SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of report (Date of earliest event reported): September 29, 1998
Elsinore Corporation
(Exact name of registrant as specified in its charter)
Nevada 001-07831 88-0117544
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
202 Fremont Street, Las Vegas, Nevada 89101
(Address of principal executive offices) (Zip Code)
(702) 385-4011
(Registrant's telephone number, including area code)
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Item 5. Other Events.
On September 29, 1998, Elsinore Corporation ("Elsinore" or the
"Company") issued to certain investment accounts controlled by Morgens,
Waterfall, Vintiadis & Company, Inc. ("MWV" and the accounts controlled by MWV,
the "Funds") 50,000,000 shares of Series A Convertible Preferred Stock of the
Company in exchange for the surrender to the Company of $18,000,000 original
principal amount of second mortgage notes held by the Funds. The 50,000,000
shares of Series A Convertible Preferred Stock have an aggregate liquidation
preference of $18,000,000 and are convertible into 93,000,000 shares of the
Company's Common Stock. Following the recapitalization, John C. "Bruce"
Waterfall will beneficially own 97,646,440 shares of Common Stock, or
approximately 99.7% of the outstanding Common Stock. All such Common Stock is
held by the Funds and are subject to Mr. Waterfall's voting and dispositive
control. The number of shares beneficially owned and the percentage of shares
beneficially owned are determined in accordance with the rules of the Securities
and Exchange Commission and (i) are based on 4,929,313 shares of Common Stock
outstanding as of September 29, 1998 and (ii) assumes that the 50,000,000 shares
of Series A Convertible Preferred Stock are converted into 93,000,000 shares of
the Company's Common Stock.
In addition, the Company issued to the Funds new second mortgage notes
in the aggregate principal amount of $11,104,000 in exchange for all remaining
outstanding second mortgage notes held by the Funds in the same aggregate
principal amount, pursuant to an amended indenture governing the second mortgage
notes that reduced the interest rate payable thereon from 13.5% to 12.83%.
Following the recapitalization, the Company has notes outstanding in the
aggregate principal amount of $11,104,000.
Other actions were taken by the Company on September 29, 1998 to reduce
the Company's indebtedness. Please see the description contained in the
Company's other report on Form 8-K filed prior to this report on October 13,
1998.
The foregoing description of the terms of the transactions is qualified
in its entirety by reference to the Exchange Agreement, Series A Preferred Stock
Purchase Agreement, Registration Rights Agreement, Certificate of Designations,
Preferences and Rights of Elsinore Corporation Series A Preferred Stock,
Acknowledgment and Confirmation of Pledge Agreement, Acknowledgment and
Confirmation of Guaranty, and Second Modification of Subordinated Deed of Trust.
A copy of each of the aforementioned agreements is filed herewith and in each
case is incorporated herein by reference.
On September 30, 1998, the Company issued a press release announcing
the transactions described above. A copy of the press release is attached as
Exhibit 99.1 to the Company's other report on Form 8-K filed prior to this
report on October 13, 1998 and incorporated herein by reference.
For more information about the Company and risks associated with
investing in the Company, investors are directed to the Company's most recent
report on Form 10-K as filed with the Securities and Exchange Commission.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma financial Information.
Not applicable.
(c) Exhibits.
Exhibit No. Description
3.3 Certificate of Designations, Preferences and
Rights of Elsinore Corporation Series A Preferred
Stock.
10.49 Exchange Agreement by and between Elsinore
Corporation and certain investment accounts named
therein, dated as of September 29, 1998.
10.50 Second Supplemental Indenture among Elsinore
Corporation, the guarantors (Elsub Management
Corporation, Four Queens, Inc., and Palm Springs
East Limited Partnership), and U.S. Bank Trust
National Association, dated as of September 29,
1998.
10.51 Series A Preferred Stock Purchase Agreement by
and between Elsinore Corporation and certain
investment accounts named therein, dated as of
September 29, 1998.
10.52 Registration Rights Agreement by and between
Elsinore Corporation and certain investment
accounts named therein, dated as of September 29,
1998.
10.53 Acknowledgment and Confirmation of Pledge
Agreement among Elsinore Corporation, Elsub
Management Corporation, Palm Springs East Limited
Partnership, and U.S. Bank Trust National
Association, dated as of September 29, 1998.
10.54 Acknowledgment and Confirmation of Guaranty among
Elsub Management Corporation, Four Queens, Inc.,
Palm Springs East Limited Partnership, and U.S.
Bank Trust National Association, dated as of
September 29, 1998.
10.55 Second Modification of Subordinated Deed of Trust
by and between Four Queens, Inc. and U.S. Bank
Trust National Association, dated as of September
29, 1998.
99.1 Press Release dated September 30, 1998.(1)
(1) Incorporated herein by reference to the report of the
Company on Form 8-K previously filed on October 13, 1998.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ELSINORE CORPORATION
By /s/ Jeffrey T. Leeds
JEFFREY T. LEEDS
President and
Chief Executive Officer
By /s/ S. Barton Jacka
S. BARTON JACKA
Secretary, Treasurer, and
Principal Financial Officer
Date: October 13, 1998
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
3.3 Certificate of Designations, Preferences and
Rights of Elsinore Corporation Series A Preferred
Stock.
10.49 Exchange Agreement by and between Elsinore
Corporation and certain investment accounts named
therein, dated as of September 29, 1998.
10.50 Second Supplemental Indenture among Elsinore
Corporation, the guarantors (Elsub Management
Corporation, Four Queens, Inc., and Palm Springs
East Limited Partnership), and U.S. Bank Trust
National Association, dated as of September 29,
1998.
10.51 Series A Preferred Stock Purchase Agreement by
and between Elsinore Corporation and certain
investment accounts named therein, dated as of
September 29, 1998.
10.52 Registration Rights Agreement by and between
Elsinore Corporation and certain investment
accounts named therein, dated as of September 29,
1998.
10.53 Acknowledgment and Confirmation of Pledge
Agreement among Elsinore Corporation, Elsub
Management Corporation, Palm Springs East Limited
Partnership, and U.S. Bank Trust National
Association, dated as of September 29, 1998.
10.54 Acknowledgment and Confirmation of Guaranty among
Elsub Management Corporation, Four Queens, Inc.,
Palm Springs East Limited Partnership, and U.S.
Bank Trust National Association, dated as of
September 29, 1998.
10.55 Second Modification of Subordinated Deed of Trust
by and between Four Queens, Inc. and U.S. Bank
Trust National Association, dated as of September
29, 1998.
99.1 Press Release dated September 30, 1998.(1)
(1) Incorporated herein by reference to the report of the
Company on Form 8-K previously filed on October 13, 1998.
EXHIBIT 3.3
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
of
ELSINORE CORPORATION SERIES A PREFERRED STOCK
The undersigned, being the duly elected President and Secretary of Elsinore
Corporation, a corporation organized and existing under the laws of the state of
Nevada (the "Corporation");
DO HEREBY CERTIFY that, pursuant to the authority conferred upon the board of
directors of the Corporation by the Corporation's articles of incorporation, the
board, by the vote of the required number of directors at a meeting, duly called
and noticed, held on September 22, 1998, adopted the following resolution
creating a series of 50,000,000 shares of convertible cumulative preferred
stock, designated as "Series A Preferred Stock":
NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority conferred upon
the board of directors of this Corporation (the "Board") in accordance with the
provisions of this Corporation's amended and restated articles of incorporation
(the "Articles of Incorporation"), there is hereby established, authorized and
created a series of the authorized preferred stock of the Corporation, $0.001
par value per share, which series is hereby designated as "Series A Preferred
Stock" (the "Series A Preferred Stock") and which consists of 50,000,000 shares.
The powers, preferences, rights, restrictions, and other matters relating to the
Series A Preferred Stock are as follows:
1. Dividend Rights. The holders of the Series A Preferred Stock shall be
entitled to receive cumulative dividends at the rate of six percent (6%) per
annum of the Dividend Base per share (as defined below), and no more, payable in
preference and priority to any payment of any dividend on the Common Stock. Such
dividends shall be cumulative from the Original Issue Date and shall accrue on
each share from day to day whether or not earned or declared, shall be payable
quarterly in arrears when and as declared by the Board of Directors, and shall
be paid to the holders of Series A Preferred Stock as their names appear on the
share register of the Corporation on the Record Date fixed by the Board of
Directors for any such dividend. Accrual of such cumulative dividends from day
to day shall be mandatory and shall not be subject to the discretion of the
Board of Directors. No dividends shall be declared or paid with respect to the
Common Stock, the Series A Preferred Stock or any other stock ranking junior to
or pari passu with the Series A Preferred Stock as to payment of dividends
(other than a dividend payable solely in shares of the Corporation) unless all
dividends accrued on the Series A Preferred Stock up to the payment date are
first declared and paid. The amount of dividends "accrued" on any share of the
Series A Preferred Stock at any date shall be deemed to be the amount of any
unpaid cumulative dividends accumulated thereon to and including such date,
whether or not earned or declared. "Dividend Base" on any day means an amount
per share equal to the Liquidation Preference for such share on such day plus
the amount, if any, of dividends accrued and unpaid with respect to such share
on the next preceding anniversary date of the date on which a share of Series A
Preferred Stock was first issued (the "Original Issue Date").
2. Liquidation Preference.
A. Description and Computation of Liquidation Preference. In the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the holders of the outstanding shares of Series A Preferred Stock
will be entitled to receive, prior and in preference to any distribution of any
of the assets or surplus funds of the Corporation to the holders of the Common
Stock by reason of their ownership thereof, the amount of $0.36 per share (as
adjusted for any stock dividends, combinations or splits with respect to such
shares, the "Liquidation Preference"), plus all accrued or declared but unpaid
dividends on such share for each share of Series A Preferred Stock then held by
them. If, upon the occurrence of such event, the assets and funds thus
distributed among the holders of the outstanding shares of the Series A
Preferred Stock will be insufficient to permit the payment to each such holder
of outstanding shares of Series A Preferred Stock of the full aggregate
Liquidation Preference plus such unpaid dividends, then the entire assets and
funds of the Corporation legally available for distribution will be distributed
ratably among the holders of the Series A Preferred Stock in proportion to the
Liquidation Preference for all shares of Series A Preferred Stock held by each
such holder which each such holder is otherwise entitled to receive.
B. Distribution of Remaining Assets. After payment to the holders of the
outstanding shares of Series A Preferred Stock of the amounts set forth in
Section 2(A), above, the entire remaining assets and funds of the Corporation
legally available for distribution, if any, will be distributed among the
holders of the Common Stock and the Series A Preferred Stock in proportion to
the shares of Common Stock then held by them and the shares of Common Stock
which they then have the right to acquire upon conversion of the shares of
Series A Preferred Stock then held by them. C. Other Liquidation Events. For
purposes of this Section 2, both (i) any acquisition of the Corporation by means
of merger or other form of corporate reorganization in which outstanding shares
of the Corporation are exchanged for securities or other consideration issued,
or caused to be issued, by the acquiring corporation or its subsidiary (other
than a mere reincorporation transaction); and (ii) a sale of all or
substantially all of the assets of the Corporation, will be treated as a
liquidation, dissolution or winding up of the Corporation and will entitle the
holders of outstanding shares of Series A Preferred Stock and of Common Stock to
receive at the closing in cash, securities or other property (valued pursuant to
Section 2(D), below) amounts as specified in Sections 2(A) and 2(B), above. D.
Valuation of Assets. Whenever the distribution provided for in this Section 2
will be payable in securities or property other than cash, the value of such
distribution will be the fair market value of such securities or other property
as determined in good faith by the Board. 3. Voting Rights.
Each holder of outstanding shares of the Series A Preferred Stock will be
entitled to the number of votes equal to the number of shares of Common Stock
into which such shares of Series A Preferred Stock could be converted (except in
the case of elections of directors, in which case each holder will be entitled
to one vote per share of Series A Preferred Stock held by such holder) and will
have voting rights and powers equal to the voting rights and powers of the
Common Stock (except as otherwise expressly provided herein or as required by
law, voting together with the Common Stock as a single class) and will be
entitled to notice of any stockholders' meeting in accordance with the bylaws of
the Corporation (the "Bylaws"). Fractional votes will not, however, be
permitted, and any fractional voting rights resulting from the above formula
(after aggregating all shares into which shares of Series A Preferred Stock held
by each holder thereof could be converted) will be rounded to the nearest whole
number (with one-half being rounded upward). Each holder of shares of Common
Stock will be entitled to one vote for each share of Common Stock held.
4. Conversion.
A. Conversion Rights. The holders of the outstanding shares of Series A
Preferred Stock have conversion rights as set forth in this Section 4(A)
("Conversion Rights"). Each share of Series A Preferred Stock will be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the Corporation or any transfer agent
for such stock, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing the Liquidation Preference by the
Series A Conversion Price (as defined herein) in effect on the date the
certificate evidencing such share is surrendered for conversion. The price at
which shares of Common Stock will be deliverable upon conversion of shares of
the Series A Preferred Stock (the "Series A Conversion Price") will initially be
$0.19355 per share of Common Stock. Such initial Series A Conversion Price will
be adjusted as hereinafter provided.
B. Mechanics of Conversion.
Before any holder of outstanding shares of Series A Preferred Stock will be
entitled to convert the same into shares of Common Stock, he will surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for such stock, and will give written
notice to the Corporation at such office that he elects to convert the same and
will state therein the name or names in which he wishes the certificate or
certificates for shares of Common Stock to be issued. The Corporation will, as
soon as practicable thereafter, issue and deliver at such office to such holder
of shares of Series A Preferred Stock, a certificate or certificates for the
number of shares of Common Stock to which he will be entitled as aforesaid. Such
conversion will be deemed to have been made immediately prior to the close of
business on the date of surrender of the shares of Series A Preferred Stock to
be converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion will be treated for all purposes as the
record holder or holders of such shares of Common Stock on such date.
C. Adjustments to Conversion Price.
(i) Special Definitions. For purposes of this Section, the following
definitions shall apply:
(1) `Options' shall mean rights, options, or warrants to subscribe for,
purchase or otherwise acquire either Common Stock or Convertible Securities.
(2) `Original Issue Date' shall mean the date on which a share of
Series A Preferred Stock was first issued.
(3) `Convertible Securities' shall mean any evidences of indebtedness,
shares (other than Series A Preferred Stock) or other securities convertible
into or exchangeable for Common Stock.
(4) `Additional Shares of Common Stock' shall mean all shares of
Common Stock issued (or, pursuant to Section 4(C)(iii) deemed to be issued)
by the Corporation after the Original Issue Date, other than shares of Common
Stock issued or issuable:
(A) upon conversion of shares of Series A Preferred Stock;
(B) upon the issuance of 70,687
shares of Common Stock to certain creditors of the Corporation pursuant to
the First Amended Plan of Reorganization of the Corporation filed May 28,
1996 in the United States Bankruptcy Court for the District of Nevada;
(C) as a dividend or distribution on the Series A Preferred Stock;
(D) for which adjustment of the Conversion Price is made pursuant
to Section 4(C)(vi); or
(E) for which adjustment of the Conversion Price is provided for
pursuant to Section 4(C)(iii).
(ii) No Adjustment of Conversion Price. No adjustment in the Conversion Price
shall be made in respect of the issuance of Additional Shares of Common Stock
unless the consideration per share for an Additional Share of Common Stock
issued or deemed to be issued by the Corporation is less than the Conversion
Price in effect on the date of, and immediately prior to, such issue.
(iii) Deemed Issue of Additional Shares of Common Stock. In the event the
Corporation at any time or from time to time after the Original Issue Date shall
issue any Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities then entitled to receive any
such Options or Convertible Securities, then the maximum number of Additional
Shares of Common Stock (as set forth in the instrument relating thereto without
regard to any provisions contained therein designed to protect against dilution)
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such a record date shall have been fixed, as
of the close of business on such record date, provided that Additional Shares of
Common Stock shall not be deemed to have been issued unless the consideration
per share (determined pursuant to Section 4(C)(v) hereof) of such Additional
Shares of Common Stock would be less than the Conversion Price in effect on the
date of and immediately prior to such issue, or such record date, as the case
may be, and provided further that in any such case in which Additional Shares of
Common Stock are deemed to be issued:
(1) No further adjustments in the Conversion Price shall be made upon the
subsequent issue of Convertible Securities or shares of Common Stock upon the
exercise of such Options or conversion or exchange of such Convertible
Securities;
(2) if such Options or Convertible Securities by their terms provide, with
the passage of time or otherwise, for any increase or decrease in the
consideration payable to the Corporation, or increase or decrease in the number
of shares of Common Stock issuable, upon the exercise, conversion or exchange
thereof, the Conversion Price computed upon the original issue thereof (or upon
the occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities (provided, however, that no such adjustment of the
Conversion Price shall affect Common Stock previously issued upon conversion of
the Series A Preferred Stock);
(3) upon the expiration of any such Options or any rights of conversion or
exchange under such Convertible Securities which shall not have been exercised,
the Conversion Price computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration, be recomputed as if:
(A) in the case of Convertible Securities or Options for Common
Stock, the only Additional Shares of Common Stock issued were the shares of
Common Stock, if any, actually issued upon the exercise of such Options or the
conversion or exchange of such Convertible Securities and the consideration
received therefor was the consideration actually received by the Corporation for
the issue of all such Options, whether or not exercised, plus the consideration
actually received by the Corporation upon such exercise, or for the issue of all
such Convertible Securities which were actually converted or exchanged, plus the
additional consideration, if any, actually received by the Corporation upon such
conversion or exchange, and
(B) in the case of Options for Convertible Securities, only the
Convertible Securities, if any, actually issued upon the exercise thereof were
issued at the time of issue of such Options and the consideration received by
the Corporation for the Additional Shares of Common Stock deemed to have been
then issued was the consideration actually received by the Corporation for the
issue of all such Options, whether or not exercised, plus the consideration
deemed to have been received by the Corporation (determined pursuant to Section
4(C)(v)) upon the issue of the Convertible Securities with respect to which such
Options were actually exercised;
(4) no readjustment pursuant to clauses (2) or (3) above shall have the
effect of increasing the Conversion Price to an amount which exceeds the lower
of (A) the Conversion Price on the original adjustment date, or (B) the
Conversion Price that would have resulted from any issuance of Additional Shares
of Common Stock between the original adjustment date and such readjustment date;
(5) in the case of any Options which expire by their terms not more than 30
days after the date of issue thereof, no adjustment of the Conversion Price
shall be made, except as to shares of Series B Preferred Stock converted in such
period, until the expiration or exercise of all such Options, whereupon such
adjustment shall be made in the same manner provided in clause (3) above; and
(6) if any such record date shall have been fixed and such Options or
Convertible Securities are not issued on the date fixed therefor, the adjustment
previously made in the Conversion Price which became effective on such record
date shall be cancelled as of the close of business on such record date, and
shall instead be made on the actual date of issuance, if any.
(iv) Adjustment of Conversion Price Upon Issuance of Additional Shares of Common
Stock. In the event the Corporation shall issue Additional Shares of Common
Stock (including Additional Shares of Common Stock deemed to be issued pursuant
to Section 4(C)(iii)) without consideration or for a consideration per share
less than the Conversion Price in effect on the date of and immediately prior to
such issue, then and in such event, such Conversion Price shall be reduced,
concurrently with such issue, to a price (calculated to the nearest hundredth of
a cent) determined by multiplying such Conversion Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance (including for this purpose the number of
shares of Common Stock issuable upon conversion of the shares of Series A
Preferred Stock outstanding immediately prior to such issue) plus the number of
shares of Common Stock which the aggregate consideration received by the
Corporation for the total number of Additional Shares of Common Stock so issued
would purchase at such Conversion Price, and the denominator of which shall be
the number of shares of Common Stock outstanding immediately prior to such
issuance (including for this purpose the number of shares of Common Stock
issuable upon conversion of the shares of Series A Preferred Stock outstanding
immediately prior to such issue) plus the number of such Additional Shares of
Common Stock so issued; provided, however, that such Conversion Price shall in
no case be reduced to a per share price lower than the par value per share of
the Common Stock.
(v) Determination of Consideration. For purposes of this Section, the consider-
ation received by the Corporation for the issue of any Additional Shares of
Common Stock shall be computed as follows:
(1) Cash and Property: Such consideration shall:
(A) insofar as it consists of cash, be computed at the aggregate
amount of cash paid therefor, prior to deducting any discounts, commissions or
other expenses allowed, paid or incurred by the Corporation but excluding any
amounts paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other than cash, be computed
at the fair value thereof at the time of such issue, as determined in good faith
by the Board of Directors; and
(C) in the event Additional Shares of Common Stock are issued
together with other shares or securities or other assets of the Corporation for
consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (A) and (B) above, as determined in
good faith by the Board of Directors.
(2) Options and Convertible Securities. The consideration per share received
by the Corporation for Additional Shares of Common Stock deemed to have been
issued pursuant to Section 4(C)(iii), relating to Options and Convertible
Securities, shall be determined by dividing
(A) the total amount, if any, received or receivable by the
Corporation as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein designed to protect against dilution) payable to the
Corporation upon the exercise of such Options or the conversion or exchange of
such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities by
(B) the maximum number of shares of Common Stock (as set forth in
the instruments relating thereto, without regard to any provision contained
therein designed to protect against dilution) issuable upon the exercise of such
Options or the conversion or exchange of such Convertible Securities.
(vi) Adjustments for Combinations or Subdivisions of Common Stock. In the event
the Corporation at any time or from time to time after the Original Issue Date
shall declare or pay any dividend on the Common Stock payable in Common Stock or
in any right to acquire Common Stock, or shall effect a subdivision of the
outstanding shares of Common Stock into a greater number of shares of Common
Stock (by stock split, reclassification or otherwise), or in the event the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
then the Conversion Price of the Series A Preferred Stock in effect immediately
prior to such event shall, concurrently with the effectiveness of such event, be
proportionately decreased or increased, as appropriate, and the amount per share
distributable to holders of Common Stock pursuant to Section 2(B) hereof shall
likewise be proportionately decreased or increased, as appropriate provided,
however, that the Conversion Price of the Series A Preferred Stock shall in no
case be reduced to a per share price lower than the par value per share of the
Series A Preferred Stock.
D. Other Distributions.
In the event the Corporation shall at any time or from time to time make or
issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities of
the Corporation or any of its subsidiaries other than Additional Shares of
Common Stock, then in each such event provision shall be made so that the
holders of Series A Preferred Stock shall receive, upon the conversion thereof,
the securities of the Corporation which they would have received had their stock
been converted into Common Stock on the date of such event.
E. Certificates as to Adjustments.
Upon the occurrence of each adjustment or readjustment of the Conversion Price
pursuant to this Section 4, the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
cause independent public accountants selected by the Corporation to verify such
computation and prepare and furnish to each holder of Series A Preferred Stock a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Corporation
shall, upon the written request at any time of any holder of Series A Preferred
Stock, furnish or cause to be furnished to such holder a like certificate
prepared by the Corporation setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of Series A Preferred Stock.
F. Notice of Record Date.
In the event of any taking by the Corporation of a record of the holders of any
class of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend) or other
distribution, any security or right convertible into or entitling the holder
thereof to receive Additional Shares of Common Stock, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Corporation shall
give, in the manner and subject to the provisions of Section 4(i) hereof, to
each holder of Series A Preferred Stock at least 15 days prior to the date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution, security or right and
the amount and character of such dividend, distribution, security or right.
G. Issue Taxes.
The Corporation shall pay any and all issue and other taxes, excluding federal,
state or local income taxes, that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of shares of Series A Preferred
Stock pursuant hereto; provided, however, that the Corporation shall not be
obligated to pay any transfer taxes resulting from any transfer requested by any
holder in connection with any such conversion.
H. Reservation of Stock Issuable Upon Conversion.
The Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series A Preferred Stock, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Series A Preferred Stock;
and if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then outstanding shares
of the Series A Preferred Stock, the Corporation will take such corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose, including, without limitation, using its best
efforts to obtain the requisite stockholder approval.
I. Fractional Shares.
No fractional shares shall be issued upon the conversion of any share or shares
of Series A Preferred Stock. All shares of Common Stock (including fractions
thereof) issuable upon conversion of more than one share of Series A Preferred
Stock by a holder thereof shall be aggregated for purposes of determining
whether the conversion would result in the issuance of any fractional share. If,
after the aforementioned aggregation, the conversion would result in the
issuance of a fraction of a share of Common Stock, the Corporation shall, in
lieu of issuing any fractional share, pay the holder otherwise entitled to such
fraction a sum in cash equal to the fair market value of such fraction on the
date of conversion (as determined in good faith by the Board of Directors of the
Corporation).
J. Notices.
Any notice required or permitted by the provisions hereof to be given to the
holders of shares of Series A Preferred Stock shall be deemed given when
delivered at the address of the recipient, whether by registered mail (with
return receipt requested), by telecopier with confirmation of receipt received,
by personal delivery, or by Federal Express or comparable overnight courier
service. For purposes hereof (i) any such address shall have been furnished in
writing to the Corporation and such address shall be at an entity that maintains
regular business hours (except for holidays) throughout the entire year; (ii)
the Corporation shall be entitled to rely on the addresses shown on the
shareholder records of the Corporation until another address is furnished
pursuant to the foregoing clause, and (iii) notice shall be deemed given if a
reasonable effort is made in good faith to effect actual delivery thereof in
accordance with the first sentence of this subsection.
K. Adjustments.
In case of any reorganization or any reclassification of the capital stock of
the Corporation or any consolidation or merger of the Corporation with or into
any other corporation or corporations or a sale of all or substantially all of
the assets of the Corporation, each share of Series A Preferred Stock shall
thereafter be convertible into the number of shares of stock or other securities
or property (including cash) to which a holder of the number of shares of Common
Stock deliverable upon conversion of such share of Series A Preferred Stock
would have been entitled upon the record date of (or date of, if no record date
is fixed) such event and, in any case, appropriate adjustment (as determined by
the Board of Directors) shall be made in the application of the provisions
herein set forth with respect to the rights and interests thereafter of the
holders of the Series A Preferred Stock, to the end that the provisions set
forth herein shall thereafter be applicable, as nearly as equivalent as is
practicable, in relation to any shares of stock or the securities or property
(including cash) thereafter deliverable upon the conversion of the shares of
Series A Preferred Stock.
5. Restrictions and Limitations.
So long as 25% or more of the originally issued shares of Series A Preferred
Stock are outstanding, the Corporation shall not undertake the following actions
without approval by the holders of 67% of the shares of Series A Preferred Stock
then outstanding: (a) modify its Certificate of Incorporation or Bylaws so as to
amend or change any of the rights, preferences, privileges of or limitations on
the Series A Preferred Stock, (b) issue any other preferred equity security or
convertible debt security or subordinated debt with warrants ranking senior to
or pari passu with the Series A Preferred Stock with respect to dividends or
distribution of assets upon liquidation, or having a conversion price less than
the Conversion Price of the Series A Preferred Stock as then in effect, or (c)
except as herein provided, purchase or otherwise acquire for value any Common
Stock, Series A Stock, Series A Preferred Stock or any other Preferred Stock of
the Corporation either junior or senior to or on a parity with the Series A
Preferred Stock except for purchases implementing employee benefit plans or
agreements, which plans or agreements have been approved by the Board of
Directors including as a part of such approval the affirmative vote of any
representative of the Series A Preferred Stock then a member of the Board of
Directors; provided however, (d) that such approval may be given by the holders
of a simple majority of the shares of Series A Preferred Stock then outstanding
in the case of an issuance of a security ranking senior to or pari passu with
the Series A Preferred Stock if such security is, in substance, convertible into
or exchangeable for Common Stock at a price higher than the Conversion Price
then in effect.
RESOLVED FURTHER, that the President or the Vice President and the Secretary or
any Assistant Secretary of the Corporation are each authorized to do or cause to
be done all such acts or things and to make, execute and deliver or cause to be
made, executed and delivered all such agreements, documents, instruments and
certificates in the name and on behalf of the Corporation or otherwise as they
deem necessary, desirable or appropriate to execute or carry out the purpose and
intent of the foregoing resolutions.
<PAGE>
IN WITNESS WHEREOF, the undersigned officers have executed and subscribed
this Certificate and do affirm the foregoing as true under the penalties of
perjury as of this 29th day of September, 1998.
By: /s/ Jeffrey T. Leeds
Name: Jeffrey T. Leeds
Title: President
By: /s/ S. Barton Jacka
Name: S. Barton Jacka
Title: Secretary
STATE OF NEVADA )
) ss:
COUNTY OF CLARK )
On this ____ day of _________________, 199__, before me, the
undersigned, a Notary Public in and for the County of Clark, State of Nevada,
duly commissioned and sworn, personally appeared ________________ known to me to
be the President of ELSINORE CORPORATION, whose name is subscribed to the within
instrument, and who acknowledged to me that he/she executed the same freely and
voluntarily and for the use and purposes therein mentioned.
-----------------------------
NOTARY PUBLIC
EXHIBIT 10.49
- --------------------------------------------------------------------------------
ELSINORE CORPORATION
EXCHANGE AGREEMENT
Dated as of September 29, 1998
- --------------------------------------------------------------------------------
<PAGE>
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT (this "Agreement") is dated as of
September 29, 1998 and entered into by and between ELSINORE CORPORATION, a
Nevada corporation ("Elsinore"), and THE INVESTMENT ACCOUNTS LISTED ON THE
SIGNATURE PAGES HEREOF (each, a "Fund" and, collectively, the "Funds").
R E C I T A L S
WHEREAS, Elsinore is a party to that certain Amended and
Restated Note Agreement, dated as of March 3, 1997, by and between Elsinore, as
issuer, the financial institutions named therein, as purchasers, and 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, as guarantors,
pursuant to which Elsinore issued 11 1/2% First Mortgage Notes due 2000 in the
original aggregate principal amount of $3,855,739.39 (such notes being the
"First Mortgage Notes");
WHEREAS, Elsinore is a party to that certain Amended and
Restated Indenture (the "Indenture"), dated as of March 3, 1997 by and between
Elsinore, as issuer, the guarantors named therein (the "Guarantors"), and U.S.
Bank Trust National Association (formerly known as First Trust National
Association), as Trustee (the "Trustee"), as amended by the First Supplemental
Indenture and pursuant to which Elsinore issued 13 1/2% Second Mortgage Notes
due 2001 in the original aggregate principal amount of $30,000,000 (such notes
being the "Second Mortgage Notes");
WHEREAS, the Funds hold Second Mortgage Notes in the original
aggregate principal amount of $29,104,000;
WHEREAS, the parties hereto have reached an agreement pursuant
to which (i) Elsinore will issue to the Funds 50,000,000 shares of Preferred
Stock in exchange for Existing Second Mortgage Notes in the original aggregate
principal amount of $18,000,000; and (ii) Elsinore will issue to the Funds New
Mortgage Notes in the aggregate principal amount of $11,104,000 pursuant to the
Indenture, as amended by the Second Supplemental Indenture in exchange for
Existing Second Mortgage Notes in the same principal amount;
NOW, THEREFORE, in consideration of the foregoing, and the
agreements, covenants and conditions contained herein and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
Section 1. DEFINITIONS
1.1 Certain Defined Terms
In addition to the terms defined in the text of this
Agreement, the following terms used in this Agreement shall have the following
meanings:
"Agreement" means this Exchange Agreement dated as of
September 29, 1998, as it may be amended, amended and restated or otherwise
modified or supplemented from time to time.
"Certificate of Designations" means the Certificate of
Designations, Preferences and Rights of Series A Convertible Preferred Stock
relating to the Preferred Stock, in the form of Exhibit A attached to the
Preferred Stock Purchase Agreement.
"Closing Date" means the date on or before September 30, 1998
on which the conditions set forth in Section 4 hereof shall have been satisfied
and the Transactions shall have been consummated.
"Existing Second Mortgage Notes" means the $29,104,000
original aggregate principal amount of Second Mortgage Notes held by the Funds,
which were issued under the Indenture prior to the amendment thereof by the
Second Supplemental Indenture.
"Existing Securities" means the Existing Second Mortgage Notes.
"First Supplemental Indenture" means the First Supplemental
Amended and Restated Indenture, dated as of September 18, 1997, among Elsinore,
The Guarantors, and the Trustee.
"Lien" means any lien, mortgage, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest).
"Morgens, Waterfall" means Morgens, Waterfall, Vintiadis & Co., Inc.
"New Securities" means the New Mortgage Notes and the Preferred Stock.
"New Mortgage Notes" means Second Mortgage Notes to be issued
under the Indenture, as amended by the Second Supplemental Indenture, in an
original aggregate principal amount of $11,104,000, which New Mortgage Notes
will bear interest at the rate of 12.83% per annum during the period beginning
on the date of the New Mortgage Notes but otherwise have terms comparable to
those of the Existing Second Mortgage Notes.
"Non-MWV Second Mortgage Notes" means the $896,000 original
aggregate principal amount of Second Mortgage Notes held by Persons other than
the Funds, which were issued under the Indenture prior to the amendment thereof
by the Second Supplemental Indenture.
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
"Preferred Stock" means the Series A Convertible Preferred
Stock of Elsinore, par value $0.001 per share, with a liquidation preference of
$0.36 per share plus accrued dividends, and with the other terms set forth in
the Certificate of Designations.
"Preferred Stock Purchase Agreement" means a Series A
Preferred Stock Purchase Agreement between Elsinore and the Funds, substantially
in the form of Exhibit B hereto.
"Registration Rights Agreement" means a Registration Rights
Agreement among Elsinore and the Funds, relating to the Preferred Stock,
substantially in the form of Exhibit C attached to the Preferred Stock Purchase
Agreement.
"Second Supplemental Indenture" means a Second Supplemental
Indenture, dated as of September 29, substantially in the form of Exhibit A
attached hereto, which amends the Indenture.
"Transaction Documents" means this Agreement, the Second
Supplemental Indenture, the Preferred Stock Purchase Agreement, the Registration
Rights Agreement, and the New Securities.
"Transactions" means the transactions pursuant to which the
Transaction Documents will be executed and delivered by the parties thereto and
the New Securities will be issued in exchange for Existing Securities, all in
accordance with the terms of this Agreement.
"Subsidiary" means any corporation, association partnership or
other business entity of which more than 50% of the total voting power of shares
of stock or partnership shares entitled to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more of the other Subsidiaries of that
Person or a combination thereof.
1.2 Other Definitional Provisions
References to "Sections" and "subsections" shall be to
Sections and subsections, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in subsection 1.1 may, unless
the context otherwise requires, be used in the singular or the plural depending
on the reference.
Section2. AGREEMENT TO CONSUMMATE TRANSACTIONS
Subject to the prior or concurrent satisfaction of the
conditions to effectiveness contained in Section 4, on the Closing Date each of
the parties hereto shall perform its agreements set forth below.
2.1 Exchange of Existing Securities for New Securities.
A. Elsinore will:
(i) execute and deliver to the Funds the Preferred Stock Purchase Agreement and
the Registration Rights Agreement;
(ii) execute and deliver, and cause the Guarantors to execute and deliver, the
Second Supplemental Indenture to the Trustee;
(iii) issue to the Funds 50,000,000 shares of Preferred Stock in exchange for
Existing Second Mortgage Notes in the original aggregate principal amount of
$18,000,000;
(iv) deliver to the Trustee for cancellation under Section 2.12 of the Indenture
all Non-MWV Second Mortgage Notes and all Existing Second Mortgage Notes
purchased by Elsinore under the Preferred Stock Purchase Agreement; and
(v) issue to the Funds New Mortgage Notes in the original aggregate principal
amount of $11,104,000 duly authenticated by the Trustee and guaranteed by the
Guarantors in exchange for Existing Second Mortgage Notes in the same principal
amount.
B. The Funds will:
(i) execute and deliver to Elsinore the Preferred Stock Purchase Agreement and
the Registration Rights Agreement;
(ii) deliver to Elsinore Existing Second Mortgage Notes in the original
aggregate principal amount of $11,104,000 in exchange for the New Mortgage
Notes; and
(iii) deliver to Elsinore Existing Second Mortgage Notes in the original
aggregate principal amount of $18,000,000 in exchange for 50,000,000 shares of
Preferred Stock in accordance with the Preferred Stock Purchase Agreement.
2.2 Consent to Amendments.
The Funds hereby consent to the amendments to the Indenture
set forth in the Second Supplemental Indenture, subject to the terms and
conditions contained therein.
2.3 Further Assurances.
Elsinore and the Funds each hereby acknowledges each of the
agreements of the parties contained in this Section 2 and agrees that they shall
execute and deliver each of the Transaction Documents to which it is a party and
exchange the New Securities for the instruments evidencing the Existing
Securities and take all such other reasonable actions as may be necessary or
advisable to effectuate the agreements contained herein.
2.4 Confirmation of Lien
Promptly after the Closing Date, Elsinore will cause Four
Queens to execute, deliver and record a Modification to Deed of Trust in form
and substance satisfactory to the Trustee and the Funds confirming that that
certain Deed of Trust, Assignment of Rents, and Security Agreement in favor of
U.S. Bank Trust National Association (f/k/a First Trust National Association),
as Beneficiary, dated as of October 8, 1993, which was recorded in the official
records of Clark County, Nevada, on October 8, 1993 in Book 931008 Document No.
0554, secures all obligations under the Indenture and the New Mortgage Notes on
a first priority basis, and will execute, deliver and record all other documents
reasonably necessary or desirable to confirm the lien and priority of such Deed
of Trust.
Section 3. REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of all Parties
Elsinore and each Fund each severally represents and warrants
to the other party hereto that it has the corporate or partnership power and
authority to execute, deliver and perform this Agreement and each of the other
Transaction Documents to which it is a party and to perform its obligations
hereunder and thereunder, and has taken all necessary corporate or partnership
action to authorize the execution, delivery and performance by it of this
Agreement and each of the other Transaction Documents to which it is a party and
to consummate the transactions contemplated hereby and thereby.
3.2 Additional Representations and Warranties of Elsinore.
A. Elsinore represents and warrants to each Fund that:
(i) No Conflict. The execution, delivery and performance by Elsinore and the
Guarantors of the Transaction Documents to which they are a party and the
consummation of the Transactions do not and will not (a) violate any provision
of any law or any governmental rule or regulation (including any gaming law,
rule or regulation) applicable to Elsinore or any of its Subsidiaries or any
Guarantor, the certificate or articles of incorporation or bylaws of Elsinore or
any of its Subsidiaries or any Guarantor, or any order, judgment or decree of
any court or other agency of government binding on Elsinore or any of its
Subsidiaries or any Guarantor; (b) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
material contractual obligation of Elsinore or any of its Subsidiaries or any
Guarantor; (c) result in or require the creation or imposition of any Lien upon
any of the properties or assets of Elsinore or any of its Subsidiaries or any
Guarantor (other than any Liens created under any of the Transaction Documents
in favor of the Trustee or the Funds); or (d) require any approval of
stockholders or any approval or consent of any Person under any contractual
obligation of Elsinore or any of its Subsidiaries or any Guarantor, except for
such approvals or consents which will be obtained on or before the Closing Date
and disclosed in writing to the Funds.
(ii) Governmental Consents. The execution, delivery and performance by Elsinore
and the Guarantors of the Transaction Documents to which they are a party and
the consummation of the transactions contemplated thereby do not and will not
require any registration with, consent or approval of, or notice to, or other
action to, with or by, any federal, state or other governmental authority or
regulatory body (including any gaming regulatory authority).
(iii) Binding Obligation. Each of the Transaction Documents has been duly
executed and delivered by Elsinore and the Guarantors listed on the signature
pages thereof and is the legally valid and binding obligation of Elsinore and
such Guarantors, enforceable against Elsinore and such Guarantors in accordance
with its respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
Section 4. CONDITIONS TO EFFECTIVENESS
Section 2 of this Agreement shall become effective upon the
satisfaction of all of the conditions set forth in this section:
4.1 Delivery of Elsinore and Guarantor Documents
On or before the Closing Date, Elsinore shall have delivered,
or caused to be delivered, to the Funds the following, each, unless otherwise
noted, dated the Closing Date:
A. Certified copies of the certificate or articles of incorporation or
partnership agreement of Elsinore and each Guarantor, together with a good
standing certificate from the Secretary of State of its respective jurisdiction
of incorporation or formation dated a recent date prior to the Closing Date;
B. Copies of the bylaws of Elsinore and each corporate Guarantor certified as of
the Closing Date by Elsinore's, corporate secretary or an assistant secretary;
C. Resolutions of the board of directors of Elsinore and each Guarantor,
approving and authorizing the execution, delivery and performance of the
Transaction Documents to which it is a party, certified as of the Closing Date
by the corporate secretary or an assistant secretary of Elsinore or such
Guarantor as being in full force and effect without modification or amendment;
D. Signature and incumbency certificates of the officers of Elsinore and each
Guarantor executing the Transaction Documents to which it is a party;
E. Executed originals of the Transaction Documents to which Elsinore and each
Guarantor is a party; and
F. Such other documents as the Funds may reasonably request.
4.2 Consent by Holders of First Mortgage Notes
On or before the Closing Date, Elsinore shall have obtained
consent to the Transactions from the holders of all outstanding First Mortgage
Notes.
4.3 Purchase or Redemption of Non-MWV Second Mortgage Notes
On or before the Closing Date, Elsinore shall have purchased
all outstanding Non-MWV Second Mortgage Notes.
4.4 Transaction Documents.
On or before the Closing Date, Elsinore and the Funds shall
have executed and delivered to each other the Preferred Stock Purchase Agreement
and the Registration Rights Agreement, and Elsinore, the Guarantors, and the
Trustee shall have executed and delivered to each other the Second Supplemental
Indenture. All conditions precedent to the effectiveness of such agreements
(other than the exchanges of Existing Securities for New Securities contemplated
thereby) shall have been satisfied or waived.
4.5 Legal Opinions.
On the Closing Date, the Funds shall have received the
favorable legal opinion of Morrison & Foerster, LLP, substantially in the form
of Exhibit C hereto and received the favorable legal opinion of Gordon & Silver,
Ltd., substantially in the form of Exhibit D hereto.
4.6 Fairness Opinion.
On or before the Closing Date, Elsinore shall have received an
opinion of Wilson Associates to the effect that the Transactions by and among
the parties hereto are fair to the minority shareholders of Elsinore from a
financial point of view.
4.7 Acknowledgement and Confirmation
On the Closing Date, Elsinore and each Guarantor shall have
executed and delivered to the Trustee and MWV an Acknowledgement and
Confirmation substantially in the form of Exhibit E, hereto.
4.8 Corporate and Partnership Proceedings
On or before the Closing Date, all corporate, partnership and
other proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by the Funds and its counsel shall be reasonably satisfactory in form
and substance to the Funds and its counsel, and Morgens, Waterfall, on behalf of
the Funds, and its counsel shall have received all such counterpart originals or
certified copies of such documents as they may reasonably request.
4.9 Other Matters
Elsinore shall have performed in all material respects all
agreements which this Agreement provides shall be performed on or before the
Closing Date except as otherwise disclosed to and agreed to in writing by the
Funds.
Section 5. MISCELLANEOUS
5.1 Survival of Representations.
The representations and warranties of the parties hereto shall
survive the consummation of the Transactions.
5.2 Integration.
This Agreement (including the Schedules and Exhibits hereto)
constitutes the entire agreement with respect to the subject matter hereof, and
supersedes all other prior agreements and understandings, both oral and written,
among the parties with respect to the subject matter hereof.
5.3. Counterparts; Effectiveness
This Agreement may be executed in any number of counterparts
(including telecopy counterparts), and by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. This Agreement shall become effective upon the execution and
delivery of a counterpart hereof by each of Elsinore and the Funds.
5.4 Severability.
A. In case any provision in or obligation under this Agreement shall be
determined to be invalid, illegal or unenforceable in any jurisdiction by any
court of competent jurisdiction before the consummation of the Transactions,
this Agreement shall be null and void.
B. In case any provision in or obligation under this Agreement shall be invalid,
illegal or unenforceable in any jurisdiction in any circumstance in which
subsection 5.4A is not applicable, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
5.5 Liability
The obligations and liabilities of the constituent investment
accounts of Investor under this Agreement shall be several, to the extent of
each such investment account's respective percentage ownership interest of
issued and outstanding shares of common stock of Elsinore, and not joint.
Elsinore has designated Morgens, Waterfall as its agent for the sole purpose of
receiving communications from, and sending communications to, such investment
accounts in connection with this Agreement. None of Morgens, Waterfall, John C.
Waterfall, or Edwin H. Morgen individually, nor any officers, directors,
employees, agents, or controlling persons of Morgens, Waterfall, shall have any
obligations or liabilities under or in connection with this Agreement by reason
of the foregoing or for any other reason.
5.6 Notices
Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given shall be in writing
and may be personally served, telexed or sent by telefacsimile or United States
mail or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
business days after depositing it in the United States mail with postage prepaid
and properly addressed. For the purposes hereof, the address of each party
hereto shall be as set forth under such party's name below, or such other
address as shall be designated by such party in a written notice delivered to
the other parties hereto.
if to Elsinore:
Elsinore Corporation
202 Fremont Street
Las Vegas, Nevada 89101
Fax: (702) 387-5120
Attention: Mr. Jeffrey T. Leeds
if to the Funds:
Morgens, Waterfall, Vintiadis & Co., Inc.
10 East 50th Street
New York, New York 10022
Attention: Joann McNiff, Esq.
5.7 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 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.
5.8 Expenses.
Each party shall bear its own expenses and costs incurred in
connection with this Agreement and the Transactions.
5.9 Governing Law
This Agreement shall be deemed to be made under, shall be
governed by and shall be construed and enforced in accordance with the internal
laws of the State of New York, without regards to conflicts of laws provisions.
5.10 Headings
Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
[Remainder of page intentionally left blank.]
<PAGE>
S-1
WITNESS, the due execution hereof by the respective duly
authorized general partner or officer of the undersigned as of the date first
written above.
ELSINORE CORPORATION
By: /s/ Jeffrey T. Leeds
Name: Jeffrey T. Leeds
Title: President
FUNDS:
BETJE PARTNERS
ENDOWMENT RESTART LLC
MORGENS WATERFALL INCOME PARTNERS, L.P.
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.
By: /s/ John C. "Bruce" Waterfall
Name: John C. "Bruce" Waterfall
Title: Authorized Signatory
<PAGE>
EXHIBIT A
FORM OF SECOND SUPPLEMENTAL INDENTURE
(See Exhibit 10.48 attached to Form 8-K)
<PAGE>
EXHIBIT B
FORM OF PREFERRED STOCK PURCHASE AGREEMENT
(See Exhibit 10.49 attached to Form 8-K)
<PAGE>
EXHIBIT C
FORM OF LEGAL OPINION OF MORRISON & FOERSTER LLP
<PAGE>
EXHIBIT D
FORM OF LEGAL OPINION OF GORDON & SILVER, LTD.
<PAGE>
EXHIBIT E
FORM OF ACKNOWLEDGEMENT AND CONFIRMATION
(See Exhibits 10.53 and 10.54 attached to Form 8-K)
EXHIBIT 10.50
------------------------------------------------------------------------
ELSINORE CORPORATION
as Issuer
and
THE GUARANTORS NAMED HEREIN
TO
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
-------------------------
SECOND SUPPLEMENTAL
INDENTURE
Dated as of September 29, 1998
Supplement to Amended and Restated Indenture
Dated as of March 3, 1997
---------------------------
------------------------------------------------------------------------
<PAGE>
SECOND SUPPLEMENTAL INDENTURE (this "Second Supplemental
Indenture"), dated as of September 29, 1998, among Elsinore Corporation, a
Nevada corporation (the "Company"), the Guarantors listed on the signature pages
hereof (the "Guarantors"), and U.S. Bank Trust National Association (formerly
known as First Trust National Association), as trustee (the "Trustee").
PRELIMINARY STATEMENTS
The Company, the Guarantors and the Trustee have heretofore
entered into that certain Amended and Restated Indenture dated as of March 3,
1997 (as amended by the First Supplemental Amended and Restated Indenture, dated
as of September 18, 1997, among the Company, the Guarantors, Palm Springs East,
Limited Partnership, and the Trustee, the "Indenture") providing for the issue
of the Company's 13 1/2% Second Mortgage Notes due 2001 in the original
aggregate principal amount of $30,000,000. All capitalized terms in this Second
Supplemental Indenture that are defined in the Indenture shall have the same
meanings assigned to them in the Indenture.
Section 10.2 of the Indenture provides that a supplemental
indenture may be entered into by the Company and the Trustee with the consent of
Holders of a majority in aggregate principal amount of the then outstanding
Securities to change or modify any provision of the Indenture, except in certain
circumstances set forth in Section 10.2 of the Indenture, in which case the
consent of Holders of 66-2/3% in aggregate principal amount of the then
outstanding Securities is required and except in certain other circumstances set
forth in Section 10.2 of the Indenture, in which case the consent of the Holders
of each outstanding Security affected thereby is required.
The Company and the Holders have agreed to amend the Indenture
in order to reduce the interest rate payable on the Notes from 13.5% to 12.83%.
On the Second Supplemental Indenture Effective Date, the Company shall issue New
Notes in the aggregate principal amount of $11,104,000.00, in exchange for
Existing Notes in the same principal amount. The New Notes shall have the same
terms, provisions and conditions as the Existing Notes except that all interest
that accrues on the Securities after the date hereof shall accrue at the rate of
12.83% per annum.
The Company has duly authorized the creation of an issue of
its New Notes of substantially the tenor and amount hereinafter set forth, and
to provide therefor, the Company has duly authorized the execution and delivery
of this Second Supplemental Indenture. All things necessary have been done to
make such New Notes, when executed by the Company and authenticated and
delivered hereunder and duly issued by the Company, the valid obligations of the
Company and to make this Second Supplemental Indenture a valid and binding
agreement of the Company and each of the Guarantors and supplement to the
Indenture. All covenants and agreements made by the Company herein are for the
equal and proportionate benefit and security of the Holders of Securities. The
Company and the Guarantors are entering into this Second Supplemental Indenture
and the Trustee is accepting this Second Supplemental Indenture for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.
Pursuant to Section 10.6 of the Indenture, the Trustee has
received an Opinion of Counsel stating that the execution of this Second
Supplemental Indenture is authorized or permitted by the Indenture.
NOW, THEREFORE, for and in consideration of the premises and
for other good and valuable consideration, the receipt and sufficiency which are
hereby acknowledged, the parties hereto hereby mutually covenant and agree as
follows:
Part I: AMENDMENTS TO DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1. Section 1.1 of the Indenture is hereby amended by adding
thereto the following definition of "Existing Notes," which shall be
inserted in proper alphabetical order:
"Existing Notes" means Company's 13-1/2% Second
Mortgage Notes due 2001 issued pursuant to this Indenture
prior to the Second Supplemental Indenture Effective Date.
SECTION 2. Section 1.1 of the Indenture is hereby amended by adding
thereto the following definition of "Second Supplemental Indenture
Effective Date," which shall be inserted in proper alphabetical order:
"Second Supplemental Indenture Effective Date" means
the date on which the Company has delivered to the Trustee an
Officers' Certificate stating that all conditions to the
effectiveness of the Second Supplemental Indenture by the
Company, as Issuer, the Guarantors, and the Trustee, dated as
of September 29, 1998, which amends this Indenture, have been
satisfied or waived in writing.
SECTION 3. Section 1.1 of the Indenture is hereby amended by adding
thereto the following definition of "New Notes," which shall be inserted
in proper alphabetical order:
"New Notes" means the Company's 12.83% Second
Mortgage Notes due 2001, issued pursuant to this Indenture on
and after the Second Supplemental Indenture Effective Date,
with interest payable from September 1, 1998 through the
Second Supplemental Indenture Effective Date at the annual
rate of 13.5% per annum on the principal amount thereof, and
thereafter at an annual rate of 12.83% per annum on the
principal amount thereof.
SECTION 4. The definition of "Securities" and "Notes" in
Section 1.1 of the Indenture is hereby amended and restated in its entirety to
read as follows:
"Securities" or "Notes" means (i) before the Second
Supplemental Indenture Effective Date, the Existing Notes and
(ii) on and after the Second Supplemental Indenture Effective
Date, the New Notes, as amended or modified from time to time
in accordance with the terms hereof.
Part II: AMENDMENTS TO TERMS RELATING TO SECURITIES
SECTION 5. Section 2.1 of the Indenture is hereby amended and
restated in its entirety to read as follows:
"SECTION 2.1 Exchange of Existing Notes for New Notes.
As a condition to receiving New Notes, the Holders of the
Existing Notes shall surrender their Existing Notes to the Trustee for
cancellation. Upon surrender of the Existing Notes, Holders of the
Existing Notes will receive New Notes in the same principal amount as
the principal amount as the Existing Notes surrendered by them. When a
Holder surrenders its Existing Notes to the Trustee, the Trustee shall
hold such instrument in `book entry only' until such Existing Notes are
cancelled."
SECTION 6. Section 2.2 of the Indenture is hereby the amending
and restating the first paragraph thereof to read in its entirety as follows:
"SECTION 2.2. Form and Dating.
The New Notes and the Trustee's certificate of authentication
in respect thereof, shall be substantially in the form of Exhibit B
hereto. Each New Note shall have an executed Guarantee endorsed thereon
substantially in the form of Exhibit C hereto. The New Notes may have
notations, legends or endorsements required by law, stock exchange rule
or usage. The Company shall approve the form of the New Notes and any
notation, legend or endorsement on them. Any such notations, legends or
endorsements not contained in the form of New Note attached as Exhibit B
hereto shall be delivered in writing to the Trustee. Each New Note shall
be dated the date of its authentication."
SECTION 7. Section 2.3 of the Indenture is hereby amended by
deleting the fourth paragraph in its entirety and substituting the following
paragraphs therefor:
"The Trustee shall authenticate the New Notes for original
issue in the aggregate principal amount of up to $11,104,000, upon a
written order of the Company in the form of an Officers' Certificate.
The Officers' Certificate shall specify the amount of New Notes to be
authenticated and the date on which the Securities are to be
authenticated. The aggregate principal amount of New Notes outstanding
at any time may not exceed $11,104,000, except as provided in Section
2.8. Upon the written order of the Company in the form of an Officers'
Certificate, the Trustee shall authenticate Securities in substitution
of securities originally issued to reflect any name change of the
Company.
On the Second Supplemental Indenture Effective Date, New Notes
in an aggregate original principal amount of $11,104,000 shall be
authenticated and delivered under this Indenture in exchange for all
then outstanding Existing Notes. Such New Notes shall thereupon be the
`Securities' and the `Notes' for all purposes under this Indenture."
Part III: AMENDMENTS TO EXHIBITS
SECTION 9. Exhibits.
The Indenture is hereby amended by deleting Exhibit B
therefrom in its entirety and substituting a new Exhibit B in the form attached
hereto as Annex I.
Part IV. MISCELLANEOUS
SECTION 10. Approvals.
Section 5.18 of the Indenture restricts the transfer of
"Disqualified Capital Stock" in the Company's Subsidiaries, including
subsidiaries which are Nevada corporate gaming licensees. Such restriction on
the transfer of equity securities in a Nevada corporate gaming licensee may not
be effective until such time as the restriction has been approved by the Nevada
State Gaming Control Board and the Nevada Gaming Commission. As such, the
restrictions contained in Section 5.18 of the Indenture, as they relate to
Subsidiaries which are Nevada corporate gaming licensees, shall not be effective
until such time as the prior approval of the Nevada State Gaming Control Board
and Nevada Gaming Commission is received, or until such time as the Nevada State
Gaming Control Board determines such approval is not required.
SECTION 11. No Third Party Beneficiaries.
Nothing in this Second Supplemental Indenture, express or
implied, shall give to any person, other than the parties hereto and their
successors under the Indenture and the Holders of the Securities, any benefit or
any legal or equitable right, remedy or claim under the Indenture.
SECTION 12. Effect on Indenture.
This Second Supplemental Indenture supplements the Indenture
and shall be a part and subject to all the terms thereof. Except as expressly
supplemented hereby, the Indenture shall continue in full force and effect.
SECTION 13. Second Supplemental Indenture Effective Date.
The Second Supplemental Indenture Effective Date shall occur
on the date that each of the following conditions precedent has been satisfied:
(i) All conditions set forth in Section 3 of that
certain Exchange Agreement dated as of September 29, 1998, by
and among the Issuer and the Investment Accounts listed on the
signature pages thereof (other than the effectiveness of this
Second Supplemental Indenture) shall have been satisfied or
waived;
(ii) Gordon & Silver, Ltd., special Nevada counsel to
the Company, shall have delivered to the Trustee its favorable
legal opinion stating that the execution of this Second
Supplemental Indenture is duly authorized by all required
corporate action of the Company and Guarantors;
(iii) Morrison & Foerster, counsel to the Company,
shall have delivered to the Trustee a favorable legal opinion
concerning the enforceability of the Second Supplemental
Indenture and the New Notes;
(iv) the Company shall have delivered to the Trustee
for cancellation under Section 2.12 of the Indenture all
outstanding Existing Notes, other than Existing Notes in the
aggregate principal amount of $11,104,000 to be exchanged for
New Notes on the Second Supplemental Indenture Effective Date;
and
(v) the Company shall have delivered to the Trustee
an Officers' Certificate stating that the conditions precedent
to the Second Supplemental Indenture Effective Date have been
satisfied or waived in writing.
Simultaneously with the effectiveness hereof, the Company
shall issue to each Holder of Existing Notes duly authenticated and executed New
Notes, together with duly executed Guarantees endorsed thereon, together with a
certificate from the Trustee regarding the authentication thereof in exchange
for all Existing Notes held by such Holder.
SECTION 14. Trustee Disclaimer.
The Trustee has accepted the amendment of the Indenture
effected by this Supplemental Indenture and agrees to execute the trust created
by the Indenture as hereby amended, but only upon the terms and conditions set
forth in the Indenture, including the forms and provisions defining and limiting
the liabilities and responsibilities of the Trustee, and without limiting the
generality of the foregoing, the Trustee shall not be responsible in any manner
whatsoever for or with respect to any of the recitals of fact contained herein,
all of which recitals are made solely by the Company, for or with respect to the
validity or sufficiency of this Supplemental Indenture or any of the terms or
provisions hereof and shall incur no liability or responsibility in respect of
the validity thereof.
SECTION 15. Integration.
This Second Supplemental Indenture (including the Schedules
and Exhibits hereto) constitutes the entire agreement with respect to the
subject matter hereof, and supersedes all other prior agreements and
understandings, both oral and written, among the parties with respect to the
subject matter hereof.
SECTION 16. Severability.
In case any provision in or obligation under this Second
Supplemental Indenture shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 17. Headings
Section and subsection headings in this Second Supplemental
Indenture are included herein for convenience of reference only and shall not
constitute a part of this Second Supplemental Indenture for any other purpose or
be given any substantive effect.
SECTION 18. Governing Laws.
This Second Supplemental Indenture and the New Notes shall be
governed by and construed in accordance with the laws of the State of New York.
* * * * *
[Remainder of page intentionally left blank.]
<PAGE>
This Second Supplemental Indenture may be signed in
counterparts with the same effect as if the signatures to each counterpart were
upon a single instrument, and all such counterparts together shall be deemed an
original of this Second Supplemental Indenture.
IN WITNESS WHEREOF, we have set our hands as of the day and
year first above written.
ELSINORE CORPORATION,
a Nevada Corporation
By: /s/ Jeffrey T. Leeds
Name: Jeffrey T. Leeds
Title: President
Attest: Brigid McCarthy
U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee
By: /s/ Timothy J. Sandell
Name: T. J. Sandell
Title: Vice President
Attest: D. Chalupsky
GUARANTORS: ELSUB MANAGEMENT CORPORATION
By: /s/ S. Barton Jacka
Name: S. Barton Jacka
Title: President
FOUR QUEENS, INC.
By: /s/ William L. Westerman
Name: William L. Westerman
Title: President
<PAGE>
PALM SPRINGS EAST, LIMITED
PARTNERSHIP
By: Elsub Management Corporation, General
Partner
By: /s/ S. Barton Jacka
Name: S. Barton Jacka
Title: President
<PAGE>
EXHIBIT B
ANNEX I
[FORM OF SECOND MORTGAGE NOTE]
ELSINORE CORPORATION
12.83% SECOND MORTGAGE NOTE
DUE 2001
CUSIP No.: 290308 AD 7
No.
Elsinore Corporation, a Nevada corporation (hereinafter called
the "Company," which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
__________ or registered assigns, the principal sum of ____________ Dollars, on
August 20, 2001.
Interest Payment Dates: February 28 and August 31.
Record Dates: February 15 and August 15.
Reference is made to the further provisions of this Security
on the reverse side, which will, for all purposes, have the same effect as if
set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to
be duly executed under its corporate seal.
Dated:
ELSINORE CORPORATION
By:____________________________
Attest:
_______________________________________
Secretary
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned Indenture.
_____________________________________
U.S. Bank Trust National Association,
as Trustee
By:_____________________________
Authorized Signatory
Dated:
<PAGE>
ELSINORE CORPORATION
12.83% Second Mortgage Note
due 2001
1. Interest.
Elsinore Corporation, a Nevada corporation (the "Company"),
promises to pay interest on the principal amount of this Security at the rate of
interest set forth in the next following paragraph. To the extent it is lawful,
the Company promises to pay interest on any interest payment due but unpaid on
such principal amount at the rate of interest set forth in the next paragraph
per annum, compounded semi-annually.
The Company will pay interest semi-annually on February 28 and
August 31 of each year (each, an "Interest Payment Date"), commencing February
28, 1999. Interest on the Securities will accrue from September 1, 1998 to the
date of this Security at the rate of 13.5%, and thereafter at the rate of
12.83%. Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months.
2. Method of Payment.
The Company shall pay interest on the Securities (except
defaulted interest) to the persons who are the registered Holders at the close
of business on the Record Date immediately preceding the Interest Payment Date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. Except as provided below, the Company shall pay principal and interest
in such coin or currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts ("U.S.
Legal Tender"). However, the Company may pay principal and interest by wire
transfer of Federal funds, or interest by its check payable in such U.S. Legal
Tender. The Company may deliver any such interest payment to the Paying Agent or
the Company may mail any such interest payment to a Holder at the Holder's
registered address.
3. Paying Agent and Registrar.
Initially, U.S. Bank Trust National Association (the
"Trustee") will act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or Co-registrar without notice to the Holders. The
Company or any of its Subsidiaries may, subject to certain exceptions, act as
Paying Agent, Registrar or Co-registrar.
4. Indenture.
The Company issued the Securities under an Amended and
Restated Indenture, dated as of March 3, 1997, as amended by a Second
Supplemental Indenture dated as of September __, 1998 (as so amended, the
"Indenture"), between the Company, the Guarantors named therein and the Trustee.
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act, as in effect on the date of the Indenture. The Securities are
subject to all such terms, and Holders of Securities are referred to the
Indenture and said Act for a statement of them. The Securities are senior,
secured obligations of the Company limited in aggregate principal amount to
$11,104,000.
5. Redemption.
The Securities are redeemable in whole or from time to time in
part at any time, at the option of the Company, upon full payment of principal
of the Securities, without premium, together with any accrued but unpaid
interest to the Redemption Date.
The Securities may also be redeemed at any time pursuant to,
and in accordance with, any order of any Gaming Authority with appropriate
jurisdiction and authority to the extent necessary in the reasonable, good faith
judgment of the Board of Directors of the Company to prevent the loss or
material impairment or secure the reinstatement of any Gaming License or to
prevent such Gaming Authority from taking any other action, which if lost,
impaired, not reinstated or taken, as the case may be, would have a material
adverse effect on the Company or any Subsidiary or where such redemption or
acquisition is required because the Holder or beneficial owner of the Securities
is required to qualify, be found suitable or become licensed as such under such
Gaming Laws and does not so qualify, obtain a finding of suitability or become
licensed.
Any redemption of the Notes shall comply with Article Three of the
Indenture.
6. Notice of Redemption.
Notice of redemption will be mailed by first class mail at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Securities to be redeemed at his registered address. Securities in
denominations larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, from and after any
Redemption Date, if monies for the redemption of the Securities called for
redemption shall have been deposited with the Paying Agent on such Redemption
Date, the Securities called for redemption will cease to bear interest and the
only right of the Holders of such Securities will be to receive payment of the
Redemption Price, including any accrued and unpaid interest to the Redemption
Date.
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of, or exchange Securities in accordance with, the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption.
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the owner of it
for all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee and the Paying Agent(s) will pay the money
back to the Company at its written request. After that, all liability of the
Trustee and such Paying Agent(s) with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
If the Company at any time deposits into an irrevocable trust
with the Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to
pay the principal of and interest on the Securities to redemption or maturity
and complies with the other provisions of the Indenture relating thereto, the
Company will be discharged from certain provisions of the Indenture and the
Securities (including the financial covenants, but excluding its obligation to
pay the principal of and interest on the Securities).
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the written consent of the Holders of a
majority, and in certain cases at least two-thirds, in aggregate principal
amount of the Securities then outstanding, and any existing Default or Event of
Default or compliance with any provision may be waived with the consent of the
Holders of a majority in aggregate principal amount of the Securities then
outstanding. Without notice to or consent of any Holder, the parties thereto may
amend or supplement the Indenture or the Securities to, among other things, cure
any ambiguity, defect or inconsistency, provide for uncertificated Securities in
addition to or in place of certificated Securities, comply with an order of any
Gaming Authority or make any other change that does not adversely affect the
rights of any Holder of a Security.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of
the Company and its Subsidiaries to, among other things, incur additional
Indebtedness, make payments in respect of its Capital Stock, enter into
transactions with Affiliates, incur Liens, sell assets, merge or consolidate
with any other person and sell, lease, transfer or otherwise dispose of
substantially all of its properties or assets. The limitations are subject to a
number of important qualifications and exceptions. The Company must annually
report to the Trustee on compliance with such limitations.
Section 5.18 of the Indenture restricts the transfer of
"Disqualified Capital Stock" in the Company's Subsidiaries, including
subsidiaries which are Nevada corporate gaming licensees. Such restriction on
the transfer of equity securities in a Nevada corporate gaming licensee may not
be effective until such time as the restriction has been approved by the Nevada
State Gaming Control Board and the Nevada Gaming Commission. As such, the
restrictions contained in Section 5.18 of the Indenture, as they relate to
Subsidiaries which are Nevada corporate gaming licensees, shall not be effective
until such time as the prior approval of the Nevada State Gaming Control Board
and Nevada Gaming Commission is received, or until such time as the Nevada State
Gaming Control Board determines such approval is not required.
13. Change of Control.
In the event there shall occur any Change of Control, each
Holder of Securities shall have the right, at such Holder's option but subject
to the limitations, and conditions set forth in the Indenture, to require the
Company to purchase on the Change of Control Payment Date in the manner
specified in the Indenture, all or any part (in integral multiples of $1,000) of
such Holder's Securities at a Change of Control Purchase Price equal to 101% of
the principal amount thereof, together with accrued and unpaid interest, if any,
to the Change of Control Payment Date.
14. Security.
In order to secure the obligations under the Indenture, the
Company, the Guarantors and the Trustee have entered into certain security
agreements in order to create security interests in certain assets and
properties of the Company, the Guarantors and their respective Subsidiaries.
15. Gaming Law.
The rights of the Holder of this Security and any owner of any
beneficial interest in this Security are subject to the Gaming Laws and the
jurisdiction and requirements of the Gaming Authorities and the further
limitations and requirements set forth in the Indenture.
16. Successors.
When a successor assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor will be
released from those obligations.
17. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Securities. Subject to certain limitations,
Holders of a majority in aggregate principal amount of the Securities then
outstanding may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Securities notice of any continuing Default
or Event of Default (except a Default in payment of principal or interest), if
it determines that withholding notice is in their interest.
18. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates as if it were not the Trustee.
19. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator,
as such, past, present or future, of the Company or any successor corporation
shall have any liability for any obligation of the Company under the Securities
or the Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder of a Security by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Securities.
20. Authentication.
This Security shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on the other side
of this Security.
21. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of
a Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
22. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company will cause CUSIP numbers
to be printed on the Securities as a convenience to the Holders of the
Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
<PAGE>
[FORM OF ASSIGNMENT]
I or we assign this Security to
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee
_____________ and irrevocably appoint ________________ agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
Dated:_______________________ Signed:____________________________
________________________________________________________________________________
(Sign exactly as name appears on the other side of this Security)
EXHIBIT 10.51
- --------------------------------------------------------------------------------
ELSINORE CORPORATION
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
Dated as of September 29, 1998
- --------------------------------------------------------------------------------
<PAGE>
ELSINORE CORPORATION
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This SERIES A PREFERRED STOCK PURCHASE AGREEMENT (this
"Agreement") is dated as of September 29, 1998, and made by and between Elsinore
Corporation, a Nevada corporation (the "Company"), and the investment accounts
listed on the signature pages hereof (collectively, "Investor").
RECITALS
WHEREAS, the Company desires to issue and sell to Investor,
and Investor desires to purchase from the Company, 50,000,000 shares of Series A
Preferred Stock; and
WHEREAS, Investor will purchase the shares of Series A
Preferred Stock in exchange for $18,000,000 original principal amount of 13 1/2%
Second Mortgage Notes due 2001 (the "Mortgage Notes") issued by the Company
pursuant to the Amended and Restated Indenture, dated March 3, 1997, among the
Company, the Guarantors named therein, and First Trust National Association, as
Trustee.
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants contained herein, the Parties hereby agree
as follows:
ARTICLE I. Purchase and Sale of Stock.
Section 1.1 Sale and Issuance of Series A Preferred Stock.
(a) The Company shall adopt and file with the Secretary of State of Nevada on or
before the Closing (as such term is defined in Section 1.2) the Certificate of
Designations, Preferences and Rights in the form attached hereto as Exhibit A
(the "Certificate of Designations").
(b) On or prior to the Closing (as defined below), the Company shall have (i)
authorized the sale and issuance to Investor of 50,000,000 shares of Elsinore
Corporation cumulative convertible Series A Preferred Stock with a cumulative
dividend of 6% and a liquidation preference of $0.36 per share, as evidenced by
share certificates substantially in the form of Exhibit B attached hereto (the
"Series A Preferred Stock"), and (ii) reserved the issuance of 93,000,000 shares
of common stock of the Company to be issued upon a conversion of the Series A
Preferred Stock (the "Conversion Shares"). The Series A Preferred Stock shall
have the rights, preferences, privileges and restrictions set forth in the
Certificate of Designations and the Conversion Shares shall have the rights,
preferences, privileges and restrictions of common stock of the Company as set
forth in the Company's Amended and Restated Articles of Incorporation (the
"Articles of Incorporation").
(c) Subject to the terms and conditions of this Agreement, Investor agrees to
purchase at the Closing, and the Company agrees to sell and issue to, and
authenticate for, Investor at the Closing, 50,000,000 shares of the Series A
Preferred Stock in exchange for the Mortgage Notes in the original aggregate
principal amount of $18,000,000.
(d) Both the Company and Investor agree that the existing requirements governing
the election of the Company's directors are adequate to provide for the election
of directors by the holders of shares of Series A Preferred Stock, pursuant to
the voting rights granted to such holders herein, in the certificate evidencing
such shares of Series A Preferred Stock, in the Certificate of Designations,
Preferences and Rights of Elsinore Corporation Series A Preferred Stock, dated
September 23, 1998, or in other documents ancillary hereto or thereto, in the
event of a default in the payment of dividends to such holders by the Company.
Section 1.2 Closing. The purchase and sale of the Preferred Stock shall take
place at the office of O'Melveny & Myers LLP, 400 South Hope Street, Los
Angeles, CA 90071, on September 29, 1998, or at such other time and place the
Company and Investor mutually agree upon orally or in writing (which time and
place are designated as the "Closing"). At the Closing, the Company will deliver
to Investor authorized, issued, and authenticated certificates representing
50,000,000 shares of the Series A Preferred Stock, and Investor will
simultaneously deliver the Mortgage Notes to the Company.
ARTICLE II. Representations and Warranties of the Company.
The Company hereby represents and warrants to Investor as follows:
Section 2.1 Organization and Qualification; Subsidiaries.
(a) The Company and each of its subsidiaries are corporations or limited
partnerships duly organized, validly existing and in good standing under the
laws of the State of Nevada, and have all requisite corporate power and
authority to own, lease and operate their respective properties and to carry on
their respective businesses as now being conducted, except as disclosed in the
SEC Reports (as defined in Section 2.6) filed prior to the date hereof, or 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.
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 2.4 hereof)
and in good standing to do business in each jurisdiction in which 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 (i) has any rights, (ii) has any obligation or liability, (iii) is,
or any of the assets used or owned by it are bound, except as disclosed in the
SEC Reports filed prior to the date hereof or 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 Investor complete
and correct copies of the Company's Articles of Incorporation and the Company's
bylaws, and the equivalent organizational documents of each of its subsidiaries,
each as amended to the date hereof. The Company's articles of incorporation, the
Company's bylaws, and the equivalent organizational documents of each of its
subsidiaries are in full force and effect. The Company is not in violation of
any of the provisions of its Articles of Incorporation or its 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 Investor a
complete and correct list of the subsidiaries of the Company, which list is
attached hereto as Schedule 2.1(d) and sets forth the amount of capital stock of
or other equity interests in such subsidiaries owned by the Company, directly or
indirectly.
Section 2.2 Capitalization of the Company and its Subsidiaries.
(a) The authorized capital stock of the Company consists of 100,000,000 shares
of common stock of which, as of the Closing, [4,929,313] shares were issued and
outstanding, and 50,000,000 shares of preferred stock, 50,000,000 of which have
been designated as Series A Preferred Stock (all of which will be sold to
Investor pursuant to this Agreement) of which, after giving effect to the
transactions contemplated hereby, 50,000,000 shares of Series A Preferred Stock
will be issued and outstanding. All outstanding shares of capital stock of the
Company have been validly issued, are fully paid, nonassessable and free of
preempting rights and were issued in accordance with the registration or
qualification provisions of the Securities Act of 1933, as amended (the
"Securities Act") and any relevant state securities laws, or pursuant to valid
exemptions therefrom. Except for the conversion privileges of the Series A
Preferred Stock or as set forth on Schedule 2.2(a) hereof, as of the Closing,
there are
(i) no outstanding shares of capital stock or other voting securities of the
Company;
(ii) no outstanding securities of the Company convertible into or exchangeable
for shares of capital stock or voting securities of the Company;
(iii) no outstanding 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 outstanding equity equivalents, performance shares, interests in the
ownership or earnings of the Company or other similar rights issued by the
Company (all stock and other securities described in this subsection (a) are
collectively termed "Company Securities").
(b) Except as set forth on Schedule 2.2(b) hereto, there are no outstanding
obligations of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any Company Securities.
(c) Except as set forth on Schedule 2.2(c) 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").
(d) Except as set forth on Schedule 2.2(d) 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.
(e) The Series A Preferred Stock, when issued, sold and delivered in accordance
with the terms of this Agreement for the consideration expressed herein, will be
duly and validly issued, fully paid, and nonassessable, and will be free of
restrictions on transfer other than restrictions on transfer under this
Agreement and the Registration Rights Agreement, dated as of the date hereof,
between Investor and the Company (the "Registration Rights Agreement") and under
applicable state and federal securities laws. The Common Stock issuable upon
conversion of the Series A Preferred Stock has been duly and validly reserved
for issuance and, upon issuance in accordance with the terms of the Articles of
Incorporation, will be duly and validly issued, fully paid, and nonassessable
and will be free of restrictions on transfer other than restrictions on transfer
under this Agreement, the Registration Rights Agreement and under applicable
state and federal securities laws.
Section 2.3 Power and Authority. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement and the Registration
Rights Agreement, the performance of all obligations of the Company hereunder
and thereunder, and the authorization, issuance (or reservation for issuance),
sale and delivery of the Series A Preferred Stock being sold hereunder and the
common stock issuable upon conversion of the Series A Preferred Stock has been
taken or will be taken prior to the Closing, and this Agreement and the
Registration Rights Agreement constitute valid and legally binding obligations
of the Company, enforceable in accordance with their respective terms, except
(a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors' rights
generally (collectively, the "Bankruptcy Exceptions");
(b) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies; and
(c) to the extent the indemnification provisions contained in the Registration
Rights Agreement may be limited by applicable federal or state securities laws.
Section 2.4 Compliance.
(a) Except as set forth in Schedule 2.4(a) or as disclosed in the SEC Reports
filed prior to the date hereof, 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 current or contemplated casino, liquor related
activities and gaming activities and operations, including, without limitation,
the Nevada Gaming Control Act, as amended, and the Indian Gaming Regulatory 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")), except where the failure to be in compliance
with such laws and regulations would not have a Company Material Adverse Effect,
and neither the Company nor any of its subsidiaries or affiliates, has received
notice 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. Except as set forth in Schedule 2.4(a) or as disclosed
in the SEC Reports filed prior to the date hereof , none of the Company or its
subsidiaries, any officer, director or, to the knowledge of the Company,
affiliate or stockholder thereof, has received any written claim, demand,
notice, complaint, court order or administrative order from any governmental
authority since 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 2.4(b) or as disclosed in the SEC Reports
filed prior to the date hereof, 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 has sufficient title and ownership of all patents, trademarks,
service marks, trade names, copyrights, licenses, information, 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 Nevada State Gaming Control Board, the
Clark County Liquor and Gaming Licensing Board, the City of Las Vegas and the
National Indian Gaming Commission (collectively referred to as the "Gaming
Authorities"), including approvals under the Gaming Laws) would 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) Except as disclosed in the SEC Reports filed prior to the date hereof,
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 2.4(d) or as disclosed in the SEC Reports
filed prior the date hereof, (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 could
reasonably be expected to 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) Except as disclosed in the SEC Reports filed prior to the date hereof,
neither the Company nor any of its subsidiaries has received 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 any of its subsidiaries, or any of the assets
owned or used by the Company or any of its subsidiaries, is or has been subject
and which would have a Company Material Adverse Effect.
(f) Except as disclosed in Schedule 2.4(f), attached hereto, or in the SEC
Reports filed prior to the date hereof, no investigation or review by any
government entity, officer or authority with respect to the Company or any of
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.
(g) Subject in part to the truth and accuracy of Investor's representations set
forth in Article III of this Agreement, the offer, sale and issuance of the
Series A Preferred Stock as contemplated by this Agreement is exempt from the
registration requirements of any applicable state and federal securities laws,
and neither the Company nor any authorized agent acting on its behalf will take
any action hereafter that would cause the loss of such exemption.
Section 2.5 Non-Contravention; Required Filings and Consents.
(a) Except as set forth in Schedule 2.5 hereto and as contemplated by Section
2.5(b), the execution, delivery and performance by the Company of this Agreement
and the Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby do not and will not:
(i) contravene or conflict with the Company's Articles of Incorporation or
bylaws, or the equivalent organizational documents of any of its subsidiaries,
or any resolution adopted by the Company's board of directors or stockholders,
or the board of directors, managing partner, limited partners, general partners,
members, 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 the
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, any of
its subsidiaries, or any of their respective assets or properties is subject or
bound; and
(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 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 the Certificate of Designations with the Secretary of State
of Nevada; and
(ii) other filings that have been made or taken on or before the Closing Date.
Section 2.6 SEC Reports.
(a) The Company has filed all required forms, reports and documents with the
Securities and Exchange Commission (the "SEC").
(i) The Company has made available to Investor, in the form filed with the SEC,
the Company's (A) quarterly reports on Form 10-Q filed by the Company with the
SEC since January 1, 1998, (B) all current reports on Form 8-K, (C) all
information statements on Form 14C, and (D) all registration statements filed by
the Company with the SEC since January 1, 1998 (collectively and as amended as
required, including the exhibits thereto, the "SEC Reports"). As of their
respective dates, the SEC Reports complied in all material respects with all
applicable requirements of 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.
(ii) 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.
(iii) 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 generally accepted
accounting principles set forth in opinions and pronouncements of the Financial
Accounting Standards Board and of the Accounting Principles Board of the
American Institute of Certified Public Accountants or by such other entity as
may be approved by a significant segment of the United States accounting
profession, in each case as the same are applicable to the circumstances as of
the date of determination ("GAAP") 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 Investor 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 2.6(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 June
30, 1998 or on the notes thereto, contained in the Company's quarterly report on
Form 10-Q for the quarterly period ended June 30, 1998;
(ii) liabilities incurred in the ordinary course of business consistent with
past practice since June 30, 1998; and
(iii) liabilities which would not, individually or in the aggregate, have a
Company Material Adverse Effect.
Section 2.7 Absence of Certain Changes. Except as set forth in Schedule 2.7
hereto or as disclosed in the SEC Reports filed prior to the date hereof, the
Company and its subsidiaries have conducted their respective businesses only in
the ordinary course, and there has not been:
(a) any declaration, setting aside or payment of any dividend or other
distribution with respect to its capital stock;
(b) 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;
(c) any making of any loan, advance or capital contributions to, or investments
in, any other person;
(d) 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;
(e) any granting by the Company or any of its subsidiaries to any officer of the
Company or any of 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, or 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;
(f) 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;
(g) 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;
(h) 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;
(i) 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
(j) any other change (other than a decline of revenue or net income) which would
have a Company Material Adverse Effect.
Section 2.8 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 2.9 Absence of Litigation. Except as disclosed in the SEC Reports filed
prior to the date hereof or in Schedule 2.9 hereto, there is no 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 Company's board of directors 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. There is no action, suit, proceeding or investigation
pending or, to the Company's knowledge, currently threatened against the Company
that questions the validity of this Agreement, the Registration Rights
Agreement, or the right of the Company to enter into such agreements, or to
consummate the transactions contemplated hereby or thereby. Except as disclosed
in the SEC Reports filed prior to the date hereof, there is no 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 Company's board of directors before any court
or arbitrator or any administrative, regulatory or governmental body, or any
agency or official which alleges any criminal action or inaction. Except as
disclosed in the SEC Reports filed prior to the date hereof, neither the Company
nor any of its subsidiaries nor any of their respective properties is 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. The foregoing
includes, without limitation, actions, suits, proceedings or investigations
pending or threatened involving the prior employment of any of the Company's
employees, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers. The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality, other than the Confirmation Order (as defined in Section 2.17).
Except as disclosed in the SEC Reports filed prior to the date hereof, there is
no action, suit, proceeding or investigation by the Company currently pending or
that the Company intends to initiate.
Section 2.10 Taxes. Except as set forth in Schedule 2.10 hereto or as disclosed
in the SEC Reports filed prior to the date hereof:
(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 Closing for which no
Returns have yet been filed and for any periods that begin before the Closing
and end after the Closing to the extent such Taxes are attributable to the
portion of any such period ending at the Closing;
(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 2.10), 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 2.10 (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).
"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. "Tax Authority" means the
Internal Revenue Service and any other domestic or foreign governmental
authority responsible for the administration of any Taxes.
Section 2.11 Employee Benefits.
(a) As used in this Section 2.11, "Plan" means 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. As used in this Section 2.11, "ERISA Plan" means
each of the Plans that is an "employee benefit plan," as that term is defined in
section 3(3) of ERISA.
(b) [intentionally omitted]
(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
Internal Revenue Code of 1986, as amended (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 Closing 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 2.11
(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 2.11(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 2.11
(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.
(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(1) of ERISA.
Section 2.12 Intellectual Property. Except as disclosed in the SEC Reports filed
prior to the date of this Agreement or as set forth in Schedule 2.12 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 or 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. "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 2.13 Material Contracts.
(a) [intentionally omitted]
(b) Except as disclosed in the SEC Reports filed prior to the date hereof,
assuming each contract or agreement that has been or is required to be filed as
an exhibit to a Form 10-K by the Company with the SEC (collectively, the
"Material Contracts") 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. 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 2.14 Insurance.
(a) 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 engaged in similar businesses, and 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.
(b) Except as disclosed in the SEC Reports filed prior to the date hereof, each
material insurance policy of the Company or its subsidiaries 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 2.15 Labor Matters.
(a) Except as set forth in Schedule 2.15(a) hereto or as disclosed in the SEC
Reports filed prior to the date hereof, 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.
(b) 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
is likely to 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.
(c) Except as set forth in Schedule 2.15(c) hereto or as disclosed in the SEC
Reports filed prior to the date hereof, 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 of
each of its subsidiaries for all services performed by any of them on or prior
to the date hereof. The Company and each of 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.
(d) Property. Except as set forth in Schedule 2.16 or as disclosed in the SEC
Reports filed prior to the date hereof, 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 2.16 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 in all material respects.
Section 2.17 Environmental Matters. Except as set forth on Schedule 2.18 or as
disclosed in the SEC Reports filed prior to the date hereof, (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 could reasonably be agreed to 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. As used in this Section 2.18, 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 2.18 Representations Complete.
(a) The Company has fully provided Investor with all the information that
Investor has requested for deciding whether to purchase the Preferred Stock and
all information that the Company believes is reasonably necessary to enable
Investor to make such decision.
(b) To the best of Company's knowledge, neither this Agreement, the Registration
Rights Agreement nor any other written statements or certificates made or
delivered in connection herewith or therewith contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
herein or therein not misleading.
Section 2.19 Registration Rights. Except as provided in the Registration Rights
Agreement, the Company has not granted or agreed to grant any registration
rights, including piggyback rights, to any person or entity.
ARTICLE III. Representations and Warranties of Investor.
Investor hereby represents and warrants that:
Section 3.1 Authorization. Investor has full power and authority to enter into
this Agreement and such agreement constitutes its valid and legally binding
obligation, enforceable in accordance with its terms, except
(a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors' rights
generally; and
(b) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
Section 3.2 [intentionally omitted].
Section 3.3 Disclosure of Information. Investor believes it has received all the
information it considers necessary or appropriate for deciding whether to
purchase the Securities. Investor further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Securities and the business,
properties, prospects and financial condition of the Company. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Section 2 of this Agreement or the right of Investor to rely thereon.
Section 3.4 Investment Experience. Investor is an investor in securities of
companies in similar financial condition as the Company and acknowledges that it
is able to fend for itself, can bear the economic risk of its investment, and
has such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Securities.
Section 3.5 Investor represents it has not been organized for the purpose of
acquiring the Securities, and Investor understands that the Securities it is
purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act, only in certain limited circumstances. In this connection, such
Investor represents that it is familiar with Securities and Exchange Commission
Rule 144 ("Rule 144"), as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act of 1933, as amended.
Section 3.6 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, Investor further agrees not to make any
disposition of all or any portion of the Securities (except under Rule 144)
unless and until the transferee has agreed in writing for the benefit of the
Company to be bound by this Section 3 and the Registration Rights Agreement
provided and to the extent this Section and such agreement are then applicable,
and:
(a) there is then in effect a registration statement under the Act covering such
proposed disposition and such disposition is made in accordance with such
registration statement; or
(b) (i) Investor shall have notified the Company of the proposed disposition and
shall have furnished the Company with a detailed statement of the circumstances
surrounding the proposed disposition, and (ii) if reasonably requested by the
Company, Investor shall have furnished the Company with an opinion of counsel,
reasonably satisfactory to the Company that such disposition will not require
registration of such shares under the Act. It is agreed that the Company will
not require opinions of counsel for transactions made pursuant to Rule 144
except in unusual circumstances;
provided, however, that nothing in this Section 3.6 shall be construed so as to
limit the ability of any of the investment accounts listed on the signature
pages hereof which constitute the Investor to exchange, sell, or otherwise
transfer all or any portion of the Securities to or with another of such
investment accounts.
Section 3.7 Legends. It is understood that the certificates evidencing the
Securities may bear one or all of the following legends:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH ACT."
ARTICLE IV. Conditions of Investor's Obligations at Closing.
The obligations of Investor under subsections 1.2 of this
Agreement are subject to the fulfillment or waiver by investor on or before the
Closing of each of the following conditions.
Section 4.1 Representations and Warranties. The representations and warranties
of the Company contained in Section 2 shall be true on and as of the Closing
with the same effect as though such representations and warranties had been made
on and as of the date of such Closing.
Section 4.2 Performance. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
Section 4.3 Compliance Certificate. The President of the Company shall deliver
to Investor at the Closing a certificate stating that the conditions specified
in Sections 4.1, 4.2, 4.3, and 4.7 have been fulfilled.
Section 4.4 Qualifications. All authorizations, approvals, or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be duly obtained and effective as of
the Closing.
Section 4.5 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to
Investor, and they shall have received all such counterpart original and
certified or other copies of such documents as they may reasonably request.
Section 4.6 Closing of Exchange Agreement . All conditions precedent to the
effectiveness of that certain Exchange Agreement dated as of the date hereof
between the Company and the Investor (other than the effectiveness of this
Agreement) shall have been satisfied or waived in accordance with the terms
thereof.
Section 4.7 Registration Rights Agreement. The Company and Investor shall have
entered into the Registration Rights Agreement in the form attached as Exhibit
C.
ARTICLE V. Conditions of the Company's Obligations at Closing.
The obligations of the Company to Investor under this
Agreement are subject to the fulfillment on or before the Closing of each of the
following conditions by that Investor:
Section 5.1 Representations and Warranties. The representations and warranties
of Investor contained in Section 3 shall be true on and as of the Closing with
the same effect as though such representations and warranties had been made on
and as of the Closing.
Section 5.2 Payment of Purchase Price. Investor shall have delivered Mortgage
Notes in the original aggregate principal amount of $18,000,000, as specified in
Section 1.2.
Section 5.3 Qualifications. All authorizations, approvals, or permits, if any,
of any governmental authority or regulatory body of the-United States or of any
state that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be duly obtained and effective as of
the Closing.
ARTICLE VI. MISCELLANEOUS.
Section 6.1 Survival of Representations, Warranties, and Covenants. The
warranties, representations and covenants of the Company and Investor contained
in or made pursuant to this Agreement shall survive the execution and delivery
of this Agreement and shall in no way be affected by any investigation of the
subject matter thereof made by or on behalf of Investor or the Company.
Section 6.2 Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
Section 6.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of New York as applied to agreements among New York
residents entered into and to be performed entirely within New York.
Section 6.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 6.5 Liability The obligations and liabilities of the constituent
investment accounts of Investor under this Agreement shall be several, to the
extent of each such investment account's respective percentage ownership
interest of issued and outstanding shares of common stock of Company, and not
joint. Company has designated Morgens, Waterfall, Vintiadis & Company, Inc.
("Morgens, Waterfall") as its agent for the sole purpose of receiving
communications from, and sending communications to, such investment accounts in
connection with this Agreement. None of Morgens, Waterfall, John C. Waterfall,
or Edwin H. Morgen individually, nor any officers, directors, employees, agents,
or controlling persons of Morgens, Waterfall, shall have any obligations or
liabilities under or in connection with this Agreement by reason of the
foregoing or for any other reason.
Section 6.6 Titles and Subtitles. The Section headings, titles and subtitles
used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
Section 6.7 Notices. Unless otherwise provided, all notices, requests, payments,
instructions or other documents to be given hereunder shall be in writing or by
written telecommunication, and shall be deemed to have been duly given if
(a) delivered personally (effective upon delivery),
(b) mailed by certified mail, return receipt requested, postage prepaid
(effective five (5) business days after dispatch),
(c) sent by a reputable, established courier service that guarantees next
business day delivery (effective the next business day), or
(d) sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed to the party to be notified at the address indicated for such
party on the signature page hereof, or at such other address as such party may
designate by ten (10) days' advance notice to the other parties.
Section 6.8 Finder's Fee.
(a) Each party represents that it neither is nor will be obligated for any
finders' fee or commission in connection with this transaction.
(b) The Company agrees to indemnify and hold harmless Investor from any
liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
Section 6.9 Expenses. Irrespective of whether the Closing is effected, the
Company shall pay all costs and expenses that it incurs, with respect to the
negotiation, execution, delivery and performance of this Agreement. If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the Registration Rights Agreement or the Certificate of
Designations, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
Section 6.10 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the holders of a majority of the
common stock issuable or issued upon conversion of the Series A Preferred Stock.
Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each holder of any securities purchased under this Agreement at the
time outstanding (including securities into which such securities are
convertible), each future holder of all such securities, and the Company.
Section 6.11 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
Section 6.12 Aggregation of Stock. All shares of the Series A Preferred Stock
held or acquired by affiliated entities or persons shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
Section 6.13 Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
[Remainder of page intentionally left blank.]
<PAGE>
WITNESS, the due execution hereof by the respective duly
authorized general partner or officer of the undersigned as of the date first
written above.
ELSINORE CORPORATION
By: /s/ Jeffrey T. Leeds
Name: Jeffrey T. Leeds
Title: President
INVESTOR:
BETJE PARTNERS
ENDOWMENT RESTART LLC
MORGENS WATERFALL INCOME PARTNERS, L.P.
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.
By: /s/ John C. "Bruce" Waterfall
Name: John C. "Bruce" Waterfall
Title: Authorized Signatory
<PAGE>
EXHIBIT A
CERTIFICATE OF DESIGNATIONS
(See Exhibit 3.3 attached to Form 8-K)
<PAGE>
EXHIBIT B
FORM OF SERIES A PREFERRED STOCK CERTIFICATE
<PAGE>
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
(See Exhibit 10.50 attached to Form 8-K)
<PAGE>
SCHEDULES TO ELSINORE CORPORATION SERIES A PREFERRED STOCK
PURCHASE AGREEMENT DATED SEPTEMBER 29, 1998
Schedule 2.1(d) Subsidiaries of the Company
Schedule 2.2(a) Capitalization of the Company an
Its Subsidiaries
Schedule 2.2(b) Other Obligations
Schedule 2.2(c) Liens
Schedule 2.2(d) Options
Schedule 2.4(a) Compliance
Schedule 2.4(b) Licenses
Schedule 2.4(d) Compliance with Orders
Schedule 2.4(f) Investigations and Reviews
Schedule 2.5 Noncontravention; Required Filings and
Consents
Schedule 2.6(b) Liabilities
Schedule 2.7 Absence of Certain Changes
Schedule 2.9 Pending or Threatened Litigation
Schedule 2.10 Taxes
Schedule 2.11(h) Payments Non-Deductible
Schedule 2.11(i) Benefits Beyond Termination
Schedule 2.11(j) Severance or Unemployment Compensation;
Acceleration of Vesting
Schedule 2.12 Intellectual Property
Schedule 2.15(a) Labor Matters
Schedule 2.15(c) Payment of Benefits
Schedule 2.16 Real Property
Schedule 2.18 Environmental Matters
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 2.1(d)
Subsidiaries of the Company
Subsidiaries of the Company as of the closing date:
Name of State of D.B.A. Company's
Subsidiary Corporation or Equity Interest
Organization in Subsidiary
- ------------------------- -------------------- ---------------------------- ------------------------------------
<S> <C> <C> <C>
Four Queens, Inc. Nevada Four Queens 100%
Hotel & Casino
Pinnacle Gaming Corp. Nevada Elsinore Manufacturing 100%
Corp.
Elsub Management Corp. Nevada Elsub Management Corp. 100%
Palm Springs East L.P. Nevada Palm Springs East L.P. 90% (by Elsub Management Corp. as
general partner)
Olympia Gaming Corp. Nevada Olympia Gaming Corp. 100%
Four Queens Nevada Four Queens 100%
Experience Corp. Experience Corp.
Eagle Gaming, Inc. Nevada Eagle Gaming, Inc. 100%
Elsinore Tahoe, Inc. Nevada Elsinore Tahoe, Inc. 100%
Elsub Corp. New Jersey Elsub Corporation 100%
Elsinore of New Jersey Elsinore of 100% (by Elsub Corp.)
New Jersey, Inc. New Jersey, Inc.
Elsinore of New Jersey Elsinore of 84.3% (Elsinore of New Jersey,
Atlantic City, L.P. Atlantic City, L.P. Inc. as general partner)
Elsinore Shore New Jersey Elsinore Shore Associates 91.5% (54.3% by Elsinore of
Associates Atlantic City, L.P. and 45.7% by
Pinnacle Gaming Corp.)
Elsinore Finance Company New Jersey Elsinore Finance Company 100%
</TABLE>
<PAGE>
SCHEDULE 2.2(a)
Capitalization of the Company and its Subsidiaries
1. Pursuant to the Management Agreement among the Company, Four Queens,
Inc. and Riviera Gaming Management Corp. - Elsinore effective April 1,
1997, Riviera Gaming Management Corp. received warrants to purchase
1,125,000 shares of the Company's Common Stock at $1 per share (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 (the "Plan" or the "Plan of Reorganization"),
certain creditors of the Company are to be issued 70,687 shares of
common stock.
3. The Company has, as of the closing date, outstanding 4,929,313
shares of common stock.
<PAGE>
SCHEDULE 2.2(b)
Other Obligations
None.
<PAGE>
SCHEDULE 2.2(c)
Liens
None.
<PAGE>
SCHEDULE 2.2(d)
Options
None.
<PAGE>
SCHEDULE 2.4(a)
Compliance
The Company has received notice from the Nevada Division of Insurance,
Department of Business & Industry, that the Company is out of compliance with
the tangible net worth requirement for workers' compensation self-insurance. If
the Company fails to provide the Department of Business & Industry with audited
September 30, 1998 financial statements by November 15, 1998 and meet the
tangible net worth requirement, the Company may be required to post a bond of
$2.5 million.
<PAGE>
SCHEDULE 2.4(b)
Licenses
1. The New Jersey Casino Service Industry License held by Four Queens, Inc. is
currently in effect, however, it will expire on May 31, 2001.
2. Olympia Gaming Corporation has not renewed its gaming license, issued by the
State of Washington.
<PAGE>
SCHEDULE 2.4(d)
Compliance with Orders
None.
<PAGE>
SCHEDULE 2.4(f)
Investigations and Reviews
The Company has received notice from the Nevada Division of Insurance,
Department of Business & Industry, that the Company is out of compliance with
the tangible net worth requirement for workers' compensation self-insurance. If
the Company fails to provide the Department of Business & Industry with audited
September 30, 1998 financial statements by November 15, 1998 and meet the
tangible net worth requirement, the Company may be required to post a bond of
$2.5 million.
<PAGE>
SCHEDULE 2.5
Non-contravention; Required Filings and Consents
None.
<PAGE>
SCHEDULE 2.6(b)
Liabilities
None.
<PAGE>
SCHEDULE 2.7
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.
The Company guaranteed a lease by and between PDS Financial Corporation - Nevada
and Four Queens, Inc. pursuant to that certain $297,000 Security Equipment Lease
Financing dated May 1, 1997, as amended, for certain equipment described
therein.
The Company guaranteed a lease by and between PDS Financial Corporation - Nevada
and Four Queens, Inc. pursuant to that certain $200,633 Security Equipment Lease
Financing dated May 1, 1997, as amended, for certain equipment described
therein.
The Company guaranteed a lease by and between PDS Financial Corporation - Nevada
and Four Queens, Inc. pursuant to that certain $399,813 Security Equipment Lease
Financing dated May 1, 1997, as amended, for certain equipment described
therein.
The Company guaranteed a lease by and between PDS Financial Corporation - Nevada
and Four Queens, Inc. pursuant to that certain $336,770 Security Equipment Lease
Financing dated May 1, 1997, as amended, for certain equipment described
therein.
The Company guaranteed a lease by and between PDS Financial Corporation - Nevada
and Four Queens, Inc. pursuant to that certain $149,500 Security Equipment Lease
Financing dated May 1, 1997, as amended, for certain equipment described
therein.
The Company guaranteed a lease by and between PDS Financial Corporation - Nevada
and Four Queens, Inc. pursuant to that certain $216,552 Security Equipment Lease
Financing dated May 1, 1997, as amended, for certain equipment described
therein.
The Company guaranteed a lease by and between PDS Financial Corporation - Nevada
and Four Queens, Inc. pursuant to that certain $1,197,688 Security Equipment
Lease Financing dated May 1, 1997, as amended, for certain equipment described
therein.
The Company guaranteed a lease by and between PDS Financial Corporation - Nevada
and Four Queens, Inc. pursuant to that certain $534,983 Security Equipment Lease
Financing dated May 1, 1997, as amended, for certain equipment described
therein.
Employment/Severance/Termination Agreements
1. Termination Fee Agreement dated as of May 5, 1998 by and between Four
Queens, Inc., a Nevada corporation and Gina L. Contner.
2. Termination Fee Agreement dated as of May 5, 1998 by and between the
Four Queens, Inc., a Nevada corporation and Raquel Rodriguez.
3. Termination Fee Agreement dated as of May 5, 1998 by and between the
Four Queens, Inc., a Nevada corporation and Philip W. Madow.
4. 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
of three of the Manager's employees (Gina Contner, Racquel Rodriguez,
Maggie Jenkins, and Yvonne Hillier) to assist with the management of
the Four Queens Hotel & Casino and Four Queens has agreed to reimburse
the Manager for the services provided.
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 Mojave Gaming, Inc., a Nevada corporation.
Employee Retention Plan
On September 5, 1998, the Board of Directors authorized and approved the
Company's Employee Retention Plan providing termination benefits to
approximately ten employees, some of whom may also receive "stay-put" bonuses on
January 1, 2000 and on January 1, 2001.
<PAGE>
SCHEDULE 2.9
Pending or Threatened Litigation
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
a 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 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. CV-S-92-00662 - Hansen-Moor v. Elsinore. The complaint alleges RICO
violations.
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. As of the closing date, the claims are on appeal before both
the Third Circuit Court of Appeals and the Ninth Circuit Bankruptcy Appellate
Panel.
Case No. A382417 - Rita Lorden v. Four Queens, Inc. This is a slip-and-fall
case, which is in the discovery stage as of the closing date. The amount of
damages claimed is less than $40,000; thus, it is in arbitration.
Harry C. Hagerty, III, has asserted by a letter dated September 14, 1998 that
the transactions contemplated by the Series A Preferred Stock Purchase Agreement
dated September __, 1998 may be unfair to minority shareholders of the Company.
<PAGE>
SCHEDULE 2.10
Taxes
1. The Company and its subsidiaries have received an extension to
September 15, 1998 on the filing of their Federal Income Tax Returns.
2. The Company and its subsidiaries have an extension to October 15, 1998
on the filing of on their State Taxes with California and New Jersey.
3. 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. The City of Las Vegas has yet to respond as of the
closing date.
<PAGE>
SCHEDULE 2.11(h)
Payments Non-Deductible
None.
<PAGE>
SCHEDULE 2.11(i)
Benefits Beyond Termination
None.
<PAGE>
SCHEDULE 2.11(j)
Severance or Unemployment Compensation;
Acceleration of Vesting
None.
<PAGE>
SCHEDULE 2.12
Intellectual Property
None.
<PAGE>
SCHEDULE 2.15(a)
Labor Matters
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 International Brotherhood of Painters & Allied Trades,
Local Union No. 159, AFL-CIO and Four Queens Hotel & Casino for the period
September 1, 1997 through August 31, 2000.
Labor agreement between International Union of Operating Engineers Local No.
501, AFL-CIO and Four Queens, Inc. d/b/a Four Queens Hotel & Casino for the
period April 1, 1997 through March 31, 2002.
Labor agreement between Professional, Clerical and Miscellaneous Employees,
Teamsters Local Union No. 995 and Four Queens Hotel & Casino for the period
December 1, 1997 through November 30, 2002.
Labor agreement between Local Joint Executive Board of Las Vegas, for and on
behalf of Culinary Workers Union, Local No. 226 and Bartenders Union, Local No.
165, and Four Queens Hotel & Casino and the for the period September 1, 1997
through a future date subject to negotiations with other downtown properties.
<PAGE>
SCHEDULE 2.15(c)
Payment of Benefits
None.
<PAGE>
SCHEDULE 2.16
Real Property
None.
<PAGE>
SCHEDULE 2.18
Environmental Matters
None.
EXHIBIT 10.52
- --------------------------------------------------------------------------------
ELSINORE CORPORATION
REGISTRATION RIGHTS AGREEMENT
Dated As Of September 29, 1998
- --------------------------------------------------------------------------------
<PAGE>
ELSINORE CORPORATION
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of the
29th day of September, 1998, and is entered into by and between ELSINORE
CORPORATION, a Nevada corporation (the "Company"), and the investment accounts
listed on the signature pages hereof (collectively, the "Initial Investor").
RECITALS
A. The Company and the Initial Investor have entered into that certain
Series A Preferred Stock Purchase Agreement, dated as of the date hereof (the
"Purchase Agreement") pursuant to which the Company desires to sell to the
Initial Investor and the Initial Investor desire to purchase from the Company
shares of the Company's Series A Preferred Stock (the "Preferred Stock") which
is convertible into shares of the Company's common stock (the "Common Stock").
B. A condition to the Initial Investor's obligations under the Purchase
Agreement is that the Company and the Initial Investor enter into this Agreement
in order to provide the Initial Investor with certain rights as set forth
herein. The Company desires to induce the Initial Investor to purchase the
Preferred Stock pursuant to the Purchase Agreement by agreeing to the terms and
conditions set forth herein.
AGREEMENT
The parties hereby agree as follows:
1. Registration Rights. The Company and the Investors covenant and agree
as follows:
1.1 Definitions. For the purposes of this Section 1:
(a) The term "Investors" means the Initial Investor and any transferees of
assignees who agree to become bound by the provisions of this Agreement in
accordance with Section 2.2 hereof.
(b) The term "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and the declaration or ordering of effectiveness of such
registration statement or document.
(c) The term "Registrable Securities" means (i) the shares of Common Stock
issued or issuable upon the conversion of the Preferred Stock and (ii) any other
shares of Common Stock of the Company issued as (or issuable upon the conversion
or exercise of any warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for or in
replacement of (including but not limited to shares of Common Stock issued upon
a stock split), the shares listed in (i), provided, however, that the foregoing
definition shall exclude in all cases Registrable Securities sold by a person in
a transaction in which his or her rights under this Agreement are not assigned.
Notwithstanding the foregoing, Common Stock or other securities shall only be
treated as Registrable Securities if and so long as they have not been (i) sold
to or though a broker or dealer or underwriter in a public distribution or a
public securities transaction, or (ii) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Section 4(1) thereof so that all transfer restrictions, and restrictive legends
with respect thereto, if any, are removed upon the consummation of such sale.
(d) The number of shares of "Registrable Securities then outstanding" shall be
determined by the number of shares of Common Stock outstanding which are, and
the number of shares of Common Stock issuable pursuant to then exercisable or
convertible securities which are, Registrable Securities;
(e) The term "Holder" means the Investors or any assignee of any Investor or
transferee of any portion of any Investor's shares of Common Stock or Preferred
Stock;
(f) "Form S-3" means such form under the Securities Act as in effect on the date
hereof or any successor form under the Securities Act;
(g) "SEC" means the Securities and Exchange Commission; and
(h) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
1.2 Request for Registration.
(a) If the Company shall receive at any time a written request from the Holders
of a majority of the Registrable Securities then outstanding that the Company
file a registration statement under the Securities Act covering the registration
of the Registrable Securities then outstanding, then the Company shall, within
ten (10) days of the receipt thereof, give written notice of such request to all
Holders and shall, subject to the limitations of subsection 1.2(b), use its best
efforts to effect within 90 days of the receipt of such request, the
registration under the Securities Act of all Registrable Securities which the
Holders request to be registered within fifteen (15) days of the mailing of such
notice by the Company.
(b) If the Holders initiating the registration request hereunder ("Initiating
Holders") intend to distribute the Registrable Securities covered by their
request by means of a firm commitment underwriting, they shall so advise the
Company as a part of their request made pursuant to this Section 1.2 and the
Company shall include such information in the written notice referred to in
subsection 1.2(a). The underwriter will be selected by a majority in interest of
the Initiating Holders and shall be reasonably acceptable to the Company. In
such event, the right of any Holder to include his Registrable Securities in
such registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 1.5(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant thereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
that the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first entirely
excluded from the underwriting.
(c) Notwithstanding the foregoing, if the Company shall furnish to Holders
requesting a registration statement pursuant to this Section 1.2 a certificate
signed by the President of the Company stating that in the good faith judgment
of the Board of Directors (the "Board of Directors") of the Company, it would be
seriously detrimental to the Company and its shareholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer such filing
for a period of not more than 120 days after receipt of the request of the
Initiating Holders; provided, however, that the Company may not utilize this
right more than once in any twelve-month period.
(d) In addition, the Company shall not be obligated to effect, or to take any
action to effect, any registration pursuant to this Section 1.2;
(i) after the Company has effected three (3) registrations pursuant to this
Section 1.2 and such registrations have been declared or ordered effective;
(ii) during the period starting with the date sixty (60) days prior to the
Company's good faith estimate of the date of filing of, and ending on a date one
hundred eighty (180) days after the effective date of, a registration subject to
Section 1.3 hereof; provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective; or
(iii) if the Holders propose to sell Registrable Securities at an aggregate
price to the public of less than $500,000;
(iv) if the Company shall deliver to the Initiating Holders an opinion of
counsel reasonably satisfactory to such Holders, to the effect that the proposed
sale or disposition of all of the Registrable Securities for which registration
was requested does not require registration under the Securities Act for any
sales or dispositions of such Registrable Securities within the period set forth
in Rule 144(e) (currently three months); or (v) if the Initiating Holders
propose to dispose of shares of Registrable Securities that may be immediately
registered on Form S-3 pursuant to a request made pursuant to Section 1.4 below.
1.3 Company Registration. If (but without any obligation to do so) the Company
proposes to register (including for this purpose a registration effected by the
Company for shareholders other than the Holders) any of its stock under the
Securities Act in connection with the public offering of such securities solely
for cash (other than a registration on Form S-4, Form S-8 or any successors
thereto, or any registration on any form which does not include substantially
the same information as would be required to be included in a registration
statement covering the sale of the Registrable Securities), the Company shall,
at such time, promptly give each Holder written notice of such registration.
Upon the written request of each Holder, given within fifteen (15) days after
the mailing of such notice by the Company, the Company shall, subject to the
provisions of Section 1.8, cause to be registered under the Securities Act all
of the Registrable Securities that each such Holder has requested to be
registered.
1.4 Form S-3 Registration. In case the Company shall receive from any Holder or
Holders a written request or requests that the Company effect a registration on
Form S-3, and any related qualification or compliance with respect to all or a
part of the Registrable Securities owned by such Holder or Holders, the Company
will:
(a) promptly give written notice of the proposed registration, and any related
qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all such qualifications
and compliances as may be so requested and as would permit or facilitate the
sale and distribution of all or such portion of such Holder's or Holders'
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 1.4:
(i) if Form S-3 is not available for such offering by the Holders;
(ii) if the Holders propose to sell Registrable Securities at an aggregate price
to the public of less than $500,000;
(iii) if the Company shall furnish to the Holders a certificate signed by the
President of the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company and
its shareholders for such Form S-3 Registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than 120 days after receipt of
the request of the Holder or Holders under this Section 1.4; provided, however,
that the Company shall not utilize this right more than once in any twelve-month
period;
(iv) if the Company has, within the twelve (12)-month period preceding the date
of such request, already effected two registrations on Form S-3 for the Holders
pursuant to this Section 1.4;
(v) in any particular jurisdiction in which the Company would be required to
qualify to do business or to execute a general consent to service of process in
effecting such registration, qualification or compliance; or
(vi) during the period ending one hundred eighty (180) days after the effective
date of a registration statement subject to Section 1.3.
(c) Subject to the foregoing, the Company shall file a registration statement
covering the Registrable Securities and other securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Holders. Registrations effected pursuant to this Section 1.4 shall not be
counted as demands for registration or registrations effected pursuant to
Sections 1.2 or 1.3, respectively.
1.5 Obligations of the Company. Whenever required under this Section 1 to effect
the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement and a prospectus
meeting the requirements of Section 10 of the Securities Act, with respect to
such Registrable Securities and use all reasonable efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to one year thereafter.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement for up to one year thereafter.
(c) Furnish to the Holders such numbers of copies of a prospectus, including a
preliminary prospectus, in conformity with the requirements of Section 10 of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities covered by such
registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonable requested by the Holders, provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the managing underwriter of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations under such an
agreement.
(f) Notify each Holder of Registrable Securities covered by such registration
statement at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing, such obligation
to continue for one hundred twenty (120) days and file any supplements or
amendments as required under Section 1.5(b) to update the prospectus for such
event.
(g) Cause all such Registrable Securities registered pursuant hereunder to be
listed on each securities exchange or market on which similar securities issued
by the Company are then listed, if any.
(h) Provide a transfer agent and registrar for all Registrable Securities
registered pursuant hereunder and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such registration.
(i) Use its best efforts to furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 1, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 1, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective:
(i) an opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities;
and
(ii) a letter dated such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
(j) To the extent reasonably necessary to effect the registration of any
Registrable Securities, make available for inspection by each seller of
Registrable Securities, any underwriter participating in any distribution
pursuant to such registration statement, and any attorney, accountant or other
agent retained by such seller or underwriter, all pertinent financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement.
1.6 Furnish Information. It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Section 1 with respect to the
Registrable Securities of any selling Holder that such Holder shall furnish to
the Company such information regarding itself, the Registrable Securities held
by it, and the intended method of disposition of such securities as shall be
required to effect the registration of such Holder's Registrable Securities. The
Company shall have no obligation with respect to any registration requested
pursuant to Section 1.2 or Section 1.4 of this Agreement if, as a result of the
application of the preceding sentence, the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the Company's obligation
to initiate such registration as specified in subsection 1.2(a) or subsection
1.4(b)(ii), whichever is applicable.
1.7 Expenses of Registration.
(a) Demand Registration. All expenses (other than underwriting discounts and
commissions) incurred in connection with registrations, filings or
qualifications pursuant to Section 1.2, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company, and the reasonable fees and
disbursements of one counsel for the selling Holders selected by them with the
approval of the Company, which approval shall not be unreasonably withheld,
shall be borne by the Company; provided, however, that the Company shall not be
required to pay for any expenses of any registration proceeding begun pursuant
to Section 1.2 if the registration request is subsequently withdrawn at the
request of the Holders of a majority of the Registrable Securities to be
registered (in which case all participating Holders shall bear such expenses),
unless the Holders of a majority of the Registrable Securities agree to forfeit
their right to one demand registration pursuant to Section 1.2 or unless the
registration request is withdrawn due to a material adverse change in the
Company's financial condition or business which was not known or reasonably
foreseeable by the selling Holders at the time the registration was requested.
(b) Company Registration. All expenses (other than underwriting discounts and
commissions) incurred in connection with registrations, filings or
qualifications of Registrable Securities pursuant to Section 1.3 for each
Holder, including (without limitation) all registration, filing, and
qualification fees, printers' and accounting fees, fees and disbursements of
counsel for the Company, and the reasonable fees and disbursements of one
counsel for the selling Holders selected by them with the approval of the
Company, which approval shall not be unreasonably withheld, shall be borne by
the Company.
(c) Registration on Form S-3. All expenses (other than underwriting discounts
and commissions) incurred in connection with the first registration requested
pursuant to Section 1.4, including (without limitation) all registration,
filing, qualification, printers' and accounting fees and the reasonable fees and
disbursements of one counsel for the selling Holder or Holders selected by them
with the approval of the Company, which approval shall not be unreasonably
withheld, and counsel for the Company shall be borne by the Company. The
expenses for subsequent registrations pursuant to Section 1.4 shall be borne by
the selling Holders.
(d) Underwriting Discounts and Commissions. All underwriting discounts and
commissions incurred in connection with registrations in connection with each
registration statement under Section 1 shall be borne by the participating
sellers (and the Company, if the Company is a seller) in proportion to the
number of shares sold by each, or as they otherwise may agree.
1.8 Underwriting Requirements.
(a) In connection with any offering involving an underwriting of shares of the
Company's capital stock, the Company shall not be required under Section 1.3 to
include any of the Holders' securities in such underwriting unless they accept
the terms of the underwriting as agreed upon between the Company and the
underwriters selected by it (or by other persons entitled to select the
underwriters), and then only in such quantity as the underwriters determine in
their sole discretion will not jeopardize the success of the offering by the
Company.
(b) If the total amount of securities, including Registrable Securities,
requested by Holders to be included in such offering exceeds the amount of
securities sold other than by the Company that the underwriters determine in
their sole discretion is compatible with the success of the offering, then the
Company shall be required to include in the offering only that number of such
securities, including Registrable Securities, which the underwriters determine
in their sole discretion will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the selling shareholders
according to the total amount of securities entitled to be included therein
owned by each selling shareholder or in such other proportions as shall mutually
be agreed to by such selling shareholders) but in no event shall:
(i) any shares being sold by a Holder exercising a demand registration right set
forth in Section 1.2 be excluded from such offering; or
(ii) the amount of securities of the selling Holders included in the offering be
reduced below ten percent (10%) of the total amount of securities included in
such offering. (c) For purposes of the parenthetical concerning apportionment in
subsection 1.8(b), for any selling shareholder which is a holder of Registrable
Securities and which is a partnership or corporation, the partners, retired
partners and shareholders of such holder, or the estates and family members of
any such partners and retired partners and any trusts for the benefit of any of
the foregoing persons, shall be deemed to be a single "selling shareholder," and
any pro-rata reduction with respect to such "selling shareholder" shall be based
upon the aggregate number of shares carrying registration rights owned by all
entities and individuals included in such "selling shareholder," as defined in
this sentence.
1.9 Delay of Registration. No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result
of any controversy that might arise with respect to the interpretation or
implementation of this Section 1.
1.10 Indemnification. In the event any Registrable Securities are included in a
registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify and hold harmless
each Holder, any underwriter (as defined in the Securities Act) for such Holder
and each person, if any, who controls such Holder or underwriter within the
meaning of the Securities Act or Exchange Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"):
(i) any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements thereto;
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading; or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law; and the
Company will pay to each such Holder, underwriter or controlling person, as
incurred, any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability, or
action;
provided, however, that the indemnity agreement contained in this subsection
1.10(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable to any Holder, underwriter or controlling person for any such
loss, claim, damage, liability, or action to the extent that it arises out of or
is based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will indemnify and hold
harmless the Company, each of its directors, each of its officers who has signed
the registration statement, each person, if any, who controls the Company within
the meaning of the Securities Act, any underwriter, any other Holder selling
securities in such registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages, or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this subsection 1.10(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
1.10(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld; provided, that
in no event shall any indemnity under this subsection 1.10(b) exceed the net
proceeds from the offering received by such Holder, except in the case of
willful fraud by such Holder.
(c) Promptly after receipt by an indemnified party under this Section 1.10 of
notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 1.10, deliver to the indemnifying
party a written notice of the commencement thereof, and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party (together with all other
indemnified parties which may be represented without conflict by one counsel)
shall have the right to retain one separate counsel, with the reasonable fees
and expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 1.10, but the omission
so to deliver written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 1.10. (d) If the indemnification provided for in this Section 1.10
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations; provided, that in no event shall any contribution by a Holder
under this Subsection 1.10
(d) exceed the net proceeds from the offering received by such Holder, except in
the case of willful fraud by such Holder. The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control; provided, however, that the obligations of the persons selling shares
pursuant to such underwriting agreement to indemnify the underwriters shall not
exceed the indemnification obligations of such persons under subsection 1.10(b).
(f) The obligations of the Company and Holders under this Section 1.10 shall
survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1, and otherwise. 1.11 Reports Under
Securities Exchange Act of 1934. With a view to making available to the Holders
the benefits of Rule 144 promulgated under the Securities Act and any other rule
or regulation of the SEC that may at any time permit a Holder to sell securities
of the Company to the public without registration or pursuant to a registration
on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms are understood
and defined in SEC Rule 144, at all times after the first day that the Company
becomes subject to the periodic reporting requirements under Sections 13 or
15(d) of the Exchange Act;
(b) take such action, including the voluntary registration of its Common Stock
under Section 12 of the Exchange Act, as is necessary to enable the Holders to
utilize Form S-3 for the sale of their Registrable Securities, such action to be
taken as soon as practicable after the end of the fiscal year in which the first
registration statement filed by the Company for the offering of its securities
to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and Exchange Act; and
(d) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request:
(i) a written statement by the Company that it has complied with the reporting
requirements of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time
after it so qualifies);
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company; and (iii) such other
information as may be reasonably requested in availing any Holder of any rule or
regulation of the SEC which permits the selling of any such securities without
registration or pursuant to such form.
1.12 Limitations on Subsequent Registration Rights. From and after the date of
this Agreement, the Company shall not, without the prior written consent of the
Holders of a majority of the outstanding Registrable Securities, enter into any
agreement with any holder or prospective holder of any securities of the Company
which would allow such holder or prospective holder:
(a) to include such securities in any registration filed under Sections 1.2,
1.3, or 1.4 hereof, unless under the terms of such agreement, such holder or
prospective holder may include such securities in any such registration only to
the extent that the inclusion of his securities will not reduce the amount of
the Registrable Securities of the Holders which is included; or
(b) to make a demand registration which could result in such registration
statement being declared effective prior to the earlier of either of the dates
set forth in subsection 1.2(a) or within one hundred twenty (120) days of the
effective date of any registration effected pursuant to Sections 1.2, 1.3, or
1.4 hereof.
1.13 "Market Stand-Off" Agreement. Each Holder hereby agrees that, during the
period of duration (up to, but not exceeding, 90 days for any underwritten
public offering) specified by the Company and an underwriter of Common Stock or
other securities of the Company, following the effective date of a registration
statement of the Company filed under the Securities Act, it shall not, to the
extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the Company
held by it at any time during such period except Common Stock included in such
registration; provided, however, that:
(a) such agreement shall be applicable only during the two-year period following
the date of the final prospectus distributed pursuant to the first such
registration statement of the Company which covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
and
(b) all officers and directors of the Company, all five-percent securityholders,
and all other persons with registration rights (whether or not pursuant to this
Agreement) enter into similar agreements.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
each Holder (and the share or securities of every other person subject to the
foregoing restriction) until the end of such period, and each Holder agrees
that, if so requested, such Holder will execute an agreement in the form
provided by the underwriter containing terms which are essentially consistent
with the provisions of this Section 1.13.
Notwithstanding the foregoing, the obligations described in
this Section 1.13 shall not apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms which may be promulgated
in the future, or a registration relating solely to a transaction on Form S-4 or
similar forms which may be promulgated in the future.
1.14 Termination of Registration Rights. No Holder shall be entitled to exercise
any right provided for in this Section 1 after such time as Rule 144 or another
similar exemption under the Securities Act is available for the sale of all of
such Holder's shares during a three (3)-month period without registration.
2. Miscellaneous.
2.1 Legended Certificates. Each certificate representing Registrable Securities
shall (unless otherwise permitted by the provisions of this Agreement) be
stamped or otherwise imprinted with a legend substantially similar to the
following (in addition to any legend required under applicable state securities
laws):
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER SUCH ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY
TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.
The Company shall be obligated to reissue promptly unlegended
certificates at the request of any holder thereof if the holder shall have
obtained an opinion of counsel at such Holder's expense (which counsel may be
counsel to the Company) reasonably acceptable to the Company to the effect that
the securities proposed to be disposed of may lawfully be so disposed of without
registration, qualification or legend.
Any legend endorsed on an instrument pursuant to applicable
state securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.
2.2 Assignment of Rights. The rights of the Investors set forth in this
Agreement may be assigned (but only with all related obligations) only to an
assignee of at least ten percent (10%) of the Initial Investor's shares of
Preferred Stock or Registrable Securities (or at least fifty percent (50%) of
the shares of a Holder (other than the Initial Investor) of Preferred Stock or
Registrable Securities in a subsequent assignment), provided that (a) the
Company is, within a reasonable time after such transfer, furnished with written
notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned, and (b) such
transferee agrees in writing to be bound by the provisions of this Agreement.
2.3 Successors and Assigns. Except as otherwise provided in this Agreement, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective permitted successors and assigns of the parties
(including transferees of any of the Company's warrants or options or any Common
Stock issued upon exercise thereof). Nothing in this Agreement, whether express
or implied, is intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
2.4 Amendments and Waivers. Any term of this Agreement may be amended or waived
only with the written consent of the Company and the holders of a majority of
the Preferred Stock and the Common Stock, each voting as a class, then
outstanding. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any Registrable Securities then
outstanding, each future holder of all such Registrable Securities, and the
Company.
2.5 Notices. Unless otherwise provided, any notice required or permitted by this
Agreement shall be in writing and shall be deemed sufficient upon delivery, when
delivered personally or by overnight courier or sent by telegram or fax, or
forty-eight (48) hours after being deposited in the U.S. mail, as certified or
registered mail, with postage prepaid, and addressed to the party to be notified
at such party's address or fax number as set forth following each party's
signature hereto, below, or as subsequently modified by written notice.
2.6 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
2.7 Liability. The obligations and liabilities of the constituent investment
accounts of Initial Investor under this Agreement shall be several, to the
extent of each such investment account's respective percentage ownership
interest of issued and outstanding shares of common stock of Company, and not
joint. Company has designated Morgens, Waterfall, Vintiadis & Company, Inc.
("Morgens, Waterfall") as its agent for the sole purpose of receiving
communications from, and sending communications to, such investment accounts in
connection with this Agreement. None of Morgens, Waterfall, John C. Waterfall,
or Edwin H. Morgen individually, nor any officers, directors, employees, agents,
or controlling persons of Morgens, Waterfall, shall have any obligations or
liabilities under or in connection with this Agreement by reason of the
foregoing or for any other reason.
2.8 Governing Law. This Agreement and all acts and transactions pursuant hereto
shall be governed, construed and interpreted in accordance with the laws of the
State of New York, without giving effect to principles of conflicts of laws. 2.9
Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
2.10 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not be considered in construing or
interpreting this Agreement.
2.11 Aggregation of Stock. All shares or rights to acquire shares of the Common
Stock held or acquired by affiliated entities or persons shall be aggregated
together for the purpose of determining the availability of any rights under
this Agreement. [Remainder of page intentionally left blank.]
<PAGE>
WITNESS, the due execution of this Registration Rights
Agreement, as of the date first above written, by the respective duly authorized
general partner, officer or agent of the undersigned as of the date first
written above.
ELSINORE CORPORATION
By: /s/ Jeffrey T. Leeds
Name: Jeffrey T. Leeds
Title: President
Notice address:
Elsinore Corporation
202 Fremont Street
Las Vegas, Nevada 89101
Fax: (702) 387-5120
Attention: Mr. Jeffrey T. Leeds
INITIAL INVESTOR:
BETJE PARTNERS
ENDOWMENT RESTART LLC
MORGENS WATERFALL INCOME PARTNERS, L.P.
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.
By: /s/ John C. "Bruce" Waterfall
Name: John C. "Bruce" Waterfall
Title: Authorized Signatory
Notice address:
Morgens, Waterfall, Vintiadis & Co. Inc.
Swiss Bank Tower
10 East 50th Street
New York, New York 10022
Fax: (212) 838-5540
EXHIBIT 10.53
ACKNOWLEDGMENT AND CONFIRMATION OF PLEDGE AGREEMENT
This ACKNOWLEDGEMENT AND CONFIRMATION OF PLEDGE AGREEMENT
(this "Acknowledgement") is dated as of September 29, 1998, entered into by
Elsinore Corporation ("Company"), Elsub Management Corporation ("EMC"), Palm
Springs East Limited Partnership ("PSELP" and together with the Company and EMC,
the "Pledgors") for the benefit of U.S. Bank Trust National Association, a
national association formerly known as First Trust National Association
("Trustee"), as Trustee under that certain Second Supplemental Indenture, dated
as of the date hereof (the "Second Supplemental Indenture"), by and between
Elsinore Corporation ("Company"), a Nevada corporation, the Guarantors listed
therein, and Trustee. Capitalized terms used herein without definition shall
have the same meanings herein as set forth in the Second Supplemental Indenture.
PRELIMINARY STATEMENTS
A. The Company, EMC, and Trustee entered into a certain Pledge
Agreement (the "1993 Pledge Agreement"), dated as of October 8, 1993. In the
1993 Pledge Agreement, the Company and EMC pledged to Trustee, and granted
Trustee a security interest in certain Pledged Collateral, as defined and
identified therein, to secure the "Indenture Obligations," as defined in that
certain Indenture (the "Original Indenture"), dated as of October 8, 1993, by
and among the Company, certain Guarantors named therein, and Trustee. Pursuant
to the Original Indenture, the Company issued notes in the aggregate principal
amount of $60,000,000, bearing interest at 12 1/2% with a stated maturity date
of October 1, 2000 (the "Original Notes").
B. On October 31, 1995, the Company filed a Chapter 11
bankruptcy reorganization case in the United States Bankruptcy Court for the
District of Nevada (the "Court"), Case No. 95-24685RCJ. On August 9, 1996, the
Court entered its Order Confirming Chapter 11 Plan of Reorganization (the
"Order") confirming the Plan of Reorganization (the "Plan") as identified in the
Order.
C. Pursuant to the Order and the Plan, the parties to the
Original Indenture entered into a certain Amended and Restated Indenture (the
"Indenture"), dated as of March 3, 1997 provided, among other things, for the
issuance of the Amended and Restated Notes (the "Amended and Restated Notes") in
an aggregate principal amount of $30,000,000, bearing interest at 13 1/2% with a
stated maturity date of August 20, 2001 in exchange for certain existing
Original Notes. The Indenture was later amended by the First Supplemental
Amended and Restated Indenture, dated as of September 18, 1997, among Company,
EMC, PSELP, Four Queens, Inc., and Trustee.
D. On March 3, 1997, the Pledgors and Trustee executed that
certain Amendment of 1993 Pledge Agreement (the "1997 Amendment"). Pursuant to
the 1997 Amendment, the 1993 Pledge Agreement was amended to secure the
Indenture Obligations of the Company after giving effect to the Indenture and
the issuance of the Amended and Restated Notes. The 1993 Pledge Agreement, as
amended by the 1997 Amendment, is referred to herein as the "Amended Pledge
Agreement."
E. The Company and Trustee, as Trustee under the Indenture and
the Indenture, have entered into the certain Second Supplemental Indenture
pursuant to which, among other things, all outstanding Amended and Restated
Notes issued under the Indenture will be exchanged for New Notes (as defined in
the Second Supplemental Indenture). The Indenture, as modified by the Second
Supplemental Indenture, is referred to herein as the "Amended and Restated
Indenture."
F. Pledgors desire expressly to confirm the foregoing matters
and to acknowledge and confirm for purposes of clarification that all
obligations of Pledgors under the Amended Pledge Agreement are obligations which
are recognized, accepted and continue to be undertaken by the Pledgors following
the execution and delivery of the Second Supplemental Indenture and the issuance
of the New Notes.
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Pledgors hereby represent
and agree as follows:
1. Pledgors hereby acknowledge that it they have reviewed the
terms and provisions of the Second Supplemental Indenture, and each other
document delivered in connection therewith. Pledgors hereby consent to the
execution and delivery of the Second Supplemental Indenture.
2. The Pledgors hereby acknowledge and confirm that it is the
intent of the Pledgors that the Amended Pledge Agreement (i) shall continue in
full force and effect and that all of each Pledgor's respective obligations
thereunder shall be valid and enforceable and shall not be impaired or limited
by the execution or effectiveness of the Second Supplemental Indenture, or any
of the documents ancillary thereto, and (ii) will guaranty or secure, as the
case may be, to the fullest extent possible the payment and performance of all
obligations of the Company under the New Notes and under the Amended and
Restated Indenture. The Pledgors represent and warrant that all representations
and warranties contained in the Amended Pledge Agreement and any agreement or
document related thereto to which it is a party or otherwise bound are true,
correct and complete in all material respects on and as of the date thereof to
the same extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case they were true, correct and complete in all material respects on and as of
such earlier date.
3. The Pledgors acknowledge and agree that nothing in the
Amended and Restated Indenture, the Second Supplemental Indenture or any other
agreement or document shall be deemed to require the consent of the Pledgors to
any future amendments to the Second Supplemental Indenture.
5. THIS ACKNOWLEDGEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
6. This Acknowledgment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, each of the undersigned Pledgors has
caused this Acknowledgement and Confirmation to be duly executed and delivered
by its officer thereunto duly authorized as of the date first written above.
ELSINORE CORPORATION
By: /s/ Jeffrey T. Leeds
Name: Jeffrey T. Leeds
Title: President
ELSUB MANAGEMENT CORPORATION
By: /s/ S. Barton Jacka
Name: S. Barton Jacka
Title: President
PALM SPRINGS EAST, LIMITED PARTNERSHIP
By: ELSUB MANAGEMENT CORPORATION,
its general partner
By: /s/ S. Barton Jacka
Name: S. Barton Jacka
Title: President
EXHIBIT 10.54
ACKNOWLEDGMENT AND CONFIRMATION OF GUARANTY
This ACKNOWLEDGEMENT AND CONFIRMATION OF GUARANTY (this
"Acknowledgement") is dated as of September 29, 1998, entered into by each of
the undersigned (each a "Guarantor" and together the "Guarantors"), for the
benefit of U.S. Bank Trust National Association, a national association formerly
known as First Trust National Association ("Trustee"), and is made with
reference to that certain Second Supplemental Indenture, dated as of the date
hereof (the "Second Supplemental Indenture"), by and between Elsinore
Corporation, a Nevada corporation ("Company"), the Guarantors listed therein,
and Trustee. Capitalized terms used herein without definition shall have the
same meanings herein as set forth in the Second Supplemental Indenture.
PRELIMINARY STATEMENTS
A. Company entered into that certain Amended and Restated
Indenture, dated as of March 3, 1997, by and between Company, the Guarantors
listed therein, and Trustee (as amended, modified and supplemented by the First
Supplemental Amended and Restated Indenture, dated as of September 18, 1997,
among Company, Trustee, Elsub Management Corporation, Four Queens, Inc., and
Palm Springs East, Limited Partnership, the "Indenture,") and such Indenture, as
amended, modified and supplemented by the First Supplemental Amended and
Restated Indenture, dated as of September 18, 1997, among Company, Trustee,
Elsub Management Corporation, Four Queens, Inc., and Palm Springs East, Limited
Partnership, and by the Second Supplemental Indenture, being the "Amended
Indenture."
B. The parties to the Indenture desire to amend, modify and
supplement the Indenture pursuant to the Second Supplemental Indenture.
C. Guarantors desire expressly to confirm the foregoing
matters and to acknowledge for purposes of clarification that all obligations of
Company under the Second Supplemental Indenture are obligations guaranteed by
the Guarantors.
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Guarantors hereby
represent and agree as follows:
1. Each Guarantor hereby acknowledges that it has reviewed the
terms and provisions of the Second Supplemental Indenture, and each other
document delivered in connection therewith to which it is a party. Each
Guarantor hereby consents to the execution and delivery of the Second
Supplemental Indenture.
2. Each Guarantor hereby acknowledges and confirms that it is
the intent of such Guarantor that the Guaranty to which it is a party will
continue to guaranty to the fullest extent possible the payment and performance
of all of Company's obligations under the Amended Indenture, including without
limitation, the payment and performance of all obligations of Company to pay
fees with respect to, and to repay the New Notes issued under the Amended
Indenture. Each Guarantor further agrees that any existing Guaranty may be
affixed to a New Note to evidence each such Guarantor's guaranty.
3. Each Guarantor acknowledges and agrees that any of the
agreements or documents related to the Indenture to which it is a party or
otherwise bound (i) shall continue in full force and effect and that all of its
obligations thereunder shall be valid and enforceable and shall not be impaired
or limited by the execution or effectiveness of the Second Supplemental
Indenture and (ii) will guaranty or secure, as the case may be, to the fullest
extent possible the payment and performance of all obligations of the Company
under the New Notes and under the Amended Indenture. Each Guarantor represents
and warrants that all representations and warranties contained in the Indenture
and any agreement or document related thereto to which it is a party or
otherwise bound are true, correct and complete in all material respects on and
as of the date thereof to the same extent as though made on and as of that date,
except to the extent such representations and warranties specifically relate to
an earlier date, in which case they were true, correct and complete in all
material respects on and as of such earlier date.
4. Each Guarantor acknowledges and agrees that nothing in the
Indenture, the Second Supplemental Indenture or any other agreement or document
shall be deemed to require the consent of such Guarantor to any future
amendments to the Second Supplemental Indenture.
5. THIS ACKNOWLEDGEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
6. This Acknowledgment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, each of the undersigned Guarantors has
caused this Acknowledgement and Confirmation to be duly executed and delivered
by its officer thereunto duly authorized as of the date first written above.
ELSUB MANAGEMENT CORPORATION
By: /s/ S. Barton Jacka
Name: S. Barton Jacka
Title: President
FOUR QUEENS, INC.
By: /s/ William L. Westerman
Name: William L. Westerman
Title: President
PALM SPRINGS EAST, LIMITED PARTNERSHIP
By: ELSUB MANAGEMENT CORPORATION,
its general partner
By: /s/ S. Barton Jacka
Name: S. Barton Jacka
Title: President
EXHIBIT 10.55
SECOND MODIFICATION OF SUBORDINATED DEED OF TRUST
Recitals
This SECOND MODIFICATION OF SUBORDINATED DEED OF TRUST (this
"Modification"), is entered into as of September 29, 1998, by and among FOUR
QUEENS, INC., a Nevada corporation ("Trustor") and U.S. BANK TRUST NATIONAL
ASSOCIATION, a national association formerly known as First Trust National
Association, in its capacity as Trustee under the Amended Indenture referred to
in Paragraph E below ("Beneficiary"). All capitalized words not otherwise
defined herein are used as defined in the Amended Indenture.
Factual Background
A. Trustor executed a certain Deed of Trust, Assignment of Rents, and
Security Agreement in favor of Beneficiary dated as of October 8, 1993 (the
"Deed of Trust") which was recorded in the Official Records of Clark County,
Nevada (the "Official Records") on October 8, 1993, in Book 931008, as Document
No. 0554. In the Deed of Trust, Trustor granted in trust for the benefit of
Beneficiary and granted Beneficiary a security interest in certain real and
personal property as identified therein.
B. The Deed of Trust originally secured the "Indenture Obligations," as
defined in that certain Indenture, dated as October 8, 1993, by and among
Elsinore Corporation, a Nevada corporation (the "Company"), certain Guarantors
named therein (including Trustor), and Beneficiary (the "Original Indenture").
C. The parties to the Original Indenture entered into an Amended and
Restated Indenture (the "Indenture"), dated as of March 3, 1997, providing,
among other things, for the issuance of amended and restated Notes in the
aggregate principal amount of $30,000,000 bearing interest at 13 1/2% with the
stated maturity date of August 20, 2001 (the "Existing Second Mortgage Notes").
The Indenture was amended by the First Supplemental Amended and Restated
Indenture, dated as of September 18, 1997, among the Company, the Beneficiary,
Elsub Management Corporation, Trustor, and Palm Springs East, Limited
Partnership.
D. The Trustor and the Beneficiary have executed that certain
Modification of Subordinated Deed of Trust, dated as of March 3, 1997, filed in
the Official Records of Clark County, Nevada on March 3, 1997 as Instrument No.
1152 in Book 970303 (the "First Modification of Deed of Trust"). Pursuant to the
First Modification of Deed of Trust, the Deed of Trust was amended to secure all
obligations under the Indenture and the Existing Second Mortgage Notes.
E. The Company and the Beneficiary, as Trustee under the Original
Indenture, have entered into that certain Second Supplemental Indenture, dated
as of September 29, 1998 (the "Second Supplemental Indenture"), pursuant to
which, among other things, certain outstanding Amended and Restated Notes issued
under the Indenture will be exchanged for New Notes in the aggregate principal
amount of $11,104,000, bearing interest at the rate of 12.83% per annum with the
stated maturity date of August 20, 2001. The Indenture, as modified by the
Second Supplemental Indenture, is referred to herein as the "Amended Indenture."
F. The parties hereto desire to modify the Deed of Trust, as modified
and amended, as set forth below in order to confirm that the Deed of Trust
secures all obligations under the Amended Indenture and the New Notes.
Amendments
1. All references to the Indenture in the Deed of Trust shall
henceforth refer to the Amended Indenture. All references in the Deed of Trust
to any documents or instruments which were amended in connection with the
Amended Indenture refer to such documents or instruments as so amended. All
capitalized terms in the Deed of Trust which are not otherwise defined therein
shall have the meanings set forth in the Amended Restated Indenture. All
capitalized terms which are defined in the Deed of Trust shall have the meanings
set forth in the Amended Indenture if different from the definitions in Deed of
Trust.
2. Except as expressly amended herein, the Deed of Trust shall remain
in full force and effect.
[Remainder of page intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the Trustor and the Beneficiary have caused this
Second Modification of Deed of Trust to be executed and delivered by their
respective officers thereunto duly authorized as of the day and first written
above.
FOUR QUEENS, INC., a Nevada Corporation
By: /s/ William L. Westerman
Name: William L. Westerman
Title: President
U.S. BANK TRUST NATIONAL ASSOCIATION,
a national association, as Beneficiary
By:
Name:
Title:
STATE OF NEVADA )
) ss:
COUNTY OF CLARK )
On this ____ day of _________________, 199__, before me, the
undersigned, a Notary Public in and for the County of Clark, State of Nevada,
duly commissioned and sworn, personally appeared William L. Westerman known to
me to be the President of FOUR QUEENS, INC., whose name is subscribed to the
within instrument, and who acknowledged to me that he/she executed the same
freely and voluntarily and for the use and purposes therein mentioned.
-----------------------------
NOTARY PUBLIC
STATE OF ________ )
) ss:
COUNTY OF _______ )
On this ____ day of _________________, 199__, before me, the
undersigned, a Notary Public in and for the County of ________, State of
________, duly commissioned and sworn, personally appeared _________________
known to me to be the _____________ of U.S. BANK TRUST NATIONAL ASSOCIATION,
whose name is subscribed to the within instrument, and who acknowledged to me
that he/she executed the same freely and voluntarily and for the use and
purposes therein mentioned.
-----------------------------
NOTARY PUBLIC
EXHIBIT 99.1
Elsinore Corporation
Press Release
Elsinore Completes Recapitalization
Las Vegas, Nevada, September 30, 1998 -- Elsinore Corporation (ELSO) today
announced completion of a recapitalization of its indebtedness. In connection
with the recapitalization, certain investment accounts controlled by Morgens,
Waterfall, Vintiadis & Company, Inc. (the "Funds") contributed $4,901,070 to the
capital of the Company, which the Company used, together with other funds of the
Company, to purchase in full all of the Company's outstanding 11 1/2% First
Mortgage Notes due 2000 in the original aggregate principal amount of
$3,855,739.39 and $896,000 of original principal amount 13 1/2% Second Mortgage
Notes of the Company due 2001. In a separate transaction, the Company issued to
the Funds 50,000,000 shares of Series A Convertible Preferred Stock of the
Company in exchange for the surrender to the Company of $18,000,000 original
principal amount second mortgage notes held by the Funds. The Preferred Stock
has an aggregate liquidation preference of $18 million and is convertible into
93 million shares of the Company's Common Stock. Finally, the Company issued to
the Funds new second mortgage notes in the aggregate principal amount of
$11,104,000 in exchange for all remaining outstanding second mortgage notes held
by the Funds in the same principal amount, pursuant to an amended indenture
governing the second mortgage notes that reduced the interest rate payable
thereon from 13 1/2% to 12.83%. Following the recapitalization, the Company has
notes outstanding in the aggregate principal amount of $11,104,000.
Elsinore Corporation is registered with the Nevada Gaming Commission as a
publicly traded holding company of Four Queens, Inc., the licensed operator of
the Four Queens Hotel & Casino in downtown Las Vegas, and is operated by Riviera
Gaming Management, a wholly-owned subsidiary of Riviera Holding Corporation,
which operates the Riviera Hotel and Casino on the Las Vegas Strip.
Contact: Elsinore Corporation
202 Fremont Street
Las Vegas, Nevada 89101
(702) 385-4011
