notes (as defined below). The Senior Notes
were issued pursuant to a Waiver of Compliance dated as of October 13, 1994,
executed by Trustee, the Company, and the Guarantors. The Senior Notes are
secured by senior security interests in the Collateral (as defined below).
C. On October 31, 1995, the Company filed a Chapter 11 bankruptcy
reorganization case in the United States Bankruptcy Court for the District of
Nevada (the "Court"), Case No. 95-24685 RCJ. On August 9, 1996, the Court
entered its Order Confirming Chapter 11 Plan of Reorganization (the "Order")
confirming the Plan of Reorganization (the "Plan") identified in the Order,
which became final on August 20, 1996 (the "Confirmation Date").
D. This Amended and Restated Indenture is entered into by the Parties
pursuant to the Order and the Plan, and is effective subject to the terms and
conditions of the Order and the Plan, as provided in the Order and the Plan.
E. The Parties desire to amend and restate the Indenture to provide,
among other things, for the issuance of Amended and Restated Notes in the
aggregate principal amount of $30,000,000. The Amended and Restated Notes will
bear interest at 13 1/2% from August 20, 1996 and will mature on August 20,
2001. Each of the Original Notes shall be exchanged for an Amended and Restated
Note in a principal amount equal to one-half of the principal amount of the
Original Note.
NOW, THEREFORE, the parties do hereby amend and restate the Original
Indenture to read in full as follows, effective on the Effective Date (as
defined in the Order) and upon satisfaction of the conditions stated in Exhibit
A to this Amended and Restated Indenture:
Each Party hereto agrees as follows for the benefit of each other Party
and for the equal and ratable benefit of the Holders of the Company's Amended
and Restated Notes (as defined below):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.
"Acceleration Notice" shall have the meaning specified in Section 7.2.
"Acquired Indebtedness" means Indebtedness of any person existing at
the time such person becomes a Subsidiary of the Company or is merged or
consolidated into or with the Company or a Subsidiary of the Company, and not
incurred in connection with or in anticipation of, such merger or consolidation
or such person becoming a Subsidiary of the Company.
"Acquisitions" means the purchase or other acquisition of any person or
substantially all the assets of any person by any other person, whether by
purchase, merger, consolidation, or other transfer, and whether or not for
consideration.
"Affiliate" means (i) any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or any
of its Subsidiaries, (ii) any spouse, immediate family member, or other relative
who has the same principal residence of any Person described in clause (i)
above, (iii) any trust in which any Person described in clause (i) or (ii) above
has a beneficial interest, and (iv) any Person which has entered into a
management contract with the Company or any of its Subsidiaries, and any
Affiliate of such Person. For purposes of this definition, the term "control"
means (a) the power to direct the management and policies of a Person, directly
or through one or more intermediaries, whether through the ownership of voting
securities, by contract, or otherwise, or (b) the beneficial ownership of 10% or
more of any class of voting Capital Stock of a Person (on a fully diluted basis)
or of warrants or other rights to acquire 10% or more of such class of Capital
Stock (whether or not presently exercisable).
"Affiliate Transaction" shall have the meaning specified in Section 5.10
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Amended and Restated Notes" means the Amended and Restated Notes
issued pursuant to this Indenture.
"Approvals" means all approvals, licenses (including Gaming Licenses),
permits, authorizations, findings and other filings necessary under applicable
Gaming Laws.
"Asset Sale" shall have the meaning specified in Section 5.14.
"Average Life" means, as of the date of determination, with respect to
any security or instrument, the quotient obtained by dividing (i) the sum of the
products of the number of years from the date of determination to the dates of
each successive scheduled principal (or redemption) payment of such security or
instrument multiplied by the amount of such principal (or redemption) payment by
(ii) the sum of all such principal (or redemption) payments.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"Board of Directors" means, with respect to any person, the Board of
Directors of such person or any committee of the Board of Directors of such
person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such person.
"Board Resolution" means, with respect to any person, a duly adopted
resolution of the Board of Directors of such person.
"Business Day" means a day that is not a Legal Holiday.
"Capital Stock" means, with respect to any person, any common stock,
preferred stock and any other capital stock of such person and shares,
interests, participations or other ownership interests (however designated), of
any person and any rights (other than debt securities convertible into corporate
stock), warrants or options to purchase any of the foregoing.
"Capitalized Lease Obligation" means obligations under a lease, entered
into on or after the Effective Date, that are required to be capitalized for
financial reporting purposes in accordance with GAAP, and the amount of
Indebtedness represented by such obligations shall be the capitalized amount of
such obligations, as determined in accordance with GAAP.
"Cases" means the following Chapter 11 bankruptcy cases in the Court, and
all petitions, consents, decrees, judgments, orders, documents, and pleadings
filed with or by the Court therein: No. 95-24685 RCJ, No. 95-24686 RCJ, No.
95-24687 RCJ, No. 95-24688 RCJ, No. 95-24689 RCJ, and No. 95-24839 RCJ.
"Cash" means U.S. Legal Tender or U.S. Government obligations.
"Cash Equivalent" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic commercial bank of recognized standing having capital and surplus
in excess of $500,000,000 and commercial paper issued by others rated at least
A-2 or the equivalent thereof by Standard & Poor's Corporation or at least P-2
or the equivalent thereof by Moody's Investors Service, Inc. and in each case
maturing within one year after the date of acquisition and (iii) investments in
money market funds substantially all of whose assets comprise securities of the
types described in clauses (i) and (ii) above.
"Casino" means a gaming establishment owned by the Company or one of
its Subsidiaries.
"Change of Control" means (i) the time that the Company first
determines or reasonably should have known that any "person" or "group" (as such
terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act,
whether or not applicable), is or becomes the "beneficial owner" (as such term
is used in Rules 13d-3 and 13d-5 under the Exchange Act, whether or not
applicable, except that a "person" shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the total voting power in the
aggregate of all classes of Capital Stock then outstanding of the Company
normally entitled to vote in elections of directors, or (ii) during any period
of 12 consecutive months after the Effective Date, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election by such Board or whose
nomination for election by the shareholders of the Company was approved by a
vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved), cease for any reason to constitute a
majority of the Board of Directors of the Company then in office.
"Change of Control Offer" shall have the meaning specified in
Section 12.1.
"Change of Control Payment Date" shall have the meaning specified in
Section 12.1.
"Change of Control Purchase Price" shall have the meaning specified in
Section 12.1.
"Change of Control Put Date" shall have the meaning specified in
Section 12.1.
"Collateral" means the Property of the Company and Property of the
Guarantors which is subject to the Liens created by the Mortgage.
"Common Stock" shall mean the Common Stock, par value $0.001 per share, of
the Company, now or hereafter issued.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to the Indenture and thereafter means such
successor.
"Company Request" means a written request of the Company or a
Guarantor, as the case may be, in the form of an Officers' Certificate.
"Consolidated Depreciation and Amortization" for any person means the
total depreciation and amortization for such person and its Consolidated
Subsidiaries, as determined in accordance with GAAP.
"Consolidated EBITDA" means, with respect to any person, for any
period, the Consolidated Net Income of such person for such period adjusted to
add thereto (to the extent deducted from net revenues in determining
Consolidated Net Income), without duplication, the sum of (i) Consolidated
Income Tax Expense, (ii) Consolidated Depreciation and Amortization expense and
(iii) Consolidated Fixed Charges.
"Consolidated Fixed Charges" of any person means, for any period, the
aggregate amount (without duplication) of (a) interest expensed or capitalized,
paid, accrued, or scheduled to be paid or accrued in accordance with GAAP
(including, in accordance with the following sentence, interest attributable to
Capitalized Lease Obligations) during such period in respect of all Indebtedness
of such person and its Consolidated Subsidiaries, including (i) original issue
discount and non-cash interest payments or accruals on any Indebtedness other
than with respect to the Notes, (ii) the interest portion of all deferred
payment obligations, calculated in accordance with GAAP, and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptance financings and currency and Interest Swap Obligations, in each case
to the extent attributable to such period and determined on a consolidated basis
in accordance with GAAP, and (b) the amount of dividends payable by such person
or any of its Consolidated Subsidiaries in respect of Disqualified Capital Stock
(other than by Subsidiaries of such person to such person or such person's
wholly owned Subsidiaries). For purposes of this definition, (x) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP and (y) interest expense
attributable to any Indebtedness represented by the guaranty by such person or a
Subsidiary of such person of an obligation of another person shall be deemed to
be the interest expense attributable to the Indebtedness guaranteed.
"Consolidated Fixed Charges Coverage Ratio" of any person on any date
of determination (the "Transaction Date") means, the ratio of (a) the aggregate
amount of Consolidated EBITDA of such person attributable to continuing
operations and businesses (exclusive of amounts attributable to operations and
businesses discontinued or disposed of) for the Reference Period to (b) the
aggregate Consolidated Fixed Charges of such person (exclusive of amounts
attributable to discontinued operations and business, but only to the extent
that the obligations giving rise to such Consolidated Fixed Charges would no
longer be obligations contributing to such person's Consolidated Fixed Charges
subsequent to the Transaction Date) during the Reference Period; provided, that
for purposes of such calculation, (i) Acquisitions which occurred during the
Reference Period or subsequent to the Reference Period and on or prior to the
date of the transaction giving rise to the need to calculate the Consolidated
Fixed Charges Coverage Ratio shall be assumed to have occurred on the first day
of the Reference Period, (ii) transactions giving rise to the need to calculate
the Consolidated Fixed Charges Coverage Ratio shall be assumed to have occurred
on the first day of the Reference Period, (iii) the incurrence of any
Indebtedness or issuance of any Disqualified Capital Stock during the Reference
Period or subsequent to the Reference Period and on or prior to the Transaction
Date (and the application of the proceeds therefrom to the extent used to
refinance or retire other Indebtedness) shall be assumed to have occurred on the
first day of such Reference Period, and (iv) the Consolidated Fixed Charges of
such person attributable to interest on any Indebtedness or dividends on any
Disqualified Capital Stock bearing a floating interest (or dividend) rate shall
be computed on a pro forma basis as if the average rate in effect from the
beginning of the Reference Period to the Transaction Date had been the
applicable rate for the entire period, unless such Person or any of its
Subsidiaries is a party to an Interest Swap obligation (which shall remain in
effect for the 12 month period immediately following the Transaction Date) that
has the effect of fixing the interest rate on the date of computation, in which
case such rate (whether higher or lower) shall be used.
"Consolidated Income Tax Expense" for any person means the total net
income tax expenses for such person and its Consolidated Subsidiaries, as
determined in accordance with GAAP.
"Consolidated Net Income" means, with respect to any person for any
period, the net income (or loss) of such person and its Consolidated
Subsidiaries (determined in accordance with GAAP) for such period, adjusted to
exclude (only to the extent included in computing such net income (or loss) and
without duplication): (a) all gains which are either extraordinary (as
determined in accordance with GAAP) or are either unusual or nonrecurring, (b)
the net income, if positive, of any person, other than a Consolidated
Subsidiary, in which such person or any of its Consolidated Subsidiaries has an
interest, except to the extent of the amount of any dividends or distributions
actually paid in Cash to such person or a Consolidated Subsidiary of such person
during such period, but not in excess of such person's pro rata share of such
person's net income for such period, (c) the net income, if positive, of any
person acquired in a pooling of interests transaction for any period prior to
the date of such acquisition, and (d) the net income, if positive, of any of
such person's Consolidated Subsidiaries to the extent that the declaration or
payment of dividends or similar distributions is not at the time permitted by
operation of the terms of its charter or bylaws or any other agreement,
instrument, judgment, decree, order, law, statute, rule or governmental
regulation applicable to such Consolidated Subsidiary.
"Consolidated Net Worth" of any person at any date means the aggregate
of capital, surplus and retained earnings of such person (plus amounts of equity
attributable to preferred stock) and its Consolidated Subsidiaries, as would be
shown on the consolidated balance sheet of such person prepared in accordance
with GAAP, adjusted to exclude (to the extent included in calculating such
equity), (a) the amount of capital, surplus and accrued but unpaid dividends
attributable to any Disqualified Capital Stock, (b) all upward revaluations and
other write-ups in the book value of any asset of such person or a Consolidated
Subsidiary of such person subsequent to the Effective Date and (c) all
investments in Subsidiaries that are not Consolidated Subsidiaries and in
persons that are not Subsidiaries.
"Consolidated Subsidiary" means, for any person, each Subsidiary of
such person (whether now existing or hereafter created or acquired) the
financial statements of which shall be (or should have been) consolidated for
financial statement reporting purposes with the financial statements of such
person in accordance with GAAP.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Deed of Trust" means the Deed of Trust, Assignment of Rents and
Security Agreement dated as of October 8, 1993, by and among Four Queens, Inc.,
Land Title of Nevada, Inc., as trustee and the Trustee, as modified by
Modification of Subordinated Deed of Trust dated March 3, 1997.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Disqualified Capital Stock" means, with respect to any person, (a)
Capital Stock of such person that, by its terms or by the terms of any security
into which it is convertible or exchangeable, is, or upon the happening of an
event or the passage of time would be, required to be redeemed or repurchased
(including at the option of the holder thereof) by such person or any of its
Subsidiaries, in whole or in part, on or prior to the Stated Maturity of the
Notes and (b) with respect to any Subsidiary of such person, any Capital Stock
other than any common stock or other equity interest with no preference,
privileges, or redemption or repayment provisions.
"Effective Date" means the date identified as such in the Plan and Order
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"Event of Default" shall have the meaning specified in Section 7.01.
"Event of Loss" means, with respect to any property or asset, any (i)
loss, destruction or damage of such property or asset; (ii) any actual
condemnation, seizure or taking, by exercise of the power of eminent domain or
otherwise, of such property or asset, or confiscation or requisition of the use
of such property or asset.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"Facility Lease" is defined in the Deed of Trust.
"Facility Lessor" is defined in the Deed of Trust.
"Four Queens Casino" means the Four Queens Casino and Hotel and
properties and operations ancillary thereto located at 202 East Fremont Street,
Las Vegas, Nevada, owned and operated by Four Queens, Inc., a wholly owned
subsidiary of the Company.
"Fremont Street Experience" means an open air street mall on Fremont
Street in Las Vegas, Nevada.
"Fremont Street L.L.C." means any Person in which the Company has an
interest which manages or operates the Fremont Street Experience.
"GAAP" means generally accepted accounting principles as in effect in
the United States from time to time.
"Gaming Authority" means any governmental board, agency or authority
with the power to regulate gaming, including the Nevada State Gaming Control
Board and the Nevada Gaming Commission, and the corresponding governmental
authorities with responsibility to interpret and enforce the laws and
regulations applicable to gaming in any Gaming Jurisdiction.
"Gaming Jurisdiction" means the State of Nevada and any other Federal,
state or local jurisdiction in which any entity in which the Company has a
direct or indirect beneficial, legal or voting interest conducts casino gaming.
"Gaming Law" means any law, rule, regulation or ordinance governing
gaming activities, including the Nevada Gaming Control Act, any administrative
rules or regulations promulgated thereunder, and any of the corresponding
statutes and regulations in each Gaming Jurisdiction.
"Gaming Licenses" means every material license, material franchise or
other material approval or authorization on the date of the Indenture or
thereafter required to own, lease, operate or otherwise conduct gaming in the
State of Nevada or any other jurisdiction in which the Company conducts or
proposes in good faith to conduct material gaming business, and applicable
liquor licenses related to any such gaming business.
"Guarantors" means, collectively, the Subsidiaries of the Company and all
future Subsidiaries of the Company.
"Guaranty" shall have the meaning provided in Section 13.1(a).
"Holder" or "Securityholder" means the person in whose name a Security
is registered on the Registrar's books.
"incur" shall have the meaning specified in Section 5.11
"Incurrence Date" shall have the meaning specified in Section 5.11.
"Indebtedness" means, without duplication, (a) all liabilities and
obligations, contingent or otherwise, with respect to any person, (i) in respect
of borrowed money (whether or not the recourse of the lender is to the whole of
the assets of such person or only to a portion thereof), (ii) evidenced by
bonds, notes, debentures or similar instruments, (iii) representing the balance
deferred and unpaid of the purchase price of any property or services, (iv)
evidenced by bankers' acceptances or similar instruments issued or accepted by
banks, (v) for the payment of money relating to a Capitalized Lease Obligation,
or (vi) evidenced by a letter of credit or a reimbursement obligation of such
person with respect to any letter of credit; (b) all obligations of such person
under Interest Swap Obligations and foreign currency hedges; (c) all liabilities
of others of the kind described in the preceding clauses (a) or (b) that such
person has guaranteed or that is otherwise its legal liability and all
obligations to purchase, redeem or acquire any Capital Stock; (d) all
obligations secured by a Lien, other than a Permitted Lien, not securing any
liability or obligation that would itself constitute Indebtedness, to which the
property or assets (including, without limitation, leasehold interests and any
other tangible or intangible property rights) of such person are subject,
whether or not the obligations secured thereby shall have been assumed by or
shall otherwise be such person's legal liability, provided, that the amount of
such obligations shall be limited to the lesser of the fair market value of the
assets or property to which such Lien attaches and the amount of the obligation
so secured; and (e) any and all deferrals, renewals, extensions, refinancings
and refundings (whether direct or indirect) of, or amendments, modifications or
supplements to, any liability of the kind described in any of the preceding
clauses (a), (b), (c) or (d), or this clause (e), whether or not between or
among the same parties.
"Indenture" means this Amended and Restated Indenture, as amended or
supplemented from time to time in accordance with the terms hereof.
"Indenture Obligations" means the obligations of the Company and the
Guarantors pursuant to this Indenture and the Securities (and any other obligor
hereunder or under the Securities) now or hereafter existing, to pay principal
of and premium, if any, and interest on the Securities when due and payable,
whether on the Maturity Date or an Interest Payment Date, by acceleration, call
for redemption, acceptance of any Change of Control Offer, or otherwise, and
interest on the overdue principal and premium, if any, of, and (to the extent
lawful) interest, if any, on, the Securities and all other amounts due or to
become due in connection with this Indenture, the Securities and the Mortgage,
including any and all extensions, renewals or other modifications thereof, in
whole or in part, and the performance of all other obligations of the Company
(and any other obligor hereunder or under the Securities) and the Guarantors,
including all costs and expenses incurred by the Trustee or the Holders in the
collection or enforcement of any such obligations or realization upon the
Collateral or the security of any Mortgage.
"Insurance Proceeds" means the Company's and the Guarantors' interest
in and to (a) all proceeds which now or hereafter may be paid under any
insurance policies now or hereafter obtained by or on behalf of the Company and
the Guarantors in connection with the conversion of the Property subject to the
Mortgage into Cash or liquidated claims, together with the interest payable
thereon and the right to collect and receive the same, including, but without
limiting the generality of the foregoing, proceeds of casualty insurance, title
insurance, business interruption insurance and any other insurance now or
hereafter maintained with respect to such Property and (b) all amounts
attributable to Events of Loss.
"Interest Payment Date" means the stated due date of an installment of
interest on the Securities.
"Interest Swap Obligation" means, when used with reference to any
person, the obligations of such person pursuant to any arrangement with any
other person whereby, directly or indirectly, such person is entitled to receive
from time to time periodic payments calculated by applying either a floating or
a fixed rate of interest on a stated notional amount in exchange for periodic
payments made by such person calculated by applying a fixed or a floating rate
of interest on the same notional amount.
"Investment" by a person in any other person means (without
duplication) (a) the acquisition by such person (whether for cash, property,
services, securities or otherwise) of capital stock, bonds, notes, debentures,
partnership or other ownership interests or other securities of such other
person or any agreement to make any such acquisition; (b) the making by such
person of any deposit with, or advance, loan or other extension of credit to,
such other person (including the purchase of property from another person
subject to an understanding or agreement, contingent or otherwise, to resell
such property to such other person) or any commitment to make any such advance,
loan or extension; (c) the entering into by such person of any guarantee of, or
other contingent obligation with respect to, Indebtedness or other liability of
such other person; (d) the making of any capital contribution by such person to
such other person or (e) the designation by the Board of Directors of a
subsidiary to be an Unrestricted Subsidiary in accordance with the definition of
"Unrestricted Subsidiary." For purposes of this definition, the definition of
"Unrestricted Subsidiary" and Section 15.3, an "Investment" shall include the
fair market value of the net assets at the time of such "Investment," as
determined in good faith by the Board of Directors.
"Legal Holiday" shall have the meaning provided in Section 14.7.
"Lien" means any mortgage, lien, pledge, charge, security interest, or
other encumbrance of any kind, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement and any lease deemed to constitute a security interest, and
any option or other agreement to give any security interest).
"Maturity Date," when used with respect to any Security, means the date
on which the principal of such Security becomes due and payable as therein or
herein provided, whether at Stated Maturity, Change of Control Payment Date, or
by declaration of acceleration, call for redemption or otherwise.
"Mortgage" means the Deed of Trust, the Pledge Agreement and any other
agreement purporting to convey to the Trustee for the benefit of Holders, a
security interest in Property pursuant to the requirements of this Indenture
executed by the Company and the Guarantors in favor of the Trustee for the
benefit of the Securityholders, as the same may be amended from time to time.
"Native American Casino" means a Casino which lawfully conducts gaming
pursuant to, and in accordance with the Indian Gaming Regulatory Act, 25 U.S.C.
ss. 2701 et seq., and the rules and regulations promulgated thereunder by the
National Indian Gaming Commission.
"Native American Casino Management Contract" means a contract to
operate and/or manage one or more Native American Casinos, or any Casino
operated on Native American land; provided that, (i) jurisdiction to rule on
disputes over such contract's terms is properly exercised by a state or federal
court in the United States and (ii) such contract by its terms is enforceable in
a state or federal court.
"Net Proceeds" means the aggregate Cash, Cash Equivalents, and fair
market value of property (valued at the fair market value thereof at the time of
receipt in good faith by the Board of Directors of the Company) other than
securities of the Company or any of its Subsidiaries, received by the Company,
after payment of expenses, commissions, discounts and the like incurred in
connection with the transaction giving rise to the Net Proceeds.
"Non-recourse Indebtedness" means Indebtedness of a person to the
extent that under the terms thereof or pursuant to applicable law no personal
recourse shall be had against such person for the payment of the principal of or
interest or premium on such Indebtedness or for any claim based on such
Indebtedness and enforcement of obligations on such Indebtedness is limited only
to recourse against interests in property and assets purchased with the proceeds
of the incurrence of such Indebtedness and as to which the Company provides no
credit support and is not directly or indirectly liable and a default with
respect to which would not entitle any party to cause any other Indebtedness to
be accelerated.
"Officer" means, with respect to the Company, the Chairman of the
Board, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Controller, or the Secretary or Assistant Secretary of the
Company.
"Officers' Certificate" means, with respect to the Company or any
Guarantor, a certificate signed by two Officers of the Company or such Guarantor
and otherwise complying with the requirements of Sections 14.4 and 14.5.
"Opinion of Counsel" means a written opinion from legal counsel to the
Trustee complying with the requirements of Sections 14.4 and 14.5. Unless
otherwise required by this Indenture, the counsel may be in-house counsel to the
Company.
"Original Indenture" means the Indenture by and among the Parties dated
October 8, 1993, prior to amendment and restatement in this Amended and Restated
Indenture.
"Original Notes" means the 12 1/2% First Mortgage Notes due 2000, that
were issued pursuant to the Original Indenture.
"Paying Agent" shall have the meaning specified in Section 2.4.
"Permitted Equity Proceeds Investments" means any Investment, solely of
the Net Proceeds received by the Company from the sale of its Qualified Capital
Stock, other than to any of its Subsidiaries, after the Effective Date, by the
Company in riverboat or dockside gaming or Casinos on Native American land,
pursuant to which Investment the Company, an Unrestricted Subsidiary, or a
Guarantor receives, in the case of a Casino on Native American land, a Native
American Casino Management Contract or, in the case of riverboat or dockside
gaming, constructs, owns or operates pursuant to a management contract a
dockside or riverboat Casino, provided that in any case, all of the rights and
interests in such Casino or contract held by the Company or any of its
Subsidiaries are pledged (except for Permitted Liens) on an exclusive basis as
Collateral for the Notes.
"Permitted FF&E Financing" means Indebtedness incurred to finance the
acquisition or lease of newly acquired or leased furniture, fixtures or
equipment ("FF&E") used directly in the operation of Casinos and secured by a
Lien on such FF&E.
"Permitted Liens" means any of the following:
(a) Liens arising by reason of any judgment, decree or order
of any court only to the extent, for an amount and for a period not resulting in
an Event of Default with respect thereto and so long as such Lien is being
contested in good faith and is adequately bonded, and any appropriate legal
proceeding which may have been duly initiated for the review of such judgment,
decree or order shall not have been finally permitted or the period within which
such proceedings may be initiated shall not have expired;
(b) Security for payment of worker's compensation or other
insurance;
(c) Security for the performance of bids, tenders, trade,
contracts (other than contracts for the payment of money) or leases, surety
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business or appeal bonds, and public and statutory bonds;
(d) Liens for taxes, assessments or other governmental charges
not yet due or which are being contested in good faith and by appropriate
proceedings by the Company or a Guarantor if adequate reserves with respect
thereto are maintained on the books of the Company or such Guarantor, as the
case may be, in accordance with GAAP;
(e) Liens of carriers, warehousemen, mechanics, landlords,
materialmen, repairmen or other like Liens arising by operation of law in the
ordinary course of business and consistent with industry practices and Liens on
deposits made to obtain the release of such Liens if (i) the underlying
obligations are not overdue for a period of more than 30 days or (ii) such Liens
are being contested in good faith and by appropriate proceedings by the Company
or a Guarantor and adequate reserves with respect thereto are maintained on the
books of the Company or such Guarantor, as the case may be, in accordance with
GAAP;
(f) Easements, rights-of-way, zoning and similar restrictions
and other similar encumbrances or title defects incurred in the ordinary course
of business and consistent with industry practices which, in the aggregate, are
not substantial in amount, and which do not in any case materially detract from
the value of the property subject thereto (as such property is used by the
Company or such Guarantor) or interfere with the ordinary conduct of the
business of the Company or such Guarantor or any of their Subsidiaries;
provided, that any such Liens are not incurred in connection with any borrowing
of money or any commitment to loan any money or to extend any credit;
(g) Liens securing any Permitted FF&E Financing, but
only on the FF&E acquired with the proceeds of such Permitted FF&E Financing;
(h) Liens securing the Notes; and
(i) Liens securing the Senior Notes.
"Person" means any individual, limited liability company, corporation,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
"Plans" means all drawings, plans and specifications prepared by or on
behalf of the Company or any of its Subsidiaries, as the same may be amended or
supplemented from time to time, and, if required by applicable law, submitted to
and approved by the building or other relevant department, which describe and
show a Casino and the labor and materials necessary for construction thereof.
"Pledge Agreement" means the Pledge Agreement dated October 8, 1993, as
amended by Amendment of 1993 Pledge Agreement dated March 3, 1997, from the
Company, Elsub Management Corporation, and Palm Springs East Limited
Partnership, as Pledgors, to the Trustee for the benefit of Holders as the same
may be amended from time to time.
"Principal" of any Indebtedness (including the Securities) means the
principal of such Indebtedness plus any applicable premium, if any, on such
Indebtedness.
"Property" or "property" means any right or interest in or to property
or assets of any kind whatsoever, whether real, personal or mixed and whether
tangible, intangible, contingent, indirect or direct.
Purchase Agreement" means the Purchase Agreement by and among the
Company, the Guarantors and the Purchasers, dated as of the date hereof,
providing for the several purchases of the Securities (including the
Guaranties).
"Purchasers" means the Purchasers named on the execution pages attached
to the Purchase Agreement.
"Qualified Capital Stock" means any Capital Stock of the Company that
is not Disqualified Capital Stock.
"Record Date" means a Record Date specified in the Securities whether
or not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to Article III of
this Indenture and Paragraph 5 in the form of Security.
"Redemption Price," when used with respect to any Security to be
redeemed, means the principal amount of the Security, without premium, together
with accrued and unpaid interest with respect to such Security to the applicable
Redemption Date.
"Reference Period" with regard to any person means the four full fiscal
quarters ended immediately preceding any date upon which any determination is to
be made pursuant to the terms of the Notes or the Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified Capital
Stock (a) issued in exchange for, or the proceeds from the issuance and sale of
which are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses incurred in connection
with the Refinancing) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock so Refinanced and (ii) if such Indebtedness being
Refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such Refinancing;
provided, that (A) Refinancing Indebtedness of any Subsidiary of the Company
shall only be used to Refinance outstanding Indebtedness or Disqualified Capital
Stock of such Subsidiary, (B) Refinancing Indebtedness shall (x) not have an
Average Life less than the Indebtedness or Disqualified Capital Stock to be so
refinanced at the time of such Refinancing and (y) in all respects, be no less
subordinated, if applicable, to the rights of Holders pursuant to the Notes than
was the Indebtedness or Disqualified Capital Stock to be refinanced and (C) such
Refinancing Indebtedness shall have no installment of principal (or redemption)
scheduled to come due earlier than the scheduled maturity of any installment of
principal (or redemption) of the Indebtedness (or Disqualified Capital Stock) to
be so refinanced which was scheduled to come due prior to the Stated Maturity.
"Registrar" shall have the meaning specified in Section 2.4.
"Required Regulatory Redemption" shall have the meaning specified in
Section 3.2.
"Restricted Investment" means any Investment provided, that the
extension of credit to customers of a Casino, consistent with industry practice
and in the ordinary course of business, shall not be a Restricted Investment.
"Restricted Payment" means, with respect to any person, (a) the
declaration or payment of any dividend or other distribution in respect of
Capital Stock of such person or any Subsidiary of such person, (b) any payment
on account of the purchase, redemption or other acquisition or retirement for
value of Capital Stock of such person or any Subsidiary of such person, (c) any
purchase, redemption, or other acquisition or retirement for value of, any
payment in respect of any amendment of the terms of, or any defeasance of, any
subordinated Indebtedness, directly or indirectly, by such person or a
Subsidiary of such person prior to the scheduled maturity, any scheduled
repayment of principal, or scheduled sinking fund payment, as the case may be,
of such Indebtedness and (d) any Restricted Investment by such person; provided,
however, that the term "Restricted Payment" shall not include:
(i) any dividend, distribution or other payment on or with
respect to Capital Stock of a person to the extent payable solely in shares of
Qualified Capital Stock of such person,
(ii) any dividend, distribution or other payment to the
Company, or any of its directly or indirectly wholly owned Subsidiaries, by any
of its Subsidiaries, or any Investment by the Company or any Guarantor in any of
its wholly owned Guarantors, and
(iii) any defeasance, redemption, repurchase, acquisition, or
other retirement for value, in whole or in part, of any subordinated
Indebtedness of an issuer in exchange for or with the Net Proceeds from the
substantially concurrent sale of Disqualified Capital Stock or Subordinated
Indebtedness of such issuer, which Capital Stock or Subordinated Indebtedness is
at least as subordinated in ranking to the Notes (or Guaranties, as applicable)
and has a lower yield to maturity than, and has no installment (contingent or
otherwise) of principal or liquidation amount (including upon the happening of
an event or the passage of time) due before any installment of principal of, the
subordinated Indebtedness being so defeased, redeemed, repurchased, acquired or
retired and, in a principal amount or with a liquidation preference (or, if such
Indebtedness is issued at less than its principal amount, with an original issue
price, as determined in accordance with GAAP) not to exceed the lesser of (x)
the principal amount of such subordinated Indebtedness being so defeased,
redeemed, repurchased, acquired or retired in exchange therefor and (y) if such
subordinated Indebtedness being acquired was issued with an original issue
discount, the accreted value thereof (as determined in accordance with GAAP) at
the time of such transaction.
"SEC" means the Securities and Exchange Commission.
"Securities" or "Notes" means the Amended and Restated Notes, as
amended or modified from time to time in accordance with the terms hereof,
issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Securityholder" See "Holder."
"Senior Noteholders" means the Persons which signed the Senior Note
Purchase Agreement as "Purchasers" and their successors and assigns.
"Senior Notes" means the notes issued by Company pursuant to the Senior
Note Purchase Agreement.
"Senior Note Purchase Agreement" means that certain Note and Stock
Purchase Agreement by and among Company, Guarantors, and the Senior Noteholders
dated October 11, 1994.
"Senior Note Documents" means the Senior Notes, the Senior Note
Purchase Agreement, and all documents evidencing, guaranteeing, securing, or in
any way relating to the Senior Notes and the Senior Note Purchase Agreement.
"Stated Maturity," when used with respect to any Security, means August
20, 2001.
"Subordinated Indebtedness" means indebtedness of the Company or a
Guarantor, as applicable, that is subordinated in right of payment to the
Securities or the Guaranty, as applicable, in all respects and has no scheduled
installment of principal due, by redemption, sinking fund payment or otherwise,
on or prior to the Stated Maturity of the securities.
"Subsidiary," with respect to any person, means (i) a corporation a
majority of whose Capital Stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such person,
by such person and one or more Subsidiaries of such person or by one or more
Subsidiaries of such person or (ii) any other person (other than a corporation)
in which such person, one or more Subsidiaries of such person, or such person
and one or more subsidiaries of such person, directly or indirectly, at the date
of determination thereof has at least majority ownership interest. An
Unrestricted Subsidiary is not a subsidiary of the Company for purposes of the
Indenture or the Notes.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code 59ss.ss.
77aaa-77bbb) as in effect on the date of the execution of this Indenture.
"Title Policy" means Policy of Title Insurance No. _________ issued by
Commonwealth Title Insurance Company dated as of March 3, 1997, which insures
the Deed of Trust.
"Trustee" means the party named as such in this indenture until a
successor replaces it in accordance with the provisions of this indenture and
thereafter means such successor.
"Trust Officer" means any officer within the corporate trust department
(or any successor group) of the Trustee including any vice president, assistant
vice president, secretary, assistant secretary or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by the persons who at that time shall be such officers, and also
means, with respect to a particular corporate trust matter, any other officer of
the corporate trust department (or any successor group) of the Trustee to whom
such trust matter is referred because of his knowledge of and familiarity with
the particular subject.
"U.S. Government Obligations" means direct non-callable obligations of,
or non-callable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.
"U.S. Legal Tender" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Unrestricted Subsidiary" shall mean any Subsidiary of the Company
that, at the time of determination shall be an Unrestricted Subsidiary as
designated by the Board of Directors of the Company, as provided below. The
Board of Directors of the Company may designate any subsidiary of the Company
(including any newly acquired or newly formed subsidiary at or prior to the time
it is so formed or acquired) to be an Unrestricted Subsidiary if (a) no Default
or Event of Default is existing or will occur as a consequence thereof, (b)
immediately after giving effect to such designation, on a pro forma basis, the
Company could incur at least $1.00 of additional Indebtedness pursuant to
paragraph (a) of Section 5.11, provided that this clause (b) shall not apply to
the designation of Unrestricted Subsidiaries that are capitalized solely with
assets constituting "Permitted Equity Proceeds Investments" and (c) such
subsidiary does not own any Capital Stock of, or own or hold any Lien on any
property of, the Company or any Subsidiary of the Company. The Board of
Directors of the Company may designate any Unrestricted Subsidiary to be a
Subsidiary, provided that (i) no Default or Event of Default is existing or will
occur as a consequence thereof and (ii) immediately after giving effect to such
designation, on a pro forma basis, the Company could incur at least $1.00 of
additional Indebtedness pursuant to paragraph (a) of Section 5.11. Each
designation shall be evidenced by filing with the Trustee a certified copy of
the resolution giving effect to such designation and an Officers, Certificate
certifying that such designation complied with the foregoing conditions.
Notwithstanding anything to the contrary, Four Queens, Inc., Pinnacle Gaming
Corporation (formerly known as Elsub II Inc.), Elsub Management Corporation,
Four Queens Experience Corporation, Eagle Gaming, Inc., Palm Springs East, L.P.
and Olympia Gaming Corporation and their direct and indirect Subsidiaries shall
not at any time be Unrestricted Subsidiaries.
"wholly owned" with respect to a Subsidiary of any person means (i)
with respect to a Subsidiary that is a limited liability company or similar
entity, a Subsidiary whose capital stock is 99% or greater beneficially owned by
such person and (ii) with respect to a Subsidiary that is other than a limited
liability company or similar entity, a Subsidiary whose capital stock or other
equity interest is 100% beneficially owned by such person.
SECTION 1.2 Incorporation by Reference of TIA.
---------------------------------
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Holder or a Securityholder.
"indenture to be Qualified means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any other
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
SECTION 1.3 Rules of Construction.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined
has the meaning assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural,
and words in the plural include the singular;
(v) provisions apply to successive events and
transactions;
(vi) "herein," "hereof" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(vii) references to Sections or Articles means
reference to such Section or Article in this Indenture, unless stated
otherwise.
ARTICLE II
THE SECURITIES
SECTION 2.1 Exchange Of Original Notes For Restated Notes.
(a) The Trustee shall certify to the Company a list of the
registered Holders of the Original Notes as of the Confirmation Date for each of
the Original Notes designating the name, address, taxpayer identification number
(if known), certificate number, and the amount of unpaid principal of the
Original Notes for each Holder. The unpaid principal designated shall be the
amount outstanding as of the Confirmation Date. All distributions of Restated
Notes shall be made to the registered Holders of the Original Notes as set forth
on the list certified to the Company by the Trustee. Entities that have acquired
Original Notes after the Confirmation Date will not be entitled to receive any
distributions of Restated Notes.
(b) As a condition to receiving the Restated Notes the
Holders of the Original Notes shall surrender their Original Notes to the
Trustee for cancellation. Upon surrender of the Original Notes, Holders of the
Original Notes will receive their pro rata share of the Restated Notes in the
amount of 52.6315% of the unpaid principal of such Original Notes, as designated
on the list provided pursuant to subsection 2.1(a) above; provided, however,
that if such amount exceeds an integral multiple of $1,000, the amount of such
excess shall be paid in cash and the Note to be issued under this Indenture
shall be issued in the amount of the largest integral multiple of $1,000
included in such amount. When a Holder surrenders its Original Notes to the
Trustee, the Trustee shall hold such instrument in "book entry only" until such
Original Notes are canceled.
(c) Any Holder whose Original Notes have been lost, stolen,
mutilated or destroyed, shall, in lieu of surrendering such Original Notes,
deliver to the Trustee (a) evidence satisfactory to the Trustee of the loss,
theft, mutilation, or destruction of such Original Notes and (b) such security
or indemnity that may be reasonably required by the Trustee to hold the Trustee
harmless with respect to any such representation of the Holder. Upon compliance
with the preceding sentence, such Holder shall, for all purposes under this
Indenture and the Plan, be deemed to have surrendered such Original Notes.
(d) As provided in the Plan, any Holder of Original Notes
which shall not have surrendered or have been deemed to surrender its Original
Notes within two (2) years after the Effective Date shall have its Claim (as
defined in the Plan) disallowed, shall receive no distribution of Restated Notes
under this Indenture or the Plan, and shall be forever barred from asserting any
claim against the Company or Guarantors on account of its Claim. Any Restated
Notes issued and held for distribution on account of such Original Notes shall
be canceled.
SECTION 2.2 Form and Dating.
The Amended and Restated Notes and the Trustee's certificate of
authentication, in respect thereof, shall be substantially in the form of
Exhibit B hereto. The Securities may have notations, legends or endorsements
required by law, stock exchange rule or usage. The Company shall approve the
form of the Securities and any notation, legend or endorsement on them. Any such
notations, legends or endorsements not contained in the form of Security
attached as Exhibit B hereto shall be delivered in writing to the Trustee. Each
Security shall be dated the date of its authentication.
The terms and provisions contained in the form of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
SECTION 2.3 Execution and Authentication.
Two Officers shall sign, or one officer shall sign and one officer
shall attest to, the Securities for the Company by manual or facsimile
signature. The Company's seal shall be impressed, affixed, imprinted, or
reproduced on the Securities and may be in facsimile form.
If an Officer whose signature is on a Security was an officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless and the
Company shall nevertheless be bound by the terms of the Securities and this
Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security, but
such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate Securities for original issue in the
aggregate principal amount of up to $30,000,000 upon a written order of the
Company in the form of an Officers' Certificate. The Officers' Certificate shall
specify the amount of Securities to be authenticated and the date on which the
Securities are to be authenticated. The aggregate principal amount of Securities
outstanding at any time may not exceed $30,000,000, except as provided in
Section 2.8. Upon the written order of the Company in the form of an Officers'
Certificate, the Trustee shall authenticate Securities in substitution of
Securities originally issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company, any Affiliate of the Company
or any of their respective Subsidiaries.
Securities shall be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.
SECTION 2.4 Registrar and Paying Agent.
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where Securities may be presented for
registration of transfer or for exchange ("Registrar") and an office or agency
in the Borough of Manhattan, The City of New York where Securities may be
presented for payment ("Paying Agent") and an office or agency where notices and
demands to or upon the Company in respect of the Securities may be served. The
Company may act as its own Registrar or Paying Agent, except that, for the
purposes of Articles III and IX, neither the Company nor any Affiliate of the
Company shall act as Paying Agent. The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company may have one or more
co-Registrars and one or more additional Paying Agents. The term "Paying Agent"
includes any additional Paying Agent. The Company hereby initially appoints the
Trustee as Registrar and Paying Agent, and the Trustee hereby initially agrees
so to act.
The Company shall enter into an appropriate written agency agreement
with any Agent not a party to this Indenture, which agreement shall implement
the provisions of this Indenture that relate to such Agent. The Company shall
promptly notify the Trustee in writing of the name and address of any such
Agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee
shall act as such.
SECTION 2.5 Paying Agent to Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, or interest on, the Securities (whether such assets have been
distributed to it by the Company or any other obligor on the Securities), and
shall notify the Trustee in writing of any Default by the Company (or any other
obligor on the Securities) in making any such payment. If the Company or a
Subsidiary of the Company acts as Paying Agent, it shall segregate such assets
and hold them as a separate trust fund for the benefit of the Holders or the
Trustee. The Company at any time may require a Paying Agent to distribute all
assets held by it to the Trustee and account for any assets disbursed and the
Trustee may at any time during the continuance of any payment Default, upon
written request to a Paying Agent, require such Paying Agent to distribute all
assets held by it to the Trustee and to account for any assets distributed. Upon
distribution to the Trustee of all assets that shall have been delivered by the
Company to the Paying Agent, the Paying Agent (if other than the Company) shall
have no further liability for such assets.
SECTION 2.6 Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before the third Business Day preceding each Interest Payment Date
and at such other times as the Trustee may request in writing a list in such
form and as of such date as the Trustee reasonably may require of the names and
addresses of Holders. The Trustee, the Registrar and the Company shall provide a
current securityholder list to any Gaming Authority upon demand.
SECTION 2.7 Transfer and Exchange.
When Securities are presented to the Registrar or a co-Registrar with a
request to register the transfer of such Securities or to exchange such
Securities for an equal principal amount of Securities of other authorized
denominations, the Registrar or co-Registrar shall register the transfer or make
the exchange as requested if its reasonable requirements for such transaction
are met; provided, however, that the Securities surrendered for transfer or
exchange shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar or
co-Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing. To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Securities at the
Registrar's or co-Registrar's request. No service charge shall be made for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax, assessments, or similar governmental
charge payable in connection therewith (other than any such transfer taxes,
assessments, or similar governmental charge payable upon exchanges or transfers
pursuant to Sections 2.2, 2.10, 3.6, or 10.5). Except for a required regulatory
redemption pursuant to Section 3.2 of this Indenture or an order of any Gaming
Authority, the Registrar or co-Registrar shall not be required to register the
transfer of or exchange of any Security selected for redemption in whole or in
part pursuant to Article Three, except the unredeemed portion of any Security
being redeemed in part.
SECTION 2.8 Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security claims and submits an affidavit or other evidence, satisfactory to
the Trustee, to the Trustee to the effect that the Security has been lost,
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Security if the Trustee's requirements are met. If
required by the Trustee or the Company, such Holder must provide an indemnity
bond or other indemnity, sufficient in the judgment of both the Company and the
Trustee, to protect the Company, the Trustee or any Agent from any loss which
any of them may suffer if a Security is replaced. The Company may charge such
Holder for its reasonable, out-of-pocket expenses in replacing a Security. Every
replacement Security is an additional obligation of the Company.
SECTION 2.9 Outstanding Securities.
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee except those canceled by it, those delivered
to it for cancellation and those described in this Section 2.9 as not
outstanding. A Security does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Security, except as provided in Section
2.10.
If a Security is replaced pursuant to Section 2.8 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof pursuant to Section 2.8.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Company or an Affiliate of the Company) holds U.S. Legal Tender or U.S.
Government Obligations sufficient to pay all of the principal and interest due
on the Securities payable on that date and payment of the Securities called for
redemption is not otherwise prohibited, then on and after that date such
Securities cease to be outstanding and interest on them ceases to accrue.
SECTION 2.10 Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, amendment, supplement, waiver or
consent, Securities owned by the Company, any Guarantor and Affiliates of the
Company or of any Guarantor shall be disregarded, except that, for the purposes
of determining whether the Trustee shall be protected in relying on any such
direction, amendment, supplement, waiver or consent, only Securities that the
Trustee knows or has reason to know are so owned shall be disregarded.
SECTION 2.11 Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare, the Guarantor shall endorse and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company reasonably and in
good faith considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare, the Guarantor shall endorse and the Trustee
shall authenticate definitive Securities in exchange for temporary Securities.
Until so exchanged, the temporary Securities shall in all respects be entitled
to the same benefits under this Indenture as permanent Securities authenticated
and delivered hereunder.
SECTION 2.12 Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent
(other than the Company or an Affiliate of the Company), and no one else, shall
cancel and, at the written direction of the Company, shall dispose of all
Securities surrendered for transfer, exchange, payment or cancellation. Subject
to Section 2.8, the Company may not issue new Securities to replace Securities
it has paid or delivered to the Trustee for cancellation. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section 2.12, except as expressly permitted in the form of Securities
and as permitted by this Indenture.
SECTION 2.13 Defaulted Interest.
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest, plus (to the extent lawful) interest on the
defaulted interest, to the persons who are Holders on a Record Date (or at its
option a subsequent special record date) which date shall be the fifteenth day
next preceding the date fixed by the Company for the payment of defaulted
interest, whether or not such day is a Business Day, unless the Trustee fixes
another record date. At least 15 days before the subsequent special record date,
the Company shall mail to each Holder with a copy to the Trustee a notice that
states the subsequent special record date, the payment date and the amount of
defaulted interest, and interest payable on such defaulted interest, if any, to
be paid.
ARTICLE III
REDEMPTION
SECTION 3.1 Right of Redemption.
Redemption of Securities shall be made in accordance with this Article
III. At its election, the Company may redeem the Securities in whole or from
time to time in part, at any time upon payment of the Redemption Price.
SECTION 3.2 Redemption Pursuant to Gaming Laws.
Notwithstanding any other provision of this Indenture, the Notes shall
also be redeemable at any time pursuant to, and in accordance with, any order of
any Gaming Authority with appropriate jurisdiction and authority, or to the
extent necessary in the reasonable, good faith judgment of the Board of
Directors of the Company to prevent the loss or material impairment or secure
the reinstatement of any Gaming License or to prevent such Gaming Authority from
taking any other action, which if lost, impaired, not reinstated or taken, as
the case may be, would have a material adverse effect on the Company or any
Guarantor, or where such redemption or acquisition is required because the
holder or beneficial owner of such security redeemed or acquired is required to
qualify, be found suitable, or become licensed as such under such Gaming Laws
and such holder or beneficial owner refuses to, or does not so qualify, obtain a
finding of suitability or become licensed (a "Required Regulatory Redemption") .
If the Company requires the redemption of any Security pursuant to this Section
3.2, then the redemption price shall be the principal amount thereof, plus
accrued interest to the date of such determination of unsuitability. The Company
shall tender the redemption price (together with any accrued and unpaid
interest) to the Trustee no later than thirty (30) days after the Company gives
the Securityholder or owner of a beneficial or voting interest written notice of
redemption or such earlier date as may be ordered by any Gaming Authority. The
Company shall notify the Trustee of any disposition or redemption required under
this Section 3.2, and upon receipt of such notice, the Trustee shall not accord
any rights or privileges under this Indenture or any Security to any
Securityholder or owner of a beneficial or voting interest who is required to
dispose of any Security or tender it for redemption, except to pay the
redemption price (together with any accrued but unpaid interest) upon tender of
such Security.
SECTION 3.3 Notices to Trustee.
If the Company elects to redeem Securities pursuant to Article III, it
shall notify the Trustee in writing of the date on which the Notes are to be
redeemed ("Redemption Date") and the principal amount of Securities to be
redeemed and whether it wants the Trustee to give notice of redemption to the
Holders.
If the Company elects to reduce the principal amount of Securities to
be redeemed pursuant to Paragraph 5 of the Securities by crediting against any
such redemption Securities it has not previously delivered to the Trustee for
cancellation, it shall so notify the Trustee of the amount of the reduction and
deliver such Securities with such notice.
The Company shall give each notice to the Trustee provided for in this
Section 3.3 at least 30 days before the Redemption Date (unless a shorter notice
shall be satisfactory to the Trustee or required by applicable Gaming Laws).
SECTION 3.4 Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed pursuant to
Paragraph 5 thereof, the Trustee shall select from among such Securities to be
redeemed pro rata or by lot or by such other method as the Trustee shall
determine to be fair and appropriate and in such manner as complies with any
applicable legal and stock exchange requirements.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of securities called for redemption.
SECTION 3.5 Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first class mail, postage
prepaid, to each Holder whose Securities are to be redeemed (unless a shorter
notice shall be required by applicable Gaming Laws). At the Company's request,
the Trustee shall give the notice of redemption in the Company's name and at the
Company's expense. Each notice for redemption shall identify the Securities to
be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price, including the amount of a
ccrued and unpaid interest to be paid upon such redemption;
(3) the name, address and telephone number of the Paying
Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent at the address specified in such notice to
collect the Redemption Price;
(5) that, unless (a) the Company defaults in its obligation
to deposit U.S. Legal Tender with the Paying Agent in accordance with Section
3.7 hereof or (b) such redemption payment is prevented for any reason, interest
on Securities called for redemption ceases to accrue on and after the Redemption
Date and the only remaining right of the Holders of such Securities is to
receive payment of the Redemption Price, including accrued and unpaid interest,
upon surrender to the Paying Agent of the Securities called for redemption and
to be redeemed;
(6) if any Security is being redeemed in part, the portion of
the principal amount, equal to $1,000 or any integral multiple thereof, of such
Security to be redeemed and that, after the Redemption Date, and upon surrender
of such Security, a new Security or Securities in aggregate principal amount
equal to the unredeemed portion thereof will be issued;
(7) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be redeemed,
as well as the aggregate principal amount of such Securities to be redeemed and
the aggregate principal amount of Securities to be outstanding after such
partial redemption;
(8) the CUSIP number of the Securities to be redeemed;
and
(9) that the notice is being sent pursuant to this Section
3.4 and pursuant to the optional redemption provisions of Paragraph 5 of the
Securities.
SECTION 3.6 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.5,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price, including accrued and unpaid interest. Upon
surrender to the Trustee or Paying Agent, such Securities called for redemption
shall be paid at the Redemption Price, including interest, if. any, accrued to
and unpaid on the Redemption Date; provided that if the Redemption Date is after
a regular Record Date and on or prior to the Interest Payment Date, the accrued
interest shall be payable to the Holder of the redeemed Securities registered on
the relevant Record Date; and provided, further, that if a Redemption Date is a
Legal Holiday, payment shall be made on the next succeeding Business Day and no
interest shall accrue for the period from such Redemption Date to such
succeeding Business Day.
SECTION 3.7 Deposit of Redemption Price.
On or before the Redemption Date, the Company shall deposit with the
Paying Agent (other than the Company or an Affiliate of the Company) U.S. Legal
Tender sufficient to pay the Redemption Price of, including accrued and unpaid
interest on, all Securities to be redeemed on such Redemption Date (other than
Securities or portions thereof called for redemption on that date that have been
delivered by the Company to the Trustee for cancellation). The Paying Agent
shall promptly return to the Company any U.S. Legal Tender so deposited which is
not required for that purpose upon the written request of the Company.
If the Company complies with the preceding paragraph and the other
provisions of this Article III and payment of the Securities called for
redemption is not prevented for any reason, interest on the Securities to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Securities are presented for payment. Notwithstanding anything herein to
the contrary, if any Security surrendered for redemption in the manner provided
in the Securities shall not be so paid upon surrender for redemption because of
the failure of the Company to comply with the preceding paragraph and the other
provisions of this Article III, interest shall continue to accrue and be paid
from the Redemption Date until such payment is made on the unpaid principal,
and, to the extent lawful, on any interest not paid on such unpaid principal, in
each case at the rate and in the manner provided in Section 5.1 hereof and the
Securities.
SECTION 3.8 Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part, the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder, without service charge, a new Security or Securities equal in principal
amount to the unredeemed portion of the Security surrendered.
ARTICLE IV
SECURITY
SECTION 4.1 Security Interest.
(a) In order to secure the Indenture Obligations, the Company,
the Guarantors and the Trustee have entered into the Mortgage. Each Holder, by
accepting a Security, agrees to all of the terms and provisions of the Mortgage
and the Trustee agrees to all of the terms and provisions of the Mortgage as the
Mortgage may be amended from time to time pursuant to the provisions thereof and
hereof.
(b) The Collateral as now or hereafter constituted shall be
held for the equal and ratable benefit of the Holders without preference,
priority or distinction of any thereof over any other by reason of difference in
time of issuance, sale or otherwise, as security for the Indenture Obligations.
(c) The provisions of TIA ss. 314(d), and the provisions of
TIA ss. 314(c)(3) to the extent applicable by specific reference in this Article
Four, are hereby incorporated by reference herein as if set forth in their
entirety and to the same extent as if the Indenture were qualified under the
TIA.
SECTION 4.2 Recording; Opinions of Counsel.
(a) The Company represents that it has caused to be executed
and delivered, filed and recorded and covenants that it will promptly cause to
be executed and delivered, filed and recorded, all instruments and documents,
and have done and will do or will cause to be done all such acts and other
things, at the Company's expense, as are necessary to subject the Collateral to
valid security interests and to perfect those security interests. The Company
shall, as promptly as practicable, cause to be executed and delivered, filed and
recorded all instruments and do all acts and other things as may be required by
law to perfect, maintain and protect the security interests under the Mortgage
and herein. The Company has obtained endorsements of title insurance naming the
Trustee as insured for the benefit of the Holders in the aggregate amount equal
to the cost of Property that is real property subject to the Mortgage, subject
only to those exceptions which are reasonably acceptable to the Trustee.
(b) The Company shall furnish to the Trustee, within 60 days
after April 1 in each year (beginning April 1, 1997) an Opinion(s) of Counsel,
dated as of such date, stating that, in the opinion of such counsel, subject to
customary exclusions and exceptions, either (A) all action has been taken with
respect to the recording, registering, filing, rerecording and refiling of the
Indenture, all supplemental indentures, the Mortgage, financing statements,
continuation statements and all other instruments of further assurance as is
necessary to maintain the security interests under the Mortgage and hereunder in
full force and effect and reciting the details of such action or referring to
prior Opinions of Counsel in which such details are given, and stating that all
financing statements and continuation statements have been executed and filed
and such other actions taken that are necessary fully to preserve and protect
the rights of the Holders and the Trustee hereunder and under the Mortgage, or
(B) no such action is necessary to maintain the security interests in full force
and effect.
SECTION 4.3 Disposition of Certain Collateral.
(a) The Company and the Guarantors may, without
consent of the Trustee, but otherwise subject to the requirements of this
Indenture:
(i) sell, assign, transfer, license or otherwise
dispose of, free from the security interests under the Mortgage and
hereunder, any machinery, equipment, or other personal Property
constituting Collateral that has become worn out, obsolete, or
unserviceable or is being upgraded, upon replacing the same with or
substituting for the same, machinery, equipment or other Property
constituting Collateral not necessarily of the same character but
being, of at least equal fair value and at least equal utility to the
Company as the Property so disposed of, which Property shall without
further action become Collateral subject to the security interests
under the Mortgage and hereunder;
(ii) (A) sell, assign, transfer, license or otherwise
dispose of, free from the security interests under the mortgage and
hereunder, inventory held for resale that is at any time part of the
Collateral in the ordinary course of the Company's business, consistent
with industry practices, (B) collect, liquidate, sell, factor or
otherwise dispose of, free from the security interests, accounts
receivable or notes receivable that are part of the Collateral in the
ordinary course of the Company's business, consistent with industry
practices, or (C) make Cash payments (including scheduled repayments of
Indebtedness permitted to be incurred hereby) from Cash that is at any
time part of the Collateral in the ordinary course of business;
(iii) abandon, sell, assign, transfer, license or
otherwise dispose of any personal Property the use of which is no
longer necessary or desirable in the proper conduct of the business of
the Company and its Subsidiaries and the maintenance of its earnings
and is not material to the conduct of the business of the Company and
its Subsidiaries; and
(iv) sell, assign, transfer, license or otherwise
dispose of, free from the Security Interests any assets or property in
accordance with Section 5.14.
(b) Notwithstanding the provisions of subsection (a) above,
the Company and the Guarantors shall not dispose of or transfer (by lease,
assignment, sale or otherwise) or pledge, mortgage or otherwise encumber
Collateral pursuant to the provisions of Section 4.3(a)(ii) or (iii) with a fair
value of 10% or more of the aggregate fair value of all Collateral then existing
in any transaction or any series of related transactions.
(c) In the event that the Company or any Guarantor has sold,
exchanged, or otherwise disposed of or proposes to sell, exchange or otherwise
dispose of any portion of the Collateral which under the provisions of this
Section 4.3 may be sold, exchanged or otherwise disposed of by the Company and
the Guarantors without consent of the Trustee, and the Company and the
Guarantors request the Trustee to furnish a written disclaimer, release or
quitclaim of any interest in such property under the Mortgage, the Trustee shall
execute such an instrument upon delivery to the Trustee of an Officers,
Certificate by the Company and the Guarantors reciting the sale, exchange or
other disposition made or proposed to be made and describing in reasonable
detail the property affected thereby, and stating and demonstrating that such
property is property which by the provisions of this Section 4.3 may be sold,
exchanged or otherwise disposed of or dealt with by the Company and the
Guarantors without any release or consent of the Trustee.
(d) Any disposition of Collateral made in compliance with the
provisions of this Section 4.3 shall be deemed not to impair the Security
Interests in contravention of the provisions of this Indenture.
Certain Releases of Collateral. leases of Collateral.
Subject to applicable law, the release of any Collateral from the terms
of the Mortgage or the release of, in whole or in part, the Liens created by the
Mortgage, will not be deemed to impair the Mortgage in contravention of the
provisions of this Indenture if and to the extent the Collateral or Liens are
released pursuant to, and in accordance with, the applicable agreement creating
the Mortgage and pursuant to, and in accordance with, the terms hereof. To the
extent applicable, without limitation, the Company and each obligor on the
Securities shall cause Trust Indenture Act ss. 314(d) relating to the release of
property or securities from the Liens of the Mortgage to be complied with. Any
certificate or opinion required by Trust Indenture Act ss. 314(d) may be made by
one officer prior to the qualification of the Indenture under the TIA and by two
officers after such qualification, except in cases which Trust Indenture Act
314(d) requires that such certificate or opinion be made by an independent
person.
Notwithstanding any other provision of this Indenture, the Notes, or
the Mortgage, upon payment to the Trustee of Two Million and no/100 Dollars
($2,000,000), the Trustee shall cause the Release Parcel to be released from the
Mortgage by causing to be recorded a deed of partial reconveyance in the
Official Records of Clark County, Nevada. Such payment shall be applied: (a)
first, to redemption of Senior Notes as provided in the Senior Note Purchase
Agreement; and (b) any remaining portion of such payment shall be applied to
redemption of Notes as provided in Article III of this Indenture.
SECTION 4.5 Payment of Expenses.
On demand of the Trustee, the Company forthwith shall pay or
satisfactorily provide for all reasonable expenditures incurred by the Trustee
under this Article IV, including the reasonable fees and expenses of counsel and
all such sums shall be a Lien upon the Collateral and shall be secured thereby.
SECTION 4.6 Suits to Protect the Collateral.
-------------------------------
Subject to Section 4.1 of this Indenture and to the provisions of the
Mortgage, the Trustee shall have power to institute and to maintain such suits
and proceedings as it may deem expedient to prevent any impairment of the
Collateral by any acts which may be unlawful or in violation of the Mortgage or
this Indenture, including the power to institute and maintain suits or
proceedings to restrain the enforcement of or compliance with any legislative or
other governmental enactment, rule or order that may be unconstitutional or
otherwise invalid or if the enforcement of, or compliance with, such enactment,
rule or order would impair the security interests in contravention of this
Indenture or be prejudicial to the interests of the Holders or of the Trustee.
The Trustee shall give notice to the Company promptly following the institution
of any such suit or proceeding.
SECTION 4.7 Trustee's Duties.
The powers and duties conferred upon the Trustee by this Article IV are
solely to protect the Security Interests and shall not impose any duty upon the
Trustee to exercise any such powers and duties, except as expressly provided in
this Indenture. The Trustee shall be under no duty to the Company or any
Guarantor whatsoever to make or give any presentment, demand for performance,
notice of nonperformance, protest, notice of protest, notice of dishonor, or
other notice or demand in connection with any Collateral, or to take any steps
necessary to preserve any rights against prior parties except as expressly
provided in this Indenture. The Trustee shall not be liable to the Company or
the Guarantors for failure to collect or realize upon any or all of the
Collateral, or for any delay in so doing, nor shall the Trustee be under any
duty to the Company or the Guarantors to take any action whatsoever with regard
thereto. The Trustee shall have no duty to the Company or the Guarantors to
comply with any recording, filing, or other legal requirements necessary to
establish or maintain the validity, priority or enforceability of the Security
Interests in, or the Trustee's rights in or to, any of the Collateral.
ARTICLE V
COVENANTS
SECTION 5.1 Payment of Securities.
The Company shall pay the principal of and interest on the Securities
on the dates and in the manner provided in the Securities and this Indenture. An
installment of principal of or interest on the Securities shall be considered
paid on the date it is due if the Trustee or Paying Agent (other than the
Company or an Affiliate of the Company) holds for the benefit of the Holders, on
or before 10:00 a.m. New York City time on that date, U.S. Legal Tender
deposited and designated for and sufficient to pay the installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Securities compounded
semi-annually, to the extent lawful.
SECTION 5.2 Maintenance of Office or Agency.
The Company and the Guarantors shall maintain in the Borough of
Manhattan, The City of New York, an office or agency where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company and the Guarantors in respect of the Securities and this Indenture
may be served. The Company and the Guarantors shall give prompt written notice
to the Trustee of the location, and any change in the location, of such office
or agency. If at any time the Company and the Guarantors shall fail to maintain
any such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the address of the Trustee set forth in Section 14.2.
The Company and the Guarantors may also from time to time designate one
or more other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company and the Guarantors of their obligation to
maintain an office or agency in the Borough of Manhattan, The City of New York,
for such purposes. The Company and the Guarantors shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency. The Company and the Guarantors
hereby initially designate the Corporate Trust Office of the Trustee as such
office.
SECTION 5.3 Limitation on Restricted Payments.
(a) The Company and the Guarantors will not, and none will permit any
of their respective Subsidiaries to, make, directly or indirectly, any
Restricted Payment (including Permitted Equity Proceeds Investments) if, after
giving effect thereto on a pro forma basis:
(1) a Default or an Event of Default shall have occurred
and be continuing; or
(2) the aggregate amount of all Restricted Payments (including
Permitted Equity Proceeds Investments) made by the Company, the Guarantors and
their respective Subsidiaries, including after giving effect to such proposed
Restricted Payment, from and after the Effective Date, would exceed the sum of
(a) the aggregate Consolidated Net Income of the
Company for the period (taken as one accounting period) commencing on
the first day of the first full fiscal quarter commencing subsequent to
the Effective Date, to and including the last day of the fiscal quarter
ended immediately prior to the date of each such calculation (or, in
the event Consolidated Net Income for such period is a deficit, then
minus 100% of such deficit), minus 100% of the amount of any writedowns
or writeoffs not otherwise reflected in Consolidated Net Income during
such period, plus
(b) the aggregate Net Proceeds received by the
Company from the sale of its Qualified Capital Stock, other than sales
to any of its Subsidiaries, after the Effective Date, plus
(c) the aggregate net book value of Investments
previously made by the Company after the Effective Date which, when
made, reduced amounts available pursuant to this clause (2) that have
been returned to the Company (excluding any such amounts included in
Consolidated Net Income).
Provided, however, that so long as the amount stated in the foregoing
clause (2) of the prior paragraph is not exceeded, the Company and Guarantors
may make Restricted Payments consisting of (t) the Investment of up to $1
million in the aggregate by the Company or any Guarantor in any of their
respective Subsidiaries for working capital purposes, (u) Investments by the
Company or any Guarantor in Fremont Street Experience, L.L.C. (or any other
entity organized for the purpose of operating the Fremont Street Experience) not
to exceed Seven Hundred Fifty Thousand Dollars ($750,000) in the aggregate
during any 12-month period for the purpose of funding operations of the Fremont
Street Experience, (v) any dividend or other distribution by a Guarantor to
stockholders or partners of such Guarantor on a pro rata basis with respect to
the amount and character of property so paid or distributed, (w) a Required
Regulatory Redemption, (x) the defeasance, redemption, repurchase or other
acquisition of Capital Stock or subordinated Indebtedness of the Company with
the Net Proceeds received by the Company from the substantially concurrent sale
of Qualified Capital Stock or in exchange for Qualified Capital Stock, (y) the
payment of any dividend or redemption of Qualified Capital Stock within 60 days
after the date of its declaration or authorization, respectively, if such
dividend or redemption could have been made on the date of such declaration or
authorization in compliance with the foregoing provisions, or (z) the Investment
in or loans to Guarantors for the purpose of financing commitments to third
parties (including, without limitation, good faith deposits and option payments)
to develop, construct, or acquire Casinos or to acquire Native American Casino
Management Contracts.
(b) Prior to the last day of the Company's first full fiscal quarter
subsequent to the Effective Date during which the Company and its Consolidated
Subsidiaries have generated Consolidated EBITDA of at least $1.0 million, the
Company and the Guarantors will not, and none will permit any of their
respective Subsidiaries to, make, directly or indirectly, any Restricted
Payment, except for (i) Investments of Permitted Equity Proceeds Investments up
to an aggregate of $10 million, and (ii) Restricted Payments made in reliance
upon clause (z) of the immediately preceding paragraph.
SECTION 5.4 Corporate Existence.
Except as otherwise provided in the Plan and Order, and subject to
Article VI, the Company and the Guarantors shall do or cause to be done all
things necessary to preserve and keep in full force and effect their corporate
existence and the corporate or other existence of each of their Subsidiaries in
accordance with the respective organizational documents of each of them and the
rights (charter and statutory) and corporate franchises of the Company and their
Guarantors and each of their Subsidiaries; provided, however, that neither the
Company nor any of the Guarantors shall be required to preserve, with respect to
itself, any right or franchise, and with respect to any of their Subsidiaries,
any such existence, right or franchise, if (a) the Board of Directors of the
Company shall determine reasonably and in good faith that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
(b) the loss thereof is not disadvantageous in any material respect to the
Holders.
SECTION 5.5 Payment of Taxes and Other Claims.
Except as otherwise provided in the Plan and Order, the Company and the
Guarantor shall, and shall cause each of their Subsidiaries to, pay or discharge
or cause to be paid or discharged, before the same shall become delinquent, (i)
all taxes, assessments and governmental charges (including withholding taxes and
any penalties, interest and additions to taxes) levied or imposed upon the
Company, any Guarantor or any of their Subsidiaries or properties and assets of
the Company, any Guarantor or any of their Subsidiaries and (ii) all lawful
claims, whether for labor, materials, supplies, services or anything else, which
have become due and payable and which by law have or may become a Lien upon the
property and assets of the Company, any Guarantor or any of their Subsidiaries;
provided, however, that neither the Company nor any Guarantor shall be required
to pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which disputed amounts adequate
reserves have been established in accordance with GAAP.
SECTION 5.6 Maintenance of Insurance.
From and at all times after the Effective Date, the Company and its
Subsidiaries shall have in effect customary insurance for business interruptions
and general liability, and shall have completion or similar bonds in place for
all ongoing projects, in each case on terms and in an amount reasonably
sufficient to avoid a material adverse change in the financial condition or
results of operation of the Company and its Subsidiaries taken as a whole.
SECTION 5.7 Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee quarterly within
the times for delivery of annual and quarterly financial statements under
Section 5.8 below an Officers' Certificate complying (whether or not required)
with Section 314 (a) (4) of the TIA and stating that a review of its activities
and the activities of its Subsidiaries during the preceding fiscal year has been
made under the supervision of the signing officers with a view to determining
whether the Company has kept, observed, performed and fulfilled its obligations
under this Indenture and further stating, as to each such Officer signing such
certificate, whether or not the signer knows of any failure by the Company, any
Guarantor or any Subsidiary of the Company or any Guarantor to comply with any
conditions or covenants in this Indenture and, if such signer does know of such
a failure to comply, the certificate shall describe such failure with
particularity. The Officers' Certificate shall also notify the Trustee should
the relevant fiscal year end on any date other than the current fiscal year end
date.
(b) So long as not contrary to the then current recommendation
of the American Institute of Certified Public Accountants, the Company shall
deliver to the Trustee within 120 days after the end of each of its fiscal years
a written report of a firm of independent certified public accountants with an
established national reputation stating that in conducting their audit for such
fiscal year, nothing has come to their attention that caused them to believe
that the Company or any Subsidiary of the Company was not in compliance with the
provisions set forth in Sections 5.3, 5.11, 5.14, 5.15, or 5.16 of this
Indenture.
(c) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, immediately upon becoming aware of any
Default or Event of Default under this Indenture, an Officers, Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto. The Trustee shall not be deemed
to have knowledge of a Default or an Event of Default unless one of its trust
officers receives notice of the Default giving rise thereto from the Company or
any of the Holders.
SECTION 5.8 Reports.
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the
Trustee and to each Holder, within 15 days after it is or would have been
required to file such with the SEC, annual and quarterly financial statements
substantially equivalent to financial statements that would have been included
in reports filed with the SEC if the Company were subject to the requirements of
Section 13 or 15(d) of the Exchange Act including, with respect to annual
information only, a report thereon by the Company's certified independent public
accountants as such would be so required, together with a management's
discussion and analysis of financial condition and results of operations which
would be so required.
SECTION 5.9 Waiver of Stay, Extension or Usury Laws.
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The Company and each Guarantor covenants (to the extent, that it may
lawfully do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law wherever enacted which would
prohibit or forgive the Company or any Guarantor from paying all or any portion
of the principal of or interest on the Securities as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that they may
lawfully do so) the Company and each Guarantor hereby expressly waives all
benefit or advantage of any such law insofar as such law applies to the
Securities, and covenant that it shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
SECTION 5.10 Limitation on Transactions with Affiliates.
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If the Company, any Guarantor, any Unrestricted Subsidiary, or any of
their respective Subsidiaries shall, on or after the Effective Date, enter into
any transaction, including any contract, agreement, understanding, loan, advance
or guarantee and including any series of related transactions, with or for the
benefit of any Affiliate other than the Company or a Guarantor (an "Affiliate
Transaction") with a value to either party in excess of $500,000, the Company or
such Subsidiary must, prior to the consummation thereof, provide written notice
of the Affiliate Transaction to the Trustee.
SECTION 5.11 Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital
Stock.
Except as set forth below or as stated in the Plan and Order, the
Company and the Guarantors will not, and none will permit any of their
respective Subsidiaries to, directly or indirectly, issue, assume, guaranty,
incur, become directly or indirectly liable with respect to (including as a
result of an acquisition, merger or consolidation), extend the maturity of, or
otherwise become responsible for, contingently or otherwise (individually and
collectively, to "incur," or, as appropriate, an "incurrence"), any Indebtedness
or any Disqualified Capital Stock from and after the Effective Date.
(a) The Company and the Guarantors may incur Indebtedness or
Disqualified Capital Stock if (i) no Default or Event of Default shall have
occurred and be continuing at the time of, or would occur after giving effect,
on a pro forma basis, to such incurrence of such Indebtedness or Disqualified
Capital Stock and (ii) on the date of the incurrence of such Indebtedness or
Disqualified Capital Stock (the "Incurrence Date"), the Consolidated Fixed
Charges Coverage Ratio of the Company for the Reference Period immediately
preceding the Incurrence Date, after giving effect, on a pro forma basis, to
such incurrence of such Indebtedness or Disqualified Capital Stock, would be at
least 2.0 to 1; provided that Indebtedness incurred by a Guarantor shall be
subordinated in all material respects to such Guarantor's guarantee of the
Company's obligations with respect to the Notes, except that Indebtedness
incurred by a Guarantor solely to guarantee Indebtedness of the Company that is
pari passu with the Notes may be pari passu with such applicable Guarantee of
the Notes.
(b) The Company and the Guarantors may incur Indebtedness
evidenced by the Notes and other obligations pursuant to the Indenture up to the
amounts specified therein as of the date thereof.
(c) The Company and the Guarantors may incur Indebtedness
evidenced by the Senior Notes.
(d) The Company and the Guarantors may incur Permitted FF&E
Financing.
(e) The Company and the Guarantors may incur Indebtedness not
to exceed Ten Million Dollars ($10,000,000) in connection with a revolving line
of credit secured by receivables and inventory made available by a bank or other
institutional lender.
(f) The Company and the Guarantors may incur Refinancing
Indebtedness with respect to any Indebtedness or Disqualified Capital stock, as
applicable, described in clauses (a) through (e) of this covenant so long as
such Refinancing Indebtedness satisfies the applicable requirements of such
clauses.
(g) The Company and the Guarantors may incur Indebtedness
solely in respect of bankers acceptances, letters of credit and performance
bonds (to the extent that such incurrence does not result in the incurrence of
any obligation for the payment of borrowed money of others), all in the ordinary
course of business, in amounts and for the purposes customary in the Company's
industry for gaming operations similar to those of the Company; provided that
the aggregate principal amount outstanding of such Indebtedness (including any
Indebtedness issued to refinance, refund or replace such Indebtedness) shall at
no time exceed $2 million.
(h) The Company may incur Indebtedness to any Guarantor of
the Company, any Guarantor of the Company may incur Indebtedness to any other
Guarantor or to the Company; provided that such obligations, in each case, shall
be subordinated in all respects to the Company's obligations pursuant to the
Notes or such Guarantor's obligations pursuant to its guaranty of the Company's
obligations pursuant to the Notes, as the case may be; provided, further, that,
in the event such Guarantor is no longer a Guarantor, any debt owed to such
person shall be deemed an incurrence for purposes of this Section 5.11.
(i) The Company and the Guarantors may incur Indebtedness
representing the balance deferred and unpaid of the purchase price of any
property or services used in the ordinary course of their business that would
constitute ordinarily a trade payable to trade creditors (other than accounts
payable or other obligations to trade creditors arising in the ordinary course
of business which have remained unpaid for greater than 60 days, unless such
payable or obligation is being contested in good faith and for which adequate
reserves have been established in accordance with GAAP).
(j) The Company and any Guarantor may post a bond or surety
obligation in order to prevent the loss or material impairment of, or to obtain,
a Gaming License, or as otherwise required by an order of any Gaming Authority
to the extent required by applicable law and consistent in character and amount
with customary industry practice.
(k) The Company and any Guarantor may incur Indebtedness not
to exceed $3 million in the aggregate outstanding at any time arising under any
appeal or reimbursement obligations with respect to any judgment, which judgment
does not constitute a Default.
(l) The company and any Guarantor may incur Indebtedness not
to exceed $3 million in the aggregate outstanding at any time constituting
reimbursement obligations with respect to letters of credit in respect of
workers' compensation claims.
SECTION 5.12 Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries.
Neither the Company, the Guarantors, nor any of their respective
Subsidiaries will, directly or indirectly, create, assume or suffer to exist any
consensual encumbrance or restriction on the ability of any such Subsidiary to
pay dividends or make other distributions on the Capital Stock of any such
Subsidiary of the Company or pay any obligation to the Company or any of its
Subsidiaries or otherwise transfer assets or make or pay loans or advances to
the Company or any of its Subsidiaries, except (a) restrictions imposed by the
Notes or the Indenture, (b) restrictions imposed by the Senior Notes and Senior
Note Documents, (c) customary provisions restricting subletting or assignment of
any lease entered into in the ordinary course of business, consistent with
industry practices, (d) restrictions imposed by applicable gaming laws or any
applicable Gaming Authority, (e) restrictions under any agreement relating to
any property, asset, or business acquired by the Company or its Subsidiaries,
which restrictions existed at the time of acquisition, were not put in place in
anticipation of such acquisition and are not applicable to any person, other
than the person acquired or to any property, asset or business other than the
property, assets and business of the person so acquired, (f) any such
restriction in existence as of the Effective Date after giving effect to the use
of proceeds to retire existing debt, (g) any restrictions with respect to a
Subsidiary of the Company imposed pursuant to an agreement which has been
entered into for the sale or disposition of all or substantially all of the
Capital Stock or assets of such Subsidiary and (h) replacements of restrictions
imposed pursuant to clauses (a) through (e) that are no more restrictive than
those being replaced.
SECTION 5.13 Limitation on Liens.
Neither the Company, the Guarantors nor their respective Subsidiaries
shall directly or indirectly, create, incur, assume or suffer to exist any Lien
in or on any right, title or interest to any of their respective properties
subject to the Liens of the Mortgage, except Permitted Liens.
SECTION 5.14 Limitations on Sales of Assets and Subsidiary Stock.
Neither the Company, the Guarantors nor any of their respective
Subsidiaries will, in one or a series of related transactions, convey, sell,
transfer, assign or otherwise dispose of, directly or indirectly, any of its
property, business or assets, including upon an Event of Loss, any sale or other
transfer or issuance of any Capital Stock of any Subsidiary of the Company,
whether by the Company or a Subsidiary of the Company, or through the issuance,
sale or transfer of Capital Stock by a Subsidiary of the Company (an "Asset
Sale"), unless (A) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect, on a pro forma,
basis, to, such Asset Sale and (B) the Board of Directors of the Company
determines in good faith that the Company or such applicable Subsidiary receives
fair market value for such Asset Sale.
Notwithstanding the foregoing provisions of this paragraph:
(a) the Company and its Subsidiaries may in the ordinary
course of business and consistent with past practices, convey, sell, lease,
transfer, assign, or otherwise dispose of assets acquired and held for resale in
the ordinary course of business;
(b) the Company and its Subsidiaries may convey, sell, lease,
transfer or otherwise dispose of assets pursuant to and in accordance with the
limitation on mergers, sales or consolidations provisions in the Indenture;
(c) the Company and its Subsidiaries may sell damaged, worn
out or other obsolete property in the ordinary course of business so long as
such property is no longer necessary for the proper conduct of the business of
the Company or such Subsidiary, as applicable;
(d) in addition to assets sold pursuant to clauses (a), (b)
and (c), above, the Company and the Guarantors may convey, sell, lease,
transfer, assign, or otherwise dispose of assets to the extent that the
aggregate proceeds from all such Asset Sales does not exceed $500,000 in any
fiscal year..
SECTION 5.15 Maintenance of Consolidated Fixed Charges Coverage Ratio.
The Company shall maintain a Consolidated Fixed Charges Coverage Ratio,
as of the last day of each fiscal quarter ending after the Effective Date, of at
least 1.25 to 1 and shall furnish to the Trustee quarterly within the times for
delivery of annual and quarterly financial statements under Section 5.8 above an
Officers' Certificate setting forth the calculations of this ratio and stating
that the Company is in compliance with this covenant.
SECTION 5.16 Maintenance of Consolidated Net Worth.
The Company shall furnish to the Trustee quarterly within the times for
delivery of annual and quarterly financial statements under Section 5.8 above an
Officers' Certificate setting forth the Consolidated Net Worth of the Company at
the end of such fiscal quarter. The Company shall maintain Consolidated Net
Worth not less than an amount equal to its Consolidated Net Worth on the
Effective Date, less Five Million Dollars ($5,000,000.00).
SECTION 5.17 Limitation on Status as Investment Company.
None of the Company, any Guarantor, any Unrestricted Subsidiary or any
of their respective Subsidiaries shall become investment companies" (as that
term is defined in the Investment" Company Act of 1940, as amended), or
otherwise become subject to regulation under the Investment Company Act.
SECTION 5.18 Restrictions on Sale and Issuance of Subsidiary Stock.
The Company and each Guarantor shall not issue or sell, and shall not
permit any of their respective Subsidiaries to issue or sell, any shares of
Disqualified Capital Stock of any Subsidiary to any Person other than the
Company or a wholly owned Subsidiary of the Company.
SECTION 5.19 Additional Subsidiary Guarantors.
The Company and each Guarantor shall cause each of their respective
Subsidiaries created or acquired after the Effective Date to enter into a
supplemental Indenture for the purpose of jointly and severally guaranteeing,
subject only to any guarantee of the Senior Notes, the Company's obligations to
pay principal, premium and interest on the Notes.
ARTICLE VI
SUCCESSOR CORPORATION
SECTION 6.1 Limitation on Merger, Sale or Consolidation.
Neither the Company nor any of the Guarantors will consolidate with or
merge with or into another person or, directly or indirectly, sell, lease or
convey all or substantially all of its assets (computed on a consolidated
basis), whether in a single transaction or a series of related transactions, to
another Person or group of affiliated Persons, unless:
(1) either (a) the Company or such Guarantor, as the
case may be, is the continuing entity or (b) the resulting, surviving
or transferee entity is a corporation organized under the laws of the
United States, any state thereof or the District of Columbia and
expressly assumes by supplemental indenture all of the obligations of
the Company or the Guarantor, as the case may be, in connection with
the Notes and the Indenture;
(2) no Default or Event of Default shall exist
or shall occur immediately after giving effect to such transaction;
(3) immediately after giving effect to such
transaction, on a pro forma basis, the Consolidated Net Worth of the
surviving or transferee entity is at least equal to the Consolidated
Net Worth of the Company or the Guarantor, as the case may be,
immediately prior to such transaction;
(4) immediately after giving effect to such
transaction, on a pro forma basis, the surviving or transferee entity
would immediately thereafter be permitted to incur at least $1.00 of
additional Indebtedness pursuant to paragraph (a) of Section 5.11;
(5) such transaction will not result in the loss
of any Gaming License; and
(6) the Company has delivered to the Trustee an
Officers' Certificate stating that such consolidation, merger,
assignment, or transfer and such supplemental indenture comply with
this Article VI and that all conditions precedent herein provided
relating to such transaction have been satisfied.
For purposes of this Section, the Consolidated Fixed Charges Coverage
Ratio shall be determined on a pro forma consolidated basis (giving effect, on a
pro forma basis, to the transaction and any related incurrence of Indebtedness
or Disqualified Capital Stock) for the four fiscal quarters which ended
immediately preceding such transaction.
For purposes of the first sentence of Section 6.1, the sale, lease or
conveyance of all or substantially all of the properties and assets of one or
more Subsidiaries of the Company or a Guarantor, which properties and assets, if
held by the Company, or a Guarantor instead of such Subsidiaries, would
constitute all or substantially all of the properties and assets of the Company
or such Guarantor, as the case may be, on a consolidated basis, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company or such Guarantor, as the case may be.
SECTION 6.2 Successor Corporation Substituted.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company or a Guarantor in accordance with
Section 6.1, the successor corporation formed by such consolidation or into
which the Company, such Guarantor or such Subsidiary, as the case may be, is
merged or to which such transfer is made, shall succeed to, and be substituted
for, and may exercise every right and power of, the Company or such Guarantor,
as the case may be, under the Indenture and the Notes with the same effect as if
such successor corporation had been named therein as the Company, such Guarantor
or such Subsidiary, as the case may be.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.1 Events of Default.
"Event of Default," wherever used herein, means any one of the
following events occurring after the Effective Date (whatever the reason for
such Event of Default and whether it shall be caused voluntarily or
involuntarily or effected, without limitation, by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) the failure by the Company to pay any
installment of interest on the Notes as and when due and payable and the
continuance of any such failure for 30 days;
(2) the failure by the Company to pay all
or any part of the principal, or premium, if any, on the Notes when and as
the same become due and payable at maturity, redemption, by acceleration or
otherwise;
(3) except as provided in clauses (1) or (2) of this
Section 7.1, failure of the Company or any Guarantor to comply with any
provision of Article XII, which failure continues for 30 days;
(4) except as otherwise provided herein, the failure
by the Company or any Guarantor to observe or perform any other
covenant or agreement contained in the Notes or the Indenture and the
continuance of such failure for a period of 30 days after written
notice is given to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in aggregate principal amount of
the Notes outstanding;
(5) other than the Cases, a decree, judgment, or
order by a court of competent jurisdiction shall have been entered
adjudging the Company, any Guarantor or any of their Subsidiaries as
bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization of the Company, such Guarantor or any of such of
their Subsidiaries under any bankruptcy or similar law, and such decree
or order shall have continued undischarged and unstayed for a period of
60 days; or a decree or order of a court of competent jurisdiction over
the appointment of a receiver, liquidator, trustee, or assignee in
bankruptcy or insolvency of the Company, such Guarantor or any of such
of their Subsidiaries, or of the property of any such person, or for
the winding up or liquidation of the affairs of any such person, shall
have been entered, and such decree, judgment, or order shall have
remained in force undischarged and unstayed for a period of 60 days;
(6) other than the Cases, the Company, any Guarantor
or any of their Subsidiaries shall institute proceedings to be
adjudicated a voluntary bankrupt, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or answer or
consent seeking reorganization under any bankruptcy or similar law or
similar statute, or shall consent to the filing of any such petition,
or shall consent to the appointment of a Custodian, receivers
liquidator, trustee, or assignee in bankruptcy or insolvency of it or
any of its assets or property, or shall make a general assignment for
the benefit of creditors, or shall admit in writing its inability to
pay its debts generally as they become due, or shall, within the
meaning of any Bankruptcy Law, become insolvent, fails generally to pay
their debts as they become due, or takes any corporate action in
furtherance of or to facilitate, conditionally or otherwise, any of the
foregoing;
(7) a default in the payment of principal, premium
or interest when due which extends beyond any stated period of grace
applicable thereto or an acceleration for any other reason of maturity
of any Indebtedness of the Company or any of its Subsidiaries with an
aggregate principal amount in excess of $1 million;
(8) final unsatisfied judgments not covered by
insurance aggregating in excess of $1 million, at any one time rendered
against the Company or any of its Subsidiaries and not stayed, bonded
or discharged within 90 days;
(9) the closing of a substantial portion of
the Four Queens Casino for more than 90 consecutive days;
(10) the loss of the legal right to operate the Four
Queens Casino and such loss continuing for more than 90 consecutive
days, except any loss of legal right caused primarily by any holder of
the Notes (other than an Affiliate);
(11) an event of default specified in the Mortgage;
(12) the occurrence of any event giving any of the
Facility Lessors or sublessors the right to terminate any of the
Facility Leases, other than expiration of a Facility Lease according to
its terms; or
(13) an event of default specified in the Senior Note
Documents.
If a Default occurs and is continuing, the Trustee must, within 90 days
after the occurrence of such default, give to the Holders notice of such
default.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (4), above, relating to the Company or any of its
Subsidiaries), then in every such case, unless the principal of all of the Notes
shall have already become due and payable, either the Trustee or the Holders of
25% in aggregate principal amount of the Notes then outstanding, by notice in
writing to the Company, and to the Trustee if given by Holders (an "Acceleration
Notice"), may declare all principal and accrued interest thereon to be due and
payable immediately. If an Event of Default specified in clause (4), above,
relating to the Company or any of its Subsidiaries occurs, all principal and
accrued interest thereon will be immediately due and payable on all outstanding
Notes without any declaration or other act on the part of Trustee or the
Holders. The Holders of no less than a majority in aggregate principal amount of
Notes generally are authorized to rescind such acceleration if all existing
Events of Default, other than the non-payment of the principal or premium, if
any, and interest on the Notes which have become due solely by such
acceleration, have been cured or waived.
Prior to the declaration of acceleration of the maturity of the Notes,
the Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may waive on behalf of all the Holders any default, except a default
in the payment of principal of or interest on any Note not yet cured, or a
default with respect to any covenant or provision which cannot be modified or
amended without the consent of the Holder of each outstanding Note affected.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, the Trustee will be under no obligation to exercise any of its rights
or powers under the Indenture at the request, order or direction of any of the
Holders, unless such Holders have offered to the Trustee reasonable security or
indemnity. Subject to all provisions of the Indenture and applicable law, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee.
Notwithstanding the 30-day period and notice requirement contained in
Section 7.1(3) above, with respect to a default under Article XII the 30-day
period referred to in Section 7.1(3) shall be deemed to have begun as of the
date the Change of Control Notice is required to be sent in the event that the
Company has not complied with the provisions of Section 12.1, and the Trustee or
Holders of at least 25% in principal amount of the outstanding Securities
thereafter give the Notice of Default referred to in Section 7.1(3) to the
Company and, if applicable, the Trustee; provided, however, that if the breach
or default is a result of a default in the payment when due of the Change of
Control Offer Price on the Change of Control Payment Date, such default shall be
deemed, for purposes of this Section 7.1, to arise no later than on the Change
of Control Payment Date.
SECTION 7.2 Acceleration of Maturity Date; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 7.1(5) or (6)) occurs and is continuing, then, and in every such case,
unless the principal of all of the Securities shall have already become due and
payable, either the Trustee or the Holders of not less then 25% in aggregate
principal amount of then outstanding Securities, by a notice in writing to the
Company and Group (and to the Trustee if given by Holders) (an "Acceleration
Notice"), may declare all of the principal of the Securities (and premium, if
applicable), determined as set forth below, together with accrued interest
thereon, to be due and payable immediately. If an Event of Default specified in
Section 7.1(5) or (6) occurs, all principal of, premium applicable to, and
accrued interest on, the Securities shall be immediately due and payable on all
outstanding Securities without any declaration or other act on the part of the
Trustee or the Holders.
At any time after such a declaration of acceleration being made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article Seven, the Holders of a
majority in aggregate principal amount of then outstanding Securities, by
written notice to the Company and the Trustee, may waive, on behalf of all
Holders, an Event of Default or an event which with notice or lapse of time or
both would become an Event of Default if:
(1) the Company has paid or deposited with the
Trustee a sum sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any,
applicable to) any Securities which would become due otherwise than by such
declaration of acceleration, and interest thereon at the rate borne by the
Securities,
(C) to the extent that payment of such
interest is lawful, interest upon overdue interest at the rate borne by the
Securities,
(D) all sums paid or advanced by the
Trustee hereunder and the compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, and
(2) all Events of Default, other than the non-payment
of amounts which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 7.12.
Notwithstanding the previous sentence of this Section 7.2, no waiver shall be
effective for any Event of Default or event which with notice or lapse of time
or both would be an Event of Default with respect to any covenant or provision
which cannot be modified or amended without the consent of the Holder of each
outstanding Security, unless all such affected Holders agree, in writing, to
waive such Event of Default or event. No such waiver shall cure or waive any
subsequent default or impair any right consequent thereon.
SECTION 7.3 Collection of Indebtedness and Enforcement by Trustee.
The Company covenants that if an Event of Default in payment of
principal, premium, or interest specified in Section 7.1(1) and (2) occurs and
is continuing, the Company shall, upon demand of the Trustee, pay to it, for the
benefit of the Holders of such Securities, the whole amount then due and payable
on such Securities for principal, premium (if any) and interest, and, to the
extent that payment of such interest shall be legally enforceable, interest on
any overdue principal (and premium, if any) and on any overdue interest, at the
rate borne by the Securities, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including
compensation to, and expenses, disbursements and advances of the Trustee, its
agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders either
(1) by such appropriate judicial proceedings as the
Trustee shall deem most effective to protect and enforce any such
rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy; or
(2) by exercise of any power of sale or other
remedies provided in the Mortgage, including the rights of a secured
creditor under the Uniform Commercial Code. In connection therewith,
Trustee may credit bid at any real or personal property foreclosure
sale in amounts deemed appropriate by Trustee in its sole discretion,
and may take ownership of any Collateral, either in its own name for
the benefit of the Holders, or in the name of a Nevada corporation
which Trustee may form; provided, that such corporation shall issue
voting stock to the Holders in such proportion as the unpaid principal
amounts of the Securities respectively held by each Holder bears to the
total outstanding principal amount of all Securities.
SECTION 7.4 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise to take any and
all actions under the TIA, including
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in
respect of the Securities and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel) and
of the Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other
property payable or deliverable on any such claims and to distribute
the same; and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making
of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 8.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment, or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 7.5 Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust in favor of the Holders, and any recovery of
judgment shall, after provision for the payment of compensation to, and
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
SECTION 7.6 Priorities.
Any money collected by the Trustee pursuant to this Article Seven shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal, premium
(if any) or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to
Section 8.7;
SECOND: To the Holders in payment of the amounts then due and unpaid
for principal of, premium (if any) and interest on, the Securities in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due and
payable on such Securities for principal, premium (if any) and interest,
respectively; and
THIRD: To whomsoever may be lawfully entitled thereto, the remainder,
if any.
SECTION 7.7 Limitation on Suits.
No Holder of any Security shall have any right to order or direct the
Trustee to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(A) such Holder has previously given written
notice to the Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% in principal
amount of then outstanding Securities shall have made written request
to the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(C) such Holder or Holders have offered to the
Trustee reasonable security or indemnity against the costs, expenses
and liabilities to be incurred or reasonably probable to be incurred in
compliance with such request;
(D) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceeding; and
(E) no direction inconsistent with such written
request has been given to the Trustee during such 60-day period by the
Holders of a majority in principal amount of the outstanding
Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 7.8 Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision of this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of' the principal of, and premium (if any) and interest on, such
Security on the Maturity Dates of such payments as expressed in such Security
(in the case of redemption, the Redemption Price on the applicable Redemption
Date, and in the case of the Change of Control Purchase Price, on the applicable
Change of Control Purchase Date) and to institute suit for the enforcement of
any such payment, and such rights shall not be impaired without the consent of
such Holder.
SECTION 7.9 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in Section 2.8, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 7.10 Delay or Omission Not Waiver.
No delay or omission by the Trustee or by any Holder of any Security to
exercise any right or remedy arising upon any Event of Default shall impair the
exercise of any such right or remedy or constitute a waiver of any such Event of
Default. Every right and remedy given by this Article Seven or by law to the
Trustee or to the Holders may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 7.11 Control by Holders.
The Holder or Holders of a majority in aggregate principal amount of
then outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred upon the Trustee, provided, that
(1) such direction shall not be in conflict with any rule of law
or with this Indenture,
(2) the Trustee shall not determine that the action so directed
would be unjustly prejudicial to the Holders not taking part in such direction,
and
(3) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 7.12 Waiver of Past Default.
Subject to Section 7.8, the Holder or Holders of not less than a
majority in aggregate principal amount of the outstanding Securities may, by
written notice to the Trustee on behalf of all Holders, prior to the declaration
of the maturity of the Securities, waive any past default hereunder and its
consequences, except a default
(A) in the payment of the principal of, premium,
if any, or interest on, any Security as specified in clauses (1) and (2) of
Section 7.1, or
(B) in respect of a covenant or provision hereof
which, under Article X, cannot be modified or amended without the
consent of the Holder of each outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair the exercise of any right arising therefrom.
SECTION 7.13 Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted to be taken by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 7.13 shall not apply to any suit instituted
by the Company, to any suit instituted by the Trustee, to any suit instituted by
any Holder, or group of Holders, holding in the aggregate more than 10% in
aggregate principal amount of the outstanding Securities, or to any suit
instituted by any Holder for enforcement of the payment of principal of, or
premium (if any) or interest on, any Security on or after the Maturity Date of
such Security.
SECTION 7.14 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Guarantor, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.
ARTICLE VIII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed.
SECTION 8.1 Duties of Trustee.
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of his own affairs.
(b) Except during the continuance of a Default or an Event
of Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no others, and no
covenants or obligations shall be implied in or read into this
Indenture which are adverse to the Trustee.
(c) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(1) The Trustee may not be relieved from liability
for its own negligent action, its own negligent failure to act, or its
own willful misconduct, except that:
(2) This paragraph does not limit the effect of
paragraph (b) of this Section 8.1.
(d) The Trustee shall comply with any order or directive of a
Gaming Authority that the Trustee submit an application for any license, finding
of suitability or other approval pursuant to any Gaming Law and will cooperate
fully and completely in any proceeding related to such application.
(e) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(f) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction received
by it pursuant to Section 7.12.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or to take or omit to take any
action under this Indenture or at the request, order or direction of the Holders
or in the exercise of any of its rights or powers if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(h) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b), (c), (e) and (g) of this
Section 8.1.
(i) The Trustee shall not be liable for interest on any assets
received by it except as the Trustee may agree in writing with the Company.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
SECTION 8.2 Rights of Trustee.
Subject to Section 8.1:
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it, may
consult with counsel and may require an Officers' Certificate or an opinion of
Counsel, which shall conform to Sections 14.4 and 14.5. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such certificate or opinion.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers.
(e) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
(g) Except with respect to Section 5.1, the Trustee shall have
no duty to inquire as to the performance of the Company's covenants in Article V
hereof. In Addition, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) any Event of Default occurring pursuant
to Sections 7.1(1), 7.1(2) and 5.1, or (ii) any Default or Event of Default of
which the Trustee shall have received written notification or obtained actual
knowledge.
SECTION 8.3 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company, any
Guarantor, any of their respective Subsidiaries, or their respective Affiliates
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights. However, the Trustee must comply with Sections 8.10 and
8.11.
SECTION 8.4 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities and it shall not be accountable for the
Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement in the Securities, other than the Trustee's
certificate of authentication, or the use or application of any funds received
by a Paying Agent other than the Trustee.
SECTION 8.5 Notice of Default.
If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Securityholder notice of
the uncured Default or Event of Default within 90 days after such Default or
Event of Default occurs. Except in the case of a Default or an Event of Default
in payment of Principal (or premium, if any) of, or interest on, any Security
(including the payment of the Change of Control Purchase Price on the Change of
Control Purchase Date and the Redemption Price on the Redemption Date), the
Trustee may withhold the notice if and so long as a Trust Officer in good faith
determines that withholding the notice is in the interest of the
Securityholders.
SECTION 8.6 Reports by Trustee to Holders.
If required by law, within 60 days after each May 15 beginning with the
May 15 following the date of this Indenture, the Trustee shall mail to each
Securityholder a brief report dated as of such May 15 that complies with TIA ss.
313(a). If required by law, the Trustee also shall comply with TIA ss.ss. 313(b)
and 313(c).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Securities are listed.
SECTION 8.7 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by it. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents, accountants,
experts and counsel.
The Company shall indemnify the Trustee (in its capacity as Trustee)
and each of its officers, directors, attorneys-in-fact and agents for, and hold
it harmless against, any claim, demand, expense (including but not limited to
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel), loss or liability incurred by them without negligence or bad faith on
its part, arising out of or in connection with the administration of this trust
and their rights or duties hereunder including the reasonable costs and expenses
of defending themselves against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The Trustee
shall notify the Company promptly of any claim asserted against the Trustee for
which it may seek indemnity. The Company shall defend the claim and the Trustee
shall provide reasonable cooperation at the Company's expense in the defense.
The Trustee may have separate counsel and the Company shall pay the reasonable
fees and expenses of such counsel; provided, that the Company will not be
required to pay such fees and expenses if it assumes the Trustee's defense and
there is no conflict of interest between the Company and the Trustee in
connection with such defense. The Company need not pay for any settlement made
without its written consent. The Company need not reimburse any expense or
indemnify against any loss or liability to the extent incurred by the Trustee
through its negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 8.7, the
Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal and premium, if any, of or interest on particular
Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 7.1(5) or (6) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 8.7 and any lien arising
hereunder shall survive the resignation or removal of the Trustee, the discharge
of the Company's obligations pursuant to Article IX of this Indenture and any
rejection or termination of this Indenture under any Bankruptcy Law.
SECTION 8.8 Replacement of Trustee.
The Holder or Holders of a majority in principal amount of the
outstanding Securities may remove the Trustee by so notifying the Company and
the Trustee in writing and may appoint a successor Trustee.
The Company may remove the Trustee if: (1) the Trustee fails to comply
with Section 8.1(d) or 8.10; (2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver, Custodian, or other public officer takes charge of the Trustee
or its property; or (4) the Trustee becomes incapable of acting. The Trustee may
resign by so notifying the Company in writing. If the Trustee resigns, or is
removed by the Company, or if a vacancy exists in the office of Trustee for any
reason other than removal by the Holders, the Company shall promptly appoint a
successor Trustee. Within six (6) months after the successor Trustee takes
office, the Holder or Holders of a majority in principal amount of the
Securities may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the Trustee provided for in Section 8.7 have
been paid, the retiring Trustee shall transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided in Section 8.7,
the resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in principal amount of the outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 8.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
8.8, the Company's obligations under Section 8.7 shall continue for the benefit
of the retiring Trustee.
SECTION 8. 9 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such. resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
SECTION 8.10 Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA ss.
310(a)(1) and TIA ss. 310(a)(5). The Trustee shall have a combined capital and
surplus of at least $25,000,000 as set forth in its most recent published annual
report of condition. The Trustee shall comply with TIA 9 310(b).
SECTION 8.11 Preferential Collection of Claims against Company.
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.
ARTICLE IX
SATISFACTION AND DISCHARGE
SECTION 9.1 Satisfaction and Discharge of the Indenture.
The Company shall be deemed to have paid and discharged the entire
Indebtedness on the Securities and the provisions of this Indenture shall cease
to be of further effect (subject to Section 9.3), if:
(1) The Company irrevocably deposits in trust with
the Trustee, pursuant to an irrevocable trust and security agreement in
form and substance reasonably satisfactory to the Trustee, (i) U.S.
Legal Tender, (ii) U.S. Government Obligations, or (iii) a combination
thereof, in an amount after payment of all Federal, state and local
taxes or other charges or assessments in respect thereof payable by the
Trustee, which through the payment of principal and interest will
provide, not later than one Business Day before the due date of payment
in respect of the Securities, U.S. Legal Tender in an amount which, in
the opinion of a nationally recognized firm of independent certified
public accountants expressed in a written certification thereof (in
form and substance reasonably satisfactory to the Trustee) delivered to
the Trustee, is sufficient to pay the principal of, premium, if any,
and each installment of principal and interest on the Securities then
outstanding on the dates on which any such payments are due and payable
in accordance with the terms of this Indenture and of the Securities;
(2) Such deposits shall not cause the Trustee to
have a conflicting interest as defined in and for purposes of the TIA;
(3) No Default or Event of Default shall have
occurred or be continuing on the date of such deposit or shall occur on
or before the 91st day (or one day after such other greater period of
time in which any such deposit of trust funds may remain subject to
bankruptcy or insolvency laws) after the date of such deposit, and such
deposit will not result in a Default or Event of Default under this
Indenture or a breach or violation of, or constitute a default under,
any other instrument to which the Company, any Guarantor or any
Subsidiary of the Company or any Guarantor is a party or by which it or
its property is bound;
(4) The deposit, defeasance and discharge will not be
deemed, or result in, a Federal income taxable event to the Holders of
the Securities and the Holders will be subject to Federal income tax
only in the same amounts and in the same manner and at the same times
as would have been the case if such deposit and defeasance had not
occurred;
(5) The deposit shall not result in the Company,
the Trustee or the trust becoming an "investment company" under the
Investment Company Act of 1940;
(6) After the passage of 91 days (or any greater
period of time in which any such deposit of trust funds may remain
subject to Bankruptcy Laws insofar as those laws apply to the Company)
following the deposit of the trust funds, such funds will not be
subject to any Bankruptcy Laws affecting creditors' rights generally;
(7) Holders of the Securities will have a
valid, perfected and unavoidable first-priority security interest in
the trust funds; and
(8) The Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel (who may be outside
Counsel to the Company, but not in-house counsel to the Company or any
of its Subsidiaries), each in form and substance satisfactory to the
Trustee, stating that all conditions precedent specified herein
relating to the defeasance contemplated by this Section 9.1 have been
complied with.
In the event all or any portion of the Securities are to be redeemed
through such irrevocable trust, the Company must make arrangements satisfactory
to the Trustee, at the time of such deposit, for the giving of the notice of
such redemption or redemptions by the Trustee in the name and at the expense of
the Company.
In the event that the Company takes the necessary action to comply with
the Provisions described in this Section 9.1 and the Securities are declared due
and payable because of the occurrence of an Event of Default, the Company will
remain liable for all amounts due on the Securities at the time of acceleration
resulting from such Event of Default in excess of the amount of money and U.S.
obligations deposited with the Trustee pursuant to this Section 9.1 at the time
of such acceleration.
SECTION 9.2 Termination of Obligations Upon Cancellation of the Securities.
In addition to the Company's rights under Section 9.1, the Company and
the Guarantors may terminate all of their obligations under this Indenture
(subject to Section 9.3) when:
(1) all Securities theretofore authenticated and
delivered (other than Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section 2.8)
have been delivered to the Trustee for cancellation;
(2) the Company or a Guarantor has paid or
caused to be paid all sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an
Officers' Certificate and an opinion of Counsel who may be outside
counsel to the Company, but not in-house counsel to the Company or any
of its Subsidiaries, each stating that all conditions precedent
specified herein relating to the satisfaction and discharge of this
Indenture have been complied with and that such satisfaction and
discharge will not result in a breach or violation of, or constitute a
Default under, this Indenture or any other instrument to which the
Company, any Guarantor or any of their Subsidiaries is a party or by
which it or their property is bound.
SECTION 9.3 Survival of Certain Obligations.
Notwithstanding the satisfaction and discharge of this Indenture and of
the Securities referred to in Section 9.1 or 9.2, the respective obligations of
the Company, the Guarantors and the Trustee under Sections 2.3, 2.4, 2.5, 2.6,
2.7, 2.8, 2.12, 2.13, Article III, Article IV, 5.1, 5.2, 5.4, 5.6, 5.19, 7.7,
7.8, 8.7, 8.8, 9.5, 9.6, 9.7, 14.l, 14.2, 14.4, 14.5, 14.7, 14.8, 14.11 and this
Section 9.3 shall survive until the Securities are no longer outstanding, and
thereafter the obligations of the Company and the Trustee under Sections 7.8,
8.7, 8.8, 9.5, 9.6, 9.7, 14.11 and this Section 9.3 shall survive. Nothing
contained in this Article IX shall abrogate any of the obligations or duties of
the Trustee under this Indenture.
SECTION 9.4 Acknowledgment of Discharge by Trustee.
After (i) the conditions of Section 9.1 or 9.2 have been satisfied,
(ii) the Company or a Guarantor has paid or caused to be paid all other sums
payable hereunder by the Company and (iii) the Company has delivered to the
Trustee an Officers' Certificate and an opinion of Counsel, each stating that
all conditions precedent referred to in clause (i), above, relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee upon request shall acknowledge in writing the discharge of the Company's
and the Guarantors' obligations under this Indenture except for those surviving
obligations specified in Section 9.3.
SECTION 9.5 Application of Trust Assets.
The Trustee shall hold any U.S. Legal Tender or U.S. Government
obligations deposited with it in the irrevocable trust established pursuant to
Section 9.1. The Trustee shall apply the deposited U.S. Legal Tender or U.S.
Government Obligations, together with earnings thereon, through the Paying Agent
(which may not for purposes of Article IX be the Company or any Affiliate of the
Company), in accordance with this Indenture and the terms of the Securities, to
the payment of principal of and interest on the Securities.
SECTION 9.6 Repayment to the Company.
Upon termination of the trust established pursuant to Section 9.1 by
payment of the trust property to the Holders, the Trustee and the Paying Agent
shall promptly pay to the Company upon request any excess U.S.
Legal Tender or U.S. Government Obligations held by them.
The Trustee and the Paying Agent shall pay to the Company upon request,
and, if applicable, in accordance with the irrevocable trust established
pursuant to Section 9.1, any U.S. Legal Tender or U.S. Government Obligations
held by them for the payment of principal of or interest on the Securities that
remain unclaimed for two years after the date on which such payment shall have
become due; provided, however, that the Trustee or such Paying Agent, before
being required to make any such repayment, may, at the expense of the Company,
cause to be published once, in a newspaper customarily published on each
Business Day and of general circulation in the Borough of Manhattan, The City of
New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining shall be repaid
to the Company. After payment to the Company, Holders entitled to such payment
must look to the Company for such payment as general creditors unless an
applicable abandoned property law designates another person.
SECTION 9.7 Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender
or U.S. Government obligations in accordance with Section 9.1 or 9.2 by reason
of any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Securities
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 9.1 or 9.2 until such time as the Trustee or Paying Agent is permitted
to apply all such U.S. Legal Tender or U.S. Government Obligations in accordance
with Section 9.1 or 9.2; provided, however, that if the Company or a Guarantor
has made any payment of principal of, premium, if any, or interest on any
Securities because of the reinstatement of its obligations, the Company or such
Guarantor shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the U.S. Legal Tender or U.S. Government Obligations
held by the Trustee or Paying Agent.
ARTICLE X
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.1 Supplemental Indentures Without Consent of Holders.
Without the consent of any Holder, the Company or any Guarantor, when
authorized by Board Resolutions, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, or may amend,
modify or supplement the Mortgage, in form satisfactory to the Trustee, for any
of the following purposes:
(1) to cure any ambiguity, defect, or inconsistency,
or to make any other provisions with respect to matters or questions
arising under this Indenture which shall not be inconsistent with the
provisions of this Indenture, provided such action pursuant to this
clause (1) shall not adversely affect the interests of any Holder in
any respect.
(2) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power herein
conferred upon the Company or to make any other change that does not
adversely affect the rights of any Holder; provided, that the Company
has delivered to the Trustee an Opinion of Counsel stating that such
change does not adversely affect the rights of any Holder;
(3) to provide for additional collateral for
or additional Guarantors of the Securities;
(4) to provide for uncertificated Securities
in addition to or in place of certificated Securities;
(5) to evidence the succession of another person to
the Company, and the assumption by any such successor of the
obligations of the Company, herein and in the Securities in accordance
with Article VI;
(6) to comply with the TIA; or
(7) to comply with any order of any Gaming Authority.
SECTION 10.2 Amendments, Supplemental Indentures and Waivers
with Consent of Holders.
Subject to Section 7.8, with the consent of the Holders of a majority
in aggregate principal amount of then outstanding Securities, by written act of
said Holders delivered to the Company and the Trustee, the Company and any
Guarantor, when authorized by Board Resolutions, and the Trustee may amend or
supplement the Mortgage, this Indenture or the Securities or enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Mortgage, this Indenture or the Securities or of modifying in any manner the
rights of the.. Holders under the Mortgage, this Indenture or the Securities.
Subject to Section 7.8, the Holder or Holders of a majority, in principal amount
of then outstanding Securities may waive compliance by the Company or any
Guarantor with any provision of the mortgage, this Indenture or the Securities.
Notwithstanding the foregoing provisions of this Section 10.2, no such
amendment, supplemental indenture or waiver shall, without the consent of the
Holders of 66-2/3% of the aggregate principal amount of outstanding Securities,
change any provision of Article XII, Article XIII, Article IV, Section 5.19 or
(except for the Stated Maturity which is governed by clause (4) below) extend
any Maturity Date of any Security, and no such amendment, supplemental indenture
or waiver shall, without the consent of the Holder of each outstanding Security
affected thereby:
(1) change the percentage of principal amount of
Securities whose Holders must consent to an amendment, supplement or
waiver of any provision of this Indenture or the Securities;
(2) reduce the rate or extend the time for
payment of interest on any Security;
(3) reduce the principal amount of any Security;
(4) change the Stated Maturity of any Security;
(5) alter the redemption provisions of
Article III in a manner adverse to any Holder;
(6) make any changes in the provisions concerning
waivers of Defaults or Events of Default by Holders of the Securities
or the rights of Holders to recover the principal or premium of,
interest on, or redemption payment with respect to, any Security;
(7) make any changes in Section 7.4, 7.7 or
this third sentence of this Section 10.2;
(8) make the principal of, or the interest on, any
Security payable with anything or in any manner other than as provided
for in this Indenture and the Securities as in effect on the date
hereof;
(9) make the Securities subordinated in right
of payment to any extent or under any circumstances to any other
indebtedness; or
(10) to comply with any order of a Gaming Authority.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
After an amendment, supplement or waiver under this Section 10.2 or
10.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article X, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
SECTION 10.3 Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 10.4 Revocation and Effect of Consents.
---------------------------------
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made on
any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of his Security by written notice to the
Company or the person designated by the Company as the person to whom consents
should be sent if such revocation is received by the Company or such person
before the date on which the Trustee receives an Officers, Certificate
certifying that the Holders of the requisite principal amount of Securities have
consented (and not theretofore revoked such consent) to the amendment,
supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those persons who were Holders at such record date, and only those persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (9) of Section 10.2, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided, that any such
waiver shall not impair or affect the right of any Holder to receive payment of
principal and premium of and interest on a Security, on or after the respective
dates set for such amounts to become due and payable expressed in such Security,
or to bring suit for the enforcement of any such payment on or after such
respective dates.
SECTION 10.5 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee
or require the Holder to put an appropriate notation on the Security. The
Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue, the
Guarantors shall endorse and the Trustee shall authenticate a new Security that
reflects the changed terms. Any failure to make the appropriate notation or to
issue a new Security shall not affect the validity of such amendment, supplement
or waiver.
SECTION 10.6 Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article X provided, that the Trustee may, but shall
not be obligated to, execute any such amendment, supplement or waiver which
affects the Trustee's own rights, duties or immunities under this Indenture. The
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an opinion of Counsel stating that the execution of any amendment,
supplement or waiver authorized pursuant to this Article X is authorized or
permitted by this Indenture.
ARTICLE XI
MEETINGS OF SECURITYHOLDERS
SECTION 11.1 Purposes for Which Meetings May Be Called.
A meeting of Securityholders may be called at any time and from time to
time pursuant to the provisions of this Article XI for any of the following
purposes:
(a) to give any notice to the Company, any Guarantor or to the
Trustee, or to give any directions to the Trustee, or to waive or to consent to
the waiving of any Default or Event of Default hereunder and its consequences,
or to take any other action authorized to be taken by Securityholders pursuant
to any of the provisions of Article VII;
(b) to remove the Trustee or appoint a successor Trustee
pursuant to the provisions of Article VIII;
(c) to consent to an amendment, supplement or waiver
pursuant to the provisions of Section 10.2; or
(d) to take any other action (i) authorized to be taken by or
on behalf of the Holder or Holders of any specified aggregate principal amount
of the Securities under any other provision of this Indenture, or authorized or
permitted by law or (ii) which the Trustee deems necessary or appropriate in
connection with the administration of this Indenture.
SECTION 11.2 Manner of Calling Meetings.
The Trustee may at any time call a meeting of Securityholders to take
any action specified in Section 11.1, to be held at such time and at such place
in The City of New York, State of New York or elsewhere as the Trustee shall
determine. Notice of every meeting of Securityholders, setting forth the time
and place of such meeting and in general terms the action proposed to be taken
at such meeting, shall be mailed by the Trustee, first-class postage prepaid, to
the Company, the Guarantors and to the Holders at their last addresses as they
shall appear on the registration books of the Registrar, not less than 10 nor
more than 60 days prior to the date fixed for a meeting. The Company shall pay
the costs and expenses of preparing and mailing such notice.
Any meeting of Securityholders shall be valid without notice if the
Holders of all Securities then outstanding are present in person or by proxy, or
if notice is waived before or after the meeting by the Holders of all Securities
outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.
SECTION 11.3 Call of Meetings by Company or Holders.
In case at any time the Company, pursuant to a Board Resolution, or the
Holders of not less than 10% in aggregate principal amount of the Securities
then outstanding, shall have requested the Trustee to call a meeting of
Securityholders to take any action specified in Section 11.1, by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have mailed the notice of such meeting within
20 days after receipt of such request, then the Company or the Holders of
Securities in the amount above specified may determine the time and place in The
City of New York, State of New York or elsewhere for such meeting and may call
such meeting for the purpose of taking such action, by mailing or causing to be
mailed notice thereof as provided in Section 11.2, or by causing notice thereof
to be published at least once in each of two successive calendar weeks (on any
Business Day during such week) in a newspaper or newspapers printed in the
English language, customarily published at least five days a week of a general
circulation in The City of New York, State of New York, the first such
publication to be not less than 10 nor more than 60 days prior to the date fixed
for the meeting.
SECTION 11.4 Who May Attend and Vote at Meetings.
To be entitled to vote at any meeting of Securityholders, a person
shall (a) be a registered Holder of one or more Securities, or (b) be a Person
appointed by an instrument in writing as proxy for the registered Holder or
Holders of Securities. The only persons who shall be entitled to be present or
to speak at any meeting of Securityholders shall be the persons entitled to vote
at such meeting and their counsel and any representatives of the Trustee and its
counsel and any representatives of the Company, the Guarantors and their
counsel.
SECTION 11.5 Regulations May Be Made by Trustee, Conduct
of the Meeting; Voting Rights; Adjournment.
Notwithstanding any other provision of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any action by or
any meeting of Securityholders, in regard to proof of the holding of Securities
and of the appointment of proxies, and in regard to the appointment and duties
of inspectors of votes, and submission and examination of proxies, certificates
and other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think appropriate. Such regulations may fix a
record date and time for determining the Holders of record of Securities
entitled to vote at such meeting, in which case those and only those persons who
are Holders of Securities at the record date and time so fixed, or their
proxies, shall be entitled to vote at such meeting whether or not they shall be
such Holders at the time of the meeting.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Securityholders as provided in Section 11.3, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Holders of a majority
in principal amount of the Securities represented at the meeting and entitled to
vote.
At any meeting each Securityholder or proxy shall be entitled to one
vote for each $1,000 principal amount of Securities held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
respect of any Securities challenged as not outstanding and ruled by the
chairman of the meeting to be not then outstanding. The chairman of the meeting
shall have no right to vote other than by virtue of Securities held by him or
instruments in writing as aforesaid duly designating him as the proxy to vote on
behalf of other Securityholders. Any meeting of Securityholders duly called
pursuant to the provisions of Section 11.2 or Section 11.3 may be adjourned from
time to time by vote of the Holder or Holders of a majority in aggregate
principal amount of the Securities represented at the meeting and entitled to
vote, and the meeting may be held as so adjourned without further notice.
SECTION 11.6 Voting at the Meeting and Record to Be Kept.
The vote upon any resolution submitted to any meeting of
Securityholders shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy and
the principal amount of the Securities voted by the ballot. The permanent
chairman of the meeting shall appoint two inspectors of votes, who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to such record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts, setting forth a
copy of the notice of the meeting and showing that such notice was mailed as
provided in Section 11.2 or published as provided in Section 11.3. The record
shall be signed and verified by the affidavits of the permanent chairman and the
secretary of the meeting and one of the duplicates shall be delivered to the
Company and the other to the Trustee to be preserved by the Trustee, the latter
to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
SECTION 11.7 Exercise of Rights of Trustee or Securityholders
May Not Be Hindered or Delayed by Call of Meeting.
Nothing contained in this Article XI shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Securityholders or
any rights expressly or impliedly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights conferred upon or
reserved to the Trustee or to the Securityholders under any of the provisions of
this Indenture or of the Securities.
ARTICLE XII
RIGHT TO REQUIRE REPURCHASE
SECTION 12.1 Repurchase of Securities at Option of the Holder
Upon Change of Control.
(a) In the event that a Change of Control occurs, each Holder
of Securities shall have the right, at such Holder's option, subject to the
terms and conditions of the Indenture, to require the Company to repurchase all
or any part of such Holder's Notes (provided, that the principal amount of such
Notes at maturity must be $1,000 or an integral multiple thereof) on the date
that is no later than 30 Business Days after the occurrence of such Change of
Control (the "Change of Control Payment Date"), at a cash price (the "Change of
Control Purchase Price") equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to and including the Change of Control
Payment Date.
(b) Within 7 Business Days after the occurrence of a Change of
Control, the Company shall make an unconditional, irrevocable offer (a "Change
of Control Offer") to the Holders to purchase for U.S. Legal Tender all of the
Securities pursuant to the offer described in clause (c) of this Section 12.1 at
the Change of Control Purchase Price. Within 5 Business Days after each date
upon which a Change of Control shall occur requiring the Company to make a
Change of Control Offer pursuant to this Section 12.01, the Company shall so
notify the Trustee.
(c) Notice of a Change of Control Offer shall be sent, at
least 20 Business Days prior to the Final Change of Control Put Date (as defined
below), by first class mail, by the Company to each Holder at its registered
address, with a copy to the Trustee. The notice to the Holders shall contain all
instructions and materials required by applicable law and shall contain or make
available to Holders other information material to such Holders, decision to
tender Securities pursuant to the Change of Control Offer. The notice, which (to
the extent consistent with this Indenture) shall govern the terms of the offer,
shall state:
(1) that the Change of Control offer is being made
pursuant to this Section 12.1 and that all Securities, or portions
thereof, tendered will be accepted for payment;
(2) the Change of Control Purchase Price (including
the amount of accrued and unpaid interest), the Change of Control
Payment Date and the Change of Control Put Date (as defined below);
(3) that any Security, or portion thereof, not
tendered or accepted for payment will continue to accrue interest;
(4) that, unless the Company defaults in depositing
U.S. Legal Tender with the Paying Agent in accordance with the last
paragraph of this clause (c), or such payment is prevented for any
reason, any Security, or portion thereof, accepted for payment pursuant
to the Change of Control Offer shall cease to accrue interest after the
Change of Control Payment Date;
(5) that Holders electing to have a Security, or
portion thereof, purchased pursuant to a Change of Control Offer will
be required to surrender the Security, with the form entitled "Option
of Holder to Elect Purchase" on the reverse of the Security completed,
to the Paying Agent (which may not for purposes of this Section 12.1,
notwithstanding anything in this Indenture to the contrary, be the
Company or any Affiliate of the Company) at the address specified in
the notice prior to the close of business on the third Business Day
prior to the Change of Control Payment Date (the "Change of Control Put
Date");
(6) that Holders will be entitled to withdraw their
election, in whole or in part, if the Paying Agent receives, prior to
the close of business on the Change of Control Put Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Securities the Holder is
withdrawing and a statement that such Holder is withdrawing his
election to have such principal amount of Securities purchased; and
(7) a brief description of the events resulting
in such Change of Control.
Any such Change of Control Offer shall comply with all applicable
provisions of Federal and state laws, including these regulating tender offers,
if applicable, and any provisions of this Indenture which conflict with such
laws shall be deemed to be superseded by the provisions of such laws. On or
before the Change of Control Payment Date, the Company shall (i) accept for
payment Securities or portions thereof properly tendered pursuant to the Change
of Control Offer prior to the close of business on the Final Change of Control
Put Date, (ii) deposit with the Paying Agent U.S. Legal Tender sufficient to pay
the Change of Control Purchase Price (including accrued and unpaid interest) of
all Securities so tendered and (iii) deliver to the Trustee Securities so
accepted together with an Officers, Certificate listing the Securities or
portions thereof being purchased by the Company. The Paying Agent shall on the
Change of Control Payment Date mail to the Holders of Securities so accepted
payment in an amount equal to the Change of Control Purchase Price (including
accrued and unpaid interest), and the Trustee shall promptly authenticate and
mail or deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Securities not so accepted
shall be promptly mailed or delivered by the Company to the Holder thereof.
<PAGE>
ARTICLE XIII
GUARANTY
SECTION 13.1 Guaranty.
(a) In consideration of good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, each of the Guarantors
hereby unconditionally guarantees (the "Guaranty") to each Holder of a Security
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of this Indenture,
the Securities or the obligations of the Company under this Indenture or the
Securities, that: (w) the principal and premium (if any) of and interest on the
Securities will be paid in full when due, whether at the maturity or interest
payment date, by acceleration, call for redemption, upon a Change of Control, or
otherwise, and interest on the overdue principal and premium and interest, if
any, of the Securities, if lawful; (x) all other obligations of the Company to
the Holders or the Trustee under this Indenture or the Securities will be
promptly paid in full or performed, all in accordance with the terms of this
Indenture and the Securities; and (y) in case of any extension of time of
payment or renewal of any Securities or any of such other obligations, they will
be paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at maturity, by acceleration, call for redemption,
upon a Change of Control Offer or otherwise. Failing payment when due of any
amount so guaranteed for whatever reason, each Guarantor shall be obligated to
pay the same before failure so to pay becomes an Event of Default.
(b) Each Guarantor hereby agrees that its obligations with
regard to this Guaranty shall be unconditional, irrespective of the validity,
regularity or enforceability of the Securities or this Indenture, the absence of
any action to enforce the same, any delays in obtaining or realizing upon or
failures to obtain or realize upon collateral, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstances
that might otherwise constitute a legal or equitable discharge or defense of a
guarantor. Each Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company or
right to require the prior disposition of the assets of the Company to meet its
obligations, protest, notice and all demands whatsoever and covenants that this
Guaranty will not be discharged except by complete performance of the
obligations contained in the Securities and this Indenture.
(c) If any Holder or the Trustee is required by any court or
otherwise to return to either the Company or any Guarantor, or any Custodian,
Trustee, or similar official acting in relation to either the Company or such
Guarantor, any amount paid by either the Company or such Guarantor to the
Trustee or such Holder, this Guaranty, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Guarantor agrees that it will
not be entitled to any right of subrogation in relation to the Holders in
respect of any obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby. Each Guarantor further agrees that, as between
such Guarantor, on the one hand, and the Holders and the Trustee, on the other
hand, (i) the maturity of the obligations guaranteed hereby may be accelerated
as provided in Section 7.2 for the purposes of this Guaranty, notwithstanding
any stay, injunction or other prohibition preventing such acceleration as to the
Company of the obligations guaranteed hereby, and (ii) in the event of any
declaration of acceleration of those obligations as provided in Section 7.2,
those obligations (whether or not due and payable) will forthwith become due and
payable by each of the Guarantors for the purpose of this Guaranty.
(d) It is the intention of each Guarantor and the Company that
the obligations of each Guarantor hereunder shall be in, but not in excess of,
the maximum amount permitted by applicable law. Accordingly, if the obligations
in respect of the Guaranty would be annulled, avoided or subordinated to the
creditors of any Guarantor by a court of competent jurisdiction in a proceeding
actually pending before such court as a result of a determination both that such
Guaranty was made without fair consideration and, immediately after giving
effect thereto, such Guarantor was insolvent or unable to pay its debts as they
mature or left with an unreasonably small capital, then the obligations .of such
Guarantor under such Guaranty shall be reduced by such court if such reduction
would result in the avoidance of such annulment, avoidance or subordination;
provided, however, that any reduction pursuant to this paragraph shall be made
in the smallest amount as is strictly necessary to reach such result. For
purposes of this paragraph, "fair consideration", "insolvency", "unable to pay
its debts as they mature", "unreasonably small capital" and the effective times
of reductions, if any, required by this paragraph shall be determined in
accordance with applicable law.
SECTION 13.2 Execution and Delivery of Guaranty.
----------------------------------
To evidence its Guaranty set forth in Section 13.1, each Guarantor
agrees that a notation of such Guaranty substantially in the form annexed hereto
as Exhibit C shall be endorsed on each Security authenticated and delivered by
the Trustee and that this Indenture shall be executed on behalf of such
Guarantor by two officers or an officer and an Assistant Secretary by manual or
facsimile signature.
Each Guarantor agrees that its Guaranty set forth in Section 13.1 shall
remain in full force and effect and apply to all the Securities notwithstanding
any failure to endorse on each Security a notation of such Guaranty.
If an officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security on which a Guaranty is
endorsed, the Guaranty shall be valid nevertheless.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guaranty set forth in
this Indenture on behalf of each Guarantor.
SECTION 13.3 Future Guarantors.
The Company and the Guarantors covenant and agree that they shall cause
each person that is or becomes a Subsidiary of the Company or any Guarantor to
execute a Guaranty in the form of Exhibit C to this Indenture and will and cause
such Subsidiary to execute an Indenture supplemental hereto for the purpose of
adding such Subsidiary as a Guarantor hereunder and the capital stock of such
Subsidiary shall be pledged, pursuant to an agreement substantially in form of
the Pledge Agreement, in favor of the Trustee for the benefit of the Holders.
SECTION 13.4 Certain Bankruptcy Events.
Each Guarantor hereby covenants and agrees that in the event of the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company, such Guarantor shall not file (or join in any filing of), or otherwise
seek to participate in the filing of, any motion or request seeking to stay or
to prohibit (even temporarily) execution on the Guaranty and hereby waives and
agrees not to take the benefit of any such stay of execution, whether under
Section 362 or 105 of the United States Bankruptcy Code or otherwise.
ARTICLE XIIIV
MISCELLANEOUS
SECTION 14.1 TIA Controls.
If any provision of this Indenture limits, qualifies, or conflicts with
the duties imposed by operation of the TIA, the imposed duties, upon
qualification of this Indenture under the TIA, shall control.
SECTION 14.2 Notices.
Any notices or other communications to the Company, the Guarantors or
the Trustee required or permitted hereunder shall be in writing, and shall be
sufficiently given if made by hand delivery, by telex, by telecopier or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Company:
with a copy to:
Gordon & Silver, Ltd.
3800 Howard Hughes Parkway, 14th Floor
Las Vegas, Nevada 89109
Attention: Gerald M. Gordon, Esq.
if to the Guarantors:
if to the Trustee:
First Trust National Association
180 E. 5th Street
St. Paul, Minnesota 55101
Attention: Frank Leslie
Telephone: (612) 244-0742
The Company, the Guarantors or the Trustee by notice to each other
party may designate additional or different addresses as shall be furnished in
writing by such party. Any notice or communication to the Company, the
Guarantors or the Trustee shall be deemed to have been given or made as of the
date so delivered, if personally delivered; when answered back, if telexed; when
receipt is acknowledged, if telecopied; and 5 Business Days after mailing if
sent by registered or certified mail, postage prepaid (except that a notice of
change of address shall not be deemed to have been given until actually received
by the addressee).
Any notice or communication mailed to a Securityholder shall be mailed
to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 14.3 Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss.312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Guarantors, the Trustee, the Registrar and any
other person shall have the protection of TIA ss. 312(c).
SECTION 14.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an opinion of Counsel (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion of
such counsel, all such conditions precedent have been complied with.
SECTION 14.5 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(1) a statement that the person making such
certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature
and scope of the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4). a statement as to whether or not, in the opinion
of each such person, such condition or covenant has been complied with;
provided, however, that with respect to matters of fact an opinion of
Counsel may rely on an Officers' Certificate or certificates of public
officials.
SECTION 14.6 Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Paying Agent or Registrar may make reasonable rules for its
functions.
SECTION 14.7 Legal Holidays.
A "Legal Holiday" used with respect to a particular place of payment is
a Saturday, a Sunday or a day on which banking institutions in New York, New
York are not required to be open. If a payment date is a Legal Holiday in New
York, New York, payment may be made at such place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
SECTION 14.8 Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE COMPANY AND EACH GUARANTOR HEREBY IRREVOCABLY SUBMIT TO
THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN
IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN
IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS INDENTURE AND THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
JURISDICTION OF THE AFORESAID COURTS. THE COMPANY AND EACH GUARANTOR IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW,
TRIAL BY JURY AND ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
SECTION 14.9 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of any of the Company, the Guarantors or any of their
Subsidiaries. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 14.10 No Recourse Against Others.
A director, officer, employee, stockholder or incorporator, as such, of
the Company or the Guarantors shall not have any liability for any obligations
of the Company or the Guarantors under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creations. Each Securityholder by accepting a Security waives and releases all
such liability. Such waiver and release are part of the consideration for the
issuance of the Securities.
SECTION 14.11 Successors.
All agreements of the Company and the Guarantors in this Indenture and
the Securities shall bind their successors. All agreements of the Trustee in
this Indenture shall bind its successor.
SECTION 14.12 Duplicate Originals.
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of them
together shall represent the same agreement.
SECTION 14.13 Severability.
In case any one or more of the provisions in this Indenture or in the
Securities shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
SECTION 14.14 Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and headings of the
Articles and the Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
SIGNATURE
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.
ELSINORE CORPORATION
By: ______________________________
Name:
Title:
Attest: ______________________
FIRST TRUST NATIONAL ASSOCIATION, as Trustee
By: ______________________________
Name:
Title:
Attest: ______________________
GUARANTORS:
ELSUB CORPORATION
By: ______________________________
Name:
Title:
FOUR QUEENS, INC.
By: ______________________________
Name:
Title:
PALM SPRINGS EAST, LIMITED
PARTNERSHIP
BY: ELSUB MANAGEMENT CORPORATION,
its general partner
By: ______________________________
Name:
Title:
<PAGE>
EXHIBITS
Exhibit A - Conditions to Effectiveness of Amended and
Restated Indenture
Exhibit B - Form of Amended and Restated Note
Exhibit C - Form of Guaranty
<PAGE>
A-1
EXHIBIT A
CONDITIONS TO EFFECTIVENESS OF
AMENDED AND RESTATED INDENTURE
The foregoing Amended and Restated Indenture shall be effective on the
Effective Date (as defined in the Order) and upon receipt by the Trustee of each
of the following documents, each duly executed by the parties thereto other than
the Trustee:
1. Amended and Restated Indenture;
2. Modification of Subordinated Deed of Trust executed in
recordable form and recordation thereof in the Official
Records of Clark County, Nevada;
3. Amendment of 1993 Pledge Agreement;
4. Termination of Disbursement and Escrow Agreement; and
5. The Title Policy, subject only to the deed of trust
securing the Senior Notes and other exceptions acceptable
to Trustee.
<PAGE>
EXHIBIT B
[FORM OF AMENDED AND RESTATED NOTE]
ELSINORE CORPORATION
13 1/2% SECOND MORTGAGE NOTE
DUE 2001
No. $
Elsinore Corporation, a Nevada corporation (hereinafter called the
"Company," which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
________________ or registered assigns, the principal sum of ______________
Dollars, on August 20, 2001.
Interest Payment Dates: February 28 and August 31.
Record Dates: February 15 and August 15.
Reference is made to the further provisions of this Security on the
reverse side, which will, for all purposes, have the same effect as if set forth
at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed under its corporate seal.
Dated: March 3, 1997.
ELSINORE CORPORATION
By: __________________________
Attest:
- - ---------------------
Secretary
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned
Indenture.
------------------------------
First Trust National Association,
as Trustee
By: ___________________________
Authorized Signatory
Dated: March 3, 1997.
<PAGE>
ELSINORE CORPORATION
13 1/2% Second Mortgage Note
due 2001
1. Interest.
Elsinore Corporation, a Nevada corporation (the "Company"), promises
to pay interest on the principal amount of this Security at a rate of 13 1/2%
per annum. To the extent it is lawful, the Company promises to pay interest on
any interest payment due but unpaid on such principal amount at a rate of 13.5%
per annum compounded semi-annually.
The Company will pay interest semi-annually on February 28 and August
31 of each year (each, an "Interest Payment Date"), commencing February 28,
1997. Interest on the Securities will accrue from August 20, 1996. Interest will
be computed on the basis of a 360-day year consisting of twelve 30-day months.
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. Except as
provided below, the Company shall pay principal and interest in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for payment of public and private debts ("U.S. Legal Tender").
However, the Company may pay principal and interest by wire transfer of Federal
funds, or interest by its check payable in such U.S. Legal Tender. The Company
may deliver any such interest payment to the Paying Agent or the Company may
mail any such interest payment to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, First Trust National Association (the "Trustee") will act
as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or Co-registrar without notice to the Holders. The Company or any of
its Subsidiaries may, subject to certain exceptions, act as Paying Agent,
Registrar or Co-registrar.
4. Indenture.
The Company issued the Securities under an Amended and Restated
Indenture, dated as of March 3, 1997 (the "Indenture"), between the Company, the
Guarantors named therein and the Trustee. Capitalized terms herein are used as
defined in the Indenture unless otherwise defined herein. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act, as in effect on the date of
the Indenture. The Securities are subject to all such terms, and Holders of
Securities are referred to the Indenture and said Act for a statement of them.
The Securities are senior, secured obligations of the Company limited in
aggregate principal amount to $30,000,000.
5. Redemption.
The Securities are redeemable in whole or from time to time in part at
any time, at the option of the Company, upon full payment of principal of the
Securities, without premium, together with any accrued but unpaid interest to
the Redemption Date.
The Securities may also be redeemed at any time pursuant to, and in
accordance with, any order of any Gaming Authority with appropriate jurisdiction
and authority to the extent necessary in the reasonable, good faith judgment of
the Board of Directors of the Company to prevent the loss or material impairment
or secure the reinstatement of any Gaming License or to prevent such Gaming
Authority from taking any other action, which if lost, impaired, not reinstated
or taken, as the case may be, would have a material adverse effect on the
Company or any Subsidiary or where such redemption or acquisition is required
because the Holder or beneficial owner of the Securities is required to qualify,
be found suitable or become licensed as such under such Gaming Laws and does not
so qualify, obtain a finding of suitability or become licensed.
Any redemption of the Notes shall comply with Article Three of the
Indenture.
6. Notice of Redemption.
Notice of redemption will be mailed by first class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Securities called for redemption shall
have been deposited with the Paying Agent on such Redemption Date, the
Securities called for redemption will cease to bear interest and the only right
of the Holders of such Securities will be to receive payment of the Redemption
Price, including any accrued and unpaid interest to the Redemption Date.
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of, or exchange Securities in accordance with, the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption.
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the owner of it
for all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Company at its written request. After that, all liability of the Trustee and
such Paying Agent(s) with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
If the Company at any time deposits into an irrevocable trust with the
Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay the
principal of and interest on the Securities to redemption or maturity and
complies with the other provisions of the Indenture relating thereto, the
Company will be discharged from certain provisions of the Indenture and the
Securities (including the financial covenants, but excluding its obligation to
pay the principal of and interest on the Securities).
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the written consent of the Holders of a majority,
and in certain cases at least two-thirds, in aggregate principal amount of the
Securities then outstanding, and any existing Default or Event of Default or
compliance with any provision may be waived with the consent of the Holders of a
majority in aggregate principal amount of the Securities then outstanding.
Without notice to or consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Securities to, among other things, cure any
ambiguity, defect or inconsistency, provide for uncertificated Securities in
addition to or in place of certificated Securities, comply with an order of any
Gaming Authority or make any other change that does not adversely affect the
rights of any Holder of a Security.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its Subsidiaries to, among other things, incur additional
Indebtedness, make payments in respect of its Capital Stock, enter into
transactions with Affiliates, incur Liens, sell assets, merge or consolidate
with any other person and sell, lease, transfer or otherwise dispose of
substantially all of its properties or assets. The limitations are subject to a
number of important qualifications and exceptions. The Company must annually
report to the Trustee on compliance with such limitations.
13. Change of Control.
In the event there shall occur any Change of Control, each Holder of
Securities shall have the right, at such Holder's option but subject to the
limitations, and conditions set forth in the Indenture, to require the Company
to purchase on the Change of Control Payment Date in the manner specified in the
Indenture, all or any part (in integral multiples of $1,000) of such Holder's
Securities at a Change of Control Purchase Price equal to 101% of the principal
amount thereof, together with accrued and unpaid interest, if any, to the Change
of Control Payment Date.
14. Security.
In order to secure the obligations under the Indenture, the Company,
the Guarantors and the Trustee have entered into certain security agreements in
order to create security interests in certain assets and properties of the
Company, the Guarantors and their respective Subsidiaries.
15. Gaming Law.
The rights of the Holder of this Security and any owner of any
beneficial interest in this Security are subject to the Gaming Laws and the
jurisdiction and requirements of the Gaming Authorities and the further
limitations and requirements set forth in the Indenture.
16. Successors.
When a successor assumes all the obligations of its predecessor under
the Securities and the Indenture, the predecessor will be released from those
obligations.
17. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Securities. Subject to certain limitations,
Holders of a majority in aggregate principal amount of the Securities then
outstanding may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Securities notice of any continuing Default
or Event of Default (except a Default in payment of principal or interest), if
it determines that withholding notice is in their interest.
18. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
19. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator, as such,
past, present or future, of the Company or any successor corporation shall have
any liability for any obligation of the Company under the Securities or the
Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder of a Security by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Securities.
20. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Security.
21. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
22. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
<PAGE>
[FORM OF ASSIGNMENT]
I or we assign this Security to
- - -----------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee
__________________ and irrevocably appoint __________________________ agent to
transfer this Security on the books of the Company. The agent may substitute
another to act for him.
Dated: _____________ Signed: __________________________________
(Sign exactly as name appears on the other side of this Security)
<PAGE>
EXHIBIT C
FORM OF GUARANTY
For value received, _________________________, a
__________________________ corporation, hereby unconditionally guarantees to the
Holder of the Security upon which this Guaranty is endorsed the due and punctual
payment, as set forth in the Indenture pursuant to which such Security and this
Guaranty were issued, of the principal of, premium (if any) and interest on such
Security when and as the same shall become due and payable for any reason
according to the terms of such Security and Article XIII of the Indenture. The
Guaranty of the Security upon which this Guaranty is endorsed will not become
effective until the Trustee signs the certificate of authentication on such
Security.
--------------------------------------
By: __________________________________
Attest: ________________________________
<PAGE>
TABLE OF CONTENTS
ARTICLE I.................................................................2
DEFINITIONS AND INCORPORATION BY REFERENCE................................2
SECTION 1.1 Definitions................................................2
SECTION 1.2 Incorporation by Reference of TIA..........................17
SECTION 1.3 Rules of Construction......................................18
ARTICLE II................................................................18
THE SECURITIES............................................................18
SECTION 2.1 Exchange Of Original Notes For Restated Notes..............18
SECTION 2.2 Form and Dating............................................19
SECTION 2.3 Execution and Authentication...............................19
SECTION 2.4 Registrar and Paying Agent.................................20
SECTION 2.5 Paying Agent to Hold Assets in Trust.......................21
SECTION 2.6 Securityholder Lists.......................................21
SECTION 2.7 Transfer and Exchange......................................21
SECTION 2.8 Replacement Securities.....................................22
SECTION 2.9 Outstanding Securities.....................................22
SECTION 2.10 Treasury Securities.......................................23
SECTION 2.11 Temporary Securities......................................23
SECTION 2.12 Cancellation..............................................23
SECTION 2.13 Defaulted Interest........................................23
ARTICLE III...............................................................24
REDEMPTION................................................................24
SECTION 3.1 Right of Redemption........................................24
SECTION 3.2 Redemption Pursuant to Gaming Laws.........................24
SECTION 3.3 Notices to Trustee.........................................24
SECTION 3.4 Selection of Securities to Be Redeemed.....................25
SECTION 3.5 Notice of Redemption.......................................25
SECTION 3.6 Effect of Notice of Redemption.............................26
SECTION 3.7 Deposit of Redemption Price................................26
SECTION 3.8 Securities Redeemed in Part................................27
ARTICLE IV................................................................27
SECURITY..................................................................27
SECTION 4.1 Security Interest..........................................27
SECTION 4.2 Recording; Opinions of Counsel.............................28
SECTION 4.3 Disposition of Certain Collateral..........................28
SECTION 4.4 Certain Releases of Collateral.............................29
SECTION 4.5 Payment of Expenses........................................30
SECTION 4.6 Suits to Protect the Collateral............................30
SECTION 4.7 Trustee's Duties...........................................30
ARTICLE V.................................................................31
COVENANTS.................................................................31
SECTION 5.1 Payment of Securities......................................31
SECTION 5.2 Maintenance of Office or Agency............................31
SECTION 5.3 Limitation on Restricted Payments..........................32
SECTION 5.4 Corporate Existence........................................33
SECTION 5.5 Payment of Taxes and Other Claims..........................33
SECTION 5.6 Maintenance of Insurance...................................34
SECTION 5.7 Compliance Certificate; Notice of Default..................34
SECTION 5.8 Reports. 34
SECTION 5.9 Waiver of Stay, Extension or Usury Laws....................35
SECTION 5.10 Limitation on Transactions with Affiliates................35
SECTION 5.11 Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock................................35
SECTION 5.12 Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries..............................................37
SECTION 5.13 Limitation on Liens.......................................38
SECTION 5.14 Limitations on Sales of Assets and Subsidiary Stock.......38
SECTION 5.15 Maintenance of Consolidated Fixed Charges Coverage Ratio..38
SECTION 5.16 Maintenance of Consolidated Net Worth.....................39
SECTION 5.17 Limitation on Status as Investment Company................39
SECTION 5.18 Restrictions on Sale and Issuance of Subsidiary Stock.....39
SECTION 5.19 Additional Subsidiary Guarantors..........................39
ARTICLE VI................................................................39
SUCCESSOR CORPORATION.....................................................39
SECTION 6.1 Limitation on Merger, Sale or Consolidation................39
SECTION 6.2 Successor Corporation Substituted..........................41
ARTICLE VII...............................................................41
EVENTS OF DEFAULT AND REMEDIES............................................41
SECTION 7.1 Events of Default..........................................41
SECTION 7.2 Acceleration of Maturity Date; Rescission and Annulment....43
SECTION 7.3 Collection of Indebtedness and Enforcement by Trustee......45
SECTION 7.4 Trustee May File Proofs of Claim...........................45
SECTION 7.5 Trustee May Enforce Claims Without Possession of
Securities.................................................46
SECTION 7.6 Priorities.................................................46
SECTION 7.7 Limitation on Suits........................................47
SECTION 7.8 Unconditional Right of Holders to Receive Principal, Premium
and Interest...............................................48
SECTION 7.9 Rights and Remedies Cumulative.............................48
SECTION 7.10 Delay or Omission Not Waiver..............................48
SECTION 7.11 Control by Holders........................................48
SECTION 7.12 Waiver of Past Default....................................49
SECTION 7.13 Undertaking for Costs.....................................49
SECTION 7.14 Restoration of Rights and Remedies........................49
ARTICLE VIII..............................................................50
TRUSTEE...................................................................50
SECTION 8.1 Duties of Trustee..........................................50
SECTION 8.2 Rights of Trustee..........................................51
SECTION 8.3 Individual Rights of Trustee...............................52
SECTION 8.4 Trustee's Disclaimer.......................................52
SECTION 8.5 Notice of Default..........................................52
SECTION 8.6 Reports by Trustee to Holders..............................53
SECTION 8.7 Compensation and Indemnity.................................53
SECTION 8.8 Replacement of Trustee.....................................54
SECTION 8. 9 Successor Trustee by Merger, Etc..........................55
SECTION 8.10 Eligibility; Disqualification.............................55
SECTION 8.11 Preferential Collection of Claims against Company.........55
ARTICLE IX................................................................55
SATISFACTION AND DISCHARGE................................................55
SECTION 9.1 Satisfaction and Discharge of the Indenture................55
SECTION 9.2 Termination of Obligations Upon Cancellation of the
Securities.................................................57
SECTION 9.3 Survival of Certain Obligations............................57
SECTION 9.4 Acknowledgment of Discharge by Trustee.....................58
SECTION 9.5 Application of Trust Assets................................58
SECTION 9.6 Repayment to the Company...................................58
SECTION 9.7 Reinstatement..............................................59
ARTICLE X.................................................................59
AMENDMENTS, SUPPLEMENTS AND WAIVERS.......................................59
SECTION 10.1 Supplemental Indentures Without Consent of Holders........59
SECTION 10.2 Amendments, Supplemental Indentures and Waivers with
Consent of Holders........................................60
SECTION 10.3 Compliance with TIA.......................................61
SECTION 10.4 Revocation and Effect of Consents.........................61
SECTION 10.5 Notation on or Exchange of Securities.....................62
SECTION 10.6 Trustee to Sign Amendments, Etc...........................62
ARTICLE XI................................................................63
MEETINGS OF SECURITYHOLDERS...............................................63
SECTION 11.1 Purposes for Which Meetings May Be Called.................63
SECTION 11.2 Manner of Calling Meetings................................63
SECTION 11.3 Call of Meetings by Company or Holders....................64
SECTION 11.4 Who May Attend and Vote at Meetings.......................64
SECTION 11.5 Regulations May Be Made by Trustee, Conduct of the Meeting;
Voting Rights; Adjournment...............................64
SECTION 11.6 Voting at the Meeting and Record to Be Kept...............65
SECTION 11.7 Exercise of Rights of Trustee or Securityholders May
Not Be Hindered or Delayed by Call of Meeting............65
ARTICLE XII...............................................................66
RIGHT TO REQUIRE REPURCHASE...............................................66
SECTION 12.1 Repurchase of Securities at Option of the Holder Upon
Change of Control.........................................66
ARTICLE XIII..............................................................68
GUARANTY..................................................................68
SECTION 13.1 Guaranty..................................................68
SECTION 13.2 Execution and Delivery of Guaranty........................69
SECTION 13.3 Future Guarantors.........................................70
SECTION 13.4 Certain Bankruptcy Events.................................70
ARTICLE XIV...............................................................70
MISCELLANEOUS.............................................................70
SECTION 14.1 TIA Controls..............................................70
SECTION 14.2 Notices. 70
SECTION 14.3 Communications by Holders with Other Holders..............71
SECTION 14.4 Certificate and Opinion as to Conditions Precedent........72
SECTION 14.5 Statements Required in Certificate or Opinion.............72
SECTION 14.6 Rules by Trustee, Paying Agent, Registrar.................72
SECTION 14.7 Legal Holidays............................................73
SECTION 14.8 Governing Law.............................................73
SECTION 14.9 No Adverse Interpretation of Other Agreements.............73
SECTION 14.10 No Recourse Against Others...............................74
SECTION 14.11 Successors...............................................74
SECTION 14.12 Duplicate Originals......................................74
SECTION 14.13 Severability.............................................74
SECTION 14.14 Table of Contents, Headings, Etc.........................74
AMENDMENT OF 1993 PLEDGE AGREEMENT
This AMENDMENT OF 1993 PLEDGE AGREEMENT ("Amendment"), is entered into
as of March 3, 1997, by and among ELSINORE CORPORATION (the "Company"), ELSUB
MANAGEMENT CORPORATION ("EMC"), PALM SPRINGS EAST LIMITED PARTNERSHIP ("PSELP"
and together with the Company and EMC, "Pledgors"), and FIRST TRUST NATIONAL
ASSOCIATION, a national association ("Trustee"). All capitalized words not
otherwise defined herein are used as defined in the Amended and Restated
Indenture referred to in Paragraph D below.
Factual Background
A. The Company and EMC and Trustee entered into a certain Pledge
Agreement dated as of October 8, 1993 (the "1993 Pledge Agreement"). In the 1993
Pledge Agreement, the Company and EMC pledged to Trustee and granted Trustee a
security interest in certain Pledged Collateral as identified therein, to secure
the "Indenture Obligations," as defined in that certain Indenture dated as of
October 8, 1993 by and among the Company, certain Guarantors named therein, and
Trustee (the "Original Indenture"). Pursuant to the Original Indenture, the
Company issued the Original Notes in the aggregate principal amount of
$60,000,000, bearing interest at 12 1/2% with a stated maturity date of October
1, 2000.
B. The Company, Guarantors, and the Senior Noteholders entered into a
certain Note and Stock Purchase Agreement dated October 11, 1994, whereby the
Company issued the Senior Notes, pursuant to a Waiver of Compliance dated as of
October 13, 1994, executed by Trustee, the Company, and the Guarantors. The
Company and EMC and the Senior Noteholders entered into a certain Pledge
Agreement dated October 14, 1994 (the "Senior Pledge Agreement") in which the
Company and EMC pledged to the Senior Noteholders and granted the Senior
Noteholders a security interest in the Pledged Collateral to secure certain
obligations under the Senior Note Documents. Trustee, the Company, the
Guarantors, and the Senior Noteholders also entered into a certain Intercreditor
Agreement dated as of October 14, 1994 (the "Intercreditor Agreement") whereby,
among other things, the Trustee subordinated its interests in the Pledged
Collateral under the 1993 Pledge Agreement to the interests of the Senior
Noteholders in the Pledged Collateral under the Senior Pledge Agreement.
C. On October 31, 1995, the Company filed a Chapter 11 bankruptcy
reorganization case in the United States Bankruptcy Court for the District of
Nevada (the "Court"), Case No. 95-24685RCJ. On August 9, 1996, the Court entered
its Order Confirming Chapter 11 Plan of Reorganization (the "Order") confirming
the Plan of Reorganization (the "Plan") as identified in the Order.
D. Pursuant to the Order and the Plan, the parties to the Original
Indenture entered into a certain Amended and Restated Indenture dated as of
March 3, 1997 providing, among other things, for the issuance of Amended and
Restated Notes in the aggregate principal amount of $30,000,000, bearing
interest at 13 1/2% with a stated maturity date of August 20, 2001. Each of the
Original Notes are to be exchanged for an Amended and Restated Note in a
principal amount equal to 52.6315% of the unpaid principal amount of the
Original Note.
E. Pursuant to the Order and the Plan, the Company and the Senior
Noteholders have executed a certain Amended and Restated Note Agreement dated as
of March 3, 1997 providing for the exchange of the Senior Notes for Amended and
Restated Senior Notes.
F. The parties desire to amend the 1993 Pledge Agreement as set forth
below.
Amendment
1. All references in the 1993 Pledge Agreement to the Indenture shall
henceforth refer to the Amended and Restated Indenture. All references in the
1993 Pledge Agreement to any documents or instruments which were amended in
connection with the Amended and Restated Indenture shall refer to such documents
or instruments as so amended. All capitalized terms in the 1993 Pledge Agreement
which are not otherwise defined therein shall have the meanings set forth in the
Amended and Restated Indenture.
2. As additional collateral security for the indefeasible payment and
performance in full of the Indenture Obligations, each Pledgor hereby pledges,
assigns, transfers, sets over and delivers to the Trustee and hereby grants the
Trustee a continuing security interest in all of the right, title and interest
of the Pledgors in, to and under any and all of the following described
property, rights and interests (such property, rights and interests to be
included in the definition of "Pledged Collateral"):
(a) all of PSELP's right, title and interest in the Restated
Commercial Promissory Note of the 29 Palms Band of Mission Indians Tribe (the
"29 Palms Band") dated March ___, 1996 in the original principal amount of
$9,000,000, all indebtedness evidenced thereby, and all proceeds thereof; and
(b) all of PSELP's right, title and interest in the
Settlement Agreement between PSELP and the 29 Palms Band dated March 29, 1996
and all proceeds thereof.
3. The parties hereby affirm each and every provision of the
Intercreditor Agreement, including but not limited to the subordination of the
interests of the Trustee in the Pledged Collateral under the 1993 Pledge
Agreement, as amended herein, to the interests of the Senior Noteholders in the
Pledged Collateral under the Senior Pledge Agreement, as amended and restated.
4. Section 7(e) of the 1993 Pledge Agreement is hereby deleted.
5. PSELP agrees to be bound by all terms and conditions of the 1993
Pledge Agreement, as amended hereby, as fully as if it were an original
signatory to such agreement.
6. Except as expressly amended herein, the 1993 Pledge Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, the Pledgors and the Trustee have caused this
Amendment of 1993 Pledge Agreement to be executed and delivered by their
respective officers thereunto duly authorized as of the day and first written
above.
ELSINORE CORPORATION
By: __________________________
Title: _________________________
ELSUB MANAGEMENT CORPORATION
By: __________________________
Title: _________________________
PALM SPRINGS EAST LIMITED PARTNERSHIP
By: __________________________
Title: _________________________
FIRST TRUST NATIONAL ASSOCIATION,
a national association, as Trustee
By: __________________________
Title: _________________________
MODIFICATION OF SUBORDINATED DEED OF TRUST
This MODIFICATION OF SUBORDINATED DEED OF TRUST ("Modification"), is
entered into as of March 3, 1997, by and among FOUR QUEENS, INC., a Nevada
corporation ("Trustor") and FIRST TRUST NATIONAL ASSOCIATION, a national
association in its capacity as Trustee under the Amended and Restated Indenture
referred to in Paragraph F below ("Beneficiary"). All capitalized words not
otherwise defined herein are used as defined in the Amended and Restated
Indenture referred to in Paragraph F below.
Factual Background
A. Trustor executed a certain Deed of Trust, Assignment of Rents, and
Security Agreement in favor of Beneficiary dated as of October 8, 1993 (the
"Deed of Trust") which was recorded in the Official Records of Clark County,
Nevada (the "Official Records") on October 8, 1993 in Book 931008 Document No.
0554. In the Deed of Trust, Trustor granted in trust for the benefit of
Beneficiary and granted Beneficiary a security interest in certain real and
personal property as identified therein (the "Property").
B. The Deed of Trust secures the "Indenture Obligations," as defined in
that certain Indenture dated as of October 8, 1993 by and among Elsinore
Corporation, a Nevada corporation (the "Company"), certain Guarantors named
therein (including Trustor), and Beneficiary (the "Original Indenture").
Pursuant to the Original Indenture, the Company issued the Original Notes in the
aggregate principal amount of $60,000,000, bearing interest at 12 1/2% with a
stated maturity date of October 1, 2000.
C. The Company, Guarantors, and the Senior Noteholders entered into a
certain Note and Stock Purchase Agreement dated October 11, 1994, whereby the
Company issued the Senior Notes, pursuant to a Waiver of Compliance dated as of
October 13, 1994, executed by Beneficiary, the Company, and the Guarantors.
Trustor executed a certain Deed of Trust, Assignment of Rents, and Security
Agreement in favor of the Senior Noteholders as beneficiary dated October 13,
1994 which was recorded in the Official Records on October 14, 1994 in Book
941014 Document No. 00611 (the "Senior Deed of Trust") in which Trustor granted
in trust for the benefit of the Senior Noteholders and granted the Senior
Noteholders a security interest in the Property to secure certain obligations
under the Senior Note Documents.
D. Beneficiary, Trustor, the Company, the Guarantors, and the Senior
Noteholders also entered into a certain Intercreditor Agreement dated as of
October 14, 1994 (the "Intercreditor Agreement"); and Beneficiary and Trustor
entered into a certain Subordination Agreement dated October 13, 1994 (the
"Subordination Agreement") which was recorded in the Official Records on October
14, 1994 in Book 94104 Document No. 00613. In the Intercreditor Agreement and
the Subordination Agreement, among other things, the Beneficiary subordinated
its interests in the Property under the Deed of Trust to the interests of the
Senior Noteholders in the Property under the Senior Deed of Trust.
E. On October 31, 1995, the Company filed a Chapter 11 bankruptcy
reorganization case in the United States Bankruptcy Court for the District of
Nevada (the "Court"), Case No. 95-24685RCJ. On August 9, 1996, the Court entered
its Order Confirming Chapter 11 Plan of Reorganization (the "Order") confirming
the Plan of Reorganization (the "Plan") as identified in the Order.
F. Pursuant to the Order and the Plan, the parties to the Original
Indenture entered into a certain Amended and Restated Indenture dated as of
March 3, 1997 providing, among other things, for the issuance of Amended and
Restated Notes in the aggregate principal amount of $30,000,000, bearing
interest at 13 1/2% with a stated maturity date of August 20, 2001. Each of the
Original Notes is to be exchanged for an Amended and Restated Note in a
principal amount equal to 52.631579% of the unpaid principal amount of the
Original Note.
G. Pursuant to the Order and the Plan, the Company and the Senior
Noteholders have executed a certain Amended and Restated Note Agreement dated as
of March 3, 1997 providing for the exchange of the Senior Notes for Amended and
Restated Senior Notes.
H. The parties desire to modify the Deed of Trust as set forth below.
Amendment
1. All references in the Deed of Trust to the Indenture shall
henceforth refer to the Amended and Restated Indenture. All references in the
Deed of Trust to any documents or instruments which were amended in connection
with the Amended and Restated Indenture shall refer to such documents or
instruments as so amended. All capitalized terms in the Deed of Trust which are
not otherwise defined therein shall have the meanings set forth in the Amended
and Restated Indenture. All capitalized terms which are defined in the Deed of
Trust shall have the meanings set forth in the Amended and Restated Indenture if
different from the definitions in the Deed of Trust.
2. The parties hereby affirm each and every provision of the
Intercreditor Agreement and the Subordination Agreement, including but not
limited to the subordination of the interests of the Beneficiary in the Property
under the Deed of Trust, as modified herein, to the interests of the Senior
Noteholders in the Property under the Senior Deed of Trust.
3. Section 1.5.2 of the Deed of Trust is hereby amended to read in full as
follows: "1.5.2 Events of Loss and Proceeds Therefrom. Upon the occurrence of
each and every Event of Loss, Trustor shall give immediate written notice
thereof to Beneficiary. Pursuant to its rights granted hereunder in all
Insurance Proceeds, upon the occurrence of each and every Event of Loss,
Beneficiary is (to the extent permitted pursuant to the terms of the Facility
Leases) hereby authorized and empowered at its option to adjust or compromise
any loss under any insurance polices on the Trust Estate and to collect and
receive all Insurance Proceeds. Each insurance company is hereby authorized and
directed to make payment for all such Insurance Proceeds directly to Beneficiary
alone and not to Trustor and Beneficiary jointly."
"Beneficiary shall apply such Insurance Proceeds first toward
reimbursement of all of Beneficiary's costs and expenses of recovering
the proceeds, including attorneys' fees. If, in any instance, each and
all of the following conditions are satisfied in Beneficiary's sole
judgment, Beneficiary shall permit Trustor to use the balance of such
proceeds ("Net Claims Proceeds") to pay costs of repairing or
reconstructing the Trust Estate in the manner described below:
(i) The plans and specifications, cost breakdown,
construction contract, construction schedule, contractor and payment
and performance bond for the work of repair or reconstruction must all
be acceptable to Beneficiary.
(ii) Beneficiary must receive evidence satisfactory to it
that after repair or reconstruction, the Trust Estate would be at least
as valuable as it was immediately before the damage or condemnation
occurred.
(iii) The Net Claims Proceeds must be sufficient in
Beneficiary's determination to pay for the total cost of repair or
reconstruction; or Trustor must provide its own funds in an amount
equal to the difference between the Net Claims Proceeds and a
reasonable estimate, made by Trustor and found acceptable by
Beneficiary, of the total cost of repair or reconstruction.
(iv) No Event of Default shall have occurred and be
continuing.
"If Beneficiary finds that such conditions have been met,
Beneficiary shall deposit the Net Claims Proceeds and any funds which
Trustor is required to provide in a noninterest-bearing account. Upon
presentation of evidence satisfactory to Beneficiary that repair or
reconstruction has been completed satisfactorily and lien-free,
Beneficiary shall (1) disburse such Net Claims Proceeds and funds to
Trustor to pay costs of repair or reconstruction, and (2) release to
Trustor any Net Claims Proceeds and funds remaining after payment of
such costs. However, if Beneficiary finds that one or more of such
conditions have not been satisfied, Beneficiary may hold the Net Claims
Proceeds as collateral for the Indenture Obligations pursuant to the
Pledge Agreement."
4. Except as expressly amended herein, the Deed of Trust shall
remain in full force and effect.
IN WITNESS WHEREOF, the Trustor and the Beneficiary have caused this
Modification of Deed of Trust to be executed and delivered by their respective
officers thereunto duly authorized as of the day and first written above.
FOUR QUEENS, INC.
By: __________________________
Title: _________________________
FIRST TRUST NATIONAL ASSOCIATION,
a national association, as Beneficiary
By: __________________________
Title: _________________________
STATE OF NEVADA )
) ss:
COUNTY OF CLARK )
On this ____ day of ____________________, 199__, before me, the
undersigned, a Notary Public in and for the County of Clark, State of Nevada,
duly commissioned and sworn, personally appeared _________________, known to me
to be the _____________ of FOUR QUEENS, INC., whose name is subscribed to the
within instrument, and who acknowledged to me that he/she executed the same
freely and voluntarily and for the use and purposes therein mentioned.
---------------------------------
NOTARY PUBLIC
STATE OF ______________ )
) ss:
COUNTY OF ____________ )
On this ____ day of ____________________, 199__, before me, the
undersigned, a Notary Public in and for the County of ___________, State of
____________, duly commissioned and sworn, personally appeared
_________________, known to me to be the _____________ of FIRST TRUST NATIONAL
ASSOCIATION, whose name is subscribed to the within instrument, and who
acknowledged to me that he/she executed the same freely and voluntarily and for
the use and purposes therein mentioned.
---------------------------------
NOTARY PUBLIC
EXHIBIT 10.25 TO MARCH 31, 1997 FORM 10-Q
AGREEMENT
Pursuant to 17 CFR Section 229.601(b)(4)(iii)(A) and (v) [Item 601(b)(4)(iii)(A)
and (v) of Regulation S-K], Elsinore Corporation agrees to file with the
Securities and Exchange Commission, upon its request, copies of instruments
defining the rights of holders of Elsinore Corporation 11.5% Notes Due 2000.
ELSINORE CORPORATION
By: ______________________
Jeffrey Leeds
President and Chief Executive Officer
By: ______________________
S. Barton Jacka
Secretary, Treasurer and
Principal Accounting Officer
Dated: May 14, 1997
COMMON STOCK REGISTRATION RIGHTS AGREEMENT
dated as of , 1997
among
ELSINORE CORPORATION
and
THE HOLDERS OF REGISTRABLE SHARES REFERRED TO HEREIN
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Definitions and Usage...........................................1
1.1. Definitions..............................................1
1.2. Usage....................................................3
Section 2 Demand Registration..............................................4
2.1. Right of Holders of Registrable Shares to Demand
Registration.............................................4
2.2. Rights of Substantial Holders to Demand Shelf
Registrations............................................5
2.3. Filing Registration Statement; Registration Period.......5
2.4. Number of Registrations..................................5
2.5. Piggy-Back Rights of Eligible Holders of Registrable
Shares...................................................6
2.6. Selection of Registration Form...........................6
2.7. Selection of Underwriters and Placement Agents...........6
Section 3 Company Registration.............................................6
Section 4 Obligations of the Company.......................................7
4.1. Registration Statement...................................7
4.2. Amendments to Registration Statement.....................7
4.3. Copies to Selling Holders................................8
4.4. Blue Sky Qualifications..................................8
4.5. Underwriting or Agency Agreement.........................8
4.6. Stop Order...............................................8
4.7. Periodic Reports.........................................8
4.8. Information Available for Due Diligence..................9
4.9. Comfort Letter; Legal Opinion............................9
4.10. Transfer Agent and Registrar............................9
4.11. Securities Exchange Listing or Quotation System.........9
4.12. CUSIP Number............................................9
4.13. Other Actions...........................................9
Section 5 Information from Selling of Registrable Shares...................9
Section 6. Expenses of Registration........................................10
6.1. Demand and Shelf Registrations...........................10
6.2. Company Registration.....................................10
6.3. Company Not Relieved of Obligations......................10
Section 7 Underwriting Requirements........................................10
Section 8 Indemnification; Contribution....................................11
8.1. Indemnification by the Company...........................11
8.2. Indemnification by the Selling Holders of Registrable
Shares...................................................11
8.3. Notification; Legal Representation.......................12
8.4. Contribution in Lieu of Indemnification..................12
8.5. Full Indemnification Regardless of Relative Fault........13
8.6. Continuing Obligations...................................13
Section 9 Transfer of Registration Rights..................................13
Section 10. Restrictions on Public Sale by Holders of Registrable Shares...13
Section 11 Covenants of the Company........................................14
11.1. Current Public Information.............................14
11.2. Restrictions on other Registrations and Sales by the
Company................................................14
11.3. Mergers, Consolidations, Reorganizations and
Transfers of Assets....................................15
11.4. Limitations on Subsequent Registration Rights..........15
Section 12 Amendment, Modification and Waivers; Further Assurances.........15
Section 13 Assignment......................................................16
Section 14. Governing Law..................................................16
Section 15 Notices.........................................................16
Section 16 Entire Agreement; Integration...................................16
Section 17 Injunctive Relief...............................................16
Section 18 Term of Agreement...............................................17
Section 19 Section Headings................................................17
Section 20 Counterparts....................................................17
Section 21 Severability....................................................17
SCHEDULES AND EXHIBITS
SCHEDULE 1 Names and Addresses for Delivery of Notices....S-1
EXHIBIT A Agreement to be Bound..........................A-1
<PAGE>
COMMON STOCK REGISTRATION RIGHTS AGREEMENT
This Common Stock Registration Rights Agreement (this
"Agreement") is entered into as of , 1997 by and among Elsinore Corporation, a
Nevada corporation (the "Company"), and the Persons named at the end of this
Agreement and in Schedule 1 as Holders of Registrable Shares (each a "Holder
of Registrable Shares" and collectively, the "Holders of Registrable Shares").
Reference is made to the Order Confirming First Amendment
Plan Of Reorganization Proposed Jointly By The Debtors And The Unofficial
Bondholders Committee, entered on August 9, 1996 (the "Order"), by the United
States Bankruptcy Court for the District of Nevada (the "Court"), in
connection with the proceedings for reorganization under Chapter 11 of
Elsinore Corporation, et al., Case Nos. 95-24685 RCJ, 95-24686 RCJ, 95-24687
RCJ, 95-24688 RCJ, 95-24689 RCJ, and 95-24839 RCJ.
WHEREAS, upon the effectiveness of the Plan of
Reorganization Proposed Jointly By Debtors And The Unofficial Bondholders
Committee ("Plan"), each of the Holders of Registrable Shares shall own shares
of common stock, par value $0.001 per share, of the Company in the respective
amounts indicated in Schedule 1; and
WHEREAS, the Court, through the Order, authorized and
directed the Company and the Holders of Registrable Shares to enter into an
agreement in the form hereof;
NOW THEREFORE, in compliance with the Order and in
consideration of the premises, covenants and agreements contained herein, the
sufficiency and adequacy of which are hereby acknowledged, and for other good
and valuable consideration the sufficiency and adequacy of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
agree as follows:
Section1.DefinitionsandUsage" and Usage.
1.1. Definitions.
As used in this Agreement:
Commission. "Commission" shall mean the Securities and
Exchange Commission.
Common Stock. "Common Stock" shall mean (i) the common stock,
par value $0.001 per share, of the Company, and (ii) shares of capital stock of
the Company issued by the Company in respect of or in exchange for shares of
such common stock in connection with any stock dividend or distribution, stock
split-up, recapitalization recombination or exchange by the Company generally of
shares of such common stock.
Continuously Effective. "Continuously Effective," with respect
to a specified registration statement, shall mean that it shall not cease to be
effective and available for Transfers of Registrable Shares thereunder for
longer than either (i) any ten consecutive business days, or (ii) an aggregate
of 15 business days during the period specified in the relevant provision of
this Agreement.
Demand Registration. "Demand Registration" shall have the
meaning set forth in Section 2.1(i).
Demanding Holders. "Demanding Holders" shall have the meaning
set forth in Section 2.1(i).
Eligible Holders of Registrable Shares. "Eligible Holders
of Registrable Shares" shall have the meaning set forth in Section 2.5(i).
Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
Holder of Registrable Shares. "Holder of Registrable Shares"
shall mean the Persons named in Schedule 1 as Holders of Registrable Shares and
Transferees of such Persons' Registrable Shares with respect to the rights that
such Transferees shall have acquired in accordance with Section 9, at such times
as such Persons shall own Registrable Shares.
Initiating Substantial Holder. "Initiating Substantial
Holder" shall have the meaning set forth in Section 2.2.
Inspectors. "Inspectors" shall have the meaning set forth in
Section 4.8.
Person. "Person" shall mean any individual, corporation,
partnership, joint venture, association, joint-stock company, limited liability
company, trust, unincorporated organization or government or other agency or
political subdivision thereof.
Register, Registered and Registration. "Register,"
"registered," and "registration" shall refer to a registration effected by
preparing and filing a registration statement or similar document in compliance
with the Securities Act, and the declaration or ordering by the Commission of
effectiveness of such registration statement or document.
Registrable Shares. "Registrable Shares" shall mean, subject
to Section 9 and Section 11.3: (i) the shares of Common Stock owned by Persons
that were Holders of Registrable Shares on the date hereof, and (ii) any shares
of Common Stock or other securities issued as (or issuable upon the conversion
or exercise of any warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange by the Company
generally for, or in replacement by the Company generally of, such shares of
Common Stock.
Registrable Shares then outstanding. "Registrable Shares then
outstanding" shall mean, with respect to a specified determination date,
Registrable Shares owned by Holders of Registrable Shares on such date.
Registration Expenses. "Registration Expenses" shall have the
meaning set forth in Section 6.1.
Registration Period. "Registration Period" shall have the
meaning set forth in Section 2.3(ii).
Securities Act. "Securities Act" shall mean the Securities
Act of 1933, as amended.
Selling Holders of Registrable Shares. "Selling Holders of
Registrable Shares" shall mean, with respect to a specified registration
pursuant to this Agreement, Holders of Registrable Shares whose Registrable
Shares are included in such registration.
Shelf Registration. "Shelf Registration" shall have the
meaning set forth in Section 2.2.
Substantial Holder. "Substantial Holder" shall mean any Holder
of Registrable Shares that owned on the date of this Agreement 10% or more of
the Registrable Shares then outstanding and such Transferee, if any, to whom
such Person Transfers Registrable Shares and assigns such Substantial Holder's
rights as a Substantial Holder as permitted by Section 9.
Transfer. "Transfer" shall mean and include the act of
selling, giving, transferring, creating a trust (voting or otherwise), assigning
or otherwise disposing of (other than pledging, hypothecating or otherwise
transferring as security) (and correlative words shall have correlative
meanings); provided however, that any transfer or other disposition upon
foreclosure or other exercise of remedies of a secured creditor after an event
of default under or with respect to a pledge, hypothecation or other transfer as
security shall constitute a "Transfer."
Violation. "Violation" shall have the meaning set forth in
Section 8.1.
1.2. Usage.
(i) References to a Person are also references
to its assigns and successors in interest (by means of merger, consolidation
or sale of all or substantially all the assets of such Person or otherwise, as
the case may be).
(ii) References to Registrable Shares "owned"
by a Holder of Registrable Shares shall include Registrable Shares beneficially
owned by such Person but which are held of record in the name of a nominee,
trustee, custodian, or other agent, but shall exclude shares of Common Stock
held by a Holder of Registrable Shares in a fiduciary capacity for customers of
such Person.
(iii) References to a document are to it as
amended, waived and otherwise modified from time to time and references to a
statute or other governmental rule are to it as amended and otherwise modified
from time to time (and references to any provision thereof shall include
references to any successor provision).
(iv) References to Sections or to Schedules or
Exhibits are to sections hereof or schedules or exhibits hereto, unless the
context otherwise requires.
(v) The definitions set forth herein are
equally applicable both to the singular and plural forms and the feminine,
masculine and neuter forms of the terms defined.
(vi) The term "including" and correlative terms
shall be deemed to be followed by "without limitation" whether or not followed
by such words or words of like import.
(vii) The term "hereof" and similar terms refer to
this Agreement as a whole.
(viii) The "date of" any notice or request given
pursuant to this Agreement shall be determined in accordance with Section 15.
Section 2. Demand Registration.
2.1. Right of Holders of Registrable Shares to Demand
Registration.
(i) If any Holder of 10% or more of the Registrable
Shares then outstanding or if one or more Holders of Registrable Shares that
own an aggregate of 51% or more of the Registrable Shares then outstanding shall
make a written request to the Company (the "Demanding Holders"), each Demanding
Holder shall be entitled to have all or any number of such Demanding Holder's
Registrable Shares included (subject to Section 7. (i)) in a registration with
the Commission in accordance with the provisions of the Securities Act
(a "Demand Registration"); provided, however, that (A) if prior to the date
of such request a Demand Registration statement pursuant to this Section 2.1
shall have been declared effective by the Commission, six months or more shall
have elapsed following the date of the written request for the most recent
such prior Demand Registration, and (B) Holders of Registrable Shares shall
not be entitled to a Demand Registration during the effective period of a
"Shelf Registration," as defined in Section 2.2. Any request made pursuant
to this Section 2.1 shall be addressed to the attention of the Secretary of
the Company, and shall specify the number of Registrable Shares to be
registered, the intended methods of disposition thereof and that the request
is for a Demand Registration pursuant to this Section 2.1(i).
(ii) The Company shall be entitled to postpone
for up to six months the filing of
any Demand Registration statement otherwise required to be prepared and filed
pursuant to this Section 2.1, if the Company determines, in its reasonable
judgment (with the concurrence of the managing underwriter, if any), that such
registration and the Transfer of Registrable Shares contemplated thereby would
materially interfere with any financing involving the Company or any of its
wholly owned subsidiaries and the Company promptly gives the Demanding Holders
notice of such determination; provided, however, that the Company shall not have
postponed pursuant to this Section 2.1(ii) the filing of any other Demand
Registration statement otherwise required to be prepared and filed pursuant to
this Section 2.1 during the 12-month period ended on the date of the relevant
request pursuant to Section 2.1(i).
2.2. Rights of Substantial Holders to Demand Shelf
Registrations. On or after the date of this Agreement, each Substantial
Holder that shall make a written request to the Company (the "Initiating
Substantial Holder"), shall be entitled to have all or any number of such
Initiating Substantial Holder's Registrable Shares included in a registration
with the Commission in accordance with the Securities Act for an offering on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act (a
"Shelf Registration") . Any request made pursuant to this Section 2.2 shall be
addressed to the attention of the Secretary of the Company, and shall specify
the number of Registrable Shares to be registered, the intended methods of
disposition thereof and that the request is for a Shelf Registration pursuant to
this Section 2.2.
2.3. Filing Registration Statement; Registration Period.
Following receipt of a request for a Demand Registration or a Shelf
Registration, the Company shall:
(i) File the registration statement with
the Commission as promptly as practicable, and shall use the Company's best
efforts to have the registration statement declared effective under the
Securities Act as soon as reasonably practicable, in each instance giving due
regard to the need to prepare current financial statements, conduct due
diligence, comply with any applicable requirements of a securities exchange on
which the Common Stock is listed or nationally recognized automated quotation
system in which the Common Stock is included, and complete any other actions
that are reasonably necessary to effect a registered public offering.
(ii) Use the Company's best efforts to keep
the relevant registration statement Continuously Effective (x) if a Demand
Registration, for up to 150 days or until such earlier date as of which all the
Registrable Shares under the Demand Registration statement shall have been
Transferred, and (y) if a Shelf Registration, for three years (a "Registration
Period"). Notwithstanding the foregoing, if for any reason the effectiveness or
availability for Transfers of Registrable Shares under a registration pursuant
to this Section 2 is suspended or, in the case of a Demand Registration,
postponed as permitted by Section 2. 1 (ii), the Registration Period shall be
extended by the aggregate number of days of such suspension or postponement.
2.4. Number of Registrations. The Company shall be obligated
to effect up to two Demand Registrations and such number of Shelf
Registrations as may be necessary to provide each and every Substantial Holder
with the right to request a Shelf Registration. If the Company shall have
complied with its obligations under this Agreement, a right to demand a
registration pursuant to this Section 2 shall be deemed to have been satisfied
(i) if a Demand Registration, upon the earlier of (x) the date as of which all
of the Registrable Shares included therein shall have been Transferred and (y)
the date as of which such Demand Registration shall have been Continuously
Effective for a period of 150 days, and (ii) if a Shelf Registration, upon the
effective date of a Shelf Registration, provided no stop order or similar order
or proceedings for such an order, is thereafter entered or initiated.
2.5. Piggy-Back Rights of Eligible Holders of Registrable
Shares.
(i) Subject to Section 9, each Holder of
Registrable Shares (other than the Demanding Holders or the Initiating
Substantial Holder, as the case may be) that owns Registrable Shares possessing
voting power and other characteristics identical to those of the Registrable
Shares specified in the relevant request for a Demand Registration or Shelf
Registration, respectively (the "Eligible Holders of Registrable Shares"), shall
be entitled to have such Registrable Shares owned by it included in a Demand
Registration statement or Shelf Registration statement, as the case may be,
prepared pursuant to Section 2.1 or Section 2.2, respectively.
(ii) Within seven days following the date of a
request pursuant to Section 2. 1 (i) or Section 2.2 the Company shall
deliver to each Eligible Holder of Registrable Shares written notice of such
Demand Registration or Shelf Registration, respectively. Upon the written
request of each Eligible Holder of Registrable Shares given within seven days
following the date of such notice, the Company shall (1) deliver to the
Demanding Holders or the Initiating Substantial Holder, as the case may be,
copies of such written requests from such Eligible Holders of Registrable
Shares, and (2) cause to be included in the registration statement and use its
best efforts to be registered under the Securities Act (subject, in the case of
a Demand Registration, to Section 7(i)) all the Registrable Shares possessing
the characteristics referred to in Section 2.5(i) that each such Eligible Holder
of Registrable Shares shall have requested to be registered.
(iii) Each Eligible Holder of Registrable
Shares shall be entitled to have its Registrable Shares possessing the
characteristics referred to in Section 2.5(i) included pursuant to this Section
2.5 in any Demand Registrations and Shelf Registrations.
2.6. Selection of Registration Form. A registration
pursuant to this Section 2 shall be on such appropriate registration form
of the Commission as shall (i) be selected by the Company and be reasonably
acceptable to the Demanding Holders owning a majority of the Registrable Shares
owned by Demanding Holders to be included in such Demand Registration or the
Initiating Substantial Holder, as the case may be, and (ii) permit the
disposition of the Registrable Shares in accordance with the intended method or
methods of disposition specified in the request pursuant to Section 2.1(i) or
Section 2.2, respectively.
2.7. Selection of Underwriters and Placement Agents.
If any registration pursuant to Section 2 involves an underwritten offering
(whether on a "firm," "best efforts" or "all reasonable efforts" basis or
otherwise), or an agented offering, Demanding Holders owning a majority of the
Registrable Shares owned by Demanding Holders to be included in such Demand
Registration or the Initiating Substantial Holder, as the case may be, shall
have the right to select the investment banker or bankers and manager or
managers to administer such underwritten offering or the placement agent or
agents for such agented offering; provided, however, that each Person so
selected shall be reasonably acceptable to the Company.
Section 3. Company Registration. If the Company proposes to register
(including for this purpose a registration effected by the Company for
shareholders of the Company other than the Holders of Registrable Shares) Common
Stock under the Securities Act in connection with a public offering solely for
cash (other than a registration on Form S-8 or equivalent successor form), the
Company shall promptly give each Holder of Registrable Shares written notice of
such registration. Upon the written request of each Holder of Registrable Shares
given within 20 days following the date of such notice, the Company shall cause
to be included in such registration statement and use its best efforts to be
registered under the Securities Act (subject to Section 7(ii) ) all the
Registrable Shares that each such Holder of Registrable Shares shall have
requested to be registered. Each Holder of Registrable Shares shall be entitled
to have its Registrable Shares included in an unlimited number of registrations
pursuant to this Section 3.
Section 4. Obligations of the Company.Section4ObligationsoftheCompany"
Whenever required under Section 2 or Section 3 to effect the registration of any
Registrable Shares, the Company shall, as expeditiously as practicable:
4.1. Registration Statement.
Prepare and file with the Commission a registration statement with respect to
such Registrable Shares and use the Company's best efforts to cause such
registration statement to become effective; provided, however, that before
filing a registration statement or prospectus or any amendments or supplements
thereto, including documents incorporated by reference after the initial filing
of the registration statement and prior to effectiveness thereof, the Company
shall furnish to one firm of counsel for the Selling Holders of Registrable
Shares (selected by Selling Holders of Registrable Shares owning a majority of
the Registrable Shares included in such registration statement or the Initiating
Substantial Holder, as the case may be) copies of all such documents in the form
substantially as proposed to be filed with the Commission at least four business
days prior to filing for review and comment by such counsel, which opportunity
to comment shall include an absolute right to control or contest disclosure if
the applicable Selling Holder of Registrable Shares reasonably believes that it
may be subject to controlling person liability under applicable securities laws
with respect thereto.
4.2. Amendments to Registration Statement. Prepare and file
with the Commission such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement
as may be necessary to comply with the provisions of the Securities Act and
rules thereunder with respect to the disposition of all securities covered by
such registration statement. If the registration is for an underwritten
offering, the Company shall amend the registration statement or supplement the
prospectus whenever required by the terms of the underwriting agreement entered
into pursuant to Section 4.5. Subject to Rule 415 under the Securities Act, if
the registration statement is a Shelf Registration, the Company shall amend the
registration statement or supplement the prospectus so that it will remain
current and in compliance with the requirements of the Securities Act for three
years after its effective date, and if during such period any event or
development occurs as a result of which the registration statement or prospectus
contains a misstatement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, the Company shall promptly notify each Selling Holder of Registrable
Shares, amend the registration statement or supplement the prospectus so that
each will thereafter comply with the Securities Act and furnish to each Selling
Holder of Registrable Shares such amended or supplemented prospectus, which each
such Holder shall thereafter use in the Transfer of Registrable Shares covered
by such registration statement. Pending such amendment or supplement each such
Holder shall cease making offers or Transfers of Registrable Shares pursuant to
the prior prospectus.
4.3. Copies to Selling Holders. Furnish to each Selling
Holder of Registrable Shares, without charge, such numbers of copies of the
registration statement, any pre-effective or post-effective amendment thereto,
the prospectus, including each preliminary prospectus and any amendments or
supplements thereto, in each case in conformity with the requirements of the
Securities Act and the rules thereunder, and such other related documents as any
such Selling Holder may reasonably request in order to facilitate the
disposition of Registrable Shares owned by such Selling Holder.
4.4. Blue Sky Qualifications. Use the Company's best efforts
(i) to register and qualify the securities covered by such registration
statement under such other securities or Blue Sky laws of such states or
jurisdictions as shall be reasonably requested by the Selling Holders of
Registrable Shares, and (ii) to obtain the withdrawal of any order suspending
the effectiveness of a registration statement, or the lifting of any suspension
of the qualification (or exemption from qualification) of the offer and transfer
of any of the Registrable Shares in any jurisdiction, at the earliest possible
moment; provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
4.5.Underwriting or Agency Agreement. In the event of any underwritten
or agented offering, enter into and perform the Company's obligations under an
underwriting or agency agreement (including indemnification and contribution
obligations of underwriters or agents), in usual and customary form, with the
managing underwriter or underwriters of or agents for such offering. Each
Selling Holder of Registrable Shares participating in such underwritten or
agented offering shall also enter into and perform its obligations under each
such agreement. The Company shall also cooperate with Demanding Holders or
Initiating Substantial Holder, as the case may be, and the managing underwriter
or agent for such offering in the marketing of the Registrable Shares, including
making available the Company's officers, accountants, counsel, premises, books
and records for such purpose, but the Company shall not be required to incur any
out-of-pocket expense pursuant to this sentence.
4.6. Stop Order. Promptly notify each Selling Holder of
Registrable Shares included in such registration statement of any stop
order issued or threatened to be issued by the Commission in connection
therewith (and take all reasonable actions required to prevent the entry of such
stop order or to remove it if entered.
4.7. Periodic Reports. Make generally available to the
Company's security holders copies of all periodic reports, proxy
statements, and other information referred to in Section 11.1 and an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act no
later than 90 days following the end of the 12-month period beginning with the
first month of the Company's first fiscal quarter commencing after the effective
date of each registration statement filed pursuant to this Agreement.
4.8. Information Available for Due Diligence. Make available
for inspection by any Selling Holder of Registrable Shares whose
Registrable Shares are included in such registration statement, any underwriter
participating in such offering and the representatives (but not more than one
firm of counsel to such Selling Holders) (collectively, the "Inspectors"), all
financial and other information as shall be reasonably necessary to enable them
to exercise their due diligence responsibility under the Securities Act;
provided, however, that information that the Company determines, in good faith,
to be confidential and which the Company notifies the Inspectors is confidential
shall not be disclosed to any Inspector unless such Inspector signs a
confidentiality agreement reasonably satisfactory to the Company or the related
Selling Holder of Registrable Shares agrees to be responsible for such
Inspector's breach of confidentiality on terms reasonably satisfactory to the
Company.
4.9. Comfort Letter; Legal Opinion. Use the Company's best
efforts to obtain a so-called "comfort letter" from its independent public
accountants, and legal opinions of counsel to the Company addressed to the
Selling Holders of Registrable Shares, in customary form and covering such
matters of the type customarily covered by such letters, and in a form that
shall be reasonably satisfactory to Selling Holders of Registrable Shares owning
a majority of the Registrable Shares included in the registration statement or
the Initiating Substantial Holder, as the case be. The Company shall furnish to
each Selling Holder of Registrable Shares a signed counterpart of any such
comfort letter or legal opinion.
4.10. Transfer Agent and Registrar. Provide and cause to be
maintained a transfer agent and registrar for all Registrable Shares
covered by such registration statement from and after a date not later than the
effective date of such registration statement.
4.11. Securities Exchange Listing or Quotation System.
Use all reasonable efforts to cause the Registrable Shares covered by such
registration statement (i) if the Common Stock is then listed on a securities
exchange or included for quotation in a recognized trading market, to continue
to be so listed or included for a reasonable period of time after the offering,
and (ii) to be registered with or approved by such other United States or state
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable the Selling Holders of
Registrable Shares to consummate the disposition of such Registrable Shares.
4.12. CUSIP Number. Use the Company's reasonable efforts
to provide a CUSIP number for the Registrable Shares prior to the effective
date of the first registration statement including Registrable Shares.
4.13. Other Actions. Take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of Registrable Shares included in each such registration.
Section 5. Information from Selling of Registrable Shares.
It shall be a condition precedent to the obligations of the Company to take
any action pursuant to this Agreement with respect to the Registrable Shares of
any Selling Holder of Registrable Shares that such Selling Holder shall furnish
to the Company such information regarding such Selling Holder, the number of the
Registrable Shares owned by it, and the intended method of disposition of such
securities as shall be required to effect the registration of such Selling
Holder's Registrable Shares.
Section 6. Expenses of Registration. Expenses in connection with
registrations pursuant to this Agreement shall be allocated and paid as follows:
6.1. Demand and Shelf Registrations. With respect to each
Demand Registration and Shelf Registration, the Company shall bear and pay
all expenses incurred in connection with any registration, filing, or
qualification of Registrable Shares with respect to such Demand Registrations
for each Selling Holder of Registrable Shares (which right may be assigned to
any Person to whom Registrable Shares are Transferred as permitted by Section
9), including all registration, filing and National Association of Securities
Dealers, Inc. fees, all fees and expenses of complying with securities or Blue
Sky laws, all word processing, duplicating and printing expenses, messenger and
delivery expenses, the reasonable fees and disbursements of counsel for the
Company, and of the Company's independent public accountants, including the
expenses of "cold comfort" letters required by or incident to such performance
and compliance, and the reasonable fees and disbursements of one firm of counsel
for the Selling Holders of Registrable Shares (selected by Demanding Holders
owning a majority of the Registrable Shares owned by Demanding Holders to be
included in a Demand Registration or by the Initiating Substantial Holder, as
the case may be) (the "Registration Expenses"), but excluding underwriting
discounts and commissions relating to Registrable Shares (which shall be paid on
a pro rata basis by the Selling Holders of Registrable Shares).
6.2. Company Registration. The Company shall bear and pay
all Registration Expenses incurred in connection with any registrations
pursuant to Section 3 for each Selling Holder of Registrable Shares (which right
may be Transferred to any Person to whom Registrable Shares are Transferred as
permitted by Section 9), but excluding underwriting discounts and commissions
relating to Registrable Shares (which shall be paid on a pro rata basis by the
Selling Holders of Registrable Shares).
6.3. Company Not Relieved of Obligations. Any failure of
the Company to pay any Registration Expenses as required by this Section 6
shall not relieve the Company of its obligations under this Agreement.
Section 7. Underwriting Requirements.
If the total amount of securities, including Registrable Shares, to be included
in a registration pursuant to this Agreement exceeds the amount of securities
that the managing underwriter or underwriters reasonably believe compatible with
the success of the offering:
(i) If such registration is pursuant to Section
2.1, the Company shall be required to include in the registration only that
number of Registrable Shares which the managing underwriter or underwriters
believe will not jeopardize the success of the offering, allocated as follows:
(x) first, up to the full number of Registrable Shares owned by the Demanding
Holders that in the opinion of the managing underwriter or underwriters can be
so Transferred (allocated among the Demanding Holders pro rata), and (y) second,
the number of Registrable Shares owned by Selling Holders of Registrable Shares
(other than Demanding Holders) that in the opinion of the managing underwriter
or underwriters can be Transferred (allocated among such Selling Holders pro
rata).
(ii) If such registration is pursuant to Section 3,
the Company shall be entitled to register (1) any number of shares of
Common Stock for Transfer by it in such registration, and (2) only that number
of Registrable Shares, if any, that the Company determines to include. Each
Selling Holder of Registrable Shares shall be required to reduce by the same
percentage the number of Registrable Shares to be registered for Transfer by it
to give effect to the foregoing.
Section 8. Indemnification; Contribution. If any Registrable Shares
are included in a registration statement under this Agreement:
8.1. Indemnification by the Company. The Company shall
indemnify and hold harmless each Selling Holder of Registrable Shares, each
Person, if any, who controls such Selling Holder within the meaning of the
Securities Act, and each officer, director, partner, and employee of such
Selling Holder and such controlling Person, against any and all losses, claims,
damages, liabilities and expenses (joint or several), including attorneys' fees
and disbursements and expenses of investigation, incurred by such party pursuant
to any actual or threatened action, suit, proceeding or investigation, or to
which any of the foregoing Persons may become subject under the Securities Act,
the Exchange Act or other federal or state laws, insofar as such losses, claims,
damages, liabilities and expenses arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"):
(i) Any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein, or
any amendments or supplements thereto;
(ii) 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; or
(iii) Any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any applicable state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any applicable state securities law;
provided, however, that the indemnification required by this Section 8.1 shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or expense if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or expense to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written information
furnished to the Company by the indemnified party expressly for use in
connection with such registration.
8.2. Indemnification by the Selling Holders of Registrable
Shares. To the extent permitted by applicable law, each Selling Holder of
Registrable Shares shall indemnify and hold harmless the Company, each of its
directors, each of its officers who shall have signed the registration
statement, each Person, if any, who controls the Company within the meaning of
the Securities Act, any other Selling Holder of Registrable Shares, any
controlling Person of any such other Selling Holder and each officer, director,
partner, and employee of such other Selling Holder and such controlling Person,
against any and all losses, claims, damages, liabilities and expenses (joint and
several), including attorneys' fees and disbursements and expenses of
investigation, incurred by such party pursuant to any actual or threatened
action, suit, proceeding or investigation, or to which any of the foregoing
Persons may otherwise become subject under the Securities Act, the Exchange Act
or other federal or state laws, insofar as such losses, claims, damages,
liabilities and expenses arise out of or are based upon any Violation, in each
case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Selling Holder of Registrable Shares expressly for use in connection with such
registration; provided, however, that (x) the indemnification required by this
Section 8.2 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or expense if settlement is effected without the
consent of the relevant Selling Holder of Registrable Shares, which consent
shall not be unreasonably withheld, and (y) in no event shall the amount of any
indemnity under this Section 8.2 exceed the gross proceeds from the applicable
offering received by such Selling Holder.
8.3. Notification; Legal Representation. Promptly after
receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, suit, proceeding, investigation or threat thereof
made in writing for which such indemnified party may make a claim under this
Section 8, such indemnified party shall deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the fees and disbursements and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time following the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 8 but shall not relieve the indemnifying
party of any liability that it may have to any indemnified party otherwise than
pursuant to this Section 8.
8.4. Contribution in Lieu of Indemnification. If the
indemnification required by this Section 8 from the indemnifying party is
unavailable to an indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to in this Section 8:
(i) The indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified parties in connection
with the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any Violation has been committed by,
or relates to information supplied by, such indemnifying party or indemnified
parties, and the parties, relative intent, knowledge, access to information and
opportunity to correct or prevent such Violation. The amount paid or payable by
a party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in Section 8.1 and Section 8.2, any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
(ii) The parties hereto agree that it would
not be just and equitable if contribution pursuant to this Section 8.4 were
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to in Section
8.4(i). No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
8.5. Full Indemnification Regardless of Relative Fault.
If indemnification is available under this Section 8, the indemnifying
parties shall indemnify each indemnified party to the full extent provided in
this Section 8 without regard to the relative fault of such indemnifying party
or indemnified party or any other equitable consideration referred to in Section
8.4.
8.6. Continuing Obligations. The obligations of the Company
and the Selling Holders of Registrable Shares under this Section 8 shall
survive the completion of any offering of Registrable Shares pursuant to a
registration statement under this Agreement, and otherwise.
Section 9. Transfer of Registration Rights. Rights under this
Agreement with respect to Registrable Shares may only be Transferred to a
Person in connection with the Transfer to such Person by a Holder of Registrable
Shares of such number of Registrable Shares which is not less than 15% of the
number of Registrable Shares outstanding on the date of this Agreement, provided
that (i) any such Transferee that is not a party to this Agreement shall have
executed and delivered to the Secretary of the Company a properly completed
agreement substantially in the form of Exhibit A, and (ii) the Transferor shall
have delivered to the Secretary of the Company, no later than 15 days following
the date of the Transfer, written notification of such Transfer setting forth
the name of the Transferor, name and address of the Transferee, and the number
of Registrable Shares which shall have been so Transferred.
Section 10. Restrictions on Public Sale by Holders of Registrable
Shares. Each Holder of Registrable Shares entitled pursuant to this Agreement
to have Registrable Shares included in a registration statement prepared
pursuant to this Agreement, if so requested by the managing underwriter or
underwriters in an underwritten offering or agent for an agented offering of any
Registrable Shares, shall not effect any public sale or distribution of shares
of Common Stock or any securities convertible into or exchangeable or
exercisable for shares of Common Stock, including a sale pursuant to Rule 144
under the Securities Act (except as part of such underwritten or agented
registration), during the ten-day period prior to, and during the 90-day period
beginning on, the date such registration statement is declared effective under
the Securities Act by the Commission, provided that such Selling Holder of
Registrable Shares is timely notified of such effective date in writing by the
Company or such managing underwriter or underwriters or agent. In order to
enforce the foregoing covenant, the Company shall be entitled to impose
stop-transfer instructions with respect to the Registrable Shares of each
Selling Holder of Registrable Shares until the end of such period.
Section 11. Covenants of the Company. The Company hereby agrees
and covenants as follows:
11.1. Current Public Information.
The Company shall file on a timely basis all reports required to be
filed by it under the Exchange Act. If the Company is not required to file
reports pursuant to the Exchange Act, upon the request of any Holder of
Registrable Shares, the Company shall make publicly available the information
specified in subparagraph (c)(2) of Rule 144 of the Securities Act, and take
such further action as may be reasonably required from time to time and as may
be within the reasonable control of the Company, to enable the Holders of
Registrable Shares to Transfer Registrable Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
under the Securities Act or any similar rule or regulation hereafter adopted by
the Commission.
11.2. Restrictions on other Registrations and Sales by the
Company.
(i) The Company shall not, and shall cause its
majority owned subsidiaries not to, effect any public sale or distribution
of any shares of Common Stock or any securities convertible into or exchangeable
or exercisable for shares of Common Stock, during the ten-day period prior to,
and during the 90-day period beginning on, the commencement of a public
distribution of the Registrable Shares pursuant to any registration statement
that was prepared pursuant to Section 2 at the request of Holders of Registrable
Shares owning an aggregate of 51% or more of the Registrable Shares then
outstanding (other than Transfers by the Company pursuant to such registration
if the registration is pursuant to Section 3). The Company shall not effect any
registration of its securities (other than on Form S-4, Form S-8, or any
successor forms to such forms), or effect any public or private sale or
distribution of any of its securities, including a sale pursuant to Regulation D
under the Securities Act, whether on its own behalf or at the request of any
holder or holders of such securities from the date of a request for a Demand
Registration pursuant to Section 2.1 by Holders of Registrable Shares owning an
aggregate of 51% or more of the Registrable Shares then outstanding until the
earlier of (x) 90 days following the date as of which all securities covered by
such Demand Registration statement shall have been Transferred, and (y) 180 days
following the effective date of such Demand Registration statement, unless the
Company shall have previously notified in writing all Selling Holders of
Registrable Shares of the Company's desire to do so, and Selling Holders of
Registrable Shares owning a majority of the Registrable Shares then outstanding
or the managing underwriter, if any, shall have consented thereto in writing.
(ii) Any agreement entered into after the date
of this Agreement pursuant to which the Company or any of its majority
owned subsidiaries issues or agrees to issue any privately placed securities
similar to any issue of the Registrable Shares (other than (x) shares of Common
Stock pursuant to a stock incentive, stock option, stock bonus, stock purchase
or other employee benefit plan of the Company approved by its Board of
Directors, and (y) securities issued to Persons in exchange for ownership
interests in any Person in connection with a business combination in which the
Company or any of its majority owned subsidiaries is a party) shall contain a
provision whereby holders of such securities agree not to effect any public sale
or distribution of any such securities during the periods described in the first
sentence of Section 11.2(i), in each case including a sale pursuant to Rule 144
under the Securities Act (unless such Person is prevented by applicable statute
or regulation from entering into such an agreement).
11.3. Mergers, Consolidations, Reorganizations and Transfers
of Assets.
The Company shall not, directly or indirectly, (x) enter into any merger,
consolidation or reorganization in which the Company shall not be the surviving
corporation or (y) Transfer or agree to Transfer all or substantially all the
Company' s assets unless prior to such merger, consolidation, reorganization or
asset Transfer, the surviving corporation or the Transferee, respectively, shall
have agreed in writing to assume the obligations of the Company under this
Agreement, and for that purpose references hereunder to "Registrable Shares"
shall be deemed to include the securities which the Holders of Registrable
Shares would be entitled to receive in exchange for Registrable Shares pursuant
to any such merger, consolidation or reorganization.
11.4. Limitations on Subsequent Registration Rights. The
Company shall not, without the prior written consent of Holders of
Registrable Shares that own an aggregate of 51% or more of the Registrable
Shares then outstanding, enter into any agreement (other than this Agreement)
with any holder or prospective holder of any securities of the Company which
would allow such holder or prospective holder to include securities of the
Company in any Demand Registration or Shelf Registration, unless under the terms
of such agreement, such holder or prospective holder may include such securities
in any such registration only to the extent that the inclusion of his, her or
its securities will not diminish the amount of Registrable Shares which may be
included.
Section 12. Amendment, Modification and Waivers; Further Assurances.
(i) This Agreement may be amended with the
consent of the Company and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company shall have obtained the written consent of Holders of
Registrable Shares owning Registrable Shares possessing a majority of the
combined voting power of the Registrable Shares then outstanding (voting
together as a single class) to such amendment, action or omission to act.
(ii) No waiver of any terms or conditions of
this Agreement shall operate as a waiver of any other breach of such terms
and conditions or any other term or condition, nor shall any failure to
enforce any provision hereof operate as a waiver of such provision or of any
other provision hereof. No written waiver hereunder, unless it by its own terms
explicitly provides to the contrary, shall be construed to effect a continuing
waiver of the provisions being waived and no such waiver in any instance shall
constitute a waiver in any other instance or for any other purpose or impair the
right of the party against whom such waiver is claimed in all other instances or
for all other purposes to require full compliance with such provision.
(iii) Each of the parties hereto shall execute
all such further instruments and documents and take all such further action
as any other party hereto may reasonably require in order to effectuate the
terms and purposes of this Agreement.
Section 13. Assignment. This Agreement and all of the provisions
hereof shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, assigns, executors, administrators or
successors; provided, however, that except as specifically provided herein with
respect to certain matters, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or delegated by the Company
without the prior written consent of Holders of Registrable Shares owning
Registrable Shares possessing a majority of the combined voting power of the
Registrable Shares outstanding (voting together as a single class) on the date
as of which such delegation or assignment is to become effective. A Holder of
Registrable Shares may Transfer its rights hereunder to a successor in interest
to the Registrable Shares owned by such assignor only as permitted by Section 9.
This Agreement is not intended to confer any rights or remedies upon any Person
other than the parties hereto and their permitted successors and assigns.
Section 14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada, without regard
to the conflict of laws principles thereof.
Section 15. Notices. All notices and requests given
pursuant to this Agreement shall be in writing and shall be made by hand
delivery, first class mail (registered or certified, return receipt requested),
telecopier, or overnight courier guaranteeing next business day delivery to the
relevant address specified in Schedule 1 to this Agreement or the relevant
agreement in the form of Exhibit A whereby such party became bound by the
provisions of this Agreement. Except as otherwise provided in this Agreement,
the date of each such notice and request shall be deemed, and the date on which
each such notice and request shall be deemed given shall be: at the time
delivered, if personally delivered or mailed; when transmission is confirmed, if
telecopied; and the next business day after timely delivery to the courier, if
sent by overnight courier guaranteeing next business day delivery.
Section 16. Entire Agreement; Integration. This Agreement supersedes
all prior agreements between or among any of the parties hereto with respect to
the subject matter contained herein, and this Agreement embodies the entire
understanding among the parties relating to such subject matter.
Section 17. Injunctive Relief. Each of the parties hereto acknowledges
that in the event of a breach by any of them of any material provision of
this Agreement, the aggrieved party may be without an adequate remedy at law.
Each of the parties therefore agrees that in the event of such a breach hereof
the aggrieved party may elect to institute and prosecute proceedings in any
court of competent jurisdiction to enforce specific performance or to enjoin the
continuing breach hereof. By seeking or obtaining any such relief, the aggrieved
party shall not be precluded from seeking or obtaining any other relief to which
it may be entitled.
Section 18. Term of Agreement. This Agreement may be terminated at
any time by a written instrument signed by the parties hereto. Unless
sooner terminated in accordance with the preceding sentence, this Agreement
shall terminate in its entirety on such date as there shall be no Registrable
Shares outstanding, provided that any shares of Common Stock previously subject
to this Agreement shall not be Registrable Shares following the sale of any such
shares in an offering registered pursuant to this Agreement.
Section 19. Section Headings. Section headings are for convenience
of reference only and shall not affect the meaning of any provision of this
Agreement.
Section 20. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, and all of which shall
together constitute one and the same instrument. All signatures need not
be on the same counterpart.
Section 21. Severability. If any provision of this Agreement shall
be invalid or unenforceable, such invalidity or unenforceability shall
not affect the validity and enforceability of the remaining provisions of
this Agreement, unless the result thereof would be unreasonable, in which
case the parties hereto shall negotiate in good faith as to appropriate
amendments hereto.
IN WITNESS WHEREOF, this Agreement has been duly entered into by the
parties hereto as of the date first written above.
ELSINORE CORPORATION
By:
Name:
Title:
HOLDERS OF REGISTRABLE SHARES:
MORGENS WATERFALL INCOME PARTNERS,
a New York limited partnership
By: MW Capital, L.L.C., a Delaware limited liability company
Title: General Partner
By:
Name: Bruce Waterfall
Title: Managing Member
RESTART PARTNERS, L.P., a Delaware limited partnership
By: Prime Group, L.P., a Delaware limited partnership
Title: General Partner
By: Prime, Inc., a Delaware corporation
Title: General Partner
By:
Name: Bruce Waterfall
Title: President
RESTART PARTNERS II, L.P., a Delaware limited partnership
By: Prime Group II, L.P., a Delaware limited partnership
Title: General Partner
By: Prime, Inc., a Delaware corporation
Title: General Partner
By:
Name: Bruce Waterfall
Title: President
RESTART PARTNERS III, L.P., a Delaware limited partnership
By: Prime Group III, L.P., a Delaware limited partnership
Title: General Partner
By: Prime, Inc., a Delaware corporation
Title: General Partner
By:
Name: Bruce Waterfall
Title: President
RESTART PARTNERS IV, L.P., a Delaware limited partnership
By: Prime Group IV, L.P., a Delaware limited partnership
Title: General Partner
By: Prime, Inc., a Delaware corporation
Title: General Partner
By:
Name: Bruce Waterfall
Title: President
RESTART PARTNERS V, L.P., a Delaware limited partnership
By: Prime Group V, L.P., a Delaware limited partnership
Title: General Partner
By: Prime, Inc., a Delaware corporation
Title: General Partner
By:
Name: Bruce Waterfall
Title: President
THE COMMON FUND FOR NON-PROFIT ORGANIZATIONS, a New York non-profit
corporation
By: Morgens, Waterfall, Vintiadis & Company, Inc., a New York
corporation
By:
Name: Bruce Waterfall
Title: President
MWV EMPLOYMENT RETIREMENT PLAN GROUP TRUST
By:
Name: David Ericson
Title: Trustee
By:
Name: Dan Levinson
Title: Trustee
By:
Name: John Raphael
Title: Trustee
By:
Name: Joann McNiff
Title: Trustee
By:
Name: Stephanie Catlett
Title: Trustee
PHOENIX PARTNERS, a New York limited partnership
By: MW Management, L.L.C., a Delaware limited liability company
Title: General Partner
By:
Name: Bruce Waterfall
Title: Managing Member
BETJE PARTNERS, a New York limited partnership
By:
Name: Zanvyl Krieger
Title: General Partner
BEA ASSOCIATES
By:
Name:
Title:
<PAGE>
SCHEDULE 1
to Common Stock Registration
Rights Agreement
NAMES AND ADDRESSES FOR DELIVERY OF
NOTICES UNDER THE AGREEMENT
COMPANY
Elsinore Corporation
202 Fremont Street
Las Vegas, NV 89101
Attention: President
Telecopy number: (702) 387-5103
HOLDERS OF REGISTRABLE SECURITIES
Morgens Waterfall Income Partners
10 East 50th Street
New York, New York 10022
Attention: Bruce Waterfall
Telecopy number: (702) 838-5540
Restart Partners, L.P.
10 East 50th Street
New York, New York 10022
Attention: Bruce Waterfall
Telecopy number: (702) 838-5540
Restart Partners II, L.P.
10 East 50th Street
New York, New York 10022
Attention: Bruce Waterfall
Telecopy number: (702) 838-5540
Restart Partners III, L.P.
10 East 50th Street
New York, New York 10022
Attention: Bruce Waterfall
Telecopy number: (702) 838-5540
Restart Partners IV, L.P.
10 East 50th Street
New York, New York 10022
Attention: Bruce Waterfall
Telecopy number: (702) 838-5540
Restart Partners V, L.P.
10 East 50th Street
New York, New York 10022
Attention: Bruce Waterfall
Telecopy number: (702) 838-5540
The Common Fund for Non-Profit Organizations
c/o Morgens, Waterfall, Vintiadis & Company, Inc.
10 East 50th Street
New York, New York 10022
Attention: Bruce Waterfall
Telecopy number: (702) 838-5540
MWV Employee Retirement Plan Group Trust
10 East 50th Street
New York, New York 10022
Attention: Bruce Waterfall
Telecopy number: (702) 838-5540
Betje Partners
10 East 50th Street
New York, New York 10022
Attention: Bruce Waterfall
Telecopy number: (702) 838-5540
Phoenix Partners
10 East 50th Street
New York, New York 10022
Attention: Bruce Waterfall
Telecopy number: (702) 838-5540
BEA Associates
1 Citicorp
153 East 53rd Street, 57th Floor
New York, New York 10022
Attention: Misia Dudley
Telecopy number: (212) 759-3772 or
(212) 355-1545
<PAGE>
EXHIBIT A
to Common Stock Registration
Rights Agreement
AGREEMENT TO BE BOUND
BY THE COMMON STOCK REGISTRATION RIGHTS AGREEMENT
The undersigned, being the transferee of shares of the common stock,
$0.001 par value per share [or describe other capital stock received in exchange
for such common stock] (the "Registrable Shares"), of Elsinore Corporation, a
Nevada corporation (the "Company"), as a condition to the receipt of such
Registrable Shares, acknowledges that matters pertaining to the registration of
such Registrable Shares are governed by the Common Stock Registration Rights
Agreement dated as of , 1997 initially by and among the Company and the Holders
of Registrable Shares referred to therein (the "Agreement"), and the undersigned
hereby (1) acknowledges receipt of a copy of the Agreement, and (2) agrees to be
bound as a Holder of Registrable Shares by the terms of the Agreement, as the
same has been or may be amended from time to time.
Agreed to this day of , .
* Include address for notices
INDEPENDENT AUDITORS' REVIEW REPORT
The Board of Directors and Shareholders
Elsinore Corporation:
We have reviewed the consolidated balance sheet of Elsinore Corporation and
subsidiaries (Reorganized Company) as of March 31, 1997, and the related
consolidated statements of operations and cash flows for the period from March
1, 1997 through March 31, 1997 and the related consolidated statements of
operations and cash flows of Elsinore Corporation and subsidiaries,
Debtor-In-Possession (Predecessor Company) for the period January 1, 1997
through February 28, 1997. These consolidated financial statements are the
responsibility of the Reorganized and Predecessor Companys' management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Elsinore Corporation and
subsidiaries, Debtor-In-Possession as of December 31, 1996 and the related
consolidated statements of operations, shareholders' equity (deficit) and cash
flows for the year then ended (not presented herein); and in our report dated
February 19, 1997, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying consolidated balance sheet as of December 31, 1996, is fairly
stated, in all material respects, in relation to the consolidated balance sheet
from which it has been derived.
Our report dated February 19, 1997, on the consolidated financial statements of
Elsinore Corporation and subsidiaries, Debtor-In-Possession as of and for the
year ended December 31, 1996, contains an explanatory paragraph that states that
on October 31, 1995, the Company filed a voluntary petition seeking to
reorganize under Chapter 11 of the United States Bankruptcy code. The Company is
currently operating as a Debtor-In-Possession under the jurisdiction of the
Bankruptcy Court and this event and circumstances relating to this event raise
substantial doubt about the entity's ability to continue as a going concern. The
consolidated balance sheet as of December 31, 1996, does not include any
adjustments that might result from the outcome of that uncertainty.
As discussed in Note 2 to the consolidated financial statements, on February 28,
1997, Elsinore Corporation emerged from bankruptcy. The consolidated financial
statements of the Reorganized Company reflect the impact of adjustments to
reflect the fair value of assets and liabilities under fresh start reporting. As
a result, the financial statements of the Reorganized Company are presented on a
different basis of accounting than those of the Predecessor Company and,
therefore, are not comparable in all respects.
Las Vegas, Nevada
May 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Mar-31-1997
<CASH> 11,542,000
<SECURITIES> 0
<RECEIVABLES> 777,000
<ALLOWANCES> (327,000)
<INVENTORY> 361,000
<CURRENT-ASSETS> 13,868,000
<PP&E> 37,089,000
<DEPRECIATION> (698,000)
<TOTAL-ASSETS> 51,733,000
<CURRENT-LIABILITIES> 8,814,000
<BONDS> 33,900,000
0
0
<COMMON> 5,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,552,000
<SALES> 14,946,000
<TOTAL-REVENUES> 16,026,000
<CGS> 0
<TOTAL-COSTS> 14,585,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,165,000
<INCOME-PRETAX> 361,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 361,000
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
