SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 2)
ELSINORE CORPORATION
(Name of Issuer)
COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of Class of Securities)
290308303
(CUSIP Number)
JOHN C. WATERFALL
10 EAST 50TH STREET
NEW YORK, NEW YORK 10022
(212) 705-0500
(Name, address and telephone number of person
authorized to receive notices and communications)
September 15, 1997
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Check the following box if a fee is being paid with the statement [ ].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not
be deemed to be "filed" for purposes of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
Page 1 of 143 Pages
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* * * * *
ITEM 1. SECURITY AND ISSUER.
This Amendment No. 2 ("Amendment") amends the statement on Schedule 13D
("Statement") filed on March 10, 1997 with the Securities and Exchange
Commission (the "Commission"), as previously amended by Amendment No. 1 filed
with the Commission on April 10, 1997, by persons named in Item 2 of the
Statement and Amendment No. 1 relating to the common stock, par value $.001
per share ("Common Stock"), of Elsinore Corporation, a Nevada corporation (the
"Issuer"). The principal executive offices of the Issuer are located at 202
Fremont Street, Las Vegas, Nevada 89101.
Except as specifically provided herein, this Amendment No. 2 does not
modify any of the information previously reported in the Statement.
* * * * *
Items 6 and 7 are hereby amended and restated as follows:
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO THE SECURITIES OF THE ISSUER.
None of the persons identified in Item 2 of the Statement and Amendment
No. 1 is a party to any contract, arrangement, understanding or relationship
with respect to any securities of the Issuer, except (a) to the extent
described in Item 2 of the Statement and Amendment No. 1 and Item 5 of the
Statement; (b) to the extent described in the next two paragraphs of this Item
6 and as set forth in Exhibits 1 and 2 to this Amendment; and (c) the Common
Stock Registration Rights Agreement attached as Exhibit B to the Statement
("Registration Rights Agreement"), which was provided for under the Plan. The
Registration Rights Agreement, under certain circumstances and conditions
specified therein, entitles certain Reporting Persons to have their shares of
Common Stock registered with the Commission under the Securities Act of 1933,
as amended.
On April 1, 1997, Waterfall, on behalf of Morgens Waterfall and the
Reporting Persons named in Item 2 of the Statement and Amendment No. 1 who own
Common Stock, issued a letter and accompanying attachments (collectively, the
"Letter") stating, among other things, that subject to the terms and
conditions set forth in the Letter, such Reporting Persons are willing to
offer to Allen Paulson or to an entity he controls an option to purchase the
Reporting Persons' respective ownership interests in the Issuer and in Riviera
Holdings Corporation, a Nevada corporation.
On September 15, 1997, Morgens Waterfall and the Reporting Persons named
in Item 2 of the Statement and Amendment No. 1 who own Common Stock entered
into such option agreement (the "Option Agreement") as set forth in the Letter
and granted to R&E Gaming Corp., a Delaware Corporation ("Gaming"), an
irrevocable option to purchase the Reporting Persons' respective ownership
interests in the Issuer and in Riviera Holdings Corporation, a Nevada
corporation.
Concurrently with the execution and delivery of the Option Agreement,
Gaming entered into an Agreement and Plan of Merger with Elsinore Acquisition
Sub, Inc., a Nevada corporation and a wholly owned subsidiary of Gaming
("Acquisition Sub"), and the Issuer, pursuant to which Acquisition Sub shall
merge with and into the Issuer, upon the terms and conditions set forth
therein.
Page 2 of 143 Pages
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT 1 Agreement and Plan of Merger by and among R&E Gaming Corp.,
Elsinore Acquisition Sub, Inc., and Elsinore Corporation, dated as of
September 15, 1997, and schedules and exhibits attached thereto.
EXHIBIT 2 Option and Voting Agreement by and among R&E Gaming Corp., as
Purchaser, and Morgens, Waterfall, Vintiadis & Company, Inc., on behalf of
certain investment accounts, as Sellers dated as of September 15, 1997, and
schedules and exhibits attached thereto.
Page 3 of 143 Pages
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SIGNATURES
After reasonable inquiry and to the best knowledge and belief of each
of the Reporting Persons, each such person or entity certifies that the
information set forth in this statement is true, complete and correct and
agrees that this statement is filed on behalf of each of them.
The Reporting Persons listed herein
s/Bruce Waterfall
Dated: October 20, 1997 By: ___________________________________
John C. "Bruce" Waterfall, on his
own behalf and as attorney-in-fact
for each of the other Reporting
Persons
Page 4 of 143 Pages
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=============================================================================
AGREEMENT AND PLAN OF MERGER
by and among
R&E GAMING CORP.,
ELSINORE ACQUISITION SUB, INC.
and
ELSINORE CORPORATION
Dated as of September 15, 1997
==============================================================================
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER................................................
Section 1.1 The Elsinore Merger.................................
Section 1.2 Effective Time; Closing.............................
Section 1.3 Effects of the Elsinore Merger......................
Section 1.4 Articles of Incorporation and Bylaws................
Section 1.5 Directors...........................................
Section 1.6 Officers............................................
Section 1.7 Consideration for the Merger........................
Section 1.8 Exchange of Shares..................................
Section 1.9 Company Plans.......................................
Section 1.10 Stockholders' Meeting...............................
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........
Section 2.1 Organization and Qualification; Subsidiaries........
Section 2.2 Capitalization of the Company and its Subsidiaries..
Section 2.3 Power and Authority.................................
Section 2.4 Approval of Options.................................
Section 2.5 Compliance..........................................
Section 2.6 Non-Contravention; Required Filings and Consents....
Section 2.7 SEC Reports.........................................
Section 2.8 Absence of Certain Changes..........................
Section 2.9 Proxy Statement.....................................
Section 2.10 No Brokers..........................................
Section 2.11 Absence of Litigation...............................
Section 2.12 Taxes...............................................
Section 2.13 Employee Benefits...................................
Section 2.14 Intellectual Property...............................
Section 2.15 Material Contracts..................................
Section 2.16 Insurance...........................................
Section 2.17 Labor Matters.......................................
Section 2.18 Real Property.......................................
Section 2.19 Bankruptcy..........................................
Section 2.20 Environmental Matters...............................
Section 2.21 Representations Complete............................
ARTICLE III REPRESENTATIONS AND WARRANTIES OF GAMING AND EAS........
Section 3.1 Organization; Power and Authority...................
Section 3.2 Non-Contravention; Required Filings and Consents....
Section 3.3 Absence of Litigation...............................
Section 3.4 Proxy Statement.....................................
Section 3.5 No Prior Activities.................................
Section 3.6 No Brokers..........................................
Page 6 of 143 Pages
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Section 3.7 Capitalization of Gaming............................
Section 3.8 Representations Complete............................
ARTICLE IV COVENANTS................................................
Section 4.1 Conduct of Business of the Company..................
Section 4.2 Proxy Statement.....................................
Section 4.3 Access to Information...............................
Section 4.4 Reasonable Best Efforts.............................
Section 4.5 Public Announcements................................
Section 4.6 Indemnification; Insurance..........................
Section 4.7 Notification of Certain Matters.....................
Section 4.8 No Solicitation.....................................
Section 4.9 Compliance with Gaming Laws.........................
ARTICLE V CONDITIONS TO CONSUMMATION OF THE MERGER..................
Section 5.1 Conditions to each Party's Obligation to
Effect the Elsinore Merger..........................
Section 5.2 Conditions to Obligations of Gaming and
EAS to Effect the Elsinore Merger...................
Section 5.3 Conditions to Obligations of the Company
to Effect the Elsinore Merger.......................
ARTICLE VI TERMINATION; AMENDMENT; WAIVER...........................
Section 6.1 Termination.........................................
Section 6.2 Effect of Termination; Termination Fee..............
Section 6.3 Fees and Expenses...................................
ARTICLE VII MISCELLANEOUS...........................................
Section 7.1 Survival............................................
Section 7.2 Entire Agreement; Assignment........................
Section 7.3 Amendment...........................................
Section 7.4 Extension or Waiver.................................
Section 7.5 Notices.............................................
Section 7.6 Governing Law.......................................
Section 7.7 Parties in Interest.................................
Section 7.8 Subsequent Actions..................................
Section 7.9 Remedies............................................
Section 7.10 Severability........................................
Section 7.11 Descriptive Headings................................
Section 7.12 Certain Definitions.................................
Section 7.13 Counterparts........................................
Page 6 of 143 Pages
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of September 15, 1997
(the "Agreement"), by and among R&E Gaming Corp., a Delaware corporation
("Gaming"), Elsinore Acquisition Sub, Inc., a Nevada corporation and a wholly
owned subsidiary of Gaming ("EAS"), and Elsinore Corporation, a Nevada
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Gaming, EAS and the
Company have each approved the transactions contemplated by the terms and
conditions set forth in this Agreement;
WHEREAS, in furtherance thereof, upon the terms and subject to the
conditions of this Agreement, (i) EAS would be merged with and into the
Company (the "Elsinore Merger") and (ii) each share of common stock, par value
$.001 per share, of the Company (the "Common Stock"), issued and outstanding
immediately prior to the Effective Time (as defined herein) (the "Shares")
would, except as otherwise expressly provided herein, be converted into the
right to receive the Merger Consideration (as defined herein);
WHEREAS, Gaming and EAS are unwilling to enter into this Agreement
unless Gaming, contemporaneously with the execution and delivery of this
Agreement, enters into an Option and Voting Agreement (the "Elsinore Option
Agreement") with Morgens, Waterfall, Vintiadis & Company, Inc., on behalf of
certain investment accounts (the "Option Seller"), providing for, among other
things, (i) the grant by the Option Seller to Gaming of an option and, under
certain circumstances set forth in the Elsinore Option Agreement, the
obligation of Gaming to purchase all of the Shares owned by the Option Seller
and (ii) the agreement by the Option Seller to cause the Shares owned by it to
be present for quorum purposes at any meeting of the stockholders of the
Company (the "Company Stockholders") called to vote upon the Elsinore Merger,
and to vote for the transactions contemplated by this Agreement and against
any Alternative Transaction (as defined in Section 4.8(b) hereof) and any
other action which may be adverse to the transactions contemplated in this
Agreement; and the Board of Directors of the Company (the "Board") has
approved the execution and delivery of the Elsinore Option Agreement which is
being executed contemporaneously with the execution hereof;
WHEREAS, on or prior to the date hereof Gaming has entered into an
Agreement and Plan of Merger (the "Riviera Merger Agreement"), by and among
Gaming, Riviera Acquisition Sub, Inc., a Nevada corporation and a wholly owned
subsidiary of Gaming ("RAS"), and Riviera Holdings Corporation, a Nevada
corporation ("Riviera"), which provides for, among other things, the merger of
RAS with and into Riviera (the "Riviera Merger"); and
WHEREAS, the Board has determined that the Elsinore Merger and the
consideration to be received by the holders of the Shares are fair to, and in
the best interests of, the Company and the Company Stockholders.
Page 8 of 143 Pages
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NOW, THEREFORE, in consideration of the foregoing premises, the
mutual representations, warranties and covenants contained herein, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree
as follows:
ARTICLE I
THE MERGER
Section 1.1 The Elsinore Merger. At the Effective Time and upon
the terms and subject to the conditions of this Agreement, and in accordance
with the applicable provisions of Nevada law, EAS shall be merged with and
into the Company, whereupon the separate existence of EAS shall cease and the
Company shall continue as the surviving corporation of the Elsinore Merger
(the "Surviving Corporation"), and shall be a wholly owned subsidiary of
Gaming.
Section 1.2 Effective Time; Closing. Unless this Agreement
shall have been terminated pursuant to Section 6.1 hereof, as soon as
practicable after the satisfaction or (if permissible) waiver of the
conditions set forth in Article V of this Agreement, the Company will file
articles of merger with the Secretary of State of the State of Nevada in
accordance with the provisions of Section 92A.005 et seq. of the Nevada
Revised Statutes (the "Nevada Merger Law") and make all other filings or
recordings required by law in connection with the Elsinore Merger. The
Elsinore Merger shall become effective at such time (the "Effective Time") as
the articles of merger are filed with the Secretary of State of the State of
Nevada in accordance with the provisions of Chapter 92A of the Nevada Revised
Statutes, or such later date as set forth in such filing, but in no event
later than April 1, 1998, unless extended as provided in Section 6.1(c)
hereof. Prior to such filing, but no later than 30 days after the
satisfaction or (if permissible) waiver of the conditions set forth in Article
V of this Agreement, a closing (the "Closing") shall be held at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, 300 South Grand Avenue, Los Angeles,
California 90071, or such other place as the parties to this Agreement shall
agree, for the purpose of confirming the satisfaction or waiver of the
conditions set forth in this Agreement. The date on which the Closing occurs
shall be referred to herein as the "Closing Date."
Section 1.3 Effects of the Elsinore Merger. The Elsinore Merger
shall have the effects set forth in the Nevada Merger Law. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time,
except as otherwise provided herein, all of the property, rights, privileges,
powers and franchises of a public as well as of a private nature, and the
title to any real estate vested by deed or otherwise in the Company and EAS
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of the Company and EAS shall become the debts, liabilities and duties of the
Surviving Corporation.
Page 9 of 143 Pages
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Section 1.4 Articles of Incorporation and Bylaws. (a) The
Articles of Incorporation of EAS in effect immediately prior to the Effective
Time, attached hereto as Exhibit A, shall be the Articles of Incorporation of
the Surviving Corporation (the "Surviving Corporation Articles of
Incorporation"), until amended in accordance with Nevada law, except that
Article I thereof shall be amended to read in its entirety as follows: "The
name of the corporation shall be Elsinore Corporation."
(b) The Bylaws of EAS in effect at the Effective Time shall,
attached hereto as Exhibit B, shall be the Bylaws of the Surviving Corporation
(the "Surviving Corporation Bylaws"), until amended in accordance with Nevada
law and the Surviving Corporation Articles of Incorporation.
Section 1.5 Directors. The directors of the Company at the
Effective Time, and, subject to the requirements of Gaming Laws (as defined
herein), any additional individuals designated by Gaming at or prior to the
Effective Time, shall be the initial directors of the Surviving Corporation,
each to hold office in accordance with the Surviving Corporation Articles of
Incorporation and the Surviving Corporation Bylaws and until his or her
successor is duly elected and qualified.
Section 1.6 Officers. The officers of the Company at the
Effective Time, and, subject to the requirements of Gaming Laws, any
additional individuals designated by Gaming at or prior to the Effective Time,
shall be the initial officers of the Surviving Corporation from and after the
Effective Time, each to hold office in accordance with the Surviving
Corporation Articles of Incorporation and the Surviving Corporation Bylaws and
until his or her successor is duly appointed and qualified.
Section 1.7 Consideration for the Merger. At the Effective
Time, by virtue of the Elsinore Merger and without any action on the part of
Gaming, EAS, the Company or the holder of any of the following securities:
(a) Each Share (other than (i) Shares to be cancelled pursuant
to Section 1.7(c) hereof, (ii) the Dissenting Shares (as defined below) and
(iii) as specified in Section 1.9 hereof) shall be converted into and
represent the right to receive the Merger Consideration (as defined herein).
From and after the Effective Time, all Shares shall no longer be outstanding
and shall automatically be cancelled and retired and shall cease to exist, and
each holder of a certificate representing any of the Shares (a "Certificate")
shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration payable to the holder thereof, without
interest, upon surrender of such Certificate in the manner provided in Section
1.8 hereof. As used herein, "Merger Consideration" means the amount of $3.16
in cash per Share, plus an amount of additional consideration (the "Additional
Consideration") equal to the daily portion of the accrual on $3.16 at 9.43%
compounded annually, accruing from June 1, 1997 to the date immediately
preceding the Effective Time; provided, that the Merger Consideration paid to
Page 10 of 143 Pages
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the Option Seller shall be reduced by the amount of Additional Consideration
paid to the Option Seller pursuant to Section 1.2(b) of the Elsinore Option
Agreement. It being understood that, assuming consummation of the Elsinore
Merger, the proviso in the preceding sentence shall have the effect of causing
the consideration per Share to be received hereunder and under the Elsinore
Option Agreement by the Option Seller from Gaming on account of the Shares
owned by the Option Seller to be equal to the consideration per Share received
by the Company Stockholders (other than the Option Seller) hereunder on
account of the Shares owned by Company Stockholders (other than the Option
Seller). Each of Gaming and EAS represents and warrants that the Merger
Consideration to be received hereunder by the Option Seller for each Share
owned by the Option Seller and any other consideration paid by Gaming or EAS
to the Option Seller for such Shares (but excluding consideration paid under
the Elsinore Option Agreement) shall be equal to the Merger Consideration
received by the other holders of Shares.
(b) Notwithstanding anything in this Agreement to the contrary,
any issued and outstanding shares of Common Stock held by a person (a
"Dissenting Stockholder") who objects to the Merger and complies with all the
provisions of Nevada law concerning the right of holders of Common Stock to
dissent from the Merger and obtain payment of the fair value of such
Dissenting Stockholder's shares of Common Stock ("Dissenting Shares") shall
not be converted as described in Section 1.7(a) hereof but shall become the
right to receive such consideration as may be determined to be due to such
Dissenting Stockholder pursuant to the laws of the State of Nevada. If, after
the Effective Time, such Dissenting Stockholder withdraws his demand for
payment or fails to perfect or otherwise loses his dissenters' rights, in any
case pursuant to the Nevada Merger Law, his shares of Common Stock shall be
deemed to be converted as of the Effective Time into the right to receive the
Merger Consideration, without interest. The Company shall give Gaming and EAS
(i) prompt notice of any demands for payment pursuant to dissenters' rights
with respect to shares of Common Stock received by the Company and (ii) the
opportunity to participate in and direct all negotiations and proceedings with
respect to any such demands. The Company shall not, without the prior written
consent of Gaming and EAS, make any payment with respect to, or settle, offer
to settle or otherwise negotiate, any such demands.
(c) Each Share owned by Gaming, EAS or their stockholders or
affiliates (the "Paulson Shares"), or which is held in the treasury of the
Company or any of its subsidiaries, shall be cancelled and retired and shall
cease to exist, and no payment of any consideration shall be made with respect
thereto.
(d) Each share of capital stock of EAS issued and outstanding
immediately prior to the Effective Time shall be converted into and shall
become one validly issued, fully paid and nonassessable share of common stock,
par value $.001 per share, of the Surviving Corporation.
Section 1.8 Exchange of Shares. (a) At or prior to the
Effective Time, Gaming shall designate a bank or trust company reasonably
acceptable to the Company to serve as exchange agent (the "Exchange Agent")
for the Shares. As soon as reasonably practicable after the Effective Time,
Page 11 of 143 Pages
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Gaming shall deposit, or shall cause to be deposited, with the Exchange Agent
for the benefit of the holders of Certificates, cash or immediately available
funds in United States dollars in an amount that equals the aggregate Merger
Consideration. Such funds (the "Payment Fund") shall be invested by the
Exchange Agent as directed by Gaming in obligations of or obligations
guaranteed by the United States of America, in commercial paper obligations
rated A-1 or P-1 or better by Moody's Investor Services, Inc. or Standard &
Poor's Corporation, respectively, or in certificates of deposit, bank
repurchase agreements, or bankers acceptances of commercial banks with capital
exceeding $500 million; provided, however, that in the event that the Payment
Fund shall realize a loss on such investment, Gaming shall promptly thereafter
deposit in the Payment Fund cash in an amount sufficient to enable the Payment
Fund to satisfy all remaining obligations originally contemplated to be paid
out of the Payment Fund.
(b) Promptly after the Effective Time, the Surviving Corporation
shall instruct the Exchange Agent to mail to each record holder of outstanding
Certificates as of the Effective Time, a form of letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to
the Certificates shall pass, only upon proper delivery of the Certificates to
the Exchange Agent) and instructions for use in effecting the surrender of the
Certificates for payment therefor. Upon surrender to the Exchange Agent of a
Certificate, together with such letter of transmittal duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor
the amount of cash that such holder has the right to receive under this
Article I, and such Certificate shall forthwith be cancelled. If payment (or
any portion thereof) is to be made to a person other than the person in whose
name the Certificate surrendered is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment shall pay to the Exchange Agent any transfer or other taxes required
by reason of the payment to a person other than the registered holder of the
Certificate surrendered or such person shall establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 1.8, each
Certificate (other than Certificates representing (i) Shares to be cancelled
pursuant to Section 1.7(c) hereof, (ii) the Dissenting Shares and (iii) Shares
specified in Section 1.9 hereof) shall represent, for all purposes, the right
to receive the Merger Consideration multiplied by the number of Shares
previously evidenced by such Certificate, without any interest thereon.
(c) All cash paid upon the surrender of the Certificates in
accordance with the terms of this Article I shall be deemed to have been paid
in full satisfaction of all rights pertaining to the Shares theretofore
represented by such Certificates, and there shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of the
Shares which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged as provided
in this Article I, except as otherwise provided by Nevada law.
Page 12 of 143 Pages
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(d) At any time following the date six months after the
Effective Time, the Surviving Corporation shall be entitled to require the
Exchange Agent to deliver to it any funds (including any interest received
with respect thereto) that have been made available to the Exchange Agent and
that have not been disbursed to holders of Certificates and, thereafter, such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon surrender of
their Certificates. Notwithstanding the foregoing, neither the Surviving
Corporation nor the Exchange Agent shall be liable to any holder of a
Certificate for the Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
Section 1.9 Company Plans.
(a) At the Effective Time, each Share held in trust for the
benefit of participants in the Four Queens' Employees' Retirement/Savings Plan
and Trust, as in effect on the date hereof (the "Company Plan"), shall be
cancelled, and the Surviving Corporation shall pay into the trust with
respect to each such cancelled Share an amount in cash equal to the product of
(i) the number of such Shares held in trust, and (ii) the Merger Consideration
per Share.
(b) At the Effective Time, the warrants issued by the Company to
Riviera shall be cancelled and Riviera shall receive an amount equal to
$2,441,250.
Section 1.10 Stockholders' Meeting. The Company, acting through
the Board, shall, in accordance with applicable law, the Company Articles of
Incorporation and the Restated and Amended Bylaws of the Company (the "Company
Bylaws"), as soon as practicable following the date hereof:
(a) duly call, give notice of, convene and hold an annual or
special meeting of the Company Stockholders (the "Stockholders' Meeting") for
the purpose of approving and adopting this Agreement and the transactions
contemplated hereby;
(b) subject to the fiduciary duties of the Board under
applicable law, recommend that the Company Stockholders vote in favor of
approving and adopting this Agreement and the transactions contemplated
hereby; and
(c) subject to the fiduciary duties of the Board under
applicable law, use its reasonable best efforts to obtain the necessary
approvals by the Company Stockholders of this Agreement and the transactions
contemplated hereby.
Page 13 of 143 Pages
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Gaming as follows:
Section 2.1 Organization and Qualification; Subsidiaries. (a)
Each of the Company and its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation, and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority would not, individually or in the
aggregate, have a Company Material Adverse Effect (as defined herein). When
used in this Agreement, the term "Company Material Adverse Effect" means any
change or effect (i) that would be materially adverse to the business, results
of operations, conditions (financial or otherwise) or prospects of the Company
and its subsidiaries, taken as a whole, or (ii) that would impair the ability
of the Company to consummate the transactions contemplated hereby.
(b) Each of the Company and its subsidiaries is duly qualified
or licensed (excluding gaming and liquor licenses, which are covered by
Section 2.5 hereof) and in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, and
to perform all of its obligations under any contract under which the Company
or any of its subsidiaries (a) has or may acquire any rights, (b) has or may
become subject to any obligation or liability or (c) is or may, or any of the
assets used or owned by it are or may, become bound, except where the failure
to be so duly qualified or licensed and in good standing or to effect such
performance would not, individually or in the aggregate, have a Company
Material Adverse Effect.
(c) The Company has heretofore furnished or made available to
Gaming complete and correct copies of the Company Articles of Incorporation
and the Company Bylaws and the equivalent organizational documents of each of
its subsidiaries, each as amended to the date hereof. The Company Articles of
Incorporation, the Company Bylaws and equivalent organizational documents are
in full force and effect. The Company is not in violation of any of the
provisions of the Company Articles of Incorporation or the Company Bylaws, and
no subsidiary of the Company is in violation of any of the provisions of such
subsidiary's equivalent organizational documents. The organizational
documents of the subsidiaries of the Company do not contain any provision
limiting or otherwise restricting the ability of the Company to control such
subsidiaries.
(d) The Company has heretofore furnished or made available to
Gaming a complete and correct list of the subsidiaries of the Company, which
list sets forth the amount of capital stock of or other equity interests in
such subsidiaries owned by the Company, directly or indirectly.
Page 14 of 143 Pages
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Section 2.2 Capitalization of the Company and its Subsidiaries.
The authorized capital stock of the Company consists of (i) 100,000,000 shares
of Common Stock of which, as of July 31, 1997, 4,929,313 Shares were issued
and outstanding. All outstanding shares of capital stock of the Company have
been validly issued, and are fully paid, nonassessable and free of preemptive
rights. Except as set forth on Schedule 2.2 hereof, as of July 31, 1997,
there are outstanding (i) no shares of capital stock or other voting
securities of the Company, (ii) no securities of the Company convertible into
or exchangeable for shares of capital stock or voting securities of the
Company, (iii) no options, subscriptions, warrants, convertible securities,
calls or other rights to acquire from the Company, and no obligation of the
Company to issue, deliver or sell any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of the Company, and (iv) no equity equivalents, performance shares,
interests in the ownership or earnings of the Company or other similar rights
issued by the Company (collectively, "Company Securities"). Except as set
forth on Schedule 2.2 hereto, there are no outstanding obligations of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any Company Securities. Except as set forth on Schedule 2.2 hereto, each of
the outstanding shares of capital stock of each of the Company's subsidiaries
is duly authorized, validly issued, fully paid and nonassessable and is
directly or indirectly owned by the Company, free and clear of all security
interests, liens, claims, pledges, charges, voting agreements or other
encumbrances of any nature whatsoever (collectively, "Liens"). Except as set
forth on Schedule 2.2 hereto, there are no existing options, calls or
commitments of any character relating to the issued or unissued capital stock
or other equity securities of any subsidiary of the Company.
Section 2.3 Power and Authority. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and,
subject to approval of this Agreement by the Company Stockholders, to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by the Company and the consummation by the Company
of the transactions contemplated by this Agreement have been duly authorized
by all necessary corporate action on the part of the Company, subject, in the
case of this Agreement, to approval of this Agreement by the Company
Stockholders. This Agreement has been duly executed and delivered by the
Company and, assuming this Agreement constitutes a valid and binding
obligation of Gaming and EAS, constitutes the valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
moratorium, or other similar laws affecting or relating to the enforcement of
creditors' rights generally (collectively, the "Bankruptcy Exceptions") and
subject to general principles of equity.
Page 15 of 143 Pages
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Section 2.4 Approval of Options. The Company has taken all
action necessary to authorize and approve the grant of options to acquire
Shares pursuant to the Elsinore Option Agreement and the sale of such Shares
upon the exercise of such options.
Section 2.5 Compliance. (a) Except as set forth in Schedule
2.5(a), since February 28, 1997, the Company, its subsidiaries and affiliates
and their respective officers or directors or, to the best knowledge of the
Company, their respective agents or employees (if any), have been and are in
compliance with all applicable laws and regulations of foreign, Federal, state
and local governmental authorities applicable to the businesses conducted by
any of the Company and its subsidiaries (including without limitation any
federal, state, local or foreign statute, ordinance, rule, regulation, permit,
consent, approval, license, judgment, order, decree, injunction or other
authorization governing or relating to the current or contemplated casino,
liquor related activities and gaming activities and operations, including,
without limitation, the Nevada Gaming Control Act, as amended (the "Nevada
Act"), and the Indian Gaming Regulatory Act (the "Indian Gaming Act") and the
rules and regulations promulgated thereunder, or applicable to the properties
owned or leased and used by the Company or its subsidiaries (collectively,
"Gaming Laws")), and neither the Company, nor, to the best knowledge of the
Company, any of its subsidiaries or affiliates, is aware of any claim of
violation, or of any actual violation, of any such laws and regulations, by
the Company or any of its subsidiaries, except where such failure or violation
(whether actual or claimed) would not have a Company Material Adverse Effect.
None of the Company or its subsidiaries, any employee, officer, director or
stockholder or, to the best knowledge of the Company or affiliate, thereof,
has received any written claim, demand, notice, complaint, court order or
administrative order from any governmental authority since February 28, 1997,
asserting that a license of it or them, as applicable, under any Gaming Laws
should be revoked or suspended.
(b) Except as set forth in Schedule 2.5(b), since February 28,
1997, each of the Company and its subsidiaries has and currently possesses,
and is current on all fees with regard to, all franchises, certificates,
licenses, permits and other authorizations from any governmental authorities
and all patents, trademarks, service marks, trade names, copyrights, licenses
and other rights that are necessary to each of the Company and its
subsidiaries for the present ownership, maintenance and operation of its
business, properties and assets (including, without limitation, all gaming and
liquor licenses), except where the failure to possess such franchises,
certificates, licenses, permits, and other authorizations, patents,
trademarks, service marks, trade names, copyrights, licenses and other rights
(other than those required to be obtained by the Nevada Gaming Commission (the
"Gaming Commission"), the Nevada State Gaming Control Board (the "Control
Board"), the Clark County Liquor and Gaming Licensing Board (the "CCB"), the
City of Las Vegas ("Las Vegas") and the National Indian Gaming Commission (the
"Indian Gaming Commission") (the Gaming Commission, the Control Board, the
CCB, Las Vegas and the Indian Gaming Commission are collectively referred to
as the "Gaming Authorities"), including approvals under the Gaming Laws) would
Page 16 of 143 Pages
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not have a Company Material Adverse Effect; and none of the Company and its
subsidiaries is in violation of any thereof, except where such violation would
not have a Company Material Adverse Effect.
(c) Since February 28, 1997, neither the Company nor any of its
subsidiaries is in violation of, or has violated (with or without notice or
lapse of time), any applicable provisions of (i) any laws, rules, statutes,
orders, ordinances or regulations, or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise, or other
instrument or obligations to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or its or any of
their respective properties are bound or affected, which, individually or in
the aggregate, would have a Company Material Adverse Effect.
(d) Except as set forth in Schedule 2.5(d), since February 28,
1997: (i) the Company and each of its subsidiaries is, and has been, in full
compliance with all of the terms and requirements of each award, decision,
injunction, judgment, order, ruling, subpoena, or verdict (each, an "Order")
entered, issued, made, or rendered by any court, administrative agency, or
other governmental entity, officer or authority or by any arbitrator to which
it, or any of the assets owned or used by it, is or has been subject, and (ii)
no event has occurred or circumstance exists that may constitute or result in
(with or without notice or lapse of time) a violation of or failure to comply
with any term or requirement of any Order to which the Company or its
subsidiaries, or any of the assets owned or used by the Company or its
subsidiaries, is subject except where such non-compliance, violation or
failure to comply would not have a Company Material Adverse Effect.
(e) Neither the Company nor any of its subsidiaries has
received, at any time since February 28, 1997, any notice or other
communication (whether oral or written) regarding any actual, alleged,
possible, or potential violation of, or failure to comply with, any term or
requirement of any Order to which the Company or its subsidiaries, or any of
the assets owned or used by the Company or its subsidiaries, is or has been
subject and which would have a Company Material Adverse Effect.
(f) No investigation or review by any government entity, officer
or authority with respect to the Company or its subsidiaries is pending or, to
the knowledge of the Company, threatened, nor, to the knowledge of the
Company, has any government entity, officer or authority indicated an
intention to conduct the same, other than, in each case, those which would not
have a Company Material Adverse Effect.
Section 2.6 Non-Contravention; Required Filings and Consents.
(a) Except as set forth in Schedule 2.6 hereto and as contemplated by Section
2.6(b), the execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby
(including, without limitation, the Elsinore Option Agreement and the Elsinore
Merger) do not and will not (i) contravene or conflict with the Company
Articles of Incorporation or the Company Bylaws or the equivalent
organizational documents of any of its subsidiaries or any resolution adopted
Page 17 of 143 Pages
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by the Board or the Company Stockholders or the board of directors or
stockholders of any of the Company's subsidiaries, (ii) contravene or conflict
with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to the
Company, any of its subsidiaries or any of their respective properties, (iii)
contravene, conflict with, or result in a violation of any of the terms or
requirements of, or give any governmental entity, official or authority right
to revoke, withdraw, suspend, cancel, terminate or modify, any authorization
that is held by the Company or any of its subsidiaries, or that otherwise
relates to the business of, or any of the assets owned by, the Company or any
of its subsidiaries, (iv) conflict with, or result in the breach or
termination of any provision of or constitute a default (with or without the
giving of notice or the lapse of time or both) under, or give rise to any
right of termination, cancellation, or loss of any benefit to which the
Company or any of its subsidiaries is entitled under any provision of any
agreement, contract, license or other instrument binding upon the Company, any
of its subsidiaries or any of their respective properties, or allow the
acceleration of the performance of, any obligation of the Company or any of
its subsidiaries under any indenture, mortgage, deed of trust, lease, license,
contract, instrument or other agreement to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any of their respective assets or properties is subject or bound, or (v)
result in the creation or imposition of any Lien on any asset of the Company
or any of its subsidiaries, except in the case of clauses (i), (ii), (iii) and
(iv) for any such contraventions, conflicts, violations, breaches,
terminations, defaults, cancellations, losses, accelerations and Liens which
would not, individually or in the aggregate, have a Company Material Adverse
Effect or be reasonably expected to prevent the consummation by the Company of
the transactions contemplated by this Agreement.
(b) The execution, delivery and performance by the Company of
this Agreement and the consummation of the transactions contemplated hereby
(including, without limitation, the Elsinore Option Agreement, the Escrow
Agreement and the Elsinore Merger) by the Company require no action by or in
respect of, or filing with, any governmental entity, official or authority
(either domestic or foreign) other than (i) the filing of articles of merger
in accordance with the Nevada Merger Law, (ii) compliance with any applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (iii) compliance with any applicable requirements of
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"), and state securities, takeover
and Blue Sky laws, (iv) obtaining all necessary gaming approvals, including
those required by the Gaming Authorities, including approvals under the Gaming
Laws, and (v) such additional actions or filings which, if not taken or made,
would not, individually or in the aggregate, have a Company Material Adverse
Effect or be reasonably expected to prevent the consummation by the Company of
the transactions contemplated by this Agreement.
Section 2.7 SEC Reports. (a) The Company has filed all
required forms, reports and documents with the Securities and Exchange
Commission (the "SEC") since February 28, 1997. The Company has made
available to Gaming, in the form filed with the SEC, the Company's (i)
Quarterly Reports on Form 10-Q filed by the Company with the SEC since
Page 18 of 143 Pages
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February 28, 1997 and (ii) all Current Reports on Form 8-K and registration
statements filed by the Company with the SEC since February 28, 1997
(collectively and as amended as required, the "SEC Reports"). As of their
respective dates, the SEC Reports complied in all material respects with all
applicable requirements of the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the "Securities Act"), and the
Exchange Act, each as in effect on the dates such SEC Reports were filed. As
of their respective dates, none of the SEC Reports, including, without
limitation, any financial statements or schedules included therein, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. No subsidiary of the Company is required, as of the date hereof,
to file any form, report, or other document with the SEC under Section 12 of
the Exchange Act. The audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company included in the SEC
Reports fairly present in all material respects, in conformity with GAAP (as
defined in Section 7.12 of this Agreement) applied on a consistent basis
(except as may be indicated in the notes thereto), the consolidated financial
position of the Company and its consolidated subsidiaries as of the dates
thereof and their consolidated results of operations and cash flows for the
periods then ended (subject to normal year-end adjustments in the case of any
unaudited interim financial statements). The Company has heretofore made
available or promptly will make available to Gaming a complete and correct
copy of any amendments or modifications, which are required to be filed with
the SEC but have not yet been filed with the SEC, to the SEC Reports.
(b) Except as set forth in Schedule 2.7(b) hereto, the Company
and its subsidiaries have no liabilities of any nature (whether accrued,
absolute, contingent or otherwise), except for (i) liabilities set forth in
the audited balance sheet of the Company dated March 31, 1997 or on the notes
thereto, contained in the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1997, (ii) liabilities incurred in the
ordinary course of business consistent with past practice since March 31, 1997
and (iii) liabilities which would not, individually or in the aggregate, have
a Company Material Adverse Effect.
Section 2.8 Absence of Certain Changes. Except as set forth in
Schedule 2.8 hereto, since February 28, 1997, the Company and its subsidiaries
have conducted their respective businesses only in the ordinary course, and
there has not been (i) any declaration, setting aside or payment of any
dividend or other distribution with respect to its capital stock, (ii) any
incurrence, assumption or guarantees by the Company or any of its subsidiaries
of any indebtedness for borrowed money other than in the ordinary course of
business, (iii) any making of any loan, advance or capital contributions to,
or investments in, any other person, (iv) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, (v) (x) any granting by
the Company or any of its subsidiaries to any officer of the Company or any of
Page 19 of 143 Pages
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its subsidiaries of any increase in compensation, except in the ordinary
course of business (including in connection with promotions) consistent with
past practice or as was required under employment agreements in effect as of
the date of the most recent audited financial statements included in the SEC
Reports filed and publicly available prior to the date of this Agreement, (y)
any granting by the Company or any of its subsidiaries to any such officer of
any increase in severance or termination pay, except as part of a standard
employment package to any person promoted or hired, or as was required under
employment, severance or termination agreements in effect as of the date of
the most recent audited financial statements included in the SEC Reports filed
or (z) except termination arrangements in the ordinary course of business
consistent with past practice with employees other than any executive officer
of the Company, any entry by the Company or any of its subsidiaries into any
employment, severance or termination agreement with any such officer, (vi) any
damage, destruction or loss (other than a decline of revenue or net income),
whether or not covered by insurance, that would be expected to have a Company
Material Adverse Effect, (vii) any transaction or commitment made, or any
contract or agreement entered into, by the Company or any of its subsidiaries
relating to any of their assets or business (including the acquisition or
disposition of any assets) or any relinquishment by the Company or any of its
subsidiaries or any contract or other right, in either case, material to the
Company and its subsidiaries, taken as a whole, other than transactions and
commitments in the ordinary course of business and those contemplated by this
Agreement, (viii) any change in accounting methods, principles or practices by
the Company materially affecting its assets, liabilities or business, except
insofar as may have been required by a change in generally accepted accounting
principles or (ix) any other change (other than a decline of revenue or net
income) which would have a Company Material Adverse Effect.
Section 2.9 Proxy Statement. The proxy or information statement
or similar materials distributed to the Company's Stockholders in connection
with the Elsinore Merger, including any amendments or supplements thereto (the
"Proxy Statement"), shall not, at the time filed with the SEC, at the time
mailed to the Company Stockholders, at the time of the Stockholders' Meeting
or at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they are made, not misleading. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to any information
provided by Gaming specifically for use in the Proxy Statement. The Proxy
Statement will comply as to form in all material respects with the provisions
of the Exchange Act.
Section 2.10 No Brokers. The Company has not employed any
broker, finder or financial advisor or incurred any liability for any
brokerage fees, commissions, finders' or financial advisory fees in connection
with the transactions contemplated hereby.
Section 2.11 Absence of Litigation. Except as disclosed in
Schedule 2.11 hereto, since February 28, 1997, there has not been any action,
suit, claim, investigation or proceeding pending against, or to the knowledge
of the Company, threatened against, the Company or any of its subsidiaries or
Page 20 of 143 Pages
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any of their respective properties or the Board before any court or arbitrator
or any administrative, regulatory or governmental body, or any agency or
official which, individually or in the aggregate, would have a Company
Material Adverse Effect. Except as disclosed in Schedule 2.11 hereto, since
February 28, 1997, there has not been any action, suit, claim, investigation
or proceeding pending against, or to the knowledge of the Company, threatened
against, the Company or any of its subsidiaries or any of their respective
properties or the Board before any court or arbitrator or any administrative,
regulatory or governmental body, or any agency or official which (i)
challenges or seeks to prevent, enjoin, alter or delay the Elsinore Merger or
any of the other transactions contemplated hereby or (ii) alleges any criminal
action or inaction. Except as disclosed in Schedule 2.11 hereto, since
February 28, 1997, neither the Company nor any of its subsidiaries nor any of
their respective properties has been subject to any order, writ, judgment,
injunction, decree, determination or award having, or which would have a
Company Material Adverse Effect or which would prevent or delay the
consummation of the transactions contemplated hereby.
Section 2.12 Taxes. Except as set forth in Schedule 2.12
hereto, (a) the Company and its subsidiaries have filed, been included in or
sent, all material returns, material declarations and reports and information
returns and statements required to be filed or sent by or relating to any of
them relating to any Taxes (as defined herein) with respect to any material
income, properties or operations of the Company or any of its subsidiaries
(collectively, "Returns"); (b) as of the time of filing, the Returns correctly
reflected in all material respects the facts regarding the income, business,
assets, operations, activities and status of the Company and its subsidiaries
and any other material information required to be shown therein; (c) the
Company and its subsidiaries have timely paid or made provision for all
material Taxes that have been shown as due and payable on the Returns that
have been filed; (d) the Company and its subsidiaries have made or will make
provision for all material Taxes payable for any periods that end before the
Effective Time for which no Returns have yet been filed and for any periods
that begin before the Effective Time and end after the Effective Time to the
extent such Taxes are attributable to the portion of any such period ending at
the Effective Time; (e) the charges, accruals and reserves for Taxes reflected
on the books of the Company and its subsidiaries are adequate under generally
accepted accounting principles to cover the Tax liabilities accruing or
payable by the Company and its subsidiaries; (f) neither the Company nor any
of its subsidiaries is delinquent in the payment of any material Taxes or has
requested any extension of time within which to file or send any material
Return (other than extensions granted to the Company for the filing of its
Returns as set forth in Schedule 2.12), which Return has not since been filed
or sent; (g) no material deficiency for any Taxes has been proposed, asserted
or assessed in writing against the Company or any of its subsidiaries other
than those Taxes being contested in good faith by appropriate proceedings and
set forth in Schedule 2.12 (which shall set forth the nature of the
proceeding, the type of return, the deficiencies proposed, asserted or
assessed and the amount thereof, and the taxable year in question); (h)
neither the Company nor any of its subsidiaries has granted any extension of
the limitation period applicable to any material Tax claims other than those
Taxes being contested in good faith by appropriate proceedings; and (i)
neither the Company nor any of its subsidiaries is subject to liability for
Taxes of any person (other than the Company or its subsidiaries).
Page 21 of 143 Pages
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For purposes of this Agreement, "Tax" or "Taxes" means all
Federal, state, local and foreign taxes, and other assessments of a similar
nature (whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto, imposed by any
Tax Authority (as defined herein). "Tax Authority" means the Internal Revenue
Service and any other domestic or foreign governmental authority responsible
for the administration of any Taxes.
Section 2.13 Employee Benefits. (a) Schedule 2.13(a) hereto
contains a true and complete list of each bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance or termination
pay, hospitalization or other medical, dental, life, disability or other
insurance, supplemental unemployment benefits, profit-sharing, pension,
savings or retirement plan, program, agreement or arrangement, and each other
employee benefit plan, program, agreement or arrangement, sponsored,
maintained or contributed to or required to be contributed to by the Company
or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with the Company would be deemed a "single
employer" within the meaning of section 4001 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), for the benefit of any employee or
terminated employee of the Company or any ERISA Affiliate (the "Plans").
Schedule 2.13(a) hereto identifies each of the Plans that is an "employee
benefit plan," as that term is defined in section 3(3) of ERISA (the "ERISA
Plans"). Neither the Company nor any ERISA Affiliate has ever maintained,
administered, contributed to or had any contingent liability with respect to
any employee pension benefit plan subject to Title IV of ERISA or Section 412
of the Code (as defined herein), other than the multiemployer plans (as
defined in Section 3(37)(A) of ERISA) which are identified on Schedule 2.13(a)
hereto.
(b) With respect to each Plan, the Company has heretofore
delivered or made available to Gaming true and complete copies of each of the
following documents (to the extent applicable):
(i) a copy thereof;
(ii) a copy of the most recent annual report and actuarial
report, if required under ERISA, and the most recent report prepared with
respect thereto in accordance with Statement of Financial Accounting Standards
No. 87, Employer's Accounting for Pensions;
(iii) a copy of the most recent actuarial report prepared
with respect thereto in accordance with Statement of Financial Accounting
Standards No. 106, Employer's Accounting for Non-Pension Postretirement
Benefits;
(iv) a copy of the most recent Summary Plan Description;
(v) if the Plan is funded through a trust or any third
party funding vehicle, a copy of the trust or other funding agreement and the
latest financial statements thereof; and
(vi) the most recent determination letter received from the
Internal Revenue Service with respect to each Plan intended to qualify under
section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code").
Page 22 of 143 Pages
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(c) Neither the Company nor any ERISA Affiliate has incurred any
liability under Title IV of ERISA, including any "withdrawal liability"
(within the meaning of Section 4201 of ERISA) with respect to any benefit
plan, and, to the knowledge of the Company, no condition exists that presents
a material risk to the Company or any ERISA Affiliate of incurring a material
liability under such Title.
(d) Neither the Company nor any ERISA Affiliate, nor, to the
knowledge of the Company, any ERISA Plan, any trust created thereunder, nor
any trustee or administrator thereof has engaged in a transaction in
connection with which the Company or any ERISA Affiliate, any ERISA Plan, any
such trust, or any trustee or administrator thereof, or any party dealing with
any ERISA Plan or any such trust would be subject to either a civil penalty
assessed pursuant to section 409 or 502(i) of ERISA or a Tax imposed pursuant
to section 4975 or 4976 of the Code, except for such penalties and Taxes which
would not, individually or in the aggregate, have a Company Material Adverse
Effect.
(e) All contributions required to be made with respect to any
ERISA Plan (whether pursuant to the terms of any ERISA Plan or otherwise) on
or prior to the Effective Time have been timely made.
(f) To the knowledge of the Company, each Plan has been operated
and administered in all material respects in accordance with its terms and
applicable law, including but not limited to ERISA and the Code except where
such noncompliance would not be expected to have a Company Material Adverse
Effect.
(g) Each ERISA Plan intended to be "qualified" within the
meaning of section 401(a) of the Code has been drafted with the intention to
be so qualified and has received a favorable determination letter from the
Internal Revenue Service on or before the date hereof.
(h) To the Company's knowledge, except as reasonably estimated
and as set forth in Schedule 2.13(h), no amounts payable under the Plans as a
result of the consummation of the transactions contemplated by this Agreement
will fail to be deductible for federal income tax purposes by application of
section 280G of the Code.
(i) Except as set forth on Schedule 2.13(i) hereto, no Plan
provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees of the
Company or any ERISA Affiliate beyond their retirement or other termination of
service (other than (i) coverage mandated by applicable law or (ii) death
benefits or retirement benefits under any "employee pension plan," as that
term is defined in section 3(2) of ERISA).
(j) Except as provided in Schedule 2.13(j) hereto, the
consummation of the transactions contemplated by this Agreement will not (i)
entitle any current or former employee or officer of the Company or any ERISA
Affiliate to severance pay, unemployment compensation or any other payment, or
(ii) accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or officer.
Page 23 of 143 Pages
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(k) There are no pending or, to the knowledge of the Company,
threatened claims by or on behalf of any Plan, by any employee or beneficiary
covered under any such Plan, or otherwise involving any such Plan (other than
routine claims for benefits).
(l) The Company has reserved the right to amend or terminate any
Plan which is a welfare benefit plan, as that term is defined in section 3(l)
of ERISA.
Section 2.14 Intellectual Property. Except as disclosed in the
SEC Reports filed prior to the date of this Agreement or as set forth in
Schedule 2.14 hereto, the Company and each of its subsidiaries owns, or is
licensed or has the right to use (in each case, free and clear of any Liens),
all Intellectual Property (as defined below) used in or necessary for the
conduct of its business substantially as currently conducted, to the knowledge
of the Company, the use of any Intellectual Property by the Company and its
subsidiaries does not infringe on or otherwise violate the rights of any
person; and, to the knowledge of the Company, no person is challenging,
infringing on or otherwise violating any right of the Company or any of its
subsidiaries with respect to any Intellectual Property owned by and/or
licensed to the Company and its subsidiaries, except in each case for such
infringements or failures to own or be licensed as would not, individually or
in the aggregate, have a Company Material Adverse Effect. For purposes of
this Agreement, "Intellectual Property" shall mean trademarks, service marks,
brand names, certification marks, trade dress, assumed names, trade names and
other indications of origin, the goodwill associated with the foregoing and
any registration in any jurisdiction of, and applications in any jurisdiction
to register, the foregoing, including any extension, modification or renewal
of any such registration or application; inventions, discoveries and ideas,
whether patentable or not in any jurisdiction; patents, applications for
patents (including, without limitation, divisions, continuations,
continuations in part and renewal applications), and any renewals, extensions
or reissues thereof, in any jurisdiction; nonpublic information, trade secrets
and confidential information and rights in any jurisdiction to limit the use
or disclosure thereof by any person; writings and other works, whether
copyrightable or not in any jurisdiction; registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof; and any similar intellectual property or proprietary rights.
Section 2.15 Material Contracts. Except as set forth in
Schedule 2.15 hereto, there are no (i) agreements of the Company or any of its
subsidiaries containing an unexpired covenant not to compete or similar
restriction applying to the Company or any of its subsidiaries, (ii) interest
rate, currency or commodity hedging, swap or similar derivative transactions
to which the Company or any of its subsidiaries is a party nor (iii) other
contracts or amendments thereto that would be required to be filed and have
not been filed as an exhibit to a Form 10-K filed by the Company with the SEC
as of the date of this Agreement (collectively, the "Material Contracts").
Assuming each Material Contract constitutes a valid and binding obligation of
each other party thereto, each Material Contract is a valid and binding
obligation of the Company or a subsidiary of the Company, as the case may be.
Page 24 of 143 Pages
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To the Company's knowledge, each Material Contract is a valid and binding
obligation of each other party thereto, and each such Material Contract is in
full force and effect and is enforceable by the Company or its subsidiaries in
accordance with its terms, except as enforcement may be limited by the
Bankruptcy Exceptions and subject to the general principles of equity. There
are no existing defaults (or circumstances or events that, with the giving of
notice or lapse of time or both would become defaults) of the Company or any
of its subsidiaries (or, to the knowledge of the Company, any other party
thereto) under any of the Material Contracts except for defaults that would
not, individually or in the aggregate, have a Company Material Adverse Effect.
Section 2.16 Insurance. The Company and its subsidiaries have
obtained and maintained in full force and effect insurance with responsible
and reputable insurance companies or associations in such amounts, on such
terms and covering such risks, including fire and other risks insured against
by extended coverage, as is consistent with industry practice for companies
(i) engaged in similar businesses and (ii) of at least similar size, to that
of the Company and its subsidiaries, and the Company and each of its
subsidiaries have maintained in full force and effect public liability
insurance, insurance against claims for personal injury or death or property
damage occurring in connection with any of the activities of the Company or
its subsidiaries or any of any properties owned, occupied or controlled by the
Company or its subsidiaries, in such amount as reasonably deemed necessary by
the Company or its subsidiaries. Schedule 2.16 hereto sets forth a complete
and correct list of all material insurance policies (including a brief summary
of the nature and terms thereof and any amounts paid or payable to the Company
or any of its subsidiaries thereunder) providing coverage in favor of the
Company or any of its subsidiaries or any of their respective properties.
Each such policy is in full force and effect, no notice of termination,
cancellation or reservation of rights has been received with respect to any
such policy, there is no default with respect to any provision contained in
any such policy, and there has not been any failure to give any notice or
present any claim under any such policy in a timely fashion or in the manner
or detail required by any such policy, except for any such failures to be in
full force and effect, any such terminations, cancellations, reservations or
defaults, or any such failures to give notice or present claims which,
individually or in the aggregate, would have a Company Material Adverse
Effect.
Section 2.17 Labor Matters. (a) Except as set forth in
Schedule 2.17(a) hereto, neither the Company nor any of its subsidiaries is a
party to any collective bargaining or other labor union contract applicable to
persons employed by the Company or any of its subsidiaries, no collective
bargaining agreement is being negotiated by the Company or any of its
subsidiaries and the Company has no knowledge of any material activities or
proceedings (i) involving any unorganized employees of the Company or its
subsidiaries seeking to certify a collective bargaining unit or (ii) of any
labor union to organize any of the employees of the Company or its
subsidiaries. There is no labor dispute, strike or work stoppage against the
Company or any of its subsidiaries pending or, to the Company's knowledge,
threatened which may interfere with the respective business activities of the
Company or any of its subsidiaries, except where such dispute, strike or work
stoppage would not have a Company Material Adverse Effect.
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(b) Except as set forth in Schedule 2.17(b) hereto, the Company
and each of its subsidiaries have paid in full, or fully accrued for in their
financial statements, all wages, salaries, commissions, bonuses, severance
payments, vacation payments, holiday pay, sick pay, pay in lieu of
compensatory time and other compensation due or to become due to all current
and former employees of the Company and each Subsidiary for all services
performed by any of them on or prior to the date hereof. The Company and its
subsidiaries are in compliance with all applicable federal, state, local and
foreign laws, rules and regulations relating to the employment of labor,
including without limitation, laws, rules and regulations relating to payment
of wages, employment and employment practices, terms and conditions of
employment, hours, immigration, discrimination, child labor, occupational
health and safety, collective bargaining and the payment and withholding of
Taxes and other sums required by governmental authorities.
Section 2.18 Real Property. Schedule 2.18 hereto identifies all
real property owned, leased or used by the Company or its subsidiaries in the
conduct of its business. Except as set forth in Schedule 2.18, the Company
and each of its subsidiaries have good and marketable title to all of their
properties and assets, free and clear of all Liens, except for those disclosed
in the financial statements and except Liens for taxes not yet due and payable
and such Liens or other imperfections of title, if any, as do not materially
detract from the value of or interfere with the present use of the property
affected thereby or which, individually or in the aggregate, would not have a
Company Material Adverse Effect; and all leases pursuant to which the Company
or any of its subsidiaries lease from others real or personal property are in
good standing, valid and effective in accordance with their respective terms,
and there is not, to the knowledge of the Company, under any of such leases,
any existing material default or event of default (or event which with notice
or lapse of time, or both, would constitute a material default and in respect
of which the Company or such subsidiary has not taken adequate steps to
prevent such a default from occurring) except where the lack of such good
standing, validity and effectiveness, or the existence of such default or
event, would not have a Company Material Adverse Effect.
Section 2.19 Bankruptcy. The plan of reorganization of the
Company, which became effective on February 28, 1997, has been confirmed by
the appropriate court, and the confirmation order issued by such court (the
"Confirmation Order") has been entered. All motions for rehearing or
reconsideration of the Confirmation Order have been denied or withdrawn. The
time allowed for appeals of the Confirmation Order has expired without any
appeal having been taken or, if the confirmation order has been appealed, no
stay is in effect. The Company has not defaulted and has fully complied with
the Confirmation Order.
Section 2.20 Environmental Matters. (a) Except as set forth on
Schedule 2.20 (i) the Company and its subsidiaries are in compliance with all
Environmental Laws (as defined herein), except where the failure to be in
compliance would not have a Company Material Adverse Effect, and (ii) to the
best knowledge of the Company, there are not, with respect to the Company or
any of its subsidiaries, any past violations of Environmental Laws, releases
of any material into the environment, actions, activities, circumstances,
conditions, events, incidents, contractual obligations or other legal
requirements that may give rise to any liability, cost or expense under any
Environmental Laws, which liabilities, costs or expenses, either individually
or in the aggregate, would have a Company Material Adverse Effect.
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(b) As used in this Section 2.20, the term "Environmental Laws"
means the applicable common law and all applicable Federal, state, local and
foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without
limitation, laws relating to emissions, discharges, releases or threatened
releases of, or exposure to, chemicals, pollutants, contaminants, asbestos-
containing materials or industrial, toxic or hazardous substances or wastes
into the environment, as well as all applicable authorizations or codes,
decrees, injunctions, judgments, licenses, orders, permits or regulations in
effect thereunder.
Section 2.21 Representations Complete. None of the
representations or warranties made by the Company herein or in any Schedule or
Exhibit hereto contains or will contain at the Effective Time any untrue
statement of a material fact, or omits or will omit at the Effective Time any
material fact required or necessary in order to make the statements contained
herein or therein, in light of the circumstances under which they are made,
not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GAMING AND EAS
Each of Gaming and EAS represents and warrants to the Company as
follows:
Section 3.1 Organization; Power and Authority. Each of Gaming
and EAS is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has all requisite
corporate power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby, except where the failure to be so organized, existing and
in good standing or to have such power and authority would not, individually
or in the aggregate, have a Gaming Material Adverse Effect (as defined
herein). When used in this Agreement, the term "Gaming Material Adverse
Effect" means any change or effect (i) that would be materially adverse to the
business, results of operations, conditions (financial or otherwise) or
prospects of Gaming and EAS and their subsidiaries, taken as a whole, or (ii)
that would impair the ability of Gaming and EAS to consummate the transactions
contemplated hereby. Each of Gaming and EAS has the requisite corporate power
and authority to execute and deliver this Agreement and consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action on the
part of each of Gaming and EAS and by the sole stockholder of each of Gaming
and EAS, and no other corporate proceedings on the part of Gaming or EAS are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered
by each of Gaming and EAS and, assuming this Agreement constitutes a valid and
binding agreement of the other parties hereto, constitutes a legal, valid and
binding agreement of each of Gaming and EAS, enforceable against each of
Gaming and EAS in accordance with its terms, except as such enforcement may be
limited by the Bankruptcy Exceptions and subject to the general principles of
equity.
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Section 3.2 Non-Contravention; Required Filings and Consents.
(a) Except as set forth on Schedule 3.2(a) hereto, the execution, delivery
and performance by each of Gaming and EAS of this Agreement and the
consummation of the transactions contemplated hereby (including, without
limitation, the Elsinore Option Agreement, the Escrow Agreement and the
Elsinore Merger) do not and will not: (i) contravene or conflict with the
Certificate of Incorporation or Bylaws of Gaming or the equivalent
organizational documents of EAS, or any resolution adopted by the board of
directors or stockholders of Gaming or EAS, (ii) assuming that all consents,
authorizations and approvals contemplated by subsection (b) below have been
obtained and all filings described therein have been made, contravene or
conflict with or constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding upon or applicable
to Gaming or to EAS or any of their respective properties, (iii) contravene,
conflict with, or result in a violation of any of the terms or requirements
of, or give any governmental entity, official or authority right to revoke,
withdraw, suspend, cancel, terminate or modify, any authorization that is held
by Gaming or EAS or that otherwise relates to the business of, or any of the
assets owned by Gaming or EAS, (iv) conflict with, or result in the breach or
termination of any provision of or constitute a default (with or without the
giving of notice or the lapse of time or both) under, or give rise to any
right of termination, cancellation, or loss of any benefit to which either
Gaming or EAS is entitled under any provision of any agreement, contract,
license or other instrument binding upon either Gaming or EAS, or allow the
acceleration of the performance of, any obligation of either Gaming or EAS
under any other agreement to which Gaming or EAS is a party or by which Gaming
or EAS is subject or bound, or (v) result in the creation or imposition of any
Lien on any asset of Gaming or EAS, except in the case of clauses (ii), (iii)
and (iv) for any such contraventions, conflicts, violations, breaches,
terminations, defaults, cancellations, losses, accelerations and Liens which
would not individually or in the aggregate have a Gaming Material Adverse
Effect or be reasonably expected to prevent the consummation by Gaming or by
EAS of the transactions contemplated by this Agreement.
(b) The execution, delivery and performance by Gaming and by EAS
of this Agreement and the consummation of the transactions contemplated hereby
(including the Elsinore Option Agreement, the Escrow Agreement and the
Elsinore Merger) by Gaming and by EAS require no action by or in respect of,
or filing with, any governmental entity, official or authority (either
domestic or foreign), other than: (i) the filing of Articles of Merger in
accordance with the Nevada Merger Law; (ii) compliance with any applicable
requirements of the HSR Act; (iii) compliance with any applicable requirements
of the Exchange Act and state securities, takeover and Blue Sky laws; (iv)
obtaining all necessary gaming approvals, including those required by the
Gaming Authorities, including, without limitation, approvals under the Gaming
Laws, if any; and (v) such additional actions or filings which, if not taken
or made, would not individually or in the aggregate have a Gaming Material
Adverse Effect or be reasonably expected to prevent the consummation by Gaming
or by EAS of the transactions contemplated by this Agreement.
Section 3.3 Absence of Litigation. Since February 28, 1997,
there has not been any action, suit, claim, investigation or proceeding
pending against, or to the knowledge of Gaming or EAS, threatened against,
Gaming or EAS or any of their subsidiaries or any of their respective
properties, or their respective boards of directors, before any court or
arbitrator or any administrative, regulatory or governmental body, or any
Page 28 of 143 Pages
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agency or official which, individually or in the aggregate, would have a
Gaming Material Adverse Effect. Since February 28, 1997, neither Gaming nor
EAS nor any of their subsidiaries nor any of their respective properties has
been subject to any order, writ, judgment, injunction, decree, determination
or award having, or which would have, a Gaming Material Adverse Effect or
which would prevent or delay the consummation of the transactions contemplated
hereby.
Section 3.4 Proxy Statement. None of the information provided
by Gaming specifically for use in the Proxy Statement shall, at the time filed
with the SEC, at the time mailed to the Company Stockholders, at the time of
the Stockholders' Meeting or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading.
Section 3.5 No Prior Activities. Since the date of its
incorporation, neither Gaming nor EAS has engaged in any activities other than
in connection with or as contemplated by this Agreement, the Riviera Merger or
in connection with arranging any financing required to consummate the
transactions contemplated hereby.
Section 3.6 No Brokers. Except for Jefferies & Co., Inc. (whose
fee will be paid by Gaming), neither Gaming nor EAS has employed any broker or
finder, nor has it incurred any liability for any brokerage fees, commissions
or finders' fees in connection with the transactions contemplated by this
Agreement.
Section 3.7 Capitalization of Gaming. On the Closing Date and
at the Effective Time, Gaming will have cash or immediately available funds in
an amount not less than the sum of (i) the aggregate amount of Merger
Consideration to be paid hereunder, (ii) the aggregate amount to be paid at
the Effective Time pursuant to Section 1.9 hereof and (iii) an amount equal to
$3.16 multiplied by the number of Dissenting Shares.
Section 3.8 Representations Complete. None of the
representations or warranties made by either Gaming or EAS herein or in any
Exhibit hereto contains or will contain at the Effective Time any untrue
statement of a material fact, or omits or will omit at the Effective Time any
material fact necessary in order to make the statements contained herein, in
light of the circumstances under which they are made, not misleading.
ARTICLE IV
COVENANTS
Section 4.1 Conduct of Business of the Company. Except as
otherwise expressly provided in this Agreement, during the period from the
date hereof to the Effective Time, the Company and its subsidiaries will each
conduct their respective operations according to its ordinary course of
business, and the Company and its subsidiaries will each use its reasonable
best efforts to preserve intact its business organization, to keep available
Page 29 of 143 Pages
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the services of its officers and employees and to maintain existing
relationships with licensors, licensees, suppliers, contractors, distributors,
and others having business relationships with it. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in
this Agreement, or as set forth in Schedule 4.1 hereto, prior to the Effective
Time, neither the Company nor any of its subsidiaries will, without the prior
written consent of Gaming:
(a) amend its Articles of Incorporation or Bylaws or other
comparable organizational documents;
(b) authorize for issuance, issue, pledge, sell, deliver or
agree or commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to purchase
or otherwise) or otherwise encumber, any capital stock of any class or any
other securities or equity equivalents (including, without limitation, stock
appreciation rights), except as required by the Company Plan, warrants or
other securities listed on Schedule 2.2, as such are in effect as of the date
hereof, or amend any of the terms of any such securities or agreements
outstanding as of the date hereof;
(c) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution (whether
in cash, stock, or property or any combination thereof) in respect of its
capital stock, or, redeem, repurchase or otherwise acquire any of its
securities or any securities of its subsidiaries;
(d) (i) except as set forth in Schedule 4.1(d)(i) hereto or in
the ordinary course of business, create or incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse the
obligations of any other person, (ii) make any loans, advances or capital
contributions to, or investments in, any other person, (iii) pledge or
otherwise encumber any shares of capital stock of the Company or any of its
subsidiaries, or (iv) mortgage or pledge any of its assets, tangible or
intangible, or create or suffer to exist any Lien thereupon;
(e) enter into any transaction, other than in the ordinary
course of business, or make any investment, except for expenditures and
transactions in an aggregate amount not to exceed by more than $350,000 the
aggregate amount of expenditures and transactions set forth in the capital
expenditures plan provided to Gaming by the Company on September 5, 1997.
(f) enter into, adopt or (except as may be required by law or by
the terms of any such arrangement) amend or terminate any bonus, profit-
sharing, compensation, severance, termination, stock option, pension,
retirement, deferred compensation, employment or other employee benefit
agreement, trust, plan, fund or other arrangement for the benefit or welfare
of any director, officer or employee, or increase in any manner the
compensation or benefits of any director, officer or employee, or grant any
benefit or termination or severance pay to any director, officer or employee
not required by any plan or arrangement as in effect as of the date hereof
(including, without limitation, the granting of stock options) or by law;
Page 30 of 143 Pages
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(g) acquire, sell, lease or dispose of, or encumber any assets
outside the ordinary course of business or any assets which in the aggregate
are material to the Company and its subsidiaries, taken as a whole, or enter
into any contract, agreement, commitment or transaction outside the ordinary
course of business;
(h) change any of the accounting principles or practices used by
the Company, except as may be required as a result of a change in law, SEC
guidelines or GAAP;
(i) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation, partnership
or other business organization or division thereof; (ii) authorize any new
capital expenditure or expenditures, except for expenditures and transactions
in an aggregate amount not to exceed by more than $350,000 the aggregate
amount of expenditures and transactions set forth in the capital expenditures
plan provided to Gaming by the Company on September 5, 1997, (iii) settle any
litigation for amounts in excess of $100,000 individually or $500,000 in the
aggregate; or (iv) enter into or amend any contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(j) make any Tax election or settle or compromise any Tax
liability, other than in the ordinary course of business;
(k) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities set forth in Schedule 2.8 hereto or reflected or
reserved against in the financial statements (or the notes thereto) of the
Company and its subsidiaries or incurred in the ordinary course of business
consistent with past practice;
(l) terminate, modify, amend or waive compliance with any
provision of any Material Contract or fail to take any action necessary to
preserve the benefits of any such Material Contract to the Company or any of
its subsidiaries;
(m) fail to comply with any laws, ordinances or other
governmental regulations applicable to the Company or any of its subsidiaries,
including, but not limited to, the Gaming Laws and any regulations promulgated
thereunder, that may have a Company Material Adverse Effect; or
(n) take, or agree in writing or otherwise to take, any of the
actions described in this Section 4.1.
Section 4.2 Proxy Statement. (a) The Company shall, as
promptly as practicable following the date hereof, prepare and file the Proxy
Statement with the SEC under the Exchange Act. Gaming and EAS shall use their
respective best efforts to cooperate with the Company in the preparation of
the Proxy Statement. As soon as practicable following completion of review of
the Proxy Statement by the SEC, the Company shall mail the Proxy Statement to
its stockholders who are entitled to vote at the Stockholders' Meeting.
Subject to the fiduciary obligations of the Board under applicable law, the
Proxy Statement shall contain the recommendation of the Board that the Company
Stockholders approve this Agreement and the transactions contemplated hereby.
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(b) The Company shall use its reasonable best efforts to
promptly obtain and furnish the information required to be included in the
Proxy Statement and to respond promptly to any comments from, or requests made
by the SEC with respect to the Proxy Statement. The Company shall promptly
notify Gaming of the receipt of comments from, or any requests by, the SEC
with respect to the Proxy Statement, and shall promptly supply Gaming with
copies of all correspondence between the Company (or its representatives) and
the SEC (or its staff) relating thereto. The Company agrees to correct any
information provided by it for use in the Proxy Statement which shall have
become, or is, false or misleading; provided, however, that the Company shall
first use its reasonable best efforts to consult with Gaming about the form
and substance of each such correction.
Section 4.3 Access to Information. (a) Subject to applicable
law and the agreements set forth in Section 4.3(b), between the date hereof
and the Effective Time, the Company will give Gaming and its counsel,
financial advisors, auditors and other authorized representatives reasonable
access (during regular business hours upon reasonable notice) to all
employees, offices and other facilities and to all books and records of the
Company and its subsidiaries, will permit Gaming and its counsel, financial
advisors, auditors and other authorized representatives to make such
inspections Gaming may reasonably require, and will cause the Company's
officers and those of its subsidiaries to furnish Gaming or its
representatives with such financial and operating data and other information
with respect to the business and properties of the Company and any of its
subsidiaries as Gaming may from time to time reasonably request. No
investigation pursuant to this Section 4.3 shall affect any representations or
warranties of the Company herein or the conditions to the obligations of
Gaming or EAS hereunder.
(b) The parties hereto each agree that the provisions of the
Confidentiality Agreement, dated as of May 5, 1997 and attached hereto as
Exhibit C (the "Confidentiality Agreement"), between the Company and Mr. Allen
E. Paulson shall apply to and be binding on Gaming and EAS, and that the terms
of the Confidentiality Agreement are incorporated herein by reference.
Section 4.4 Reasonable Best Efforts. Subject to the terms and
conditions contained herein, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things reasonably necessary, proper or advisable
under all applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. Without limiting the generality
of the foregoing, the parties hereto shall cooperate with one another (i) in
the preparation and filing of any required filings under the HSR Act, the
Gaming Laws and the other laws referred to in Sections 2.5 and 3.2 hereof,
(ii) in determining whether action by or in respect of, or filing with, any
governmental body, agency, official or authority is required, proper or
advisable, or any actions, consents, waivers or approvals are required to be
obtained from parties to any contracts in connection with the transactions
contemplated by this Agreement, (iii) in seeking to obtain any such actions,
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consents and waivers and in making any such filings, and (iv) in seeking to
lift any order, decree or ruling restraining, enjoining or otherwise
prohibiting the Elsinore Merger. If at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party hereto shall take
all such necessary action.
Section 4.5 Public Announcements. Each of the parties hereto
agrees that it will not issue any press release or otherwise make any public
statement with respect to this Agreement or the transactions contemplated
hereby without the prior consent of the other party, which consent shall not
be unreasonably withheld or delayed; provided, however, that such disclosure
can be made without obtaining such prior consent if (i) the disclosure is
required by law, and (ii) the party making such disclosure has first used its
reasonable best efforts to consult with the other party about the form and
substance of such disclosure.
Section 4.6 Indemnification; Insurance. (a) From and after the
Effective Time, the Surviving Corporation shall indemnify and hold harmless
each person who is, or has been at any time prior to the date hereof or who
becomes prior to the Effective Time, an officer, director or employee of the
Company or any of its subsidiaries (collectively, the "Indemnified Parties"
and individually, an "Indemnified Party") against all losses, liabilities,
expenses (including attorneys' fees), claims or damages in connection with any
claim, suit, action, proceeding or investigation based in whole or in part
upon the fact that such Indemnified Party is or was a director, officer or
employee of the Company or any of its subsidiaries and arising out of acts or
omissions occurring prior to and including the Effective Time (including but
not limited to the transactions contemplated by this Agreement) to the fullest
extent permitted by Nevada law, for a period of not less than six years
following the Effective Time; provided, that in the event any claim or claims
are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until
final disposition of any and all such claims.
(b) The provisions of the Surviving Corporation Articles of
Incorporation with respect to indemnification and exculpation shall not be
amended, repealed or otherwise modified for a period of six years after the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who at the Effective Time are or were current or former
directors or officers of the Company in respect of actions or omissions
occurring at or prior to the Effective Time (including, without limitation,
the transactions contemplated by this Agreement), unless such modification is
required by law.
(c) Prior to the Closing Date, the Company shall obtain a tail
insurance policy (the "Company D & O Liability Insurance Tail") covering the
directors and officers for acts or failures to act prior to the Effective
Time, and having substantially the same coverage and deductibles as the
Company's directors' and officers' liability insurance policy as in effect on
July 1, 1997.
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(d) From and after the Effective Time, no Indemnified Party
shall be liable to Gaming, EAS or the Surviving Corporation (or anyone
claiming rights through any of them, including Allen E. Paulson) for breach of
any of the representations, warranties, covenants or agreements contained in
this Agreement. It is the express understanding of the parties that the sole
remedy of Gaming and EAS under this Agreement (or anyone claiming rights under
this Agreement through Gaming or EAS) in the event of a breach or alleged
breach by the Company of its representations, warranties, covenants or
agreements), shall be to refuse to consummate the Elsinore Merger, subject,
however, to Gaming's rights under Article VI hereof.
(e) This Section 4.6 is intended to benefit the Indemnified
Parties and their respective heirs, executors and personal representatives,
and shall be binding on the successors and assigns of the Company and the
Surviving Corporation.
Section 4.7 Notification of Certain Matters. The Company shall
give prompt notice to Gaming and EAS, and Gaming and EAS shall give prompt
notice to the Company, upon becoming aware of: (i) the occurrence or non-
occurrence, of any event the occurrence, or non-occurrence of which would
cause any representation or warranty contained in this Agreement to be untrue
or inaccurate, and (ii) any failure of the Company or Gaming and EAS, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder; provided, that the delivery of
any notice pursuant to this Section 4.7 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
Section 4.8 No Solicitation. (a) The Company and its
subsidiaries and affiliates will not, and the Company and its subsidiaries and
affiliates will use their reasonable best efforts to ensure that their
respective officers, directors, employees, investment bankers, attorneys,
accountants and other agents do not, directly or indirectly: (i) initiate,
solicit or encourage, or take any action to facilitate the making of, any
offer or proposal which constitutes or is reasonably likely to lead to any
Alternative Transaction (as defined below) with respect to the Company or any
of its subsidiaries or an inquiry with respect thereto, or, (ii) in the event
of an unsolicited Alternative Transaction for the Company or any of its
subsidiaries, engage in negotiations or discussions with, or provide any
information or data to any person relating to any Alternative Transaction,
subject to the Board's good faith determination, after consulting with outside
legal counsel to the Company, that the failure to engage in such negotiations
or discussions or provide such information would likely result in a breach of
the Board's fiduciary duties under applicable law if such Alternative
Transaction would provide the Company Stockholders with a purchase price per
Share that is higher (the amount of such excess in the purchase price per
Share is hereinafter referred to as the "Spread") than the Merger
Consideration to be received by the Company Stockholders. The Company shall
notify Gaming and EAS orally and in writing of any such inquiries, offers or
proposals (including, without limitation, the terms and conditions thereof and
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the identity of the person making such), within twenty four hours of the
receipt thereof. The Company shall, and shall cause its subsidiaries and
affiliates, and their respective officers, directors, employees, investment
bankers, attorneys, accountants and other agents to, immediately cease and
cause to be terminated all existing discussions and negotiations, if any, with
any parties conducted heretofore with respect to any Alternative Transaction
relating to the Company or any of its subsidiaries. Notwithstanding anything
to the contrary, nothing contained in this Section 4.8 shall prohibit the
Company or the Board from communicating to the Company Stockholders a position
as required by Rules 14d-9 and 14a-2 promulgated under the Exchange Act.
(b) As used in this Agreement, "Alternative Transaction" shall
mean any tender or exchange offer for the Common Stock or for the equivalent
securities of any of the Company's subsidiaries, any proposal for a merger,
consolidation or other business combination involving any such person, any
proposal or offer to acquire in any manner a ten percent or more equity
interest in, or ten percent or more of the business or assets of, such person,
any proposal or offer with respect to any recapitalization or restructuring
with respect to such person or any proposal or offer with respect to any other
transaction similar to any of the foregoing with respect to such person or any
subsidiary of such person; provided, however, that, as used in this Agreement,
the term "Alternative Transaction" shall not apply to any transaction of the
type described in this subsection (b) involving Gaming, EAS or their
affiliates.
Section 4.9 Compliance with Gaming Laws. None of Gaming, EAS or
their officers, directors or shareholder will attempt to influence, direct or
cause the direction of the management or policies of the Company pending
receipt of all required approvals of the Gaming Authorities, pursuant to the
Gaming Laws, for the transactions contemplated by this Agreement and the
Elsinore Option Agreement.
ARTICLE V
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 5.1 Conditions to each Party's Obligation to Effect the
Elsinore Merger. The respective obligation of each party to effect the
Elsinore Merger is subject to the satisfaction or waiver on or prior to the
Effective Time of the following conditions:
(a) Any waiting period applicable to the consummation of the
Elsinore Merger under the HSR Act shall have expired or been terminated, and
no action shall have been instituted by the Department of Justice or Federal
Trade Commission challenging or seeking to enjoin the consummation of this
transaction, which action shall have not been withdrawn or terminated.
(b) At the Stockholders' Meeting, this Agreement shall have been
approved and adopted by the affirmative vote of the holders of not less than a
majority of the Shares, excluding the Paulson Shares.
Page 35 of 143 Pages
<PAGE>
(c) There shall not have been any statute, rule, regulation,
judgment, order or injunction promulgated, entered, enforced, enacted or
issued applicable to the Elsinore Merger by any governmental entity which,
directly or indirectly, (i) prohibits the consummation of the Elsinore Merger
or the transactions contemplated by the Elsinore Option Agreement, (ii)
prohibits or materially limits the ownership or operation by the Company, or
any of its respective subsidiaries of a material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, or seeks to
compel the Company or Gaming or EAS to dispose of or hold separate any
material portion of the business or assets of the Company or Gaming or EAS and
its subsidiaries, taken as a whole, as a result of the Elsinore Merger or any
of the other transactions contemplated by this Agreement, or (iii) prohibits
Gaming or EAS from effectively controlling in any material respect the
business or operations of the Company, taken as a whole; provided, that the
parties hereto shall have used their reasonable best efforts to cause any such
statute, rule, regulation, judgment, order or injunction to be repealed,
vacated or lifted.
(d) The Riviera Merger shall have become effective.
(e) Other than the filing of the articles of merger in
accordance with the Nevada Merger Law, all licenses, permits, registrations,
authorizations, consents, waivers, orders or other approvals required to be
obtained, and all filings, notices or declarations required to be made, prior
to the Effective Time, by Gaming, EAS, Mr. Allen E. Paulson, the Company or
any of its subsidiaries in order to consummate the Riviera Merger and the
transactions contemplated by this Agreement, and in order to permit the
Company and its subsidiaries to conduct their respective businesses in the
jurisdictions regulated by the Gaming Authorities after the Effective Time in
the same manner as conducted by the Company and its subsidiaries immediately
prior to the Effective Time shall have been obtained or made.
Section 5.2 Conditions to Obligations of Gaming and EAS to
Effect the Elsinore Merger. The obligations of Gaming and EAS to effect the
Elsinore Merger shall be subject to the satisfaction at or prior to the
Effective Time of the following additional conditions:
(a) The Company shall have performed in all material respects
all of its obligations under this Agreement required to be performed by it at
or prior to the Closing Date and the representations and warranties of the
Company contained in this Agreement shall be true and correct in all respects
as of the date of this Agreement and at and as of the Closing Date as if made
at and as of such time, except (i) for changes specifically permitted by this
Agreement and (ii) that those representations and warranties which address
matters as of a particular date shall remain true and correct as of such
particular date.
Page 36 of 143 Pages
<PAGE>
(b) Neither the consummation nor the performance of any of the
transactions contemplated in this Agreement will, directly or indirectly (with
or without notice or lapse of time), materially contravene, or conflict with,
or result in a material violation of, or cause Gaming or EAS or any affiliate
of Gaming or EAS to suffer any material adverse consequence under, (a) any
applicable legal requirement or Order or (b) any legal requirement or Order
that has been published, introduced, or otherwise proposed by or before any
governmental entity.
(c) The Option Seller shall have entered into the Elsinore
Option Agreement concurrent with the execution of this Agreement, and the
Elsinore Option Agreement shall be in full force and effect and the Option
Seller shall have complied in all respects with the terms thereof;
(d) Mr. Allen E. Paulson shall not have become deceased or
Disabled (as defined herein). As used herein, "Disabled" means Mr. Allen E.
Paulson's incapacity due to physical or mental illness, injury or disease,
which incapacity renders him unable to perform the requisite duties of the
chief executive officer of Gaming for a consecutive period of 90 days or more.
Any question as to the existence, extent or potentiality of Mr. Allen E.
Paulson's disability upon which Gaming and the Option Seller cannot agree
shall be determined by a qualified, independent physician selected by the
Company and approved by Gaming and the disputing Option Sellers (whose
approval shall not be unreasonably withheld or delayed). The determination of
such physician shall be final and conclusive for all purposes of this
Agreement.
(e) Gaming shall have received such documents as Gaming or EAS
may reasonably request for the purpose of (i) evidencing the accuracy at any
time on or prior to the Closing Date of any of the Company's representations
and warranties, (ii) evidencing the performance by the Company of, or the
compliance by the Company with, any covenant or obligation required to be
performed or complied with by the Company, (iii) evidencing the satisfaction
of any condition referred to in Sections 5.1 and 5.2 hereof or (iv) otherwise
facilitating the consummation or performance of any of the transactions
contemplated hereby.
(f) The cost to the Company (net of any amounts paid by third
parties) of the Company D&O Liability Insurance Tail obtained pursuant to
Section 4.6(c) hereof shall not exceed the aggregate of $150,000.
Section 5.3 Conditions to Obligations of the Company to Effect
the Elsinore Merger. The obligations of the Company to effect the Elsinore
Merger shall be subject to the satisfaction at or prior to the Effective Time
of the following additional conditions:
(a) Gaming and EAS shall have performed in all material respects
all of its obligations under this Agreement required to be performed by it at
or prior to the Effective Time and the representations and warranties of
Gaming and EAS contained in this Agreement shall be true and correct in all
respects as of the date of this Agreement and at and as of the Effective Time
as if made at and as of such time, except (i) for changes specifically
permitted by this Agreement and (ii) that those representations and warranties
which address matters as of a particular date shall remain true and correct as
of such particular date.
Page 37 of 143 Pages
<PAGE>
(b) At the Closing Date, Gaming shall have in cash or
immediately available funds, an amount equal to the sum of (i) the aggregate
amount of Merger Consideration to be paid hereunder, (ii) the aggregate amount
to be paid at the Effective Time pursuant to Section 1.9 hereof and (iii) an
amount equal to $3.16 multiplied by the number of Dissenting Shares.
(c) The Company shall have received such documents as the
Company may reasonably request for the purpose of (i) evidencing the accuracy
of any of Gaming's and EAS' representations and warranties, (ii) evidencing
the performance by Gaming and EAS of, or the compliance by Gaming and EAS
with, any covenant or obligation required to be performed or complied with by
Gaming and EAS, (iv) evidencing the satisfaction of any condition referred to
in Sections 5.1 and 5.3 hereof or (v) otherwise facilitating the consummation
or performance of any of the transactions contemplated hereby.
ARTICLE VI
TERMINATION; AMENDMENT; WAIVER
Section 6.1 Termination. This Agreement may be terminated and
the Elsinore Merger may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the Company Stockholders:
(a) by mutual written consent of Gaming and EAS, on the one hand,
and the Company, on the other hand;
(b) by Gaming and EAS, on the one hand, or the Company, on the
other hand, if any court or governmental authority of competent jurisdiction
shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Elsinore Merger and such
order, decree, ruling or other action shall have become final and
nonappealable; provided, that Gaming and the Company shall have used their
reasonable best efforts to have such injunction lifted;
(c) by Gaming and EAS, on the one hand, or the Company, on the
other hand, at any time after April 1, 1998, (the "Termination Date") if the
Elsinore Merger shall not have occurred by such date; provided, that if the
Elsinore Merger has not occurred solely by virtue of the fact that the
required approvals of one or more of the Gaming Authorities have not been
obtained and the Gaming Authorities have not informed Mr. Allen E. Paulson,
Gaming or the Company that a review of the applications for such approvals is
scheduled by the appropriate Gaming Authorities for a later date, then the
Termination Date shall be extended until such approvals have been granted or
denied, except that under no circumstances shall such extension continue after
June 1, 1998; and, provided, further, that the right to terminate this
Agreement under this subparagraph (c) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the
principal cause of the failure of the Elsinore Merger to have occurred by such
date;
Page 38 of 143 Pages
<PAGE>
(d) by Gaming and EAS if (i) there shall have been a breach of
any representation or warranty of the Company contained herein which would
have a Company Material Adverse Effect or prevent the consummation of the
Elsinore Merger or the transactions contemplated hereby, which shall not have
been cured on or prior to ten business days following notice from Gaming of
such breach, (ii) there shall have been a breach of any covenant or agreement
of the Company contained herein which would have a Company Material Adverse
Effect or prevent the consummation of the Elsinore Merger or the transactions
contemplated hereby, which shall not have been cured on or prior to ten
business days following notice of such breach, (iii) the Board shall have
withdrawn or modified, in a manner materially adverse to Gaming, its approval
or recommendation of this Agreement, the Elsinore Merger or the transactions
contemplated hereby or shall have recommended, or the Company shall have
entered into an agreement providing for, an Alternative Transaction, or the
Board shall have resolved to do any of the foregoing, (iv) the Stockholders
Meeting shall have been held and the vote described in Section 5.1(b) shall
not have been obtained, (v) Mr. Allen E. Paulson shall have become deceased or
Disabled or (vi) the Riviera Merger Agreement shall have been terminated; or
(e) by the Company if (i) there shall have been a breach of any
representation or warranty of Gaming contained herein which would have a
Gaming Material Adverse Effect or prevent the consummation of the Elsinore
Merger or the transactions contemplated hereby, which shall not have been
cured on or prior to ten business days following notice from the Company of
such breach, (ii) there shall have been a breach of any covenant or agreement
of Gaming contained herein which would have a Gaming Material Adverse Effect
or prevent the consummation of the Elsinore Merger or the transactions
contemplated hereby, which shall not have been cured on or prior to ten
business days following notice of such breach, (iii) the Board determines, in
good faith after consulting with outside legal counsel to the Company, that it
is required, in the exercise of its fiduciary duties under applicable law, to
enter into a definitive agreement with respect to an Alternative Transaction
or (iv) the Stockholders Meeting shall have been held and the vote described
in Section 5.1(b) shall not have been obtained.
(f) by the Company if the Closing has not occurred within 30 days
after receipt of required approvals of the Gaming Authorities; provided,
however, that all of the conditions to Gaming's obligation to effect the
Elsinore Merger contained in Sections 5.1 and 5.2 hereof shall have been
satisfied or waived by Gaming.
Section 6.2 Effect of Termination; Termination Fee. (a) In the
event of the termination and abandonment of this Agreement pursuant to Section
6.1, this Agreement shall forthwith become void and have no effect, without
any liability on the part of any party hereto, other than pursuant to the
provisions set forth in Section 6.2(b), Section 6.2(c) and Section 6.3 hereof.
Page 39 of 143 Pages
<PAGE>
(b) In the event this Agreement is terminated pursuant to
Sections 6.1(d)(iii), 6.1(d)(iv), 6.1(e)(iii) or 6.1(e)(iv) hereof, the
Company shall pay to Gaming immediately upon the closing of an Alternative
Transaction an aggregate amount equal to three percent of the consideration
for the equity of the Company which is received by the Company or its
stockholders in the Alternative Transaction valued at the higher of the value
of the consideration on the date of (i) the execution of the definitive
agreement with respect to an Alternative Transaction and (ii) the closing of
the Alternative Transaction (the "Termination Fee").
(c) In the event (A) this Agreement is terminated (except
pursuant to a Non-Payment Termination Event (as defined herein)) or (B) the
Elsinore Merger does not occur in accordance with the terms of this Agreement
on or before April 2, 1998 (or if the Termination Date is extended as provided
in Section 6.1(c) hereof, June 2, 1998) for any reason other than the
occurrence of a Non-Payment Termination Event, then the Company shall be
entitled to receive from Gaming and/or EAS, no later than five business days
from the date of such termination, on behalf of the Company Stockholders other
than the Option Seller (i) an amount equal to $178,776, plus interest in an
amount equal to 9.43% per annum on $893,878.68 from June 1, 1997, through the
date immediately preceding the execution date hereof, and (ii) an amount equal
to $230.94 multiplied by the number of days in the period beginning on the
execution date hereof and ending on the date immediately preceding the earlier
to occur of (x) the termination of this Agreement (except pursuant to a Non-
Payment Termination Event) or (y) the Termination Date, as extended pursuant
to Section 6.1(c) hereof, if applicable; provided, that the Company shall be
entitled to receive the payment described in this Section 6.2(c) if the Option
Seller is entitled to retain the payments made to it pursuant to Section
1.2(b) of the Elsinore Option Agreement, and, further, provided, that the
Company shall not be entitled to such compensation if this Agreement is not
consummated as a result of a breach by the Company. For purposes of this
Agreement, a "Non-Payment Termination Event" shall mean the termination of
this Agreement pursuant to Sections 6.1(a), 6.1(b), 6.1(c) (because of the
failure to satisfy Sections 5.1(a), 5.1(c), 5.1(d), 5.2(c), or 5.2(f)),
6.1(d), 6.1(e)(iii) or 6.1(e)(iv) hereof. In addition, in the event that this
Agreement is terminated pursuant to Section 6.1(c) because of the failure of
Gaming, RAS or Mr. Allen E. Paulson to obtain the required approvals of the
Gaming Authorities, then such event shall constitute a Non-Payment Termination
Event unless Mr. Allen E. Paulson is in breach of his representation and
covenant contained in Section 6.2(d) hereof.
(d) The ability of Gaming and EAS to terminate their obligations
without triggering the right of the Company to receive the consideration
described in Section 6.2(c) hereof is predicated upon the accuracy of the
following representation and performance by Mr. Allen E. Paulson of the
following agreement: (A) Mr. Allen E. Paulson has represented that prior to
the execution of this Agreement, he has discussed in detail with his Nevada
counsel his background and knows of no reason why he should not be able to
obtain all necessary Gaming Authorities approvals prior to April 1, 1998; and
(B) Mr. Allen E. Paulson has agreed that he will pursue vigorously and will
give complete and prompt attention requests of Gaming Authorities for
information and will do nothing which might delay receipt of all necessary
Gaming Authorities approvals.
Page 40 of 143 Pages
<PAGE>
Section 6.3 Fees and Expenses. Except as set forth herein, each
party shall bear its own expenses and costs in connection with this Agreement
and the transactions contemplated hereby. In the event this Agreement is
terminated pursuant to Sections 6.1(d), 6.1(e)(iii) or 6.1(e)(iv) hereof, and
as a condition to such termination, the Company shall, immediately upon (i)
the execution of a definitive agreement with respect to an Alternative
Transaction, or (ii) the approval or recommendation by the Board, directly or
indirectly, of such an Alternative Transaction, reimburse Gaming, EAS and Mr.
Allen E. Paulson the documented out-of-pocket expenses (the "Expenses") of
Gaming, EAS and Mr. Allen E. Paulson, incurred from April 15, 1997, in
connection with (i) the transactions contemplated by this Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Survival. Subject to the following sentence, the
representations, warranties, covenants and agreements contained herein shall
not survive beyond the Effective Time. The covenants and agreements contained
herein which by their terms contemplate performance after the Effective Time
(including by the Surviving Corporation after the Elsinore Merger) shall
survive the Effective Time. In addition, Sections 6.2 and 6.3 hereof shall
survive termination of this Agreement. The representation and warranty made
in Section 2.4 hereof shall survive indefinitely.
Section 7.2 Entire Agreement; Assignment. This Agreement
(including the Schedules and Exhibits hereto) (i) shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof,
and supersedes all other prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof and (ii)
shall not be assigned by operation of law or otherwise and any purported
assignment shall be null and void, except that Gaming and EAS may assign this
Agreement to any of their affiliates without the prior written consent of the
Company; provided, that (i) no such assignment shall relieve Gaming and EAS of
their obligations hereunder if such assignee does not perform such
obligations, and (ii) such assignment will not result in any delay in (x) the
consummation of the transactions contemplated hereby by more than one month as
determined by the Company's counsel or (y) the ability to satisfy the
condition contained in Section 5.1(e) hereof by more than one month as
determined by the Company's counsel.
Section 7.3 Amendment. This Agreement may be amended by action
taken by the Company, Gaming and EAS at any time before or after adoption of
the Elsinore Merger by the Company Stockholders but, after any such approval,
no amendment shall be made which decreases the Merger Consideration or changes
the form thereof or which adversely affects the rights of the Company
Stockholders hereunder without the approval of the Company Stockholders. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
Page 41 of 143 Pages
<PAGE>
Section 7.4 Extension or Waiver. At any time prior to the
Effective Time, the Company, on the one hand, and Gaming, on the other hand,
may (i) extend the time for the performance of any of the obligations or other
acts of the other party, (ii) waive any inaccuracies in the representations
and warranties of the other party contained herein or in any document,
certificate or writing delivered pursuant hereto, or (iii), subject to
applicable law, waive compliance by the other party with any of the agreements
or conditions contained herein. Any agreement on the part of any party hereto
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any
party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights.
Section 7.5 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person,
by overnight courier with receipt requested, by facsimile transmission (with
receipt confirmed by automatic transmission report) or two business days after
being sent by registered or certified mail (postage prepaid, return receipt
requested), to the other party as follows:
if to Gaming:
P.O. Box 9660
Rancho Santa Fe, CA 92067
Fax: (619) 756-3194
Attention: Mr. Allen E. Paulson
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, California 90071
Fax: (213) 687-5600
Attention: Brian J. McCarthy, Esq.
if to the Company:
202 Fremont Street
Las Vegas, Nevada 89101
Fax: (702) 387-5120
Attention: Mr. Jeffrey T. Leeds
with a copy to:
Gordon & Silver, Ltd.
3800 Howard Hughes Parkway
14th Floor
Las Vegas, Nevada 89109
Fax: (702) 369-2666
Attention: Gerald M. Gordon, Esq.
Page 42 of 143 Pages
<PAGE>
- and -
Kummer Kaempfer Bonner & Renshaw
3800 Howard Hughes Parkway
7th Floor
Las Vegas, NV 89109
Fax: (702) 796-7181
Attention: Martha J. Ashcraft, Esq.
or to such other address as the party to whom notice is given may have
previously furnished to the other party in writing in the manner set forth
above.
Section 7.6 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Nevada, without
regard to the principles of conflicts of law thereof. Each of the parties
hereto hereby irrevocably and unconditionally consents to submit to
jurisdiction of the courts of the State of Nevada and of the United States of
America located in the State of Nevada for any litigation arising out of or
relating to this Agreement and the transactions contemplated hereby.
Section 7.7 Parties in Interest. This Agreement shall be binding
upon and shall inure solely to the benefit of each party hereto and its
successors and permitted assigns, and, except as set forth in Section 4.6,
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement, provided, that the Option
Seller is an intended beneficiary of the representation and warranty contained
in Section 2.4 hereof.
Section 7.8 Subsequent Actions. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that
any deeds, bills of sale, assignments, assurances or any other actions or
things are necessary or desirable to vest, perfect or confirm of record or
otherwise in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of the Company or EAS acquired
or to be acquired by the Surviving Corporation as a result of or in connection
with the Elsinore Merger, or otherwise to carry out this Agreement, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of the Company or EAS, all such
deeds, bills of sale, assignments, assumption agreements and assurances, and
to take and do, in the name and on behalf of each of such corporations or
otherwise, all such other actions and things as may be necessary or desirable
to vest, perfect or confirm any and all right, title and interest in, to and
under such rights, properties or assets of the Surviving Corporation or
otherwise to carry out this Agreement.
Section 7.9 Remedies. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Page 43 of 143 Pages
<PAGE>
Section 7.10 Severability. The provisions of this Agreement
shall be deemed severable, and the invalidity or unenforceability of any
provision shall not affect the validity and enforceability of the other
provisions hereof. If any provision of this Agreement, or the application
thereof to any person or entity or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid and unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other
persons, entities or circumstances shall not be affected by such invalidity or
unenforceability.
Section 7.11 Descriptive Headings. The descriptive headings
herein are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.
Section 7.12 Certain Definitions. For purposes of this
Agreement, the term:
(a) "affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned person;
(b) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or otherwise;
(c) "GAAP" means United States generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or
in such other statements by such other entity as approved by a significant
segment of the accounting profession in the United States as in effect on the
date hereof.
(d) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act); and
(e) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary), owns,
directly or indirectly, fifty percent or more of the stock or other equity
interests, the holder of which is generally entitled to vote for the election
of the board of directors or other governing body of such corporation,
partnership, joint venture or other legal entity.
Section 7.13 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same Agreement.
Page 44 of 143 Pages
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officers as of the date first
above written.
R&E GAMING CORP.
By: s/ Allen E. Paulson
-------------------------
Name:
Title:
ELSINORE ACQUISITION SUB, INC.
By: s/ Allen E. Paulson
-------------------------
Name:
Title:
ELSINORE CORPORATION
By: s/ Jeffrey T. Leeds
-------------------------
Name:
Title: President
Page 45 of 143 Pages
<PAGE>
SCHEDULES TO AGREEMENT AND PLAN OF MERGER BETWEEN R&E
GAMING CORP., ELSINORE ACQUISITION SUB, INC. AND ELSINORE
CORPORATION
Schedule 2.2 Capitalization of the Company and its Subsidiaries
Schedule 2.5(a) Compliance
Schedule 2.5(b) Intellectual Property and Licenses
Schedule 2.5(d) Compliance with Orders
Schedule 2.6 Noncontravention; Required Filings and Consents
Schedule 2.7(b) SEC Reports; Liabilities
Schedule 2.8 Absence of Certain Changes
Schedule 2.11 Pending or Threatened Litigation
Schedule 2.12 Taxes
Schedule 2.13(a) Employee Benefits
Schedule 2.13(h) Payments Non-Deductible
Schedule 2.13(i) Benefits Beyond Termination
Schedule 2.13(j) Severance of Unemployment Compensation;
Acceleration of Vesting
Schedule 2.14 Intellectual Property
Schedule 2.15 Material Contracts
Schedule 2.16 Insurance
Schedule 2.17(a) Labor Matters
Schedule 2.17(b) Payment of Benefits
Schedule 2.18 Real Property
Schedule 2.20 Environmental Matters
Page 46 of 143 Pages
<PAGE>
SCHEDULE 2.2
Capitalization of the Company and its Subsidiaries
1. The Riviera Warrants.
2. Pursuant to the First Amended Plan of Reorganization of the Company
filed May 28, 1996 in the United States Bankruptcy Court for the
District of Nevada ("Plan"), certain creditors of the Company shall
be issued 70,687 shares of common stock.
3. The Company presently has outstanding 4,929,313 shares of common
stock.
Page 47 of 143 Pages
<PAGE>
SCHEDULE 2.5(a)
Compliance
1. The New Jersey Casino Service Industry License held by Four Queens,
Inc. is currently in effect; however, it will expire on
September 30, 1997.
2. Olympia Gaming Corporation has not renewed its gaming license issued
by the State of Washington.
Page 48 of 143 Pages
<PAGE>
SCHEDULE 2.5(b)
Intellectual Property;
Licenses
1. The New Jersey Casino Service Industry License held by Four Queens,
Inc. is currently in effect; however, it will expire on
September 30, 1997.
2. Olympia Gaming Corporation has not renewed its gaming license issued
by the State of Washington.
3. See Schedule 2.14 for list of patent and trademark filings.
Page 49 of 143 Pages
<PAGE>
SCHEDULE 2.5(d)
Compliance with Orders
None
Page 50 of 143 Pages
<PAGE>
Schedule 2.6
Non-contravention; Required Filings and Consents
1. The Amended and Restated Note Agreement dated as of March 3, 1997
for $3,855,739.39 First Mortgage Notes Due 2000 of Elsinore
Corporation Guaranteed by Eagle Gaming, Inc.; Elsub Management
Corporation; Four Queens, Inc.; Elsinore Tahoe, Inc.; Four Queens
Experience Corporation; Olympia Gaming Corporation, Palm Springs
East Limited Partnership; and Pinnacle Gaming Corporation (formerly
ELSUB II, Inc.) contains a provision allowing the Holder of Notes
to accelerate the indebtedness due in the event of a change in
control and conditions mergers, sales or consolidations of the
Company and its subsidiaries.
2. The Amended and Restated Indenture dated as of March 3, 1997 between
the Company, the Guarantors (as set forth therein) and First Trust
National Association contains a provision whereby in the event of a
change in control, the Holders of the Securities shall have the
right to require the Company to repurchase the notes and which
conditions mergers, sales or consolidations of the Company and its
subsidiaries.
3. In the event of a merger or consolidation, the holder of the
Riviera Warrants is entitled to payment of the amount by which the
price per share to be paid for the Company's common stock in the
merger or consolidation exceeds the exercise price of the Warrants.
Page 51 of 143 Pages
<PAGE>
Schedule 2.7(b)
SEC Reports, Liabilities
None.
Page 52 of 143 Pages
<PAGE>
Schedule 2.8
Changes
Indebtedness Incurred by the Company
The Company guaranteed a lease by and between PDS Financial Corporation-
Nevada and Four Queens, Inc. pursuant to that certain $505,206.30
Security Equipment Lease Financing dated May 1, 1997, as amended, for
certain equipment described therein. (See Schedule 2.15).
Indebtedness Extended by the Company
The Company loaned approximately $40,000 to the Company's employees
during the interim period when the Company changed 401(k) plans so that
the employees would not be penalized during the interim period. The
loans were issued to five employees to assist the employees with the purchase
of their primary residences. Additionally, two employees took service
distributions in 1997 as permitted under 401(k) plans. The Company was
reimbursed by Merrill Lynch, the Plan Administrator and Trustee in August,
1997.
Employment/Severance/Termination Agreements
1. Termination Fee Agreement dated as of May 5, 1997 by and between
the Company and Cynthia A. Fremont.
2. Termination Fee Agreement dated as of May 5, 1997 by and between
Four Queens, Inc., a Nevada corporation and Gina L. Contner.
3. Termination Fee Agreement dated as of May 5, 1997 by and between
the Four Queens, Inc. a Nevada corporation and Raquel Rodriguez.
4. Termination Fee Agreement dated as of May 5, 1997 by and between
the Four Queens, Inc., a Nevada corporation and Philip W. Madow.
5. Loan-Out of Services Agreement dated as of August 12, 1996, by and
between Four Queens, Inc. and Riviera Gaming Management Elsinore,
Inc., as Manager, pursuant to which the Manager agreed to lend the
services three of the Manager's employees (Martin Gross, Gina
Contner and Racquel Rodriguez) to assist with the management of
the Four Queens Hotel & Casino and Four Queens agreed to reimburse
the Manager for the services provided.
Page 53 of 143 Pages
<PAGE>
Changed Accounting Methods
The Company changed its accounting method after the Plan of Reorganization was
confirmed to reflect "fresh start" reporting, whereby the reorganization value
is allocated to the Company's assets following the methodology prescribed in
APBO No. 16.
Corporate Status
The Company filed Articles of Dissolution with the Nevada Secretary of State
in order to dissolve two of the Company's subsidiaries: Elsinore-Missouri
Gaming, Inc., a Nevada corporation and Majove Gaming, Inc., a Nevada
corporation.
Issuance of Securities
The Riviera Warrants.
Leases
First Amendment to Lease, made effective as of May 14, 1997, between the
Company, Finley Company, and Four Queens, Inc.
Page 54 of 143 Pages
<PAGE>
SCHEDULE 2.11
Litigation
Case No. A338909 - Raymond Corona v. Elsinore Corporation and Four Queens,
Inc. This matter was stayed by the bankruptcy proceeding. No proof of claim
was filed.
Case No. C119073 - In the Matter of Proceedings to Compel Custodian of Records
to appear as witnesses in the State of Arizona. A subpoena was served on Ed
Fasulo in June, 1992 on behalf of Four Queens requesting all documents
relating to Stephen P. Mirretti for a grand jury investigation.
Case No. A370692 - Maliki S. Elshaied v. Four Queens, Inc. A former employee
filed a petition for judicial review. Four Queens' labor counsel filed a
notice of intent to participate on June 17, 1997.
Case No. A366865 - Celia Amaya v. Four Queens, Inc. The complaint, which was
filed on November 22, 1996, alleges plaintiff was hit by a vehicle and pieces
of falling wall when a valet hit a wall and rail. Damages in excess of
$10,000 were requested in the complaint. The Company has asserted that the
claim arose post-petition but not pre-effective date and that the plaintiff
should have filed an administrative claim.
Case No. A348749 - William Williams III v. Four Queens, Inc. This matter was
stayed by the bankruptcy proceeding. The amount of the claim (which is
classified as a Class 10 claim) will be liquidated in the state court.
Case No. A348176 - Kozloski v. Four Queens, Inc. This matter was stayed by
the bankruptcy proceeding. The amount of the claim (which is classified as a
Class 10 claim) will be liquidated in the state court.
Case No. CV-S-92-00662 - Hansen-Moor v. Elsinore. The complaint alleges RICO
violations.
Case Nos. CV-S-94-01126 and CV-S-94-01137 - Poulos v. Ceasar's World,
Inc., et al., and Ahern v. Ceasar's World, Inc., et al. filed against
various casino and gaming companies alleging RICO violations. This
matter was stayed by the bankruptcy. No proof of claim was filed.
Case Nos. 89-2413 and 89-2143 Finkler v. Elsinore Share Associates and Hotel
Employees and Restaurant Employees International Union Local 54 v. Elsinore
Share Associates. These complaints allege WARN Act violations as well as
other claims for damages.
Page 55 of 143 Pages
<PAGE>
SCHEDULE 2.12
Taxes
1. The Company and its subsidiaries have received an extension to
September 15, 1997 on the filing of its Elsinore Corporation and
Subsidiaries Federal Income Tax Return.
2. The Company is in receipt of a letter dated May 29, 1997, from
George W. Stevens, Director, Department of Finance and Business
Services, City of Las Vegas, Nevada addressed to Four Queens
Hotel & Casino claiming an underpayment of room taxes to the
City for the period of January 1, 1995 through March 31, 1997
in the amount of $60,160.59. The Company is contending that
this claim is barred by the Company's bankruptcy filing on
October 31, 1995.
Page 56 of 143 Pages
<PAGE>
Schedule 2.13(a)
Employee Benefits
Employee Benefit Programs
1. Four Queens
Medical Insurance (with Dental and Vision), Group No. 190100;
Account No. 190101; H.P.N. Co. No. 10300; Group No. 62531
Prescriptions - P.C.I. No. 19019
Administered by Silver State Medical Administrators
2. Four Queens
Life/Accidental Death and Dismemberment, Policy No. GLUC-11G7
Administered by Mutual of Omaha
3. Four Queens Employees' 401(k) Retirement/Savings Plan and Trust
Administered by Merrill Lynch
4. Four Queens, Inc. Premium Only Plan
Administered by Four Queens, Inc.
Union Contract Trusts
The Company contributes to the following Union Contract Trusts:
1. Construction Industry and Carpenters Joint Pension Trust for
Southern Nevada
2. Carpenters' Joint Apprenticeship Committee Fund
3. Southern Nevada Operating Engineers Apprenticeship and Training
Trust Fund (not due until 9/98)
4. International Brotherhood of Painters and Allied Trades Union and Industry
Pension Fund No. 159, AFL-CIO
The Four Queens contributes to the following Union Contract Trust:
1. Central Pension Fund of the International Union of Operating
Engineers and Participating Employees
2. Hotel Employees and Restaurant Employees International Union
Welfare Fund
Termination/Severance Agreements
See Schedule 2.8.
Page 57 of 143 Pages
<PAGE>
Schedule 2.13(h)
Payments Non-Deductible
None
Page 58 of 143 Pages
<PAGE>
Schedule 2.13(i)
Benefits Beyond Termination
Name Pay Period Ending Payments to be Severance Ends
7/29/97 Made
R. Howe $4,139.42 6 9/19/97
B. McGinty $2,000.00 7 10/7/97
G. Lee $1,383.80 6 9/22/97
S. Barnes $2,030.29 12 12/11/97
W. English $1,195.28 6 9/18/97
L. Tanner $1,096.00 4 8/22/97
Y. Robles $918.40 7 11/4/97
H. Robles $918.40 7 11/4/97
D. Hewitt $1,038.46 1 8/12/97
In some cases, the last payment is not for the full amount; the payment will
be for the amount owing (i.e., a former employee could be owed for 40 hours or
for 20 hours).
Page 59 of 143 Pages
<PAGE>
Schedule 2.13(j)
Severance of Unemployment Compensation;
Acceleration of Vesting
None
Page 60 of 143 Pages
<PAGE>
Schedule 2.14
Intellectual Property
1. Patent file - Multiple Action Blackjack Patent, No. 5,154,429
2. Patent file - Multiple Action Blackjack Patent, No. 5,257,789
3. Trademark file - Reel Winners Club Reg. No. 1,305,392
4. Trademark file - Two Reeler & Design Reg. No. 1,465,030
5. Trademark file - For the Games People Play Reg. No. 1,705,535
6. Trademark file - For the Games People Play Reg. No. 1,705,662
7. Trademark file - Club 55 Reg. No, 1,710,860
8. Trademark file - Multiple Action Reg. No. 1,738,726
9. Trademark file - Triple Play Reg. No. 1,908,004
10. Trademark file - Trifecta Serial No. 74/322,375
11. Trademark file - Multiple Action Logo Reg. No, 1,842,109
12. Trademark file - Four Queens Reg. No. 1,851,742
13. Trademark file - Four Queens Logo Reg. No. 1,875,617
14. Trademark file - 4 Queens Reg. No. 1,851,743
15. Trademark file - 4 Queens Logo Reg. No. 1,854,918
16. Trademark file - Doubleheader Logo Serial No. 74/527,959
17. Nevada State Trademark file - For the Games People Play Hotel Services
18. Nevada State Trademark file - For the Games People Play Casino Services
19. Canadian Patent File - Gaming Table Reg. No. 73408
20. Canadian Trademark File - Four Queens No. 847,726
21. Canadian Trademark File - Multiple Action Serial No. 725,077
22. Australian Patent File - Multiple Action Serial No. 649,368
23. Australian Patent File - Multiple Action Blackjack Logo Serial No.
649,369
Page 61 of 143 Pages
<PAGE>
Schedule 2.15
Material Contracts
1. Master Lease Agreement (the "Lease Agreement") dated May 1, 1997 as
amended August 1, 1997 by and between PDS Financial Corporation - Nevada,
a Nevada corporation ("PDS") and Four Queens, Inc., a Nevada corporation
("Four Queens") provides that Four Queens shall not assign the agreement
without the prior written consent of PDS; provided, however, that PDS
shall consent to an assignment to Allen Paulson or an entity controlled by
Allen Paulson. Lease Agreement 14.2. The Lease Agreement was
guaranteed by the Company.
2. Agreement dated April 28, 1992 by and between Four Queens, Inc., a Nevada
corporation ("Four Queens"), Jeanne Hood, Edward M. Fasulo and Richard A.
LeVasseur whereby Four Queens agreed to pay monthly to Hood, Fasulo and
LeVasseur 20% of the royalties, fees, money and revenue collected from the
licensing of Multiple Action Blackjack.
3. License Agreement dated March 27, 1992 by and between Four Queens, Inc., a
Nevada corporation as assignee of Richard A. LeVasseur and C.A.R.D., Inc.,
a Nevada corporation.
4. License Agreement dated March 27, 1997 by and between Four Queens Hotel &
Casino as assignee of Richard A. LeVasseur and C.A.R.D., Inc., a Nevada
corporation.
5. Both the Amended and Restated Articles of Organization of Fremont Street
Experience Limited Liability Company, a Nevada limited liability company
filed with the Secretary of State on November 27, 1995 and the Amended and
Restated Operating Agreement on the Fremont Street Experience Limited
Liability Company, a Nevada limited liability company dated June 6, 1995
provides that a person may be a substituted member if two-thirds of the
then outstanding Members' Voting Units approve of the transfer of title of
the entire hotel or casino business.
6. The Riviera Warrants.
7. The Plan provided for the Company to enter into a management agreement,
substantially in the form of Exhibit "10" to the supplement to the Plan
(the "Management Agreement"), with the management group designated by the
Bondholders Committee (as defined in the Plan). Since the effective date
of the Plan, Riviera Gaming Management Corp.-Elsinore has been managing
the Four Queens Hotel and Casino substantially in accordance with the
terms and conditions set forth in the Management Agreement. No written
management agreement has been executed by the parties.
8. First Amendment to Lease, made effective as of May 14, 1997, between the
Company, Finley Company, and Four Queens, Inc.
Page 62 of 143 Pages
<PAGE>
Schedule 2.16
Insurance Policies
Insurance Coverage January 19, 1997 to January 19, 1998:
Agent: Layne & Associates
4045 South Spencer Street
4th Floor
Las Vegas, Nevada 89119
1. Property Coverage
Fireman's Fund Insurance Company
Policy No. 68 DKF 80352563
INSURED: Elsinore Corporation, a Nevada corporation;
Four Queens, Inc., a Nevada corporation d/b/a
Four Queens Hotel and Casino.
BLANKET LIMIT: $97,920,000 (Including all Real and Personal
Property, Business Interruption, Data
Processing, Equipment and Media, Extra Expense)
SUBLIMITS: $50,000,000 Flood
$50,000,000 Earthquake
$10,700,000 Business Interruption
$1,000,000 Extra Expense
$100,000 EDP Media
$100,000 Accounts Receivable
$1,000,000 Off Premises Power
$500,000 Valuable Papers
DEDUCTIBLES: $25,000 All Perils, Except
$50,000 Flood
$50,000 Earthquake
24 Hours - Business Interruption
$25,000 Extra Expense
$25,000 EDP; Accounts Receivable; Valuable
Papers
FORM OF COVERAGE: All Risk of Direct Physical Loss
VALUATION: Replacement Cost & Agreed Amount
LOCATIONS INSURED: Hotel/Casino, Parking Garage, Main Street
Storage
Page 63 of 143 Pages
<PAGE>
2. Boiler & Machinery
(Included within Property Policy)
INSURED: Elsinore Corporation, a Nevada corporation; Four
Queens, Inc., a Nevada corporation d/b/a Four Queens
Hotel and Casino.
CATASTROPHIC LIMIT: $97,920,000
SUBLIMITS: $250,000 Expediting Expense
$250,000 Water Damage Limit
$250,000 Consequential Damage
$250,000 Ammonia Contamination
$250,000 Spoilage
DEDUCTIBLE: $25,000 Per Loss, with 24 Hour Indirect Loss and
Business Interruption
VALUATION: Agreed Amount for Direct Damage Loss Actual Loss
Sustained for Business Interruption Losses/Extra
Expense
3. General Liability Coverage
Lexington Insurance Company
Policy No. 2810057
INSURED: Elsinore Corporation, a Nevada corporation; Four
Queens, Inc., a Nevada corporation d/b/a Four Queens
Hotel and Casino.
PER OCCURRENCE: $1,000,000
GENERAL AGGREGATE: $2,000,000
MEDICAL PAYMENTS: Excluded
EMPLOYEE BENEFITS: $1,000,000 Each Claim and Aggregate for all Claims,
subject to a $1,000 Deductible Each Claim
LIQUOR LIABILITY: $1,000,000 Each Occurrence and Aggregate
EMPLOYER'S STOP-GAP
LIABILITY: $1,000,000 Aggregate
INNKEEPER'S LIABILITY: $20,000 Per Guest
$50,000 Aggregate
Page 64 of 143 Pages
<PAGE>
SAFETY DEPOSIT BOX
LEGAL LIABILITY: $50,000 Per Guest
$500,000 Aggregate
SELF-INSURED
RETENTION LIMIT: $25,000 Per Occurrence
$250,000 Annual Aggregate
(Defense & Expenses within SIR)
4. Automobile Coverage
Northland Insurance Coverage
Policy No. NG 000 180
INSURED: Elsinore Corporation, a Nevada corporation; Four
Queens, Inc., a Nevada corporation d/b/a Four Queens
Hotel and Casino.
COMBINED BODILY INJURY
& PROPERTY DAMAGE;
INCLUDE NON-OWNED &
HIRED: $1,000,000 Each Occurrence
UNINSURED/UNDERINSURED
MOTORISTS: $1,000,000
MEDICAL PAYMENTS: $5,000
COLLISION
COVERAGE: Included, w/$500 deductible on all autos except
1967 Chevy.
COMPREHENSIVE
COVERAGE: Included, w/$500 deductible on all autos except
1967 Chevy.
HIRED & NON-OWNED
AUTOMOBILE PHYSICAL
DAMAGE: $50,000 Limit any one vehicle, subject to a
$500 Deductible.
GARAGEKEEPERS
LEGAL LIABILITY: $1,000,000 subject to:
$2,500 Comprehensive Deductible
$2,500 Collision Deductible
Page 65 of 143 Pages
<PAGE>
5. Crime Coverage
Fidelity & Deposit Company of Maryland
Policy No. CCP 002 67 08
INSURED: Elsinore Corporation, a Nevada corporation; Four
Queens, Inc., a Nevada corporation d/b/a Four Queens
Hotel and Casino.
EMPLOYEE DISHONESTY: $1,000,000
MONEY & SECURITIES
INSIDE & OUTSIDE: $1,000,000
FORGERY & ALTERATIONS: $1,000,000
DEDUCTIBLES: $10,000 Each Occurrence
COVERAGE INCLUDES: Investment Committee Members of the Welfare and
Pension Plan
6. Umbrella Liability
Royal Indemnity Company, TIG Insurance, Fireman's Fund
INSURED: Elsinore Corporation, a Nevada corporation; Four
Queens, Inc., a Nevada corporation d/b/a Four Queens
Hotel and Casino.
LIMIT: $50,000,000
RETENTION: $10,000
FIRST LAYER: $10,000,000 in excess of the primary insurance
Royal Insurance Company Policy No. P HN 202080
SECOND LAYER: $10 Million to $20 Million
TIG Insurance Company
Policy No. XLX 926 2624
THIRD LAYER: $20 Million in excess to $30 Million
Fireman's Fund Insurance Company
Policy No. XXK 000 6793 4802
Page 66 of 143 Pages
<PAGE>
7. Erisa Compliance Liability
Fidelity Deposit Insurance Company
Policy No. CCP 0033751
EMPLOYEE DISHONESTY: $250,000; no deductible
8. Excess Worker's Compensation Coverage
Frontier Insurance Company
Policy No. FSO 1155
WORKERS COMP: Statutory
EMPLOYER'S LIABILITY: $1,000,000
RETENTION: $275,000 per claim
ESTIMATED PAYROLL $24,670,979
Page 67 of 143 Pages
<PAGE>
Schedule 2.17(a)
Labor Matters
Contracts in Effect
Labor Agreement between United Brotherhood of Carpenters and Joiners of
America, Local Union No. 1780, Southern California/Nevada Regional Council of
Carpenters and Four Queens Hotel and Casino for the period January 15, 1997
through January 14, 2000.
Labor Agreement between Four Queens, Inc. d/b/a Four Queens Hotel and Casino
and International Union of Operating Engineers Local No. 501, AFL-CIO for the
period April 1, 1997 through March 31, 2002.
A Collective Bargaining Agreement between the Four Queens Hotel & Casino and
the Local Joint Executive Board of Las Vegas for and on behalf of Culinary
Workers Union, Local No. 226 and Bartenders Union, Local No. 165 for the
period September 1, 1997 through May 31, 1997, at which time the parties
agreed to negotiate wages and health and welfare contributions to conform with
other entity/union contracts.
Contracts Under Negotiation
The Four Queens Hotel and Casino is negotiating a labor agreement with the
International Brotherhood of Painters & Allied Trades, Local Union No. 159,
AFL-CIO for the period September 1, 1997 through August 31, 2002.
Negotiations are being conducted for a new contract with the Professional,
Clerical and Miscellaneous Employees, Teamsters Local Union No. 995. The term
of the present contract extended from April 2, 1983 through April 1, 1987, and
continues thereafter unless either party notifies the other on the anniversary
of the effective date.
Page 68 of 143 Pages
<PAGE>
Schedule 2.17(b)
Payment of Benefits
None
Page 69 of 143 Pages
<PAGE>
SCHEDULE 2.18
Real Property
Real Property Owned
See attached Fourth Amendment to Preliminary Title Report dated as of July 6,
1997, prepared by Nevada Title Company.
Real Property Leased
1. See attached Fourth Amendment to Preliminary Title Report dated as of
July 6, 1997, prepared by Nevada Title Company.
2. Standard Industrial/Commercial Single-Tenant Lease (the "Warehouse
Lease")dated May 1, 1993 by and between The Berg Family Partnership and
Four Queens Hotel/Casino for real property to be used as a warehouse
having APN 020-080-003-25 and located at 809 N. Main Street, Las
Vegas, Nevada for a five (5) year term with three options to renew
commencing May 1, 1993 and ending April 30, 1998. The Warehouse Lease
requires the Landlord's consent for an assignment of the Warehouse
Lease, including a change in the control of the Tenant.
Page 70 of 143 Pages
<PAGE>
NEVADA TITLE COMPANY
3320 West Sahara Ave. Suite # 200
Las Vegas, Nevada 89102
(702) 251-5000
ATTENTION: ROBBIE D. GRAHAM
July 8, 1997
Your Number: FOUR QUEENS HOTEL AND CASINO
Our Number: 95-03-1487 RMG
4th Amendment
==============================================================================
Dated as of JULY 6, 1997 at 7:30 A.M.
In response to the above referenced application of a Policy of Title
Insurance,
NEVADA TITLE COMPANY
hereby reports that it is prepared to issue, as of the date hereof, a Policy
or Policies of Title Insurance describing the land and the estate or interest
hereinafter set forth, insuring against loss which may be sustained by reason
of any defect, lien or encumbrance not shown or referred to as an Exception
below or not excluded from coverage pursuant to the printed Schedules,
Conditions and Stipulations of said Policy forms.
The printed Exceptions and Exclusions from the coverage of said Policy or
Policies are set forth in Exhibit "A" attached. Copies of the Policy forms
should be read. They are available from the office which issued this report.
This report (and any supplements or amendments thereto) is issued solely for
the purpose of facilitating the issuance of a Policy of Title Insurance, and
no liability is assumed hereby. If it is desired that liability be assumed
prior to the issuance of a policy of title insurance, a Binder or Commitment
should be required.
s/ Robbie D. Graham
- --------------------------------
Title Officer: ROBBIE D. GRAHAM
The form of Policy of Title Insurance contemplated by this report is:
American Land Title Association Lender's Policy
Page 71 of 143 Pages
<PAGE>
ESCROW NO: 95-03-1487 RMG
4th Amendment
SCHEDULE A
THE ESTATE OR INTEREST IN THE LAND DESCRIBED OR REFERRED TO IN THIS SCHEDULE
COVERED BY THIS REPORT IS:
A FEE
Title to said estate or interest at the date hereof is vested in:
SEE EXHIBIT "B" ATTACHED HERETO AND MADE A PART THEREOF
The land referred to in this report is situated in the State of Nevada, County
of Clark, and is described as follows:
SEE EXHIBIT "A" ATTACHED HERETO AND BY THIS REFERENCE MADE A PART HEREOF FOR
LEGAL DESCRIPTION:
BUYER:
FOUR QUEENS HOTEL AND CASINO
Address:
FOUR QUEENS HOTEL AND CASINO
LAS VEGAS, NV
Page 72 of 143 Pages
<PAGE>
ESCROW NO: 95-03-1487 RMG
4th Amendment
EXHIBIT "A"
LEGAL DESCRIPTION
PARCEL I:
LOTS ONE (1), TWO (2), THREE (3), FOUR (4), FIVE (5) AND SIX (6) IN BLOCK
NINETEEN (19) OF CLARK'S LAS VEGAS TOWNSITE, AS SHOWN BY MAP THEREOF ON FILE
IN BOOK 1 OF PLATS, PAGE 37, IN THE OFFICE OF THE COUNTY RECORDER OF CLARK
COUNTY, NEVADA.
TOGETHER WITH THAT PORTION OF VACATED ALLEY ADJOINING SAID LOTS, RECORDED JULY
03, 1980, AS DOCUMENT NO. 1208178, TITLE TO WHICH WOULD PASS BY OPERATION OF
LAW.
PARCEL II:
LOTS SEVEN (7) AND EIGHT (8) IN BLOCK NINETEEN (19) OF CLARK'S LAS VEGAS
TOWNSITE, AS SHOWN BY MAP THEREOF ON FILE IN BOOK 1 OF PLATS, PAGE 37, IN THE
OFFICE OF THE COUNTY RECORDER OF CLARK COUNTY, NEVADA.
TOGETHER WITH THAT PORTION OF THE VACATED ALLEY ADJOINING SAID LOTS, TITLE TO
WHICH WOULD PASS BY OPERATION OF LAW.
PARCEL III:
LOTS NINE (9) AND TEN (10) IN BLOCK NINETEEN (19) OF CLARK'S LAS VEGAS
TOWNSITE, AS SHOWN BY MAP THEREOF, ON FILE IN BOOK 1 OF PLATS, PAGE 37, IN THE
OFFICE OF THE COUNTY RECORDER OF CLARK COUNTY, NEVADA.
TOGETHER WITH THAT PORTION OF THE VACATED ALLEY ADJOINING SAID LOTS, TITLE TO
WHICH WOULD PASS BY OPERATION OF LAW.
PARCEL IV:
LOTS ELEVEN (11) AND TWELVE (12) IN BLOCK NINETEEN (19) OF CLARK'S LAS VEGAS
TOWNSITE, AS SHOWN BY MAP THEREOF, ON FILE IN BOOK 1 OF PLATS, PAGE 37, IN THE
OFFICE OF THE COUNTY RECORDER OF CLARK COUNTY, NEVADA.
TOGETHER WITH THAT PORTION OF THE VACATED ALLEY ADJOINING SAID LOTS, TITLE TO
WHICH WOULD PASS BY OPERATION OF LAW.
PARCEL V:
LOTS THIRTEEN (13) IN BLOCK NINETEEN (19) OF CLARK'S LAS VEGAS TOWNSITE, AS
SHOWN BY MAP THEREOF ON FILE IN BOOK 1 OF PLATS, PAGE 37, IN THE OFFICE OF THE
COUNTY RECORDER OF CLARK COUNTY, NEVADA.
TOGETHER WITH THAT PORTION OF VACATED ALLEY ADJOINING SAID LOT, WHICH WOULD
PASS BY OPERATION OF LAW.
Page 73 of 143 Pages
<PAGE>
ESCROW NO: 95-03-1487 RMG
4th Amendment
EXHIBIT "A" (continued)
LEGAL DESCRIPTION
PARCEL VI:
LOTS FOURTEEN (14), FIFTEEN (15) AND SIXTEEN (16) BLOCK NINETEEN (19) OF
CLARK'S LAS VEGAS TOWNSITE, AS SHOWN BY MAP THEREOF ON FILE IN BOOK 1 OF
PLATS, PAGE 37, IN THE OFFICE OF THE COUNTY RECORDER OF CLARK COUNTY, NEVADA.
PARCEL VII:
THAT PORTION OF BLOCK 19 OF CLARK'S LAS VEGAS TOWNSITE, AS SHOWN BY MAP
THEREOF ON FILE IN BOOK 1 OF PLATS, PAGE 37, IN THE OFFICE OF THE OFFICE OF
THE COUNTY RECORDER OF CLARK COUNTY, NEVADA, DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHWESTERLY CORNER OF LOT 17, BLOCK 19, OF SAID CLARK'S LAS
VEGAS TOWNSITE;
THENCE ALONG THE NORTHEASTERLY LINE OF SAID LOT 17, THE SOUTHEASTERLY
PROLONGATION OF SAID NORTHEASTERLY LINE AND THE NORTHEASTERLY LINE OF LOT 28
OF SAID BLOCK 19, SOUTH 62 DEGREES 15' EAST A DISTANCE OF 300 FEET TO THE
SOUTHEASTERLY LINE OF SAID BLOCK 19;
THENCE ALONG THE SOUTHEASTERLY LINE OF SAID BLOCK 19, SOUTH 27 DEGREES 45"
WEST A DISTANCE OF 132 FEET TO THE NORTHEASTERLY LINE OF THE SOUTHWESTERLY 18
FEET OF SAID BLOCK 19;
THENCE ALONG THE NORTHEASTERLY LINE OF SAID SOUTHWESTERLY 18 FEET, NORTH 62
DEGREES 15' WEST A DISTANCE OF 300 FEET TO THE NORTHWESTERLY LINE OF SAID
BLOCK 19;
THENCE ALONG THE NORTHWESTERLY LINE OF SAID BLOCK 19, NORTH 27 DEGREES 45'
EAST A DISTANCE OF 132 FEET TO THE TRUE POINT OF BEGINNING.
TOGETHER WITH AN EASEMENT FOR INGRESS AND EGRESS OVER AND ACROSS THE FOLLOWING
DESCRIBED PARCEL OF LAND:
COMMENCING AT THE SOUTHWESTERLY CORNER OF SAID BLOCK 19;
THENCE ALONG THE SOUTHWESTERLY LINE OF SAID BLOCK 19, SOUTH 62 DEGREES 15'
EAST A DISTANCE OF 132 FEET TO THE TRUE POINT OF BEGINNING.
THENCE CONTINUING ALONG SAID SOUTHWESTERLY LINE, SOUTH 62 DEGREES 15' EAST A
DISTANCE OF 36 FEET;
THENCE NORTH 27 DEGREES 45' EAST A DISTANCE OF 18 FEET TO THE NORTHEASTERLY
LINE OF THE SOUTHWESTERLY 18 FEET OF SAID BLOCK 19;
THENCE ALONG THE NORTHEASTERLY LINE OF SAID SOUTHWESTERLY 18 FEET, NORTH 62
DEGREES 15' WEST A DISTANCE OF 36 FEET;
THENCE SOUTH 27 DEGREES 45' WEST A DISTANCE OF 18 FEET TO THE TRUE POINT OF
BEGINNING.
PARCEL VIII:
LOTS TWENTY-NINE (29) AND THIRTY (30) IN BLOCK NINETEEN (19) OF CLARK'S LAS
VEGAS TOWNSITE, AS SHOWN BY MAP THEREOF IN FILE IN BOOK 1 OF PLATS, PAGE 37,
IN THE OFFICE OF THE COUNTY RECORDER OF CLARK COUNTY, NEVADA.
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EXHIBIT "A" (continued)
LEGAL DESCRIPTION
TOGETHER WITH THAT PORTION OF VACATED ALLEY ADJOINING SAID LOTS, TITLE TO
WHICH WOULD PASS BY OPERATION OF LAW.
PARCEL IX:
LOTS THIRTY-ONE (31) AND THIRTY-TWO (32) IN BLOCK NINETEEN (19) OF CLARK'S LAS
VEGAS TOWNSITE, AS SHOWN BY MAP THEREOF, ON FILE IN BOOK 1 OF PLATS, PAGE 37,
IN THE OFFICE OF THE COUNTY RECORDER OF CLARK COUNTY, NEVADA.
TOGETHER WITH THAT PORTION OF VACATED ALLEY ADJOINING SAID LOTS, TITLE TO
WHICH WOULD PASS BY OPERATION OF LAW.
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SCHEDULE B
At the date hereof Exceptions to coverage in addition to the printed
exceptions and exclusions contained in said policy form would be as follows:
(1) TAXES, State and County Taxes for the fiscal period of 1997 to 1998, a
lien now due and payable in the total amount of $11,052.41
First installment of $2,763.41 unpaid delinquent third Monday in August
Second installment of $2,763.00 unpaid delinquent first Monday in October
Third installment of $2,763.00 unpaid delinquent first Monday in January
Fourth installment of $2,763.00 unpaid delinquent first Monday in March
(2) TAXES: State and County Taxes for the fiscal period of 1997 to 1998, a
lien now due and payable in the total amount of $5,040.95
First installment of $1,260.95 unpaid delinquent third Monday in August
Second installment of $1,260.00 unpaid delinquent first Monday in October
Third installment of $1,260.00 unpaid delinquent first Monday in January
Fourth installment of $1,260.00 unpaid delinquent first Monday in March
(3) TAXES: State and County Taxes for the fiscal period of 1997 to 1998, a
lien now due and payable in the total amount of $7,201.14
First installment of $1,801.14 unpaid delinquent third Monday in August
Second installment of $1,800.00 unpaid delinquent first Monday in October
Third installment of $1,800.00 unpaid delinquent first Monday in January
Fourth installment of $1,800.00 unpaid delinquent first Monday in March
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(4) TAXES: State and County Taxes for the fiscal period of 1997 to 1998, a
lien now due and payable in the total amount of $348,358.20
First installment of $87,091.20 unpaid delinquent third Monday in August
Second installment of $87,089.00 unpaid delinquent first Monday in October
Third installment of $87,089.00 unpaid delinquent first Monday in January
Fourth installment of $87,089.00 unpaid delinquent first Monday in March
(5) TAXES: State and County Taxes for the fiscal period of 1997 to 1998, a
lien now due and payable in the total amount of $16,578.62
First installment of $4,146.62 unpaid delinquent third Monday in August
Second installment of $4,144.00 unpaid delinquent first Monday in October
Third installment of $4,144.00 unpaid delinquent first Monday in January
Fourth installment of $4,144.00 unpaid delinquent first Monday in March
(6) TAXES: State and County Taxes for the fiscal period of 1997 to 1998, a
lien now due and payable in the total amount of $5,526.21
First installment of $1,383.21 unpaid delinquent third Monday in August
Second installment of $1,381.00 unpaid delinquent first Monday in October
Third installment of $1,381.00 unpaid delinquent first Monday in January
Fourth installment of $1,381.00 unpaid delinquent first Monday in March
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(7) TAXES: State and County Taxes for the fiscal period of 1997 to 1998, a
lien now due and payable in the total amount of $11,052.41
First installment of $2,763.41 unpaid delinquent third Monday in August
Second installment of $2,763.00 unpaid delinquent first Monday in October
Third installment of $2,763.00 unpaid delinquent first Monday in January
Fourth installment of $2,763.00 unpaid delinquent first Monday in March
(8) TAXES: State and County Taxes for the fiscal period of 1997 to 1998, a
lien now due and payable in the total amount of $11,052.41
First installment of $2,763.41 unpaid delinquent third Monday in August
Second installment of $2,763.00 unpaid delinquent first Monday in October
Third installment of $2,763.00 unpaid delinquent first Monday in January
Fourth installment of $2,763.00 unpaid delinquent first Monday in March
(9) TAXES: State and County Taxes for the fiscal period of 1997 to 1998, a
lien now due and payable in the total amount of $3,600.72
First installment of $900.72 unpaid delinquent third Monday in August
Second installment of $900.00 unpaid delinquent first Monday in October
Third installment of $900.00 unpaid delinquent first Monday in January
Fourth installment of $900.00 unpaid delinquent first Monday in March
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(10) TAXES: State and County Taxes for the fiscal period of 1997 to 1998, a
lien now due and payable in the total amount of $10,348.91
First installment of $2,587.91 unpaid delinquent third Monday in August
Second installment of $2,587.00 unpaid delinquent first Monday in October
Third installment of $2,587.00 unpaid delinquent first Monday in January
Fourth installment of $2,587.00 unpaid delinquent first Monday in March
(11) TAXES: State and County Taxes for the fiscal period of 1997 to 1998, a
lien now due and payable in the total amount of $3,600.72
First installment of $900.72 unpaid delinquent third Monday in August
Second installment of $900.00 unpaid delinquent first Monday in October
Third installment of $900.00 unpaid delinquent first Monday in January
Fourth installment of $900.00 unpaid delinquent first Monday in March
(12) TAXES: State and County Taxes for the fiscal period of 1997 to 1998, a
lien now due and payable in the total amount of $67,721.16
First installment of $16,931.16 unpaid delinquent third Monday in August
Second installment of $16,930.00 unpaid delinquent first Monday in October
Third installment of $16,930.00 unpaid delinquent first Monday in January
Fourth installment of $16,930.00 unpaid delinquent first Monday in March
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(13) TAXES: State and County Taxes for the fiscal period of 1997 to 1998, a
lien now due and payable in the total amount of $8,641.36
First installment of $2,161.36 unpaid delinquent third Monday in August
Second installment of $2,160.00 unpaid delinquent first Monday in October
Third installment of $2,160.00 unpaid delinquent first Monday in January
Fourth installment of $2,160.00 unpaid delinquent first Monday in March
(14) SUPPLEMENTAL TAXES: Any supplemental taxes which may become a lien on
the subject property by reason of increased valuations due to land use or
improvement, NRS 361.260, or otherwise.
(15) PATENT: Reservations and Easements in the patent from the State of
Nevada, recorded November 30, 1902, in Book "F" of Miscellaneous Page 268 of
Official Records.
(16) PATENT: Reservations and Easements in the patent from the State of
Nevada, recorded June 13, 1904, in Book "F" of Miscellaneous, Page 497 of
Official Records.
(17) PATENT: Reservations and Easements in the patent from the State of
Nevada, recorded February 28, 1905, in Book "F" of Miscellaneous, Page 571 of
Official Records.
(18) Covenants, conditions and restrictions (but deleting restrictions, if
any, based upon race, color, religion, or national origin) as contained in the
deeds recorded March 21, 1911, in Book 1 of Deeds, Page 428 as Document No.
2544, March 25, 1919 in Book 1 of Deeds, Page 202 as Document No. 1252,
December 15, 1921 in Book 8 of Deeds, Page 196 as Document 16598, March 13,
1922 in Book 8 of Deeds, Page 296 as Document 16940 and recorded May 23, 1922
in Book 8 of Deeds, Page 358 as Document No. 17174 and in the documents of
record wherein the grantor is the Las Vegas Land and Water Co. of Official
Records.
(19) A Leasehold estate, for a term of 60 years commencing November 1, 1964
and ending 60 years thereafter, in said Lots 1 through 6, inclusive, as
created by or based upon the following instruments:
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(a) A lease of said Lots 3, 4, and 5 in Parcel Four (4) dated November 1,
1959, executed by Julia Schaeffer, a widow, Marjorie Wilson, a married woman,
Genevieve Herick, a widow, and Robert E. Schaeffer, a married man, as lessors,
and Downtown, Inc., a Nevada Corporation, as Lessee, for a term commencing
November 1, 1959 and ending March 31, 2071 (as said lease has been amended) as
disclosed by a "Short Form" thereof recorded April 22, 1960 as Document No.
195415, Official Records, as amended by instruments dated June 26, 1963,
recorded November 9, 1964 as Document No. 469884, Official Records, dated June
1, 1964, recorded October 15, 1964 as Document No. 465035 Official Records,
dated April 30, 1968 (unrecorded), dated March 18, 1969 (unrecorded), and
dated May 11, 1972, recorded July 5, 1972 as Document No. 203280, Official
Records, by paragraph 5 of instrument entitled "Non-Disturbance Agreement"
dated January 17, 1973, recorded January 30, 1973 as Document No. 257009,
Official Records, and by letter agreement dated January 17, 1973 (unrecorded),
all as disclosed by Certificate of Agreement dated January 17, 1973, recorded
January 30, 1973 as Document No. 257011, Official Records.
(b) A lease of said Lot 6 in Parcel Four (4) dated May 26, 1964, executed by
Morris Soss and Olga Soss, husband and wife, and David Soss, as lessors, and
Downtown, Inc., as lessee, for a term commencing November 1, 1964 and ending
October 31, 2058, recorded October 15, 1964 as Document No. 465031, Official
Records, as amended by instrument dated March 3, 1969, recorded March 6, 1969
as Document No. 750239, Official Records.
(c) A Sub-lease "Short Form" of said Lots 3, 4, 5 and 6 in Parcel Four (4)
executed by Downtown, Inc., as Sublessor, and Four Queens, Inc., as sublessee,
dated January 29, 1973, for a term commencing at its date and expiring October
31, 2024, recorded January 30, 1973 as Document No. 257016, Official Records,
which sublease is subordinated to a month-to-month sublease of said Lots 3, 4,
and 5, dated December 14, 1959, executed by Downtown, Inc., as lessor and A.W.
Ham, Jr., as lessee, recorded November 19, 1964 as Document No. 471744,
Official Records, as amended by letter agreement dated January 17, 1973
(unrecorded), and to a month-to-month sublease of said Lot 6, dated March 26,
1964, by Downtown, Inc., as lessor, to A.W. Ham, Jr., as lessee, recorded
October 15, 1964 as Document No. 465032, Official Records, as amended by
instrument dated March 3, 1969, recorded March 19, 1969 as Document No.
752325, Official Records, and by said letter agreement dated January 27, 1973
(unrecorded) and as to said Lots 3, 4, 5 and 6, subordinate and supplemental
to a sublease of said Lots 1 through 6, inclusive, dated May 26, 1964,
executed by A.W. Ham, Jr., as sublessor, and Four Queens, Inc., a sublessee,
for a term commencing on November 1, 1964 and ending Sixty (60) years
thereafter, recorded October 15, 1964 as Document No. 465033, Official
Records, as amended by instruments dated June 15, 1964, recorded October 15,
1964 as Document No. 465034, Official Records, dated February 25, 1965
(unrecorded) and dated January 29, 1973, recorded January 30, 1973 as Document
No. 257003, Official Records, and by said letter agreement dated January 17,
1973 (unrecorded), all as disclosed by Certificate of Agreement dated January
29, 1973, recorded January 30, 1973 as Document No. 257017, Official Records.
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(d) A lease of said lots 1 and 2 in Parcel Four (4) executed by A.W. Ham,
Jr., as lessor, with Four Queens, Inc., as lessee, dated January 1973,
recorded January 30, 1973 as Document No. 257007, Official Records, which
lease is, as to said Lots 1 and 2, supplemental to a sublease of said Lots 1
through 6 inclusive, dated May 26, 1964, executed by A.W. Ham, Jr., as
sublessor, and Four Queens, Inc., as sublessee, for a term commencing on
November 1, 1964, and ending Sixty (60) years thereafter, recorded October 15,
1964, as Document No. 465033, Official Records, as amended by instruments
dated June 15, 1964, recorded October 15, 1964, as Document No. 465034,
Official Records, dated February 25, 1965 (unrecorded), and dated January 29,
1973, recorded January 30, 1973, as Document No. 257008, Official Records, and
by letter agreement dated January 17, 1973 all as disclosed by Certificate of
Agreement dated January 29, 1973, recorded January 30, 1973 as Document No.
257017, Official Records.
The terms, covenants, conditions and provisions in an instrument entitled
"Certificate of Merger", recorded July 10, 1973 in book 344 as Document No.
303967 of Official Records.
An Assignment of the Lessee's interest in said lease was:
Executed by: ELSINORE CORPORATION, A NEVADA CORPORATION
To: FOUR QUEENS, INC., A NEVADA CORPORATION
Recorded: May 27, 1987 in Book 870527 as Document No. 00939 of Official
Records
Subject to proceedings pending in the U.S. Bankruptcy Court of the District of
Nevada, Southern Division on behalf of FOUR QUEEN'S, INC., Debtor, Case No.
95-4686, wherein a petition for relief was filed on October 31, 1995 under
Chapter 11.
Affects: PARCEL 4
(20) EASEMENT: An easement affecting that portion of said land and for the
purposes therein and incidental purposes thereto, in favor of CITY OF LAS
VEGAS, for street and alley purposes, recorded December 11, 1970, in Book 85
as Document No. 67735 of Official Records.
Affects: THE EAST 15.00 FEET OF LOT 13
(21) Leasehold Estates, for a remaining term of 2 years 7 months from
September 1, 1972 (ending March 31, 1975) and for a term of 99 years
commencing on April 1, 1975 and ending on and including March 31, 2074, as
created by or based upon:
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(a) Lease dated March 30, 1965 executed by Bank of Nevada and Leon H.
Rockwell, Jr., Trustees, as lessor, and Desert Sands Trading Fort, Inc., as
lessee, recorded May 19, 1965 as Document No. 505104, Official Records,
unrecorded letters dated January 19, 1970 and July 15, 1971 and unrecorded
agreement dated April 25, 1972 executed by Bank of Nevada, a Nevada Banking
Corporation and Leon H. Rockwell, Jr., Trustees and Four Queens, Inc., and
(b) Unrecorded Lease Agreement dated April 25, 1972, executed by Bank of
Nevada and Leon H. Rockwell, Jr., Trustees, as lessors and Four Queens, Inc.,
as lessee, as disclosed by two Certificates and Agreements by Bank of Nevada
and Leon H. Rockwell, Jr., Trustees and Marjorie Rockwell Riley, lessors, and
Four Queens, Inc., lessee, each dated January 24, 1973, recorded January 30,
1973 as Document Nos. 257013 and 257014, Official Records.
The terms, covenants, conditions and provisions in an instrument entitled
"Certificate of Merger", recorded July 10, 1973 in Book 344 as Document No.
303967 of Official Records.
An Assignment of the Lessee's interest in said lease was:
Executed by: ELSINORE CORPORATION, A NEVADA CORPORATION
To: FOUR QUEENS, INC., A NEVADA CORPORATION
Recorded: May 27, 1987 in Book 870527 as Document No. 00939 of Official
Records.
Subject to proceedings pending in the U.S. Bankruptcy Court of the District of
Nevada, Southern Division on behalf of FOUR QUEEN'S, INC., Debtor, Case No.
95-4686, wherein a petition for relief was filed on October 31, 1995 under
Chapter 11.
Affects: PARCEL 5
(22) An unrecorded lease dated May 1, 1970 from Thomas L. Carroll,
individually and as Executor of the Estate of Nellis C. Carroll, deceased, and
as Trustee under said decedent's will, as lessor, to Four Queens, Inc., as
lessee, as disclosed by (unrecorded) Certificates by University of Santa
Clara, dated January 26, 1973 and Roman Catholic Bishop of Reno, dated January
19, 1973, and also disclosed by Memorandum Leases described in the following
paragraph:
(b) Memorandum Leases by University of Santa Clara dated January 26, 1973,
and Roman Catholic Bishop of Reno, dated January 19, 1973, recorded January
30, 1973 as Document No. 257019 and 257018, Official Records.
The terms, covenants, conditions and provisions in an instrument entitled
"Certificate of Merger", recorded July 10, 1973 in book 344 as Document No.
303967 of Official Records.
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An Assignment of the Lessee's interest in said lease was:
Executed by: ELSINORE CORPORATION, A NEVADA CORPORATION
To: FOUR QUEENS, INC., A NEVADA CORPORATION
Recorded: May 27, 1987 in Book 870527 as Document No. 00939 of Official
Records.
Subject to proceedings pending in the U.S. Bankruptcy Court of the District of
Nevada, Southern Division on behalf of FOUR QUEEN'S, INC., Debtor, Case No.
95-4686, wherein a petition for relief was filed on October 31, 1995 under
Chapter 11.
Affects: PARCEL 11
(23) Terms, covenants, conditions and provisions in an instrument entitled,
"AGREEMENT", by and between FOUR QUEENS, INC., doing Business as FOUR QUEENS
HOTEL AND CASINO, A CORPORATION AND THE CITY OF LAS VEGAS, A MUNICIPAL
CORPORATION recorded October 5, 1972, in Book 269 as Document No. 228248, of
Official Records.
Affects: PORTIONS OF VACATED ALLEY
(24) Terms, covenants, conditions and provisions in an instrument entitled,
"AGREEMENT FOR ELECTRIC SERVICE WITHIN A BUILDING", by and between NEVADA
POWER COMPANY, A NEVADA CORPORATION and ELSINORE CORPORATION recorded January
19, 1976, in Book 587 as Document No. 546612, of Official Records.
Affects: ALL LOTS
(25) Terms, covenants, conditions and provisions in an instrument entitled,
"SUPPLEMENT TO FOUR QUEENS HOTEL AGREEMENT FOR ELECTRIC SERVICE WITHIN A
BUILDING", by and between NEVADA POWER COMPANY and ELSINORE CORPORATION
recorded February 26, 1976, in Book 597 as Document No. 556901, of Official
Records.
(26) An unrecorded Lease executed by and between the parties named herein,
for the terms and upon and subject to all of the terms, covenants, and
provisions contained therein;
Dated: January 1, 1978
Lessor: FINLEY COMPANY, A NEVADA CORPORATION
Lessee: ELSINORE CORPORATION, A NEVADA CORPORATION
Term: Commence on January 1, 1978, terminate December 31, 1997
Disclosed by: SHORT FORM LEASE
Recorded: February 22, 1978 in Book 850 as Document No. 809864
The terms, covenants, conditions and provisions in an instrument entitled
"Certificate of Merger", recorded July 10, 1973 in Book 344 as Document No.
303967 of Official Records.
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An Assignment of the Lessee's interest in said lease was:
Executed by: ELSINORE CORPORATION, A NEVADA CORPORATION
To: FOUR QUEENS, INC., A NEVADA CORPORATION
Recorded: May 27, 1987 in Book 870527 as Document No. 00939 of Official
Records.
Subject to proceedings pending in the U.S. Bankruptcy Court of the District of
Nevada, Southern Division on behalf of FOUR QUEEN'S INC., Debtor, Case No. 95-
4686, wherein a petition for relief was filed on October 31, 1995 under
Chapter 11.
Affects: PARCEL 6
(27) ORDER OF VACATION: Any easements not vacated by that certain Order of
Vacation recorded July 3, 1980 in Book 1249 as Document No. 1208177 of
Official Records.
(28) ORDER OF VACATION: Any easements not vacated by that certain Order of
Vacation recorded July 3, 1980 in Book 1249 as Document No. 1208178 of
Official Records.
(29) Terms, covenants, conditions and provisions in an instrument entitled,
"ACCESS TO EQUIPMENT AGREEMENT", by and between NEVADA POWER COMPANY and
ELSINORE CORPORATION recorded July 21, 1980, in Book 1255 as Document No.
1214776, of Official Records.
(30) EASEMENT: An easement affecting that portion of said land and for the
purposes therein and incidental purposes thereto, in favor of NEVADA POWER
COMPANY and CENTRAL TELEPHONE COMPANY, for electrical and communication
facilities, recorded August 11, 1980, in Book 1264 as Document No. 1223990 of
Official Records.
Affects: THE SOUTHERLY TWENTY (20) FEET OF LOT 13
(31) An encroachment of improvements located on said land, onto the land
adjoining on the West, North and East consisting of overhanging building
canopy and decorative support posts as disclosed by Right of Way Encroachment
Agreement subject to covenants, conditions and restrictions contained therein,
recorded February 12, 1981 in Book 1355 as Document No. 1314564 of Official
Records.
(32) An encroachment of improvements located in said land, onto the land
adjoining on the alley way consisting of grease trap as disclosed Right of Way
Encroachment Agreement by subject to covenants, conditions restrictions
contained therein, recorded February 12, 1981 in book 1355 as Document No.
1314568 of Official Records.
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(33) Terms, covenants, conditions and provisions in an instrument entitled,
"AGREEMENT FOR ELECTRIC SERVICE WITHIN A BUILDING", by and between NEVADA
POWER COMPANY, A NEVADA CORPORATION and ELSINORE CORPORATION, A NEVADA
CORPORATION recorded May 14, 1981, in Book 1401 as Document No. 1360009, of
Official Records.
(34) EASEMENT: An easement affecting that portion of said land and for the
purposes therein and incidental purposes thereto, in favor of NEVADA POWER
COMPANY, for electrical lines, recorded May 26, 1981, in Book 1407 as Document
No. 1366317 of Official Records.
Affects: LOTS 6, 7, 8, 9 AND 10
(35) EASEMENT: An easement affecting that portion of said land and for the
purposes therein and incidental purposes thereto, in favor of NEVADA POWER
COMPANY, for electrical lines, recorded June 17, 1981, in Book 1418 as
Document No. 1377580 of Official Records.
Affects: LOTS 11 AND 12
(36) An encroachment of improvements located on said land, onto the land
adjoining on the easterly (3rd Street) side consisting of architectural
landscaping (sidewalk) as disclosed by Right of Way Encroachment Agreement
subject to covenants, conditions and restrictions contained therein, recorded
June 24, 1981 in Book 1422 as Document No. 1381246 of Official Records.
(37) Terms, covenants, conditions and provisions in an instrument entitled,
"DECLARATION OF COVENANTS AND RESTRICTIONS AND RECIPROCAL GRANT OF EASEMENTS",
by and between OTTO J. WESTLAKE, GUARDIANSHIP OF JULIA E. ALBERS, OTTO J.
WESTLAKE, GUARDIAN and KATHERINE M. PURKISS recorded October 25, 1983, in Book
1834 as Document No. 1783453, of Official Records.
(38) An unrecorded Lease executed by and between the parties named herein,
for the terms and upon and subject to all of the terms, covenants, and
provisions contained therein;
Dated: October 25, 1983
Lessor: JULIA A. ALBERS, OTTO J. WESTLAKE, GUARDIAN
Lessee: FOUR QUEENS, INC., A NEVADA CORPORATION
Term: FIFTY (50) YEARS
Disclosed by: MEMORANDUM OF LEASE
Recorded: October 25, 1983 in Book 1824 as Document No. 1783454
Instrument entitled "Memorandum of Lease Term", dated March 1, 1984 and
recorded March 5, 1984 in Book 1884 as Document No. 1843555, recites in part
as follows:
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"Landlord and Tenant for themselves, their heirs, successors and assigns
acknowledge and agree that the Possession Date of the Lease, as defined in
Section 2.1 of the Lease, occurred on March 1, 1984 and accordingly, the
termination date of the Lease is February 28, 2034."
The terms, covenants, conditions and provisions in an instrument entitled
"Certificate of Merger", recorded July 10, 1973 in Book 344 as Document No.
303967 of Official Records.
Subject to proceedings pending in the U.S. Bankruptcy Court of the District of
Nevada, Southern Division on behalf of FOUR QUEEN'S, INC., Debtor, Case No.
95-4686, wherein a petition for relief was filed on October 31, 1995 under
Chapter 11.
An Assignment of the Lessor's interest in said lease was:
Executed by: RICHARD A. OSHINS, EXECUTOR OF THE ESTATE OF JULIA E. ALBERS,
DECEASED
TO: CHARLES W. PURKISS, AN UNDIVIDED 25% INTEREST
Recorded: September 2, 1987 in Book 870902 as Document No. 00850 of
Official Records.
An Assignment of the Lessor's interest in said lease was:
Executed by: RICHARD A. OSHINS, EXECUTOR OF THE ESTATE OF JULIA E. ALBERS,
DECEASED
TO: OTTO J. WESTLAKE, an undivided 50% interest recorded September
2, 1987 in Book 870902 as Document No. 00851 of Official
Records.
The Lessor's interest of OTTO J. WESTLAKE was assigned by BARBARA L. FORBES,
beneficiary of the Estate of Otto J. Westlake deceased to Ralph A. Forbes and
Barbara L. Forbes, Co-Trustees of the Ralph A. Forbes and Barbara L. Forbes,
co-Trustees of the Ralph A. Forbes Revocable Family Trust dated May 5, 1975
recorded December 30, 1993 in Book 931230 as Document No. 01992 of Official
Records.
An Assignment of the Lessor's interest in and said lease was:
Executed by: RICHARD A. OSHINS, EXECUTOR OF THE ESTATE OF JULIA E. ALBERS,
DECEASED
TO: JEWEL M. BOYD, an undivided 25% interest
Recorded: September 22, 1987 in Book 870922 as Document No. 00946 of
Official Records.
Page 87 of 143 Pages
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Affects: PARCEL 8
(39) An unrecorded Lease executed by and between the parties named herein,
for the terms and upon and subject to all of the terms, covenants, and
provisions contained therein;
Dated: October 25, 1983
Lessor: KATHERINE M. PURKISS
Lessee: FOUR QUEENS, INC., A NEVADA CORPORATION
Term: FIFTY (50) YEARS
Disclosed by: MEMORANDUM OF LEASE
Recorded: October 25, 1983 in Book 1824 as Document No. 1783455
Instrument entitled "Memorandum of Lease Term", dated March 1, 1984 and
recorded March 5, 1984 in Book 1884 as Document No. 1843556, recites in part
as follows:
"Landlord and Tenant for themselves, their heirs, successors and assigns
acknowledge and agree that the Possession Date of the Lease, as defined in
Section 2.1 of the Lease, occurred on March 1, 1984 and accordingly, the
termination date of the Lease is February 28, 2034."
The terms, covenants, conditions, and provisions in an instrument entitled
"Certificate of Merger", recorded July 10, 1973 in Book 344 as Document No.
303967 of Official Records.
Subject to proceedings pending in the U.S. Bankruptcy Court of the District of
Nevada, Southern Division on behalf of FOUR QUEEN'S INC., Debtor, Case No. 95-
4686, wherein a petition for relief was filed on October 31, 1995 under
Chapter 11.
An Assignment of the Lessor's interest in said lease was:
Executed by: CHARLES W. PURKISS, EXECUTOR OF THE ESTATE OF KATHARINE M.
PURKISS, DECEASED
To: JEWEL M. BOYD, an undivided 50% interest
Recorded: December 11, 1987 in book 871211 as Document No. 00863 of
Official Records.
An Assignment of the Lessor's interest in said lease was:
Executed by: CHARLES W. PURKISS, EXECUTOR OF THE ESTATE OF KATHARINE M.
PURKISS, DECEASED
To: CHARLES W. PURKISS, an undivided 50% interest
Recorded: December 11, 1987 in book 871211 as Document No. 00864 of
Official Records.
Page 88 of 143 Pages
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Affects: PARCEL 9
(40) An unrecorded Lease executed by and between the parties named herein,
for the terms and upon and subject to all of the terms, covenants, and
provisions contained therein;
Dated: October 25, 1983
Lessor: OTTO J. WESTLAKE
Lessee: FOUR QUEENS, INC., A NEVADA CORPORATION
Term: FIFTY (50) YEARS
Disclosed by: MEMORANDUM OF LEASE
Recorded: October 25, 1983 in Book 1824 as Document No. 1783456
Instrument entitled "Memorandum of Lease Term", dated March 1, 1984 and
recorded March 5, 1984 in book 1884 as Document No. 1843554, recites in part
as follows:
"Landlord and Tenant for themselves, their heirs, successors and assigns
acknowledge and agree that the Possession Date of the Lease, as defined in
Section 2.1 of the Lease, occurred on March 1, 1984 and accordingly, the
termination date of the Lease is February 28, 2034."
The terms, covenants, conditions and provisions in an instrument entitled
"Certificate of Merger", recorded July 10, 1973 in Book 344 as Document No.
303967 of Official Records.
Subject to proceedings pending in the U.S. Bankruptcy Court of the District of
Nevada, Southern Division on behalf of FOUR QUEEN'S, INC., Debtor, Case No.
95-4686, wherein a petition for relief was filed on October 31, 1995 under
Chapter 11.
An Assignment of the Lessor's interest in said lease was:
Executed by: BARBARA L. FORBES, as beneficiary of the Estate of Otto J.
Westlake, deceased
TO: RALPH A. FORBES AND BARBARA L. FORBES, CO-TRUSTEES OF THE RALPH A. FORBES
REVOCABLE FAMILY TRUST DATED MAY 5, 1975, RECORDED DECEMBER 30, 1993 IN BOOK
931230 AS DOCUMENT NO. 01992 OF OFFICIAL RECORDS.
Affects: PARCEL 7
(41) A Lease executed by and between the parties named herein, for the term
and upon and subject to all of the terms, covenants, and provisions contained
therein;
Dated: March 23, 1984
Lessor: CITY OF LAS VEGAS, A MUNICIPAL CORPORATION
Lessee: FOUR QUEENS, INC., A NEVADA CORPORATION
Term: FIFTY (50) YEARS
Recorded: April 3, 1984 in Book 1898 as Document No. 1857942
Page 89 of 143 Pages
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Instrument entitled "Memorandum of Lease Term", dated April 2, 1984 and
recorded April 3, 1984 in book 1898 as Document No. 1857941, recites in part
as follows:
"Lessor and Lessee for themselves, their successors and assigns, acknowledge
and agree that the possession date of the Lease as referred to in Section 2 of
the Indenture of Lease occurred on April 2, 1984, and, accordingly, the
termination date of the lease is April 1, 2034."
The terms, covenants, conditions and provisions in an instrument entitled
"Certificate of Merger", recorded July 10, 1973 in Book 344 as Document NO.
303967 of Official Records.
Subject to proceedings pending in the U.S. Bankruptcy Court of the District of
Nevada, Southern Division on behalf of FOUR QUEEN'S, INC., Debtor, Case No.
95-4686, wherein a petition for relief was filed on October 31, 1995 under
Chapter 11.
Affects: PARCEL 10 (LOTS 17 THROUGH 28 AND PORTION OF ALLEY)
(42) Reservations of right of way and easements recorded March 11, 1986 in
Book 860311 as Document NO. 00432 recites in part as follows:
"Reserving an easement to the CITY OF LAS VEGAS FIRE DEPARTMENT of direct
access to the Four Queens Hotel fire control room.
ALSO RESERVING an easement to the CITY OF LAS VEGAS, CENTRAL TELEPHONE
COMPANY, NEVADA POWER COMPANY and the LAS VEGAS VALLEY WATER DISTRICT with
right of ingress and egress."
Affects: PARCEL VI AND VACATED ALLEY
(43) DEED OF TRUST: A Deed of Trust to secure an indebtedness of
$60,000,000.00 and any other amounts payable under the terms thereof:
Recorded: October 8, 1993 in Book 931008 Document No. 00554 of Official
Records.
Dated: October 8, 1993
Trustor: FOUR QUEENS, INC., A NEVADA CORPORATION
Trustee: LAND TITLE OF NEVADA, INC.
Beneficiary: FIRST TRUST NATIONAL ASSOCIATION, A NATIONAL ASSOCIATION
The amount due, terms and conditions of the indebtedness should be determined
by contacting the owner of the debt.
Page 90 of 143 Pages
<PAGE>
ESCROW NO: 95-03-1487 RMG
4th Amendment
Affects: ALL LOTS
SUBORDINATION AGREEMENT: An Agreement which states that this instrument was
subordinated to the lien of the Deed of Trust recorded October 14, 1994 in
Book 941014 of Official Records as document 00611; By an Agreement recorded
October 14, 1994 in Book 941014 of Official Records as document number 00613.
Said Subordination Agreement was modified by instrument recorded July 7, 1995
in Book 950707 as Document No. 01557 of Official Records.
The above Deed of Trust was Subordinated to Airspace Easements shown as Items
No. 46 and No. 47 herein, by Agreement recorded June 30, 1995 in Book 950630
as Document No. 00131 of Official Records.
(44) FINANCING STATEMENT: The effect of a Financing Statement to secure an
indebtedness of the amount stated herein, executed by FOUR QUEENS, INC., in
favor of FIRST TRUST NATIONAL ASSOCIATION, AS TRUSTEE, in the amount of $ (NOT
SET OUT), DATED October 7, 1993, and recorded October 8, 1993 in Book 931008
as Document No. 00555 of Official Records.
Affects: ALL LOTS
(45) AIRSPACE EASEMENT: An easement affecting that portion of said land and
for the purposes therein and incidental purposes thereto, in favor of CITY OF
LAS VEGAS, A MUNICIPAL CORPORATION OF THE STATE OF NEVADA, for the
construction, support, operation, maintenance, repair and use of the
improvements for the Fremont Street Experience (a Celestial Vault), recorded
June 13, 1994, in Book 940613 as Document No. 05223 of Official Records.
Affects: THE NORTHEASTERLY 18 FEET OF PARCEL 6
(46) AIRSPACE EASEMENT: An easement affecting that portion of said land and
for the purposes therein and incidental purposes thereto, in favor of CITY OF
LAS VEGAS, A MUNICIPAL CORPORATION OF THE STATE OF NEVADA, for the
construction, support, operation, maintenance, repair and use of the
improvements for the Fremont Street Experience (a Celestial Vault), recorded
June 13, 1994, in Book 940613 as Document No. 05224 of Official Records.
Affects: NORTHEASTERLY 18 FEET OF PARCELS 5 AND 6
Page 91 of 143 Pages
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ESCROW NO: 95-03-1487 RMG
4th Amendment
(47) DEED OF TRUST: A Deed of Trust to secure an indebtedness of
$3,000,000.00 and any other amounts payable under the terms thereof:
Recorded: October 14, 1994 in Book 941014 Document No. 00611 of Official
Records.
Dated: October 13, 1994
Trustor: FOUR QUEENS, INC., A NEVADA CORPORATION
Trustee: LAND TITLE OF NEVADA, INC.
Beneficiary: PUTNAM DIVERSIFIED INCOME TRUST, PUTNAM HIGH INCOME CONVERTIBLE
AND BOND FUND, PUTNAM MASTER INTERMEDIATE INCOME TRUST, PUTNAM
MANAGE HIGH YIELD TRUST AND PUTNAM CAPITAL MANAGER TRUST-PUTNAM
DIVERSIFIED INCOME FUND
The amount due, terms and conditions of the indebtedness should be determined
by contacting the owner of the debt.
Affects: ALL LOTS
An instrument purports to modify the terms of the hereinabove stated Deed of
Trust as therein provided, and recorded MARCH 3, 1997, in Book 970303 as
Document No. 01154 of Official Records.
(48) FINANCING STATEMENT: The effect of a Financing Statement to secure an
indebtedness of the amount stated herein, executed by FOUR QUEENS, INC., in
favor of PUTNAM DIVERSIFIED INCOME TRUST; PUTNAM HIGH INCOME CONVERTIBLE AND
BOND FUND; PUTNAM MASTER INTERMEDIATE INCOME TRUST; PUTNAM MANAGED HIGH YIELD
TRUST AND PUTNAM CAPITAL MANAGER TRUST-PUTNAM DIVERSIFIED INCOME FUND, in the
amount of $(NOT SET OUT), dated October 10, 1994, and recorded October 14,
1994 in Book 941014 as Document No. 00612 of Official Records.
Affects: ALL LOTS
(49) LIEN: A lien due the United States of America for an amount hereinafter
set out and any other amounts due thereunder;
Debtor: ELSINORE CORPORATION & SUBSIDIARIES DBA: FOUR QUEENS HOTEL &
CASINO A CORPORATION
Amount: $5,729,665.86
Identifying No.: 88-0117544
Recorded: November 21, 1994 in Book 941121 as Document No. 00950
of Official Records.
(50) AIRSPACE EASEMENT: An easement affecting that portion of said land and
for the purposes therein and incidental purposes thereto, in favor of CITY OF
LAS VEGAS, A MUNICIPAL CORPORATION OF THE STATE OF NEVADA, for the
construction, support, operation, maintenance, repair and use of the
improvements for the Fremont Street Experience (a Celestial Vault), recorded
June 30, 1995, in Book 950630 as Document No. 00139 of Official Records.
Affects: THE NORTHEASTERLY 18 FEET OF PARCEL FIVE (5)
Page 92 of 143 Pages
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ESCROW NO: 95-03-1487 RMG
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(51) AIRSPACE EASEMENT: An easement affecting that portion of said land and
for the purposes therein and incidental purposes thereto, in favor of CITY OF
LAS VEGAS, A MUNICIPAL CORPORATION OF THE STATE OF NEVADA, for the
construction, support, operation, maintenance, repair and use of the
improvements for the Fremont Street Experience (as Celestial Vault), recorded
November 21, 1995, in Book 951121 as Document No. 01239 of Official Records.
Affects: THE NORTHEASTERLY 18 FEET OF PARCEL FIVE (5)
(52) AIRSPACE EASEMENT: An easement affecting that portion of said land and
for the purposes therein and incidental purposes thereto, in favor of CITY OF
LAS VEGAS, A MUNICIPAL CORPORATION OF THE STATE OF NEVADA, for the
construction, support, operation, maintenance, repair and use of the
improvements for the Fremont Street Experience (a Celestial Vault), recorded
November 21, 1995, in Book 951121 as Document No. 01241 of Official Records.
Affects: THE NORTHEASTERLY 18 FEET OF PARCEL FIVE (5)
(53) AIRSPACE EASEMENT: An easement affecting that portion of said land and
for the purposes therein and incidental purposes thereto, in favor of CITY OF
LAS VEGAS, A MUNICIPAL CORPORATION OF THE STATE OF NEVADA, for the
construction, support, operation, maintenance, repair and use of the
improvements for the Fremont Street Experience (a Celestial Vault), recorded
November 21, 1995, in Book 951121 as Document No. 01244 of Official Records.
Affects: THE NORTHEASTERLY 18 FEET OF PARCEL FIVE (5)
(54) AIRSPACE EASEMENT: An easement affecting that portion of said land and
for the purposes therein and incidental purposes thereto, in favor of CITY OF
LAS VEGAS, A MUNICIPAL CORPORATION OF THE STATE OF NEVADA, for the
construction, support, operation, maintenance, repair and use of the
improvements for the Fremont Street Experience (a Celestial Vault), recorded
November 12, 1995, in Book 951121 as Document No. 01246 of Official Records.
Affects: THE NORTHEASTERLY 18 FEET OF PARCEL FIVE (5)
(55) Terms, covenants, conditions and provisions in an instrument entitled,
"ORDINANCE NO. 4036", RELATING TO AMENDMENT OF LAS VEGAS REDEVELOPMENT AREA as
set forth in instrument recorded November 22, 1996 in Book 961122 as Document
No. 00847; Notice of Adoption of said Amendment recorded November 22, 1996 in
Book 961122 as Document No. 00848; re-recorded November 25, 1996 in Book
961125 as Document No. 00566 and map delineating said areas was filed November
22, 1996 in Land Grant File, Page 78 as Document 00849 of Official Records.
(56) This company requires a full and complete, confirmed copy of the First
Amended Plan of Reorganization in the matter of The estate of Four Queens Inc.
Debtor, in Case No. 95-24686 RCJ, in United States Bankruptcy Court, District
of Nevada, dated May 22, 1996 and any and all amendments thereto.
Page 93 of 143 Pages
<PAGE>
ESCROW NO: 95-03-1487 RMG
4th Amendment
(57) This company requires a Certified Copy of Bankruptcy Order entered with
the consent of both the Bondholders and the Debtors authorizing an extension
of time as set forth in Section 2.32 of The First Amended Plan, dated May
22,1996.
(58) The right is reserved to make additional exceptions and/or requirements
after examination of above bankruptcy documentation.
(59) Discrepancies, conflicts in boundary lines, shortage in area,
encroachments, or any other facts which a correct survey would disclose, and
which are not shown by the public records.
(60) Subject to the rights of party or parties in possession in accordance
with any unrecorded leases and/or sub-leases, affecting portions of said land
for the term and upon the terms, covenants, conditions and provisions therein
contained.
(61) Prior to the issuance of an ALTA form Policy of Title Insurance, it
shall be required that this Company be furnished with an ALTA/ACSM LAND TITLE
SURVEY conforming to the minimum standard requirements as revised in 1992.
(62) The requirement that a physical inspection of the subject land be made
prior to the close of escrow.
NOTE: Additional exceptions and/or requirements may be added to this report
upon completion of said inspection.
Page 94 of 143 Pages
<PAGE>
ESCROW NO: 95-03-1487 RMG
4th Amendment
TAX INFORMATION:
1997-1998
Tax District: 203
Tax Rate: 3.0481
Parcel No.: 139-34-111-061
Real Estate: $362,600.00
Improvements: $.00
Assessed Valuation: $362,600.00
Acreage Assessed: N/A
NOTE: This record is for assessment use only. No liability is assumed as to
the accuracy of the data delineated hereon.
AFFECTS: PARCEL ONE (1)
TAX INFORMATION:
1997-1998
Tax District: 203
Tax Rate: 3.0481
Parcel No.: 139-34-111-056
Real Estate: $165,380.00
Improvements: $.00
Assessed Valuation: $165,380.00
Acreage Assessed: N/A
NOTE: This record is for assessment use only. No liability is assumed as to
the accuracy of the data delineated hereon.
AFFECTS: PARCEL TWO (2)
TAX INFORMATION:
1997-1998
Tax District: 203
Tax Rate: 3.0481
Parcel No.: 139-34-210-062
Real Estate: $236,250.00
Improvements: $.00
Assessed Valuation: $236,250.00
Acreage Assessed: N/A
NOTE: This record is for assessment use only. No liability is assumed as to
the accuracy of the data delineated hereon.
AFFECTS: PARCEL THREE (3)
Page 95 of 143 Pages
<PAGE>
ESCROW NO: 95-03-1487 RMG
4th Amendment
TAX INFORMATION:
1997-1998
Tax District: 203
Tax Rate: 3.0481
Parcel No.: 139-34-111-057
Real Estate: $362,600.00
Improvements: $8,676,290.00
Personal Property: $2,389,810.00
Assessed Valuation: $11,428,700.00
Acreage Assessed: N/A
NOTE: This record is for assessment use only. No liability is assumed as to
the accuracy of the data delineated hereon.
AFFECTS: A PORTION OF PARCEL FOUR (4)
TAX INFORMATION:
1997-1998
Tax District: 203
Tax Rate: 3.0481
Parcel No.: 139-34-111-058
Real Estate: $543,900.00
Improvements: $.00
Assessed Valuation: $543,900.00
Acreage Assessed: N/A
NOTE: This record is for assessment use only. No liability is assumed as to
the accuracy of the data delineated hereon.
AFFECT: A PORTION OF PARCEL FOUR (4)
TAX INFORMATION:
1997-1998
Tax District: 203
Tax Rate: 3.0481
Parcel No.: 139-34-111-059
Real Estate: $181,300.00
Improvements: $.00
Assessed Valuation: $181,300.00
Acreage Assessed: N/A
NOTE: This record is for assessment use only. No liability is assumed as to
the accuracy of the data delineated hereon.
AFFECTS: A PORTION OF PARCEL FOUR (4)
Page 96 of 143 Pages
<PAGE>
ESCROW NO: 95-03-1487 RMG
4th Amendment
TAX INFORMATION:
1997-1998
Tax District: 203
Tax Rate: 3.0481
Parcel No.: 139-34-111-060
Real Estate: $362,600.00
Improvements: $.00
Assessed Valuation: $362,600.00
Acreage Assessed: N/A
NOTE: This record is for assessment use only. No liability is assumed as to
the accuracy of the data delineated hereon.
AFFECTS: PARCEL FIVE (5)
TAX INFORMATION:
1997-1998
Tax District: 203
Tax Rate: 3.0481
Parcel No.: 139-34-111-062
Real Estate: $362,600.00
Improvements: $.00
Assessed Valuation: $362,600.00
Acreage Assessed: N/A
NOTE: This record is for assessment use only. No liability is assumed as to
the accuracy of the data delineated hereon.
AFFECTS: PARCEL SIX (6)
TAX INFORMATION:
1997-1998
Tax District: 203
Tax Rate: 3.0481
Parcel No.: 139-34-111-055
Real Estate: $118,130.00
Improvements: $.00
Assessed Valuation: $118,130.00
Acreage Assessed: N/A
NOTE: This record is for assessment use only. No liability is assumed as to
the accuracy of the data delineated hereon.
AFFECTS: PARCEL SEVEN (7)
Page 97 of 143 Pages
<PAGE>
ESCROW NO: 95-03-1487 RMG
4th Amendment
TAX INFORMATION:
1997-1998
Tax District: 203
Tax Rate: 3.0481
Parcel No.: 139-34-111-054
Real Estate: $118,130.00
Improvements: $221,390.00
Assessed Valuation: $339,520.00
Acreage Assessed: N/A
NOTE: This record is for assessment use only. No liability is assumed as to
the accuracy of the data delineated hereon.
AFFECTS: PARCEL EIGHT (8)
TAX INFORMATION:
1997-1998
Tax District: 203
Tax Rate: 3.0481
Parcel No.: 139-34-111-053
Real Estate: $118,130.00
Improvements: $.00
Assessed Valuation: $118,130.00
Acreage Assessed: N/A
NOTE: This record is for assessment use only. No liability is assumed as to
the accuracy of the data delineated hereon.
TAX INFORMATION:
1997-1998
Tax District: 203
Tax Rate: 3.0481
Parcel No.: 139-34-210-046
Real Estate: $1,417,500.00
Improvements: $804,250.00
Assessed Valuation: $2,221,750.00
Acreage Assessed: N/A
NOTE: This record is for assessment use only. No liability is assumed as to
the accuracy of the data delineated hereon.
AFFECTS: PARCEL TEN (10)
Page 98 of 143 Pages
<PAGE>
ESCROW NO: 95-03-1487 RMG
4th Amendment
TAX INFORMATION:
1997-1998
Tax District: 203
Tax Rate: 3.0481
Parcel No.: 139-34-111-063
Real Estate: $283,500.00
Improvements: $.00
Assessed Valuation: $283,500.00
Acreage Assessed: N/A
NOTE: This record is for assessment use only. No liability is assumed as to
the accuracy of the data delineated hereon.
AFFECTS: PARCEL ELEVEN (11)
JJH
Page 99 of 143 Pages
<PAGE>
ESCROW NO: 95-03-1487 RMG
4th Amendment
EXHIBIT "B"
A Leasehold Estate as to Parcels I, II, IV, VI, VII and IX
and
A Fee Estate as to Parcels III, V and VIII
Page 100 of 143 Pages
<PAGE>
Copy of a map dated May 8, 1905 of Clark's Las Vegas Townsite, a subdivision
of Lincoln County, Nevada, showing lots one through forty as subdivided by
then owner Las Vegas Land and Water Company
Page 101 of 143 Pages
<PAGE>
SCHEDULE 2.20
Environmental Matters
None.
Page 102 of 143 Pages
<PAGE>
SCHEDULE 3.2(a)
Non-Contravention; Required Filings and Consents
------------------------------------------------
Mr. Allen E. Paulson ("Mr. Paulson") is the owner of all of the issued
and outstanding capital stock of Gaming. Mr. Paulson is also the beneficial
owner of approximately 25% of all of the issued and outstanding capital stock
of Full House Resorts, Inc., a Delaware corporation ("FHR") and is the
Chairman of the Board of FHR. Prior to the execution of this Agreement, Mr.
Paulson had proposed that FHR participate in the transactions contemplated by
this Agreement. However, Mr. Paulson has been advised by FHR that it does not
plan to do so.
FHR has entered into a joint venture Master Agreement, dated December 29,
1995 (the "JV Agreement"), with GTECH/Dreamport Company ("GTECH"), to, among
other things, present certain business opportunities to each other. This
obligation was terminated pursuant to a letter, dated January 27, 1997, from
GTECH to FHR, amending the JV Agreement, a copy of which was provided to the
Company.
Page 103 of 143 Pages
<PAGE>
EXHIBIT A
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
OF
ELSINORE ACQUISITION SUB, INC.
Pursuant to 78.385 of the Nevada Revised Statutes (the "NRS"),
the undersigned, being at least two-thirds of the Board of Directors of
Elsinore Acquisition Sub, Inc., a Nevada corporation (the "Corporation"), does
hereby declare and state as follows:
1. That the Articles of Incorporation of the Corporation were
duly filed with the Nevada Secretary of State on July 1,
1997.
2. That this amendment was approved by unanimous written
consent of the holders of all of the outstanding shares of
capital stock of the Corporation.
3. That the Articles of Incorporation of the Corporation are
hereby amended in their entirety, as follows:
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
ELSINORE ACQUISITION SUB, INC.
ARTICLE 1
NAME
The name of the Corporation is Elsinore Acquisition Sub, Inc.
Page 104 of 143 Pages
<PAGE>
ARTICLE 2
INITIAL RESIDENT AGENT AND REGISTERED OFFICE
The name of the initial resident agent of the Corporation is The
Corporation Trust Company of Nevada, a corporate resident of the State of
Nevada, whose business address is One East First Street, Reno, Nevada 89501.
ARTICLE 3
CAPITAL STOCK
Section 3.1. Authorized Shares. The aggregate number of shares
of capital stock that the Corporation shall have the authority to issue is
1,000 shares of common stock with a par value of $.001 per share (the "Common
Stock").
Section 3.2. Assessment of Shares. The capital stock of the
Corporation, after the amount of the subscription price has been paid, shall
not be subject to pay the debts of the Corporation, and no capital stock
issued as fully paid up shall ever be assessable or assessed.
Section 3.3. Denial of Preemptive Rights. No stockholder of the
Corporation shall have any preemptive or other right, by reason of his status
as a stockholder, to acquire any unissued shares, treasury shares, or
securities convertible into shares of the capital stock of the Corporation.
This denial of preemptive rights shall, and is intended to, negate any rights
which would otherwise be given to stockholders pursuant to NRS 78.265,
78.267 or any successor statute.
ARTICLE 4
DIRECTORS
Section 4.1. Style of Governing Board. The members of the
governing board of the Corporation shall be styled Directors.
Section 4.2. Initial Board of Directors. The initial Board of
Directors shall consist of one member.
Section 4.3. Names and Addresses. The name and address of the
person who is to serve as Director until the first annual meeting of the
stockholders, or until his successor shall have been elected and qualified, is
as follows:
Page 105 of 143 Pages
<PAGE>
Name Address
Allen E. Paulson c/o Skadden, Arps, Slate,
Meagher & Flom LLP
300 S. Grand Avenue
Los Angeles, CA 90071
Attention: Brian J. McCarthy
Section 4.4. Increase or Decrease of Directors. The number of
Directors of the Corporation may be increased or decreased from time to time
as shall be provided in the bylaws of the Corporation.
ARTICLE 5
LIABILITY OF DIRECTORS AND OFFICERS
Section 5.1 Limitation of Person Liability. No director of
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 of the Corporation for acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law or the payment of
distributions in violation of NRS 78.300. If the NRS are hereafter amended
or interpreted to eliminate or limit further the personal liability of
directors or officers, then the liability of directors or officers shall be
eliminated or limited to the full extent then so permitted.
Section 5.2 Payment of Expenses. In addition to any other
rights of indemnification permitted by the law of the State of Nevada as may
be provided for by the Corporation, in its bylaws or by agreement, the
reasonable expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding, involving alleged acts or omissions of
such officer or director in his or her capacity as an officer or director of
the Corporation, must be paid, by the Corporation or through insurance
purchased and maintained by the Corporation or through other financial
arrangements made 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.
Section 5.3 Repeal And Conflicts. Any repeal or modification
of this Section 5 approved by the stockholders of the Corporation shall be
prospective only. In the event of any conflict between this Article 5 and any
other Article of the Corporation's Articles of Incorporation, the terms and
provisions of this Article 5 shall control.
Page 106 of 143 Pages
<PAGE>
ARTICLE 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 of the Corporation shall be in
compliance with, the requirements and qualifications imposed by the Nevada
Gaming Control Act (Nevada Revised Statutes 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 7
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.
The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, I have executed these Amended and Restated
Articles of Incorporation of the Corporation as of September , 1997.
__________________________
Allen E. Paulson
President, Secretary & Treasurer
Page 107 of 143 Pages
<PAGE>
Exhibit B
BYLAWS
OF
ELSINORE ACQUISITION SUB, INC.
ARTICLE I
IDENTIFICATION
Section 1.1 Name. The name of the corporation is Elsinore
Acquisition Sub, Inc.
Section 1.2 Registered Office and Resident Agent. The address
of the registered office of the corporation is One East First Street, Reno
Nevada 89501; and the name of the resident agent at this address is The
Corporation Trust Company of Nevada.
Section 1.3 Fiscal Year. The fiscal year of the corporation
shall begin on the 1st day of January in each year and end on the 31st day of
December next following.
ARTICLE II
STOCK
Section 2.1 Issuance of Shares. Shares of stock may be issued
for labor, services, personal property, real estate or leases thereof or for
money from time to time by the Board of Directors. Treasury shares may be
disposed of by the corporation for such consideration as aforesaid from time
to time by the Board of Directors.
Section 2.2 Payment of Shares. The consideration for the
issuance of shares may be paid, in whole or in part, in money, in other
property, as aforesaid, or in labor or services actually performed for the
corporation. When payment of the consideration for which shares are to be
issued shall have been received by the corporation such shares shall be deemed
to be fully paid and non- assessable. Future services shall not constitute
payment or part payment for shares of the corporation. In the absence of
fraud in the transaction, the judgment of the Board of Directors as to the
value of the consideration received for shares shall be conclusive. No
certificate shall be issued for any share until the share is fully paid.
Section 2.3 Certificates Representing Shares. Each holder of
the shares of stock of the corporation shall be entitled to a certificate
signed by the President or a Vice President and the Secretary or an Assistant
Secretary of the corporation, certifying the number of shares owned by him in
the corporation.
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Section 2.4 Transfer of Stock. The corporation shall register
a transfer of a stock certificate presented to it for transfer if;
(a) Endorsement. The certificate is properly endorsed by the
registered holder or by his duly authorized attorney;
(b) Witnessing. The endorsement or endorsements are witnessed
by one witness unless this requirement is waived by the Secretary of the
corporation;
(c) Adverse Claims. The corporation has no notice of any
adverse claims or has discharged any duty to inquire into any such claims;
(d) Collection of Taxes. There has been compliance with any
applicable law relating to the collection of taxes.
ARTICLE III
THE STOCKHOLDERS
Section 3.1 Place of Meetings. Meetings of the stockholders of
the corporation may be held at its registered office in the State of Nevada or
at any other place within or without the State of Nevada as may be designated
in the notice thereof.
Section 3.2 Annual Meetings. Unless the stockholders shall have
executed and delivered a written consent electing at least one-fourth of the
directors annually, the annual meeting of the stockholders shall be held each
year at the principal office of the corporation at the hour of 10:00 o'clock
A.M. on the anniversary date of the incorporation of this corporation, if this
day shall fall on a normal business day, and if not, then on the first
following normal business day. Failure to hold the annual meeting at the
designated time shall not work a forfeiture or dissolution of the corporation.
Section 3.3 Special Meetings. Special meetings of the
stockholders may be called by the President, the Board of Directors, or by the
Secretary at the written request (stating the purpose or purposes for which
the meeting is called) of the holders of not less than one-tenth of all the
shares entitled to vote at the meeting.
Section 3.4 Notice of Meetings; Waiver. Written notice stating
the place, day, and hour of the meeting and, in case of a special meeting the
purpose or purposes for which the meeting is called, shall be delivered not
less than ten (10) nor more than sixty (60) days before the date of the
meeting, either personally or by mail, by or at the direction of the
President, the Secretary, or the officer or persons calling the meeting, to
each registered holder entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States
mail addressed to the registered holder at his address as it appears on the
stock transfer books of the corporation, with postage on it prepaid. Waiver
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<PAGE>
by a stockholder in writing of notice of a stockholders' meeting shall
constitute a waiver of notice of the meeting, whether executed and/or
delivered before or after such meeting.
Section 3.5 Quorum. A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
the stockholders. The stockholders present at a duly organized meeting may
continue to do business until adjournment, notwithstanding the withdrawal of
enough stockholders to leave less than a quorum. The act of a majority of the
shares entitled to vote at a meeting at which a quorum is present shall be the
act of the stockholders, unless a greater number is required by applicable
law.
Section 3.6 Proxies. A stockholder may vote either in person or
by proxy executed in writing by the stockholder or by his duly authorized
attorney-in-fact. No proxy shall be valid after six months from the date of
its creation, unless otherwise provided in the proxy.
Section 3.7 Action Without A Meeting. Any action that may be
taken at a meeting of the stockholders, or of a committee, may be taken
without a meeting if a consent in writing, setting forth the actions taken,
shall be signed by the stockholders, or the members of the committee, holding
at least a majority of the voting power, unless a greater proportion of voting
power is required for such an action at a meeting, as the case may be.
ARTICLE IV
THE BOARD OF DIRECTORS
Section 4.1 Number and Qualifications. The business and affairs
of the corporation shall be managed by a Board of one (1) or more Directors.
The number of directors may be increased or decreased from time to time and at
any time by the stockholders, or Board of Directors.
Section 4.2 Election. Members of the initial Board of Directors
shall hold office until the first annual meeting of stockholders and until
their successors shall have been elected and qualified. At the first annual
meeting of stockholders and at each annual meeting thereafter, the
stockholders shall elect directors to hold office until the next succeeding
annual meeting. Each director shall hold office for the term for which he is
elected and until his successor shall be elected and qualified.
Notwithstanding anything herein to the contrary, any director may be removed
from office at any time by the vote or written consent of stockholders
representing not less than two-thirds of the issued and outstanding stock
entitled to vote.
Section 4.3 Vacancies. Any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of the majority of the
remaining directors, though less than a quorum of the Board of Directors, and
by the affirmative vote of the majority of the stockholders entitled to vote
for the election of directors. A director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office, subject to
removal as aforesaid.
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Section 4.4 Place of Meeting. The Board of Directors, annual,
regular or special, may be held either within or without the State of Nevada.
Section 4.5 Annual Meetings. Immediately after the annual
meeting of the stockholders, the Board of Directors may meet each year for the
purpose of organization, election of officers, and consideration of any other
business that may properly be brought before the meeting. No notice of any
kind to either old or new members of the Board of Directors for this annual
meeting shall be necessary.
Section 4.6 Other Meetings. Other meetings of the Board of
Directors may he held upon notice by letter, telegram, facsimile, cable, or
radiogram, delivered for transmission not later than during the third day
immediately preceding the day for the meeting, or by telephone, or radiophone
received not later than during the second day preceding the day for the
meeting, upon the call of the President or Secretary of the corporation at any
place within or without the State of Nevada. Notice of any meeting of the
Board of Directors may be waived in writing signed by the person or persons
entitled to the notice, whether before or after the time of the meeting.
Neither the business to be transacted at, nor the purpose of, any meeting of
the Board of Directors need be specified in the notice or waiver of notice of
the meeting.
Section 4.7 Quorum. A majority of the number of directors
holding office shall constitute a quorum for the transaction of business. The
act of the majority of the directors present at a meeting at which a quorum
has been achieved shall be the act of the Board of Directors unless the act of
a greater number is required by applicable law.
Section 4.8 Action Without A Meeting. Any action that may be
taken at a meeting of the directors, or of a committee, may be taken without a
meeting if a consent in writing, setting forth the actions taken, shall be
signed by all of the directors, or all of the members of the committee, as the
case may be.
ARTICLE V
THE OFFICERS
Section 5.1 Officers. The officers of the corporation shall
consist of a President, Secretary and Treasurer, and may also include a
Chairman of the Board, one or more Vice Presidents, Assistant Secretaries,
Assistant Treasurers, or such other officers or assistant officers or agents
as may be provided herein, or otherwise deemed necessary, from time to time by
the Board of Directors. Officers need not be directors of the corporation.
Each officer so elected shall hold office until his successor is elected and
qualified, but shall be subject to removal at any time by the vote or written
consent of a majority of the directors. No person shall be prohibited from
concurrently holding more than one office or from being the sole officer of
the corporation.
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Section 5.2 Vacancies. Whenever any vacancies shall occur in any
office by death, resignation, increase in the number of offices of the
corporation, or otherwise; the same shall be filled by the Board of Directors,
and the officer so elected shall hold office until his successor is elected
and qualified, subject to removal as aforesaid.
Section 5.3 The Chairman of the Board of Directors. The
Chairman of the Board of Directors shall preside at all meetings of the
directors, discharge all duties incumbent upon the presiding officer, and
perform such other duties as the Board of Directors may prescribe.
Section 5.4 The President. The President shall have active
executive management of the operations of the corporation, subject, however,
to the control of the Board of Directors. He shall preside at all meetings of
stockholders, discharge all the duties incumbent upon a presiding officer, and
perform such other duties as these Bylaws provide or the Board of Directors
may prescribe. The President shall have full authority to execute powers in
behalf of the corporation, to vote stock owned by it in any other corporation,
and to execute powers of attorney appointing other corporations, partnerships,
or individuals the agent of the corporation.
Section 5.5 The Vice President. The Vice President shall
perform all duties incumbent upon the President during the absence or
disability of the President, and shall perform such other duties as these
Bylaws provide or the Board of Directors may prescribe.
Section 5.6 The Secretary. The Secretary shall attend all
meetings of the stockholders and of the Board of Directors, and shall keep a
true and complete record of the proceedings of these meetings. He shall be
custodian of the records of the corporation. He shall attend to the giving of
all notices and shall perform such other duties as these Bylaws may provide or
the Board of Directors may prescribe.
Section 5.7 The Treasurer. The Treasurer shall keep correct and
complete records of account, showing accurately at all times the financial
condition of the corporation. He shall be the legal custodian of all moneys,
notes, securities, and other valuables that may from time to time come into
the possession of the corporation. He shall immediately deposit all funds of
the corporation coming into his hands in some reliable bank or other
depositary to be designated by the Board of Directors, and shall keep this
bank account in the name of the corporation. He shall furnish at meetings of
the Board of Directors, or whenever requested, a statement of the financial
condition of the corporation, and shall perform such other duties as these
Bylaws may provide or the Board of Directors may prescribe. The Treasurer may
be required to furnish bond in such amount as shall be determined by the Board
of Directors.
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Section 5.8 Transfer of Authority. In case of the absence of
any officer of the corporation, or for any other reason that the Board of
Directors may deem sufficient, the Board of Directors may transfer the powers
or duties of that officer to any other officer or to any director or employee
of the corporation, provided a majority of the full Board of Directors
concurs.
ARTICLE VI
NEGOTIABLE INSTRUMENTS, DEEDS, AND CONTRACTS
Section 6.1 Negotiable Instruments, Deeds, and Contracts. All
checks, drafts, notes bonds, bills of exchange, and orders for the payment of
money of the corporation; all deeds, mortgages, and other written contracts
and agreements to which the corporation shall be a party; and all assignments
or endorsements of stock certificates, registered bonds, or other securities
owed by the corporation shall, unless otherwise required by law, or otherwise
authorized by the Board of Directors as hereinafter set forth, be signed by
the President or by anyone of the following officers: Vice President,
Secretary, or Treasurer. The Board of Directors may designate one or more
persons, officers or employees of the corporation, who may, in the name of the
corporation and in lieu of, or in addition to, those persons hereinabove
named, sign such instruments; and may authorize the use of facsimile
signatures of any of such persons. Any shares of stock issued by any other
corporation and owned or controlled by the corporation may be voted at any
stockholders' meeting of the other corporation by the President of the
corporation, if he be present; or, in his absence, by the Secretary of the
corporation and, in the event both the President and Secretary shall be
absent, then by such person as the President of the corporation shall, by duly
executed proxy, designate to represent the corporation at such stockholders
meeting.
ARTICLE VII
INDEMNIFICATION
Section 7.1 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, expect 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
Page 113 of 143 Pages
<PAGE>
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
Page 114 of 143 Pages
<PAGE>
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 VII (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 VII, 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 VII at all times to provide the must
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
Page 115 of 143 Pages
<PAGE>
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 VII.
(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 7.2 Vested Rights. Neither the amendment nor repeal of
this ARTICLE VII, nor the adoption of any provision of the Articles of
Incorporation or the Bylaws or of any statute inconsistent with this ARTICLE
VII, 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 VIII
AMENDMENTS
Section 8.1 The power to alter, amend or repeal these Bylaws, or
adopt new Bylaws, is vested in the Board of Directors, but the affirmative
vote of a majority of the Board of Directors holding office shall be necessary
to effect any such action.
I hereby certify that the foregoing Bylaws are a true and correct
copy of the Bylaws of the corporation as adopted as of September 4, 1997.
s/ Allen E. Paulson
-----------------------------
Allen E. Paulson, Secretary
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<PAGE>
Exhibit C
CONFIDENTIALITY AGREEMENT
May 5, 1997
Mr. Allen Paulson
c/o Jefferies & Company, Inc.
Attention: M. Brent Stevens
Managing Director, Corporate Finance
11100 Santa Monica Boulevard, Tenth Floor
Los Angeles, CA 90025
Re: Elsinore Corporation
____________________
Gentlemen:
We understand that you are considering a possible negotiated
acquisition transaction (the "Transaction") with Elsinore Corporation. In
connection with the foregoing, Elsinore Corporation or its subsidiaries (the
"Company") may furnish to you, either orally, in writing, or by inspection,
certain information, material and documents (collectively, "Proprietary
Information") regarding the Company and its business, assets, financial
condition, operations and prospects, which may be helpful in evaluating the
Transaction. As a condition to our furnishing you with Proprietary
Information, you hereby agree as follows:
1. All Proprietary Information heretofore or hereafter furnished to
you by the Company shall be deemed confidential and shall be kept in strict
confidence under appropriate safeguards. The term Proprietary Information, as
used herein, does not include any information which (i) as shown by written
records, was lawfully in your possession prior to any disclosure by the
Company, provided that the source of such information was, to the best of your
knowledge, not bound by confidentiality obligations in respect thereof, or
(ii) is generally available to the public other than as a result of disclosure
by your employees, your agents, your representatives or others acting on your
behalf.
2. Except as otherwise provided herein or without the Company's
prior written consent, you will not, directly or indirectly: (i) disclose or
reveal any Proprietary Information to any persons, firms or entities except to
a limited group of your attorneys or professional advisors, including
Jefferies & Company, Inc., who are actively and directly participating in the
evaluation of the Transaction (collectively, the "Representatives"), each of
whom shall be informed by you of the confidential nature of the Proprietary
Information and provided with a copy of this letter agreement and agree in
Page 117 of 143 Pages
<PAGE>
Mr. Allen Paulson
May 5, 1997
Page 2
writing to observe the same terms and conditions set forth herein as if
specifically named a party hereto; (ii) use the Proprietary Information for
any purpose other than in connection with the Transaction; and (iii) except as
may be required by law or judicial process or as requested by any
governmental, regulatory or self-regulatory organization, disclose to any
person or entity the terms, conditions or other facts with respect to the
Transaction (including the existence and status thereof) or that Proprietary
Information has been made available to you. In any event, you shall be
responsible for any disclosure of the Proprietary Information by your
Representatives other than pursuant to the terms and subject to the conditions
of this letter agreement.
3. Upon written notice from the Company, you will deliver promptly
to the Company all written or tangible material containing or reflecting any
Information contained in the Proprietary Information (whether prepared by the
Company or otherwise), without retaining any copies, summaries, analyses or
extracts thereof. All documents, memoranda, notes and other writings
whatsoever prepared by you or your representatives based on the information
contained in the Proprietary Information shall be destroyed, and such
destruction shall be certified in writing to the Company by you or your
representatives supervising such destruction.
4. Notwithstanding any provisions of this letter agreement to the
contrary, in the event that you are requested or required in a judicial,
administrative or governmental proceeding to disclose any Proprietary
Information, you will provide the Company with prompt notice of such request
so that the Company may, at its sole cost and expense, seek an appropriate
protective order or waive your compliance with the confidentiality provisions
of this letter agreement. If as a result of any such request or requirement,
you are, in the opinion of your counsel, compelled to disclose Proprietary
Information to any tribunal or else stand liable for contempt or other censure
or penalty, you may disclose such Proprietary Information to such tribunal
without liability hereunder provided that you comply with the notice
provisions of this Section 4.
5. Except as may be specifically provided hereafter in a
definitive written agreement providing for the Transaction (a "Transaction
Agreement"), the Company shall not be deemed to make or have made any
representation or warranty, express or implied, as to the accuracy or
completeness of any Proprietary Information which the Company furnishes to
you, and the Company shall have no liability to you or any of your
Representatives resulting from the use of any Proprietary Information by you
or your representatives.
6. Until the earliest of (i) the execution by you of a Transaction
Agreement or (ii) two years from the date of this letter agreement, you agree
not to initiate or maintain contact (except for those contacts made in the
Page 118 of 143 Pages
<PAGE>
Mr. Allen Paulson
May 5, 1997
Page 3
ordinary course of business) with any officer, director or employee or agent
of the Company or its subsidiaries regarding its business, operations,
prospects or finances, except with the express written permission of the
Company. You further agree that for a period of one year from the date hereof
you will not hire any of the employees of the Company or its subsidiaries with
whom you had contact during the period of your investigation of the Company
unless such employee is terminated by the Company.
7. You hereby acknowledge that you are aware (and that your
Representatives who are apprised of this matter have been advised) that the
United States securities laws prohibit you, the Representatives and any person
or entity who has received material non-public information about the Company
from purchasing or selling securities of the Company.
8. Without prejudice to any rights and remedies otherwise
available to the Company, the Company shall be entitled to equitable relief by
way of injunction if you breach any provision of this letter agreement. No
failure or delay by the Company or the representatives in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder. If any party employs legal counsel to enforce any of the
provisions of this letter agreement or if any action at law or equity is
instituted in connection with or arising from this letter agreement, by any
party against the other(s), the prevailing party(ies) shall be entitled to
receive its/their costs, expenses and attorneys' fees.
9. You also understand and agree that no contract or agreement
providing for a transaction with the Company shall be deemed to exist between
you and the Company unless and until a Transaction Agreement has been executed
and delivered, and you hereby waive, in advance, any claims (including,
without limitation, breach of contract) in connection with a possible
transaction with the Company unless and until you shall have entered into a
Transaction Agreement. You also agree that unless and until a Transaction
Agreement between the Company and you has been executed and delivered, the
Company has no legal obligation of any kind whatsoever with respect to any
such transaction by virtue of this letter agreement or any other written or
oral expression with respect to such transaction except, in the case of this
letter agreement, for the matters specifically agreed to herein. For purposes
of this paragraph, the term "Transaction Agreement" does not include an
executed letter of intent or any other preliminary written agreement, nor does
it include any written or verbal acceptance of an offer or bid on your part.
10. This letter agreement shall be binding upon your successors
and assigns and shall inure to the benefit of, and be enforceable by, the
Company's successor and assigns.
Page 119 of 143 Pages
<PAGE>
Mr. Allen Paulson
May 5, 1997
Page 4
11. The provisions of this letter agreement shall be severable in
the event that any of the provisions hereof are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
12. This letter agreement shall be construed (both as to validity
and performance) and enforced in accordance with, and governed by, the laws of
the State of Nevada applying to agreements made and to be performed wholly
within such jurisdiction.
13. This letter agreement contains the entire agreement between
you and the Company concerning the confidentiality of the Proprietary
Information. This letter agreement may be waived, amended or modified only by
an instrument in writing signed by the party against which such waiver,
amendment or modification is sought to be enforced, and such written
instrument shall set forth specifically the provisions of this letter
agreement that are to be so waived, amended or modified.
14. This letter agreement may be executed in any number of
counterparts and each of such counterpart shall for all purposes be deemed an
original, and all such counterparts shall together constitute but one and the
same instrument.
Please indicate your agreement with the foregoing by executing the
accompanying copy of this letter agreement and returning it, whereupon it
shall constitute a binding agreement between us as of the date first above
written.
Very truly yours,
ELSINORE CORPORATION
s/ Jeffrey T. Leeds
----------------------
Jeffrey T. Leeds
President
AGREED TO AND ACCEPTED:
s/ Allen E. Paulson
- -----------------------
Allen E. Paulson
Page 120 of 143 Pages
<PAGE>
R&E Gaming Corp.
P.O. Box 9660
Rancho Santa Fe, CA 92067
September 15, 1997
Elsinore Corporation
202 Fremont Street
Las Vegas, Nevada 89101
Morgens, Waterfall, Vintiadis
& Company, Inc.
Swiss Bank Tower
10 East 50th Street
New York, NY 10022
Ladies and Gentlemen:
Reference is made to Schedule 3.2(a) of the Agreement and Plan of
Merger, dated as of September __, 1997 (the "Agreement"), by and among R&E
Gaming Corp. ("Gaming"), a Delaware corporation, Elsinore Acquisition Sub,
Inc. ("EAS"), a Nevada corporation and Elsinore Corporation ("Elsinore"), a
Nevada corporation. Terms used herein but not otherwise defined shall have
the meaning given to such terms as set forth in the Agreement.
In the event that the Elsinore Merger is terminated pursuant to
Section 6.1(b) or 6.1(c) of the Agreement solely by virtue of the fact that
there is an order or injunction prohibiting the consummation of the Elsinore
Merger pursuant to an action involving Full House Resorts Inc., a Delaware
corporation, then such termination shall not constitute a Non-Payment
Termination Event (as defined in the Elsinore Merger Agreement and the
Elsinore Option Agreement) and Elsinore shall be entitled to receive from
Gaming and/or EAS the amount set forth in Section 6.2(c) of the Agreement and
the Option Seller shall be entitled to receive the grant set forth in Section
1.3(a) of the Option Agreement.
Very truly yours,
R&E Gaming Corp.
By: s/ Allen E. Paulson
------------------------
Name: Allen E. Paulson
Title: President
Page 121 of 143 Pages
<PAGE>
====================================================================
OPTION AND VOTING AGREEMENT
by
and
between
R&E GAMING CORP.,
as Purchaser,
and
MORGENS, WATERFALL, VINTIADIS & COMPANY, INC.,
on behalf of certain investment accounts,
as Seller
Dated as of September 15, 1997
==================================================================
Page 122 of 143 Pages
<PAGE>
OPTION AND VOTING AGREEMENT
OPTION AND VOTING AGREEMENT (this "Agreement"), dated as of
September 15, 1997, by and between R & E Gaming Corp., a Delaware corporation
(together with its assignees or designees, the "Purchaser"), and Morgens,
Waterfall, Vintiadis & Company, Inc., on behalf of certain investment accounts
identified on the signature pages hereto (the "Seller").
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Purchaser is entering into an Agreement and Plan of Merger (the
"Elsinore Merger Agreement") with Elsinore Acquisition Sub, Inc., a Nevada
corporation and a wholly owned subsidiary of the Purchaser ("Acquisition
Sub"), and Elsinore Corporation, a Nevada corporation ("EC"), pursuant to
which the Acquisition Sub shall merge with and into EC (the "Elsinore
Merger"), upon the terms and conditions set forth therein;
WHEREAS, the Seller desires that the Purchaser, Acquisition Sub and
EC enter into the Elsinore Merger Agreement;
WHEREAS, as partial consideration for the grant by the Seller of
the option hereunder, the Purchaser agrees to pay the Seller an amount equal
to $2,936,550.08, if the transactions contemplated by the Elsinore Merger
Agreement are not consummated, other than as a result of certain circumstances
specified herein;
WHEREAS, in order to ensure payment of the obligation described in
the immediately preceding paragraph, concurrently with the execution and
delivery of this Agreement and the Elsinore Merger Agreement, the Purchaser
has delivered a letter of credit in the face amount of $2,936,550.08 to the
Seller, which is substantially in the form of Exhibit A hereto (the "Letter of
Credit"), which shall provide that it may be drawn on in the event the
transactions contemplated by the Elsinore Merger Agreement are not
consummated, other than as a result of certain circumstances specified herein;
WHEREAS, the Seller beneficially owns 4,646,440 shares of EC common
stock, par value $.001 per share (all shares of EC common stock being the
"Common Stock" and all shares of Common Stock owned by the Seller, being the
"Shares"), which Shares represent approximately 94.3% of the issued and
outstanding shares of Common Stock; and
WHEREAS, in consideration for entering into the Elsinore Merger
Agreement, the Seller desires to (i) grant to the Purchaser an option to
purchase from the Seller all (but not less than all) of the Shares upon the
terms and subject to the conditions set forth herein and (ii) vote the Shares
in the manner set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements contained herein, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
Page 123 of 143 Pages
<PAGE>
ARTICLE I
GRANT OF OPTION
SECTION 1.1 Grant of Option. Upon the terms and subject to the
conditions set forth herein, the Seller hereby grants to the Purchaser an
irrevocable option (the "Purchase Option") to purchase the Shares.
The Purchase Option shall be exercisable, in whole and not in part,
by written notice (the "Exercise Notice") by the Purchaser delivered to the
Seller, at any time after the date hereof, but not later than the date on
which the Elsinore Merger Agreement is terminated pursuant to Section 6.1(c)
thereof or if the Elsinore Merger Agreement has otherwise been terminated,
then June 1, 1998 (such period being hereinafter referred to as the "Exercise
Period"); provided, however, that the Purchase Option shall not be exercisable
at any time when such exercise would violate any applicable law, including,
without limitation, any statute or regulation related to the ownership or
control of a publicly traded company registered with the Nevada Gaming
Commission (the "Gaming Commission"). In addition, in the event the Elsinore
Merger is consummated, the Purchase Option shall terminate automatically, the
Shares shall be converted into the right to receive the Merger Consideration
set forth in the Elsinore Merger Agreement; it being understood that the
Elsinore Merger Agreement provides for a reduction of the consideration
payable, upon consummation of the Elsinore Merger, to the Seller on account of
any interest previously paid to the Seller pursuant to Section 1.2(b) hereof.
The Seller hereby consents to the reduction of the consideration payable to it
under the terms of the Elsinore Merger Agreement by the amount of interest
paid to it pursuant to Section 1.2(b) hereof.
Upon exercise of the Purchase Option or the exercise of the Put
Option (as defined in Section 4.7 hereof), subject to the conditions contained
in Article V hereof, the Seller shall sell, assign, transfer, convey and
deliver to the Purchaser, and the Purchaser shall purchase and accept from the
Seller at the closing (the "Closing") to be held as soon as possible after the
satisfaction or waiver of the conditions set forth in this Agreement (the date
on which the Closing occurs shall be referred to herein as the "Closing
Date"), the Seller's rights, title and interest in and to the Shares in
exchange for the Purchase Price (as defined below).
SECTION 1.2 Purchase Price.
(a) Upon exercise of the Purchase Option or the Put Option,
the Purchaser agrees to pay to the Seller on the Closing Date, in
consideration for the purchase of the Shares, an aggregate amount equal to
$3.16 per Share (the "Initial Purchase Price" and, when adjusted as provided
in this Section 1.2, the "Purchase Price"), for an aggregate of $14,682,750.40
in addition to any accrued but unpaid interest payments required by Section
1.2(b).
Page 124 of 143 Pages
<PAGE>
(b) During the period commencing on June 1, 1997 and ending
on the date immediately preceding the earlier of the Closing Date or the date
this Agreement is terminated in accordance with its terms, the Purchaser
agrees to pay to the Seller $3,793.38 per day, which represents interest
calculated at 9.43% per annum on the Initial Purchase Price, payable monthly
in arrears on each monthly anniversary of such execution and not later than
the fifth day following such monthly anniversary of such period, unless
otherwise provided in this Section 1.2(b). The first payment to be made by
the Purchaser shall be made on the date of execution of this Agreement and
shall consist of all amounts due and payable to such date under this Section
1.2(b). All payments required to be made in accordance with this Section
1.2(b) shall be made by wire transfer or immediately available funds to such
account as the Seller shall have designated on Exhibit B hereto.
(c) If, between the date of this Agreement and the Closing
Date, the number of issued and outstanding shares of Common Stock shall have
been changed (or EC shall have declared a record date with respect to a
prospective change of the Common Stock) into a different number of shares or a
different class of shares by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
this Agreement (including the terms "Share" and "Common Stock") will be deemed
to relate to all securities issued with respect to the Common Stock, and the
Purchase Price shall be correspondingly adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split, combination
or exchange of shares.
(d) If, between the date of this Agreement and the Closing
Date, EC issues or commits to issue any shares of Common Stock (other than (i)
the issuance of 70,687 shares of Common Stock to the holders of unsecured
claims against EC or Four Queens, Inc., (ii) the issuance of 1,125,000 shares
of Common Stock to Riviera pursuant to warrants held by Riviera (the "Riviera
Warrants"), and (iii) any other options, convertible securities and other
rights to acquire shares of Common Stock referred to in Section 2.2 or
Schedule 2.2 of the Elsinore Merger Agreement or issued in accordance with
Section 4.1 thereof, without consideration or for a consideration per share
less than the Purchase Price in effect immediately prior to such issuance (in
the case of non-cash consideration, deemed to be the fair market value
thereof), the Purchase Price shall immediately be reduced to the price
determined by dividing (1) the sum of (A) the number of shares of Common Stock
outstanding immediately prior to such issuance multiplied by the Purchase
Price in effect immediately prior to such issuance and (B) the consideration,
if any, received by EC upon such issuance, by (2) the total number of shares
of Common Stock outstanding immediately after such issuance.
(e) If, between the date of this Agreement and the Closing
Date, any dividend or other distribution (other than a stock dividend, which
shall require the adjustment set forth in clause (c) above) is declared or
paid upon the Common Stock (whether in cash, property or securities), the
Page 125 of 143 Pages
<PAGE>
Purchase Price shall be reduced by the per share amount of such dividend or
distribution (in the case of non-cash dividends or distributions, by an amount
equal to the fair market value thereof).
(f) If, between the date of this Agreement and the Closing
Date, EC or any of its subsidiaries shall repurchase or otherwise acquire any
shares of Common Stock (other than shares issued pursuant to warrants,
options, convertible securities and other rights to acquire shares of Common
Stock referred to in Section 2.2 or Schedule 2.2 of the Elsinore Merger
Agreement or issued in accordance with Section 4.1 thereof), and the per share
consideration paid by EC or its subsidiaries (in the case of non-cash
consideration, valued of the fair market value thereof) exceeds the Purchase
Price per share, the total Purchase Price shall be reduced to the price
determined by dividing (i) the difference between (A) the number of shares of
Common Stock outstanding immediately prior to such repurchase or redemption
multiplied by the Purchase Price in effect immediately prior to such purchase
or redemption minus (B) the consideration, if any, paid by EC for such
repurchase or redemption, by (ii) the total number of shares of Common Stock
outstanding immediately after such repurchase or redemption.
SECTION 1.3 Termination of Elsinore Merger Agreement.
(a) The Seller shall be entitled to receive, as partial
consideration for the grant by the Seller of the Purchase Option to the
Purchaser hereunder, an amount equal to $2,936,550.08 if (A) the Elsinore
Merger Agreement is terminated (except pursuant to a Non-Payment Termination
Event (as defined herein) or (B) the Elsinore Merger does not occur in
accordance with the terms thereof on or before April 1, 1998 (or, if the
termination date of the Elsinore Merger Agreement is extended in accordance
with Section 6.1(c) thereof, June 1, 1998) for any reason other than the
occurrence of a Non-Payment Termination Event; provided, that the Seller shall
be entitled to receive the consideration described above in the event that the
Seller shall be entitled to receive the consideration described in Section 1.3
of the Riviera Option and Voting Agreement (as defined in Section 4.7 hereof)
in accordance with the terms thereof; and, provided further that the Seller
shall be entitled to the consideration described above if the Elsinore Merger
is not consummated as a result of the breach by Purchaser, Acquisition Sub, or
Allen E. Paulson of any covenants or warranties made by or about them in the
Elsinore Merger Agreement; and, provided further, that the Seller shall not be
entitled to the consideration described above if the Elsinore Merger is not
consummated as a result of the breach of this Agreement by the Seller. A
"Non-Payment Termination Event" shall mean the termination of the Elsinore
Merger Agreement pursuant to Sections 6.1(a), 6.1(b), 6.1(c) (because of the
failure to satisfy Sections 5.1(a), 5.1(c), 5.1(d), 5.2(c), or 5.2(f)),
6.1(d), 6.1(e)(iii) or 6.1(e)(iv) thereof. In addition, in the event that the
Elsinore Merger Agreement is terminated pursuant to Section 6.1(c) because of
the failure of Purchaser, Acquisition Sub or Mr. Allen E. Paulson to obtain
the required approvals of the Gaming Authorities, then such event shall
constitute a Non-Payment Termination Event unless Mr. Allen E. Paulson is in
breach of his representation and covenant contained in Section 6.2(d) of the
Elsinore Merger Agreement.
Page 126 of 143 Pages
<PAGE>
(b) In order to ensure payment of the obligation described
in Section 1.3(a) hereof, concurrently with the execution and delivery of this
Agreement, the Purchaser shall deliver a Letter of Credit in the face amount
of $2,936,550.08 to the Seller. In the event that the Seller shall be
entitled to receive compensation pursuant to Section 1.3(a) hereof, the Seller
shall be entitled to demand payment under the Letter of Credit issued to the
Seller.
(c) In the event the Elsinore Merger Agreement is
terminated pursuant to Sections 6.1(b), 6.1(d)(i), 6.1(d)(ii), 6.1(d)(iii),
6.1(d)(iv), 6.1(d)(v), 6.1(e)(iii) or 6.1(e)(iv) thereof, the Seller shall
immediately pay to the Purchaser an amount equal to all payments received by
the Seller pursuant to this Agreement; provided that the Seller shall be
entitled to retain such payments if either (i) the Shares shall be purchased
pursuant to this Agreement or (ii) the Elsinore Merger is not consummated as a
result of the breach by the Purchaser, Acquisition Sub or Allen E. Paulson of
any covenants or warranties made by or about them in the Elsinore Merger
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1 Representations and Warranties of the Seller. The
Seller represents and warrants to the Purchaser as follows:
(a) Organization and Standing. The Seller is duly
organized, validly existing and in good standing under the laws of its state
of organization, and has all requisite power and authority to enter into and
perform its obligations under this Agreement.
(b) Authority. The execution and delivery of this
Agreement, and the performance by the Seller of its obligations hereunder,
have been duly authorized by all necessary action on the part of the Seller
and the owners of the investment accounts as to which it is acting. This
Agreement has been duly executed and delivered by the Seller and, assuming the
due execution and delivery hereof by the Purchaser, this Agreement constitutes
a valid and binding obligation of the Seller, enforceable against the Seller
in accordance with its terms.
(c) The Stock. The Seller is the record and beneficial
owner of, and has good and valid title to, the number of Shares recited to be
owned in the recitals hereof, free and clear of all liens, encumbrances,
claims, charges, security interests, pledges, restrictions, assessments and
limitations (including voting limitations) of every kind whatsoever
(collectively, "Liens"). The Seller shall deliver to the Purchaser, and the
Purchaser will acquire, good and valid title in the Shares, with full voting
rights, free and clear of any Liens. Except for this Agreement, there are no
outstanding warrants, subscriptions, rights (including preemptive rights),
options, calls, commitments or other agreements or Liens to encumber, purchase
Page 127 of 143 Pages
<PAGE>
or acquire any of the Shares of the Seller or securities convertible into the
Shares of the Seller. Neither the Seller nor any of its affiliates or
associates (as such terms are defined in Rule 12b-2 promulgated under the
Securities Exchange Act of 1934, as amended) holds either of record or
beneficially any securities or capital stock of EC or any of EC's direct or
indirect subsidiaries other than the Seller's Shares.
(d) No Conflict. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not require notice
to, or the consent of, any party to any contract, lease, agreement, mortgage
or indenture (each a "Contract") to which the Seller is a party or by which it
is bound, or the consent, approval, order or authorization of, or the
registration, declaration or filing with, any governmental authority, except
for those (i) required under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), if any, (ii) required by the Nevada
Gaming Commission (the "Gaming Commission"), the Nevada State Gaming Control
Board (the "Control Board"), the City of Las Vegas ("Las Vegas") and the Clark
County Liquor and Gaming Licensing Board (the "CCB") (the Gaming Commission,
the Control Board, Las Vegas and the CCB are collectively referred to as the
"Gaming Authorities"), including, without limitation, approvals under the
Nevada Gaming Control Act, as amended, and the rules and regulations
promulgated thereunder (the "Nevada Act") or (iii) set forth on Schedule
2.1(d) hereto. Assuming that the notices, consents and approvals referred to
in the preceding sentence have been given, made or obtained, the execution,
delivery and performance by the Seller of this Agreement and the consummation
of the transactions contemplated hereby will not (i) violate any law, statute,
ordinance, regulation, rule or order of any Federal or Nevada authority
(collectively, "Laws"), (ii) result in a breach or violation of any provision
of, constitute a default under, or result in the termination of, or an
acceleration of indebtedness or creation of any Lien under, any material
contract to which the Seller is a party or by which it is bound or (iii)
conflict with or violate any provision of the organizational documents of the
Seller.
(e) Brokers, Finders, etc. The Seller is not a party to
any agreement or understanding that would make it subject to any valid claim
of any broker, investment banker, finder or other intermediary in connection
with the transactions contemplated by this Agreement.
SECTION 2.2 Representations and Warranties of the Purchaser. The
Purchaser hereby represents and warrants to the Seller as follows:
(a) Organization and Standing. The Purchaser is duly
organized, validly existing and in good standing under the laws of its state
of incorporation, and has all requisite power and authority to enter into and
perform its obligations under this Agreement.
Page 128 of 143 Pages
<PAGE>
(b) Authority. The execution and delivery of this
Agreement, and the performance by the Purchaser of its obligations hereunder,
have been duly authorized by all necessary action on the part of the
Purchaser. This Agreement has been duly executed and delivered on behalf of
the Purchaser and, assuming the due execution and delivery hereof by the
Seller, this Agreement constitutes a valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms.
(c) No Conflict. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not require notice
to, or the consent of, any party to any Contract to which the Purchaser or any
of its affiliates is a party or by which any of them is bound, or the consent,
approval, order or authorization of, or the registration, declaration or
filing with, any governmental authority, except for (i) those required under
the HSR Act, if any, (ii) approvals, as necessary, by the Gaming Authorities,
including, without limitation, approvals under the Nevada Act, and (iii)
approval by the EC Board of Directors (which Seller represents has been
granted). Except as set forth in the preceding sentence, the execution,
delivery and performance by the Purchaser of this Agreement and the
consummation of the transactions contemplated hereby will not (i) violate any
Laws, (ii) result in a breach or violation of any provision of, or constitute
a default under, any contract to which the Purchaser is a party or by which it
is bound or (iii) conflict with any provision of the certificate of
incorporation or bylaws of the Purchaser.
(d) Purchase For Investment. Upon exercising the Purchase
Option or in connection with the Put Option, the Purchaser represents and
warrants that it intends to acquire the Shares for its own account, not as a
nominee or agent, and not with a view to, or for offer or resale in connection
with, any distribution thereof in violation of the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the "Securities Act"),
without prejudice, however, to the Purchaser's right at all times to sell or
otherwise dispose of all or any part of said Shares pursuant to a effective
registration statement under the Securities Act and any applicable state
securities laws, or under an exemption from registration available under the
Securities Act and such other applicable state securities laws. The Purchaser
represents and warrants that it (i) is knowledgeable, sophisticated and
experienced in business and financial matters, and fully understands the
limitations on transfer described above, and (ii) is an "accredited investor"
as such term is defined in Rule 501(a) of Regulation D under the Securities
Act.
(e) No Brokers. Except for Jefferies & Co., Inc., neither
the Purchaser nor Acquisition Sub has employed any broker or finder, nor has
it incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the transactions contemplated by this Agreement or the
Elsinore Merger Agreement.
Page 129 of 143 Pages
<PAGE>
ARTICLE III
VOTING AGREEMENTS
SECTION 3.1 Merger. The Seller agrees and covenants to the
Purchaser that at any meeting of stockholders of EC called to vote upon the
Elsinore Merger and the Elsinore Merger Agreement or at any adjournment
thereof or in any other circumstances upon which a vote, consent or other
approval with respect to the Elsinore Merger and the Elsinore Merger Agreement
is sought, the Seller shall cause its Shares to be present for quorum purposes
and to vote (or caused to be voted) its Shares in favor of the terms thereof
and each of the other transactions contemplated by the Elsinore Merger
Agreement.
SECTION 3.2 Competing Transaction. The Seller agrees and
covenants to the Purchaser that at any meeting of stockholders of EC or at any
adjournment thereof or in any other circumstances upon which their vote,
consent or other approval is sought, the Seller shall vote (or cause to be
voted) its Shares against (i) any merger agreement or merger (other than the
Elsinore Merger Agreement and the Elsinore Merger), consolidation,
combination, sale of substantial assets, sale or issuance of securities of EC
or its subsidiaries, reorganization, joint venture, recapitalization,
dissolution, liquidation or winding up of or by EC or its subsidiaries and
(ii) any amendment of EC's Restated Articles of Incorporation (the "Articles
of Incorporation") or Restated and Amended Bylaws or other proposal or
transaction involving EC or any of its subsidiaries which amendment or other
proposal or transaction would in any manner impede, frustrate, prevent,
nullify or result in a breach of any covenant, representation or warranty or
any other obligation or agreement of EC under or with respect to, the Elsinore
Merger, the Elsinore Merger Agreement or any of the other transactions
contemplated by the Elsinore Merger Agreement or by this Agreement (each of
the foregoing in clause (i) or (ii) above, a "Competing Transaction").
ARTICLE IV
COVENANTS
SECTION 4.1 Exclusive Dealing. The Seller agrees that it will
not, directly or indirectly, through any director, officer, agent, partner,
shareholder, affiliate, representative or otherwise:
(a) solicit, initiate, encourage submission of offers or
proposals from, or participate in any discussions, negotiations, agreements,
arrangements or understandings with, any person in respect of a Competing
Transaction; or
(b) participate in any discussions or negotiations with,
or furnish or afford access to any information to, any other person regarding
a Competing Transaction, or otherwise cooperate in any manner with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person to engage in any Competing Transaction.
Page 130 of 143 Pages
<PAGE>
SECTION 4.2 No Sale. Without limiting the foregoing, the Seller
agrees that it will not, directly or indirectly, (i) sell, transfer, assign,
pledge, hypothecate or otherwise encumber or dispose of, (ii) give a proxy
with respect to, or (iii) limit the right to vote in any manner, any of the
Shares owned by it, except pursuant to the express terms of this Agreement.
SECTION 4.3 Further Assurances. From time to time, whether
before, at, or after the Closing, each party hereto agrees to execute and
deliver, or cause to be executed and delivered, such additional instruments,
certificates and other documents, and to take such other action, as the other
party hereto may reasonably require in order to carry out the terms and
provisions of this Agreement and the transactions contemplated hereby
(including, without limitation, voting the Shares in favor of any such
transaction).
SECTION 4.4 Expenses. All reasonable actual out of pocket costs
and expenses, including reasonable legal fees, incurred solely and directly in
connection with the negotiation, execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby shall be paid by the
Purchaser upon receipt of reasonably detailed statements or invoices therefor.
SECTION 4.5 Publicity. The Seller and the Purchaser agree that,
prior to the Closing, no public release or announcement concerning this
Agreement shall be issued by any such party without the prior written consent
(which consent shall not be unreasonably withheld) of the other parties
hereto, except as such release or announcement may be required by Law (in
which event the other parties hereto shall have reasonable opportunity to
comment on the form and content of the disclosure).
SECTION 4.6 Notice of Certain Events. The Seller and the
Purchaser each agrees to notify the other party hereto promptly of (a) any
event or condition that, with or without notice or lapse of time, would cause
any of the representations and warranties made by such party herein to be no
longer complete and accurate as of any date on or before the Closing Date, (b)
any failure, with or without notice or lapse of time, on the part of such
party to comply with any of the covenants or agreements on its part contained
herein at any time on or before the Closing Date or (c) the occurrence of any
event, with or without notice or lapse of time, that may make the satisfaction
of any of the conditions set forth in Section 5.1 hereof impossible or
unlikely.
SECTION 4.7 Seller's Put. If any time prior to the Closing Date
the transactions contemplated by (i) the Agreement and Plan of Merger, dated
as of September 15, 1997 (the "Riviera Merger Agreement"), by and among the
Purchaser, Riviera Acquisition Sub Inc., a Nevada corporation and a wholly
owned subsidiary of the Purchaser ("RAS"), and Riviera Holdings Corporation, a
Nevada corporation ("Riviera"), which provides for, among other things, the
merger of RAS with and into Riviera (the "Riviera Merger") or (ii) the Option
Page 131 of 143 Pages
<PAGE>
and Voting Agreement, dated as of September 15, 1997 (the "Riviera Option and
Voting Agreement"), by and among the Purchaser, the Seller, Keyport Life
Insurance Company, on behalf of a certain investment account, and SunAmerica
Life Insurance Company, are consummated and a closing has occurred thereunder,
then, upon written notice to the Purchaser by the Seller, the Purchaser shall
purchase all of the Shares at the aggregate Purchase Price in accordance with
and subject to the terms and conditions of this Agreement (the "Put Option").
Notwithstanding the foregoing, the obligations of the Purchaser to purchase
the Shares pursuant to the Put Option shall be suspended for up to ten
business days if the Purchaser gives notice to the Seller that it intends to
consummate the Elsinore Merger within such time period.
SECTION 4.8 Action with Respect to 13.5% Second Mortgage Notes.
Seller represents that it is the owner of $29,104,000 principal amount of
13.5% Second Mortgage Notes due 2001, of EC (the "13.5% Notes") issued under
the Indenture dated as of March 3, 1997, by and among EC, the Guarantors named
therein and First Trust National Association (the "Indenture"). Seller hereby
agrees that, if the Elsinore Merger is consummated, it hereby waives any
rights it may have to require EC to repurchase all or a part of the 13.5%
Notes pursuant to Article XII of the Indenture.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.1 Conditions Precedent to Exercise of Purchase Option
and Put Option. The Purchaser shall have no obligation to exercise the
Purchase Option; provided, however, that the Purchaser shall use its best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things reasonably necessary and proper under all applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including cooperation (i) in the preparation and filing of any
required filings under the HSR Act and the laws referred to in Sections 2.1(d)
and 2.2(c) hereof, (ii) in determining whether action by or in respect of, or
filing with, any governmental body, agency, official or authority is required,
proper or advisable, or any actions, consents, waivers or approvals are
required to be obtained from parties to any contracts in connection with the
transactions contemplated by this Agreement, (iii) in seeking to obtain any
such actions, consents and waivers and in making any such filings, and (iv) in
seeking to lift any order, decree or ruling restraining, enjoining, or
otherwise prohibiting the exercise of the Purchase Option or the Put Option.
Upon exercise of the Purchase Option or the Put Option, the obligation of the
Purchaser to purchase the Shares shall be subject to the satisfaction or
(except in the case of Section 5.1(c)(i), which may not be waived) waiver by
the Purchaser on the Closing Date of each of the following conditions
precedent:
(a) HSR Act. The waiting period under the HSR Act, if
applicable, shall have expired or been terminated.
Page 132 of 143 Pages
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(b) No Injunctions or Restraints. No temporary restraining
order or preliminary or permanent injunction of any court or administrative
agency of competent jurisdiction prohibiting the transactions contemplated by
this Agreement, the Elsinore Merger Agreement, the Riviera Option and Voting
Agreement or the Riviera Merger Agreement shall be in effect or shall be
threatened.
(c) Consents. All consents, approvals, authorizations and
waivers from the Board of Directors and governmental and regulatory
authorities required to consummate the transactions contemplated hereby (the
"Approvals") shall have been obtained before the Closing Date and, in the case
of clauses (ii) and (iii) below, before the execution of this Agreement and
shall not have expired or been rescinded, including the following:
(i) All necessary gaming approvals, including, without
limitation, licensing or finding of suitability of the Purchaser
and approval of a change of control of EC by the Gaming
Authorities;
(ii) Waiver by the Board of Directors of EC of any
voting restrictions under the Articles of Incorporation that are
applicable to a purchaser of greater than ten percent of the
issued and outstanding shares of Common Stock; and
(iii) All approvals and waivers necessary to exempt the
Purchaser for purposes of the transactions contemplated hereby
from applicable merger moratorium statutes and control share
acquisition statutes, including, without limitation, Nevada
Revised Statutes Sections 78.411-.444 and 78.378-.3793;
(d) Representations and Warranties. The representations
and warranties of the Seller set forth in this Agreement shall be true and
correct in all material respects on and as of the Closing Date, as though made
on and as of the Closing Date (and by delivery of the Shares the Seller shall
be deemed to affirm the satisfaction of this condition).
(e) Performance of Obligations of Seller. The Seller shall
have delivered the Shares to the Purchaser.
(f) Consummation of Riviera Transactions. Either the
Riviera Merger shall have been consummated or the shares of Riviera common
stock, $.001 par value, which are the subject of the Riviera Option and Voting
Agreement, shall have been purchased by the Purchaser.
(g) No Violation of Law. The consummation of the Purchase
Option or the Put Option shall not constitute a violation of any Laws.
Page 133 of 143 Pages
<PAGE>
SECTION 5.2 Conditions Precedent to the Seller's Obligation. The
obligation of the Seller to sell, assign, transfer, convey and deliver the
Shares owned by it or the investment accounts it manages, as applicable, upon
exercise of the Purchase Option by the Purchaser or the Put Option by Seller
shall be subject to the satisfaction or (except in the case of Sections 5.2(a)
and 5.2(c), which may not be waived), waiver on the Closing Date of each of
the following conditions precedent:
(a) HSR Act. The waiting period under the HSR Act, if
applicable to the Purchaser, shall have expired or been terminated.
(b) No Injunctions or Restraints. No temporary restraining
order or preliminary or permanent injunction of any court or administrative
agency of competent jurisdiction prohibiting the transactions contemplated by
this Agreement shall be in effect.
(c) Consents. All Approvals shall have been obtained and
shall not have expired or been rescinded, including those set forth in Section
5.1(c).
(d) No Violation of Law. The consummation of the Purchase
Option or the Put Option shall not constitute a violation of any Laws.
(e) Representations and Warranties. The representations
and warranties of the Purchaser set forth in this Agreement shall be true and
correct in all material respects on and as of the Closing Date, as though made
on and as of the Closing Date, except as otherwise contemplated by this
Agreement (and by its acceptance of the Shares, the Purchaser shall be deemed
to reaffirm the accuracy of such representations and warranties).
(f) Performance of Obligations of the Purchaser. The
Purchaser shall have performed all obligations required to be performed by it
under this Agreement on or prior to the Closing Date (and by its acceptance of
the Shares, the Purchaser shall be deemed to affirm the satisfaction of this
condition), including the payment of the Purchase Price and all unpaid
amounts, if any payable under Section 1.2(b).
(g) Occurrence of Riviera Merger or Exercise of Riviera
Option. The Riviera Merger (as defined in Section 4.7) or the Closing of the
Riviera Option and Voting Agreement (as defined in Section 4.7) shall have
occurred.
Page 134 of 143 Pages
<PAGE>
ARTICLE VI
TERMINATION AND AMENDMENT
SECTION 6.1 Termination. This Agreement shall terminate without
any further action on the part of the Purchaser or the Seller if (i) the
Purchase Option or the Put Option has been exercised and the Closing has
occurred or (ii) the Purchase Option or the Put Option has not been exercised
and either (x) the Elsinore Merger has been consummated or (y) the Elsinore
Merger Agreement has been terminated pursuant to Sections 6.1(a), 6.1(b),
6.1(c), 6.1(d), 6.1(e)(i), 6.1(e)(ii) or 6.1(f) thereof or (iii) June 1, 1998
shall have occurred.
SECTION 6.2 Effect of Termination. In the event this Agreement
shall have been terminated in accordance with Section 6.1 of this Agreement,
this Agreement shall forthwith become void and have no effect, except (i) to
the extent such termination results from a breach by any of the parties hereto
of any of its obligations hereunder (in which case such breaching party shall
be liable for all damages allowable at law and any relief available in
equity), and (ii) as otherwise set forth in any written termination agreement,
if any, and (iii) that Sections 1.2(b), 1.3 and 6.2 shall survive the
termination of this Agreement.
SECTION 6.3 Amendment. This Agreement and the Schedules and
Exhibits hereto may not be amended except by an instrument or instruments in
writing signed and delivered on behalf of each of the parties hereto. At any
time prior to the Closing Date, any party hereto which is entitled to the
benefits hereof may (a) extend the time for the performance of any of the
obligations or other acts of any other party, (b) waive any inaccuracy in the
representations and warranties of any other party contained herein, in any
Schedule and Exhibit hereto, or in any document delivered pursuant hereto, and
(c), subject to applicable law, waive compliance with any of the agreements of
any other party hereto or any conditions contained herein. Any agreement on
the part of any of the parties hereto to any such extension or waiver (i)
shall be valid only if set forth in an instrument in writing signed and
delivered on behalf of each such party, and (ii) shall not be construed as a
waiver or extension of any subsequent breach or time for performance
hereunder.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person,
by overnight courier with receipt requested, by facsimile transmission (with
Page 135 of 143 Pages
<PAGE>
receipt confirmed by automatic transmission report), or two business days
after being sent by registered or certified mail (postage prepaid, return
receipt requested), to the other party as follows:
(a) if to the Purchaser, to:
P.O. Box 9660
Rancho Santa Fe, CA 92067
Attention: Mr. Allen E. Paulson
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Brian J. McCarthy, Esq.
(b) if to Seller, to:
Swiss Bank Tower
10 East 50th Street
New York, New York 10022
Attention: Mr. Bruce Waterfall
with a copy to:
O'Melveny & Myers, LLP
400 South Hope Street
Los Angeles, CA 90071-2899
Attention: C. James Levin, Esq.
SECTION 7.2 Release. Upon the purchase by the Purchaser of the
Shares, the Purchaser shall hereby release on behalf of itself and EC all
claims, causes of actions, rights and liabilities held by the Purchaser or EC
against the Seller based on or arising from the Seller's ownership of the
Shares or actions as a Stockholder of EC at all times to and including the
Closing Date, and the sale of the Shares to the Purchaser, except for the
representations and warranties of the Seller set forth in Sections 2.1(b) and
2.1(c) hereof which shall survive indefinitely.
SECTION 7.3 Interpretation. When a reference is made in this
Agreement to a Section, Schedule or Exhibit, such reference shall be to the
applicable Section, Schedule or Exhibit of this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. When the words "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." All accounting terms not defined in this Agreement shall have
the meanings determined by generally accepted accounting principles as of the
date hereof. All capitalized terms defined herein are equally applicable to
both the singular and plural forms of such terms.
Page 136 of 143 Pages
<PAGE>
SECTION 7.4 Severability. If any provision of this Agreement or
the application of any such provision shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other
provision hereof. In lieu of any such invalid, illegal or unenforceable
provision, the parties hereto intend that there shall be added as part of this
Agreement a valid, legal and enforceable provision as similar in terms to such
invalid, illegal or unenforceable provision as may be possible or practicable
under the circumstances.
SECTION 7.5 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, and all of
which, when taken together, shall be deemed to constitute but one and the same
instrument.
SECTION 7.6 Entire Agreement. This Agreement and the Schedules
and Exhibits hereto constitute the entire agreement, and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
SECTION 7.7 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Nevada, regardless
of the laws that otherwise might govern under any applicable principles of
conflicts of law, except that gaming approval requirements shall be governed
by and construed in accordance with the laws of the State of Nevada.
SECTION 7.8 Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or delegated by any of
the parties hereto without the prior written consent of the other parties;
provided, that the Purchaser may assign the Purchase Option and the
obligations under this Agreement to any other person who is designated by the
Purchaser and; further provided, that the Purchaser shall remain responsible
for the performance of such designee's obligations.
SECTION 7.9 No Third-Party Beneficiaries. Nothing herein
expressed or implied shall be construed to give any person other than the
parties hereto (and their respective successors and assigns) any legal or
equitable rights hereunder.
Page 137 of 143 Pages
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused its duly
authorized officers to execute this Agreement as of the date first above
written.
R&E GAMING CORP.
By: s/ Allen E. Paulson
-------------------------
Name: Allen E. Paulson
Title:
MORGENS, WATERFALL,
VINTIADIS & COMPANY, INC.
By: s/ Bruce Waterfall
------------------------------
Name: Bruce Waterfall
Title: President
on behalf of the investment accounts for
the entities listed below
BETJE PARTNERS
THE COMMON FUND
MORGENS WATERFALL INCOME PARTNERS
PHOENIX PARTNERS, L.P.
MWV EMPLOYEE RETIREMENT PLAN GROUP TRUST
RESTART PARTNERS, L.P.
RESTART PARTNERS II, L.P.
RESTART PARTNERS III, L.P.
RESTART PARTNERS IV, L.P.
RESTART PARTNERS V, L.P.
Page 138 of 143 Pages
<PAGE>
[The body of the Letter of Credit should be provided by the Issuing Bank. The
drawing certificate should be substantially in the following form.]
EXHIBIT A
CERTIFICATE FOR DRAWING WITH RESPECT TO
IRREVOCABLE LETTER OF CREDIT NO. ____
DATED ______________, 1997
The undersigned, a duly authorized officer of Morgens, Waterfall,
Vintiadis & Company, Inc. ("Morgens, Waterfall") hereby certifies to City
National Bank (the "Bank"), with reference to irrevocable letter of credit No.
____ (the "Letter of Credit"; any capitalized term used herein and not defined
shall have its respective meaning as set forth in the Letter of Credit) issued
by the Bank in favor of Morgens, Waterfall, that all of the following has
occurred:
(1) Either (x) the Agreement and Plan of Merger, dated as
of September 15, 1997 (the "Elsinore Merger Agreement"), by and
among R&E Gaming Corp., a Delaware corporation ("Gaming"),
Elsinore Acquisition Sub, Inc., a Nevada corporation, and Elsinore
Corporation, a Nevada corporation, has terminated or (y) the
Elsinore Merger (as defined in the Elsinore Merger Agreement) has
not occurred in accordance with the terms thereof on or before
April 1, 1998 (or, if the termination date of the Elsinore Merger
Agreement is extended in accordance with Section 6.1(c) thereof,
June 1, 1998); and
(2) Morgens, Waterfall is entitled to payment in the amount
of $_______ in accordance with the terms of Section 1.3(a) of the
Option and Voting Agreement, dated as of September 15, 1997, by
and between Gaming and Morgens, Waterfall.
Demand is hereby made under the Letter of Credit for $_______.
Please remit payment to Morgens, Waterfall, Vintiadis & Company, Inc., account
number ___________ at ___________, ABA No. ____________, REF. : ___________.
Page 139 of 143 Pages
<PAGE>
Exhibit A
ATTACHMENT to STANDBY L/C Application
ISSUING BANK LETTERHEAD
DATE: (date of l/c)
IRREVOCABLE STANDBY LETTER OF CREDIT
NUMBER: (l/c number)
BENEFICIARY: APPLICANT:
(beneficiary name & address) (applicant name & address)
DATE AND PLACE OF EXPIRY:
(day/month/year)
AT OUR COUNTERS
AMOUNT: (Currency amount of l/c)
GENTLEMEN:
WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT IN YOUR FAVOR
AVAILABLE BY PAYMENT OF YOUR DRAFTS AT SIGHT DRAWN ON CITY NATIONAL BANK,
INTERNATIONAL DEPARTMENT, LOS ANGELES, CALIFORNIA AND ACCOMPANIED BY THE
DOCUMENTS AS SPECIFIED BELOW:
1. THIS ORIGINAL STANDBY LETTER OF CREDIT, AND AMENDMENT(S) IF ANY.
2. BENEFICIARY'S SIGNED AND DATED STATEMENT WORDED AS PER ATTACHED EXHIBIT.
EACH DRAFT DRAWN HERE UNDER MUST STATE "DRAWN UNDER CREDIT NUMBER (l/c number)
OF CITY NATIONAL BANK, LOS ANGELES, CALIFORNIA.
WE HEREBY ENGAGE WITH YOU THAT ALL DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH
THE TERMS AND CONDITIONS OF THIS CREDIT SHALL BE DULY HONORED IF PRESENTED FOR
PAYMENT AT THE OFFICE OF CITY NATIONAL BANK, INTERNATIONAL DEPARTMENT, 505
SOUTH OLIVE STREET SUITE 300, LOS ANGELES, CALIFORNIA 90014 ON OR BEFORE THE
EXPIRATION DATE OF THIS CREDIT.
EXCEPT SO FAR AS OTHERWISE EXPRESSLY STATED, THIS CREDIT IS SUBJECT TO THE
UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS, (1925 REVISION),
INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 500.
SINCERELY,
___________________________
(authorized bank signature)
********
Standby Wording Approval
Firm Name
___________________________
Authorized Signature - Date
Page 140 of 143 Pages
<PAGE>
Exhibit B
Seller
Morgens, Waterfall
Account
Citibank N.Y.
ABA #: 021000089
For: Morgan Stanley & Co.
Account #: 38890774
Credit To: Edwin Morgens and
Bruce Waterfall as
Agents
Sub-Account #: 038-30008
Ref: Elsinore/Riviera Option
Agreement Interest
Page 141 of 143 Pages
<PAGE>
MORGENS, WATERFALL, VINTIADIS & COMPANY, INC.
R & E Gaming Corp.
c/o Paulson Enterprises
Del Mar Country Club
6001 Clubhouse Drive
Rancho Santa Fe, CA 92067
Re: Elsinore Voting and Option Agreement
------------------------------------
Gentlemen:
This Letter Agreement is made with reference to that certain Option
and Voting Agreement dated as of September __, 1997 by and between R & E
Gaming Corp., a Delaware corporation (the "Purchaser") and Morgens, Waterfall
Vintiadis & Company, Inc. (the "Seller") (said Agreement being the "Option
Agreement"). Capitalized terms used in this Letter Agreement not otherwise
defined herein have the meanings assigned thereto in the Option Agreement.
In the fifth recital of the Option Agreement, the Seller represents
that it owns 4,646,440 shares of EC Common Stock, representing approximately
94.3% of the issued and outstanding shares of Common Stock. The Seller
received these shares in connection with EC's plan of reorganization. The
Seller has been informed that it may have received more shares of EC Common
Stock in EC's plan of reorganization than it is entitled to, and that it may
need to return to EC or assign to third parties some shares of EC Common
Stock. The Seller believes the maximum amount of shares that would be subject
to such claims does not exceed one percent of the total number of outstanding
shares of EC Common Stock.
Pursuant to this Letter Agreement, you and we agree that, if the
Seller is required to return to EC, cancel, or transfer to third parties any
shares of EC Stock such that it owns less than 4,646,440 shares of EC Common
Stock, the Seller shall notify the Purchaser thereof, and of the number of
share of EC Common Stock held by the Seller after such event (the "Revised
Number"); provided that the Revised Number shall not represent less than 93%
--------
of the outstanding shares of EC Common Stock. Upon delivery of such notice,
the Option Agreement shall be hereby and without further action of the parties
hereto amended as follows:
Page 142 of 143 Pages
<PAGE>
If you are in agreement with the foregoing, please execute and
deliver to me a counterpart of this Letter Agreement.
Very truly yours,
MORGANS, WATERFALL, VINTIADIS
& COMPANY, INC. on behalf of
certain Investment Accounts
By: s/ Bruce Waterfall
-----------------------
Title: ------------------
BRUCE WATERFALL
PRESIDENT
ACKNOWLEDGED AND AGREED this
15 day of September, 1997
R & E GAMING CORP.
By: s/ Allen E. Paulson
---------------------
Title --------------------
Page 143 of 143 Pages
<PAGE>
