SCHEDULE 14C
(Rule 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14 (c)
of the Securities Exchange Act of 1934 (Amendment No. ___ )
Check the appropriate box:
Preliminary Information Statement Confidential, for Use of the Commission
Only (as permitted by Rule 14c-5(d)(2))
Definitive Information Statement
________________________________________________________________________________
ELSINORE CORPORATION
________________________________________________________________________________
(Name Of Registrant As Specified In Its Charter)
Payment of Filing Fee (check the appropriate box):
No fee required. Fee computed on table below per Exchange Act Rules 14c-5(g) and
0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11.
________________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
(5) Total fee paid:
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Fee paid previously with preliminary materials. Check box if any part of the fee
is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the previous filing
by registration statement number, other Form or Schedule and the date of its
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<PAGE>
ELSINORE CORPORATION
202 Fremont Street
Las Vegas, Nevada 89101
September 24, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders of
Elsinore Corporation, to be held at 12:00 p.m. on October 26, 1999 at the Royal
Pavilion at the Four Queens Hotel and Casino, 202 Fremont Street, Las Vegas,
Nevada 89101.
The business to be conducted at the meeting includes the election of directors
and consideration of any other matters that may properly come before the meeting
and any adjournment or postponement thereof.
It is important that your shares be represented at the Annual Meeting.
On behalf of the Board of Directors,
/s/ S. Barton Jacka
S. Barton Jacka
Secretary of Elsinore Corporation
<PAGE>
ELSINORE CORPORATION
202 FREMONT STREET
LAS VEGAS, NEVADA 89101
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the annual meeting (the "Annual Meeting") of
stockholders of Elsinore Corporation, a Nevada corporation (the "Company"), will
be held in the Royal Pavilion at the Four Queens Hotel and Casino, 202 Fremont
Street, Las Vegas, Nevada 89101, at 12:00 p.m. on October 26, 1999, for the
following purposes:
(a) To elect three directors; and
(b) To transact any other business which may properly come before
the Annual Meeting or any adjournment or postponement
thereof.
WE ARE NOT ASKING FOR A PROXY,
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
The Board of Directors has fixed September 24, 1999 as the record date for
determination of stockholders entitled to notice of and to vote at the Annual
Meeting and any adjournments or postponements thereof. Accordingly, only holders
of record of Common Stock at the close of business on such date shall be
entitled to vote at the Annual Meeting and any adjournment or postponement
thereof. A list of such stockholders will be available for examination by any
stockholder at the Annual Meeting and, for purposes germane to the Annual
Meeting, at the office of the Secretary of the Company, 202 Fremont Street, Las
Vegas, Nevada, for a period of ten days prior to the Annual Meeting.
This information statement is being mailed to the Company's stockholders on or
about September 25, 1999 by order of the Company's Board of Directors.
The Officers and Directors of the Company cordially invite you to attend the
Annual Meeting.
On behalf of the Board of Directors,
/s/ S. Barton Jacka
S. Barton Jacka
Secretary of Elsinore Corporation
Las Vegas, Nevada, September 24, 1999
<PAGE>
INFORMATION STATEMENT
This Information Statement is being furnished on or about September 25, 1999 by
the Board of Directors of Elsinore Corporation (the "Company") in connection
with the annual meeting (the "Annual Meeting") of the stockholders of the
Company to be held at the Four Queens Hotel and Casino, 202 Fremont Street, Las
Vegas, Nevada 89101, at 12:00 p.m. on October 26, 1999, and with any adjournment
or postponement thereof. The Company's principal executive offices are located
at 202 Fremont Street, Las Vegas, Nevada 89101, and its telephone number is
(702) 385-4011.
The Board of Directors of the Company has fixed September 24, 1999 as the record
date for the determination of stockholders entitled to notice and to vote at the
Annual Meeting (the "Record Date"). As of the Record Date, there were 4,929,313
shares of Common Stock, $.001 par value per share (the "Common Stock"), issued
and outstanding and held by approximately 662 holders of record. In addition,
50,000,000 shares of Series A Convertible Preferred Stock are outstanding. The
shares of Preferred Stock have the right to convert to 93,000,000 shares of the
Company's Common Stock. The Company's annual report on Form 10-K (the "Annual
Report") to stockholders for the fiscal year ended December 31, 1998, including
audited financial statements, is being transmitted to stockholders of record as
of the Record Date concurrently. Stockholders are urged to read the Annual
Report in its entirety.
The presence of the holders of a majority of the Company's outstanding shares of
voting stock shall constitute a quorum. Each share of Common Stock and Preferred
Stock (on an as-converted basis except with respect to election of directors) is
entitled to one vote on all matters submitted to a vote of stockholders. In
connection with the cumulative voting feature applicable to the election of
directors, each stockholder is entitled to as many votes as shall equal the
number of shares held by such person at the close of business on the record date
multiplied by the number of directors to be elected. A stockholder may cast all
of such votes for a single nominee or may apportion such votes among any two or
more of them, as he or she sees fit. A stockholder may withhold votes from any
or all nominees. Proposals are approved if the number of shares voted in favor
exceeds the number voted against. The affirmative vote of a plurality of the
shares represented at the Annual Meeting will be necessary for the election of
directors. Abstentions will be treated as negative votes cast on a particular
matter as well as shares present and represented for purposes of establishing a
quorum. If nominee recordholders do not vote on specific issues because they did
not receive specific instructions on such issues from the beneficial owners of
such shares ("Broker Nonvotes"), such Broker Nonvotes will not be treated as
either votes cast or shares present or represented for purposes of establishing
a quorum.
WE ARE NOT ASKING FOR A PROXY,
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
As of March 15, 1999, the Company had two classes of voting securities, Common
Stock and Series A Convertible Preferred Stock. Series A Convertible Preferred
Stock votes on an as-converted basis except with respect to the election of
directors for which each share is entitled to one vote as described above. As of
March 15, 1999, the beneficial ownership of Common Stock by each person who is
known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock and Series A Convertible Preferred Stock, is as
follows:
<PAGE>
<TABLE>
<CAPTION>
Common Stock
Name and Address of Beneficial Owner (1) Amount and Nature of Percent of
Beneficial Ownership Class
John C. "Bruce" Waterfall, who
exercises voting and investment
authority over the Common Stock
owned by the MWV Accounts,
as follows (2)(3)(4):
<S> <C> <C>
Betje Partners 4,278,690.06 46.5
Endowment Prime, L.L.C. (f/k/a)
The Common Fund for Non-Profit Organizations 14,362,544.84 75.4
Morgens Waterfall Income Partners, L.P. 2,604,280.86 34.6
MWV Employee Retirement Plan Group Trust 879,022.60 15.2
MWV International, Ltd. 3,898,515.00 79.1
Phoenix Partners, L.P. 12,276,868.62 71.4
Restart Partners, L.P. 10,573,213.56 69.5
Restart Partners II, L.P. 19,851,401.86 80.7
Restart Partners III, L.P. 16,089,026.04 76.5
Restart Partners IV, L.P. 10,135,926.78 67.3
Restart Partners V, L.P. 2,696,949.78 35.4
Total 97,646,440.00 99.7%
</TABLE>
<TABLE>
<CAPTION>
Preferred Stock
Name and Address of Beneficial Owner Amount and Nature of Percent of
Beneficial Ownership Class
John C. "Bruce" Waterfall, who exercises
voting and investment authority over the
Common Stock owned by the MWV Accounts, as
follows (2)(3)(4):
<S> <C> <C>
Betje Partners 2,300,371.00 4.6
Endowment Prime, L.L.C. (f/k/a)
The Common Fund for Non-Profit Organizations 7,596,894.00 15.2
Morgens Waterfall Income Partners, L.P. 1,400,151.00 2.8
MWV Employee Retirement Plan Group Trust 450,110.00 .9
MWV International, Ltd. - *
Phoenix Partners, L.P. 6,600,467.00 13.2
Restart Partners, L.P. 5,523,296.00 11.0
Restart Partners II, L.P. 10,579,301.00 21.2
Restart Partners III, L.P. 8,650,014.00 17.3
Restart Partners IV, L.P. 5,449,423.00 10.9
Restart Partners V, L.P. 1,449,973.00 2.9
Total 50,000,000.00 100.0%
*Less then 1% of the outstanding shares
</TABLE>
<PAGE>
(1) In addition to the persons reported in the table, Riviera Gaming Management
Corp.-Elsinore ("RGME"), which manages the Four Queens Hotel and Casino, holds
warrants to purchase 1,125,000 shares of Common Stock. If RGME were to exercise
the warrants, it would become the owner of approximately 18.5% of the
outstanding Common Stock (without giving effect to the conversion of the
Preferred Stock). The relevant Exchange Act rules generally provide that a
person is deemed the beneficial owner of a security if that person has the right
to acquire beneficial ownership of such security within 60 days through the
exercise of any option, warrant or right. Although the warrants, by their terms,
are exercisable at any time, the Company understands that as a condition
precedent to such exercise, RGME would have to apply for and obtain the approval
of the Nevada Gaming Authorities. The Company is not aware of any such
application having been filed by RGME. Furthermore, the Company's understanding
is that the timing of the Nevada Gaming Authorities' decisions on any such
applications to exercise the warrants would be subject to substantial
uncertainty. In addition, the arrangement under which RGME manages the Four
Queens Hotel and Casino will terminate at the end of 1999. Accordingly, RGME is
not reported in the table as beneficially owning more than 5% of the Common
Stock.
(2) 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 are based on 4,929,313 shares of Common Stock
outstanding as of September 20, 1999.
(3) The address for Mr. Waterfall and each of the MWV Accounts is 10 East 50th
Street, New York, New York 10022.
(4) Pursuant to agreements and undertakings with the Board and the Commission
which were required in order for the Plan of Reorganization, effective February
28, 1997, (the "Plan") to become effective, Mr. Waterfall is the only individual
who exercises voting and investment power (including dispositive power) with
respect to Common Stock and Preferred Stock owned by the MWV Accounts. MWV and
its affiliates other than Mr. Waterfall are either investment advisors to, or
trustees or general partners of, the MWV Accounts. Accordingly, for purposes of
the relevant Exchange Act rules, they could also be deemed the beneficial owners
of Common Stock and Preferred Stock held by the MWV Accounts. The possible
attribution of ownership of Common Stock, expressed in number of shares and
percent of the class, to MWV and those affiliates is as follows: MWV-
9,056,227.66 (90.2%); Endowment Prime, L.L.C. - 14,362,544.84(75.4%); MW
Capital, L.L.C. - 2,604,280.86 (34.6%); MW Management, L.L.C. -
12,276,868.62(71.4%); Prime Group, L.P. -10,573,213.56(69.5%); Prime Group II,
L.P. - 19,851,401.86 (80.7%); Prime Group III, L.P. - 16,089,026.04 (76.5%);
Prime Group IV, L.P. - 10,135,926.78 (67.3%); and Prime Group V, L.P. -
2,696,949.78 (35.4%). The 0possible attribution of ownership of Preferred Stock,
expressed in number of shares and percent of the class, to MWV and those
affiliates is as follows: MWV- 2,750,481.00 (5.5%); Endowment Prime, L.L.C. -
7,596,894.00(15.2%); MW Capital, L.L.C. 1,400,151.00 (2.8%); MW Management,
L.L.C. - 6,600,467.00(13.2%); Prime Group, L.P. -5,523,296.00 (11.0%); Prime
Group II, L.P. - 10,579,301.00 (21.2%); Prime Group III, L.P. - 8,650,014.00
(17.3%); Prime Group IV, L.P. - 5,449,423.00 (10.9%); and Prime Group V, L.P. -
1,449,973.00 (2.9%). In view of Mr. Waterfall's possession of sole voting and
investment power over the Common Stock and Preferred Stock on behalf of the MWV
Accounts, these entities disclaim beneficial ownership of Common Stock and
Preferred Stock.
<PAGE>
Security Ownership of Management
As of March 15, 1999, the beneficial ownership of Common Stock by each of
Elsinore's directors and by its directors and executive officers as a group, as
such ownership is known by Elsinore, is as follows:
Amount and Nature of Percent
Title of Class Name of Beneficial Owner Beneficial Ownership of Class
Common Stock John C. "Bruce" Waterfall,
Chairman of the Board (1) 97,646,440 (2) 99.7%
Common Stock Directors and executive
officers as a group
(3 persons) 97,646,440 (2) 99.7
Series A John C. "Bruce" Waterfall,
Convertible Chairman of the Board (1)
Preferred 50,000,000 100.0
Series A Directors and executive
Convertible officers as agroup
Preferred (3 persons) 50,000,000 100.0
(1) See note (4) to the table on page 4.
(2) See note (2) to the table on page 4 discussing beneficial owners of more
than 5% of the outstanding Common Stock for information regarding Mr.
Waterfall's beneficial ownership.
Changes in Control
The Company entered into an Agreement and Plan of Merger ("Merger Agreement"),
dated as of September 15, 1997, between R&E Gaming Corp. ("R&E"), Elsinore
Acquisition Sub, Inc. ("EAS") and the Company. Pursuant to the Merger Agreement,
the Company would merge with EAS and would become a wholly-owned subsidiary of
R&E. The Company's shareholders (other than those who exercised dissenter's
rights under Nevada law) would receive in exchange for each share of the
Company's Common Stock held, cash in the amount of $3.16 plus an amount equal to
the daily accrual on $3.16 at 9.43% compounded annually, accruing from June 1,
1997 to the date immediately preceding consummation of the Merger.
On March 20, 1998, the Company was notified by R&E, through Mr. Allen Paulson
("Paulson"), that it was the Company's position that the Merger Agreement was
void and unenforceable against R&E and EAS, or alternatively, R&E and EAS
intended to terminate the Merger Agreement. R&E alleged, among other things,
violations by the Company of the Merger Agreement, violations of law and
misrepresentations by the manager of certain investment accounts that hold 94.3%
of the Company's outstanding Common Stock in connection with an option and
voting agreement relating to the Company's stock which that manager entered into
with R&E in connection with the merger, and the non-satisfaction of certain
conditions precedent to completing the merger. The Company denied the
allegations and asked that R&E complete the merger.
<PAGE>
Thereafter, in April 1998, Paulson, R&E, EAS and certain other entities filed a
lawsuit against eleven defendants, including the Company and the manager of
certain investment accounts which hold 94.3% of the Company's outstanding Common
Stock (Paulson, et al. v Jeffries & Company et al.). The lawsuit was filed in
the United States District Court for the Central District of California. The
complaint has been amended several times, partially as a result of various
motion proceedings. The allegations against the Company include breach of the
Merger Agreement, as well as fraud and various violations of the federal
securities laws. The Court has dismissed without prejudice all claims alleging
violation of the Nevada anti-racketeering statute in connection with the
proposed merger. Plaintiffs are seeking (i) unspecified actual damages in excess
of $20 million, (ii) $20 million in exemplary damages, (iii) treble damages, and
(iv) rescission of the Merger Agreement and other relief. Discovery is now
proceeding. No trial date has been set. A change in control of the Company will
result if the Merger is consummated or if the Common Stock held by the MWV
Accounts is acquired by R&E pursuant to the Option Agreement. Upon the
occurrence of either event, the Company would be controlled by R&E which, in
turn, is controlled by Allen E. Paulson.
The Company is currently unable to form an opinion as to the amount of its
exposure, if any. Although the Company intends to defend the lawsuit vigorously,
there can be no assurance that it will be successful in such defense or that
future operating results will not be materially adversely affected by the final
resolution of the lawsuit.
A change in control of the Company would result if the Merger is consummated or
if the Common Stock held by the MWV Accounts is acquired by R&E pursuant to the
Option Agreement. Upon the occurrence of either event, the Company would be
controlled by R&E which, in turn, is controlled by Allen E. Paulson.
ELECTION OF DIRECTORS
At the Annual Meeting, three directors will be elected to serve until the next
annual meeting of the stockholders or until their respective successors have
been duly elected and qualified. The Board of Directors has nominated John C.
"Bruce" Waterfall, Jeffrey T. Leeds and S. Barton Jacka for election at the
Annual Meeting. The Board of Directors knows of no reason why any of the
nominees would be unable or unwilling to serve.
The Board of Directors unanimously recommends a vote FOR all nominees listed
below.
Nominees for Director
The following sets forth the names, ages and positions of each person who is a
director, executive officer or significant employee of the Company. Each person
listed below assumed his position with the Company on the Plan Effective Date
and was re-elected at the Company's 1998 Annual Shareholders' Meeting held on
September 22, 1998 to serve until the next Annual Shareholders' Meeting. In
1998, the Company did not have any executive officer who was not also a Director
of the Company.
Name Age Position
Directors and Officers
John C. "Bruce" Waterfall 62 Chairman of the Board
Jeffrey T. Leeds 43 President, Chief Executive
Officer and Director
S. Barton Jacka 63 Treasurer, Secretary and Director
Significant Employee
Dual B. Cooper, Jr. 56 General Manager
<PAGE>
John C. "Bruce" Waterfall. Mr. Waterfall has been a professional money manager
and analyst for the past 30 years with MWV, of which he is President and a
co-founder. Certain investment accounts managed by MWV own 99.7% of the
outstanding Common Stock, and Mr. Waterfall exercises sole voting and investment
authority over that Common Stock. Mr. Waterfall also serves as a director of
Darling International, Inc., a publicly reporting company under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
Jeffrey T. Leeds. Since 1993, Mr. Leeds has been President of Leeds Group, Inc.,
a private investment-banking firm which he co-founded. Mr. Leeds is also a
Principal of Advance Capital Management, LLC, a private equity firm which he
formed in 1995.
S. Barton Jacka. Mr. Jacka is a gaming consultant and serves as chairman of the
gaming compliance committees several companies licensed by the Nevada Gaming
Authorities. From 1993 to 1996, Mr. Jacka was with Bally Gaming, Inc. and Bally
Gaming International, Inc., first as Director of Government Affairs and Gaming
Compliance and later as Vice President. Mr. Jacka retired from the position of
Chairman of the Nevada State Gaming Control Board, a position he held from 1985
to 1987, prior to entering the private sector.
Dual B. Cooper, Jr. Mr. Cooper assumed the position of General Manager of the
Four Queens effective September 3, 1999. Mr. Cooper has over 30 years of
experience in the Gaming Industry. He has worked with Harrah's, Bally's, the
Desert Inn and most recently at Casino Magic Corp.
Committees and Meetings
The Board of Directors currently has an Audit Committee. The membership of such
committees is determined from time to time by the Board of Directors. Currently,
the Audit Committee consists of Messrs. Waterfall, Leeds, and Jacka.
The functions of the Audit Committee include reviewing the independence of the
independent auditors, recommending to the Board of Directors the engagement and
discharge of independent auditors, reviewing with the independent auditors the
plan and results of auditing engagements, approving or ratifying each material
professional service provided by independent auditors, considering the range of
audit and non-audit fees, reviewing the scope and results of the Company's
procedures for internal auditing and the adequacy of internal accounting
controls and directing and supervising special investigations.
The Company did not have a compensation committee in 1998. The full Board of
Directors has made all decisions regarding executive officer compensation.
Messrs. Leeds and Jacka receive compensation as executive officers and are
members of the Board of Directors.
In 1998, the Board of Directors held 7 meetings and took action by written
consent 2 times and held one Special Meeting, and the Audit Committee held 2
meetings. Except for Mr. Leeds, each director attended more than 75% of the
aggregate number of meetings of the Board and the committees on which he served
in 1998.
Compensation of Directors
Current Board of Directors. Mr. Waterfall receives no compensation from the
Company for serving as Chairman of the Board and attending Board of Directors
meetings. Each of the other directors receives an annual fee of $25,000 in
consideration of his attendance at each quarterly Board of Directors meeting
plus $1,000 for each additional meeting (other than meetings by telephone
conference) at which his attendance is required. All directors receive
reimbursement for reasonable expenses incurred in attending each meeting of the
Board of Directors. Jeffrey T. Leeds and S. Barton Jacka also receive $10,000
per year in consideration of serving as executive officers of the Company.
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Based solely upon a review of Forms 3 and 4 furnished to the Company pursuant to
SEC Rule 16a-3(e) during fiscal year 1998, Form 3 was filed later than the due
date by the Endowment Prime L.L.C., relating to its acquisition of shares of
Series A Convertible Preferred Stock on September 29, 1998. Form 4 was filed
later than the due date by each of Endowment Restart L.L.C. (f/k/a Common Fund
for Non-Profit Organizations), Morgens Waterfall Income Partners, MWV Group
Trust, Restart Partners, Restart Partners II, L.P., Restart Partners III, L.P.,
Restart Partners IV, L.P., Restart Partners V, L.P., Betje Partners, Phoenix
Partners, L.P., Prime Group, L.P., Prime, Inc., Prime Group II, L.P., Prime
Group III, L.P., Prime Group IV, L.P., Prime Group V, L.P., MW Management,
L.L.C., MW Capital L.L.C., MWV, and Mr. Waterfall, each of which Form 4 relates
to the acquisition by such reporting person of the Company's Series A
Convertible Preferred Stock on September 29, 1998.
Certain Relationships and Related Transactions
On September 29, 1998, certain investment accounts controlled by Morgens,
Waterfall, Vintiadis & Company, Inc. ("MWV" and the accounts controlled by MWV,
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 11.5% First Mortgage Notes due 2000 in the original
aggregate principal amount of $3,855,739.39, and $896,000 of original principal
amount 13.5% Second Mortgage Notes of the Company due 2001.
Also on September 29, 1998, 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 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.
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.
Pursuant to the recapitalization discussed above, the Funds beneficially own
99.7% of the Common Stock and $11,104,000 principal amount of the New Mortgage
Notes.
Chairman of the Board Waterfall is President and a principal shareholder of
Morgens, Waterfall, Vintiadas and Company, Inc., which manages the Funds. Since
the Plan Effective Date, the Funds have beneficially owned 94.3% of the Common
Stock and $29,104,000 principal amount of the New Second Mortgage Notes.
RGME manages the Four Queens Hotel and Casino under a management arrangement
with Four Queens, Inc. ("Four Queens"). In connection with RGME's management,
RGME's principal officer also has served, at the request of the Company, as the
sole director and officer of Four Queens on a non-salaried basis and is excluded
from performing policy-making functions for the Company. The arrangement, under
which RGME manages the Four Queens, will terminate at the end of 1999. As such,
RGME's principal officer has resigned as the sole director and officer of the
Four Queens.
<PAGE>
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning compensation
paid by the Company to each person who served as Chief Executive Officer during
any part of the year ended December 31, 1998. No person who held any other
executive officer position during any part of 1998 received a total annual
salary and bonus in excess of $100,000 in such year.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation Awards
Securities All Other
Name and Principal Position Underlying Compensation
Year Salary($) Bonus($) Options (#) ($)
<S> <C> <C> <C> <C> <C>
Jeffrey T. Leeds 1998 37,000 -0- -0- -0-
President and Chief 1997 35,000 -0- -0- -0-
ExecutiveOfficer 1996 -0- -0- -0- -0-
</TABLE>
Mr. Leeds assumed his positions on the Plan Effective Date.
Stock Options and Similar Rights
The Company granted no stock options or stock appreciation rights (collectively,
"Stock Rights") during 1998 nor were any Stock Rights exercised in 1998. As of
the Plan Effective Date, all previously outstanding Stock Rights were canceled.
Compensation Committee Interlocks and Insider Participation
The Company did not have a compensation committee in 1998. The full Board of
Directors has made all decisions regarding executive officer compensation.
Messrs. Leeds and Jacka receive compensation as executive officers and are
members of the Board of Directors.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
Since the Plan Effective Date, Messrs. Leeds and Jacka have been the only
executive officers of the Company. The Board of Directors has established
minimal stipends for Messrs. Leeds and Jacka, in light of the Company's
financial position, and determined the salary of the former General Manager of
the Four Queens. The Board of Directors has delegated all other compensation
decisions to RGME. Pursuant to RGME's Management Arrangement, in the event
compensation in excess of $125,000 is granted to any employee, such compensation
must be approved by the Board of Directors.
<PAGE>
Chief Executive Compensation
Jeffrey Leeds received compensation for serving as President and Chief Executive
Officer of the Company in 1998 in the amount of $10,000. Such amount was
determined primarily based on the Company's financial position.
BOARD OF DIRECTORS
John C. "Bruce" Waterfall, Chairman
Jeffrey T. Leeds
S. Barton Jacka
<PAGE>
PERFORMANCE GRAPH
The following graph compares the annual change in the cumulative total return,
assuming reinvestment of dividends, if any, on the Company's Common Stock with
the annual change in the cumulative total returns of the Nasdaq Stock Market
(U.S. Companies), the American Stock Exchange Index (U.S. Companies) (the "AMEX
Index") and the Nasdaq Amusement and Recreation Services Index (the "Nasdaq
79xx"), which the Company considers to be its industry peer group. Nasdaq 79xx
is comprised of companies whose stock is traded on the Nasdaq National Market
and which have a standard industry classification within 7900-7999. The graph
assumes an investment of $100 on February 28, 1997, in each of the stocks
comprising the Nasdaq Stock Market, the AMEX Index and the Nasdaq 79xx. Data as
to the Company's trading price is based solely on reported activity on the
Nasdaq Bulletin Board. The graph lines merely connect the prices on the dates
indicated and do not reflect fluctuation between the dates.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN FOR ELSINORE CORPORATION, NASDAQ
STOCK MARKET (U.S. COMPANIES) INDEX, AMEX INDEX AND NASDAQ 79XX
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CRP TOTAL RETURNS INDEX FOR: 2/28/97 12/31/97 12/31/98
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Nasdaq Stock Market (U.S. Companies) 100.00 121.1 170.7
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AMEX Stock Market (U.S. Companies) 100.00 120.0 128.2
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Nasdaq Stocks (SIC 7900-7999 U.S. Companies)
amusement and recreation services 100.00 115.6 118.2
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Company Common Stock 100.00 1,406.25 193.75
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The trading market for the Common Stock is extremely thin. The MWV Accounts own
99.7% of the outstanding Common Stock, which they acquired pursuant to the Plan,
and they have not bought or sold any Common Stock since the Plan became
effective. In view of the lack of an organized or established trading market for
the Common Stock, the extreme thinness of whatever trading market may exist, the
limited number of shares that are not held by the MWV Accounts, and the current
litigation relating to the Merger Agreement, the prices reflected on the chart
as reported on the Nasdaq Bulletin Board may not be indicative of the price at
which any prior or future transactions were or may be effected in the Common
Stock. Stockholders are cautioned against drawing any conclusions from the data
contained herein, as past results are not necessarily indicative of future stock
performance. The Performance Graph in no way reflects the Company's forecast of
future stock price performance.
THE FOREGOING REPORT OF THE BOARD OF DIRECTORS AS TO EXECUTIVE COMPENSATION AND
THE PERFORMANCE GRAPH THAT APPEARS IMMEDIATELY ABOVE SHALL NOT BE DEEMED TO BE
SOLICITING MATERIAL OR TO BE FILED UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES EXCHANGE ACT OF 1934, OR INCORPORATED BY REFERENCE IN ANY DOCUMENT SO
FILED.
SELECTION OF INDEPENDENT AUDITORS
Effective June 17, 1999 Elsinore Corporation (the "Company") dismissed KPMG LLP
("KPMG"). The decision to change accountants was approved by the Audit Committee
and the Board of Directors of the Company.
The reports of KPMG on the Company's financial statements as of and for the two
years ended December 31, 1998, did not contain an adverse opinion or disclaimer
of opinion, and were not qualified or modified as to uncertainty, audit scope,
or accounting principles.
During the two most recent fiscal years and the interim periods subsequent to
December 31, 1998 through June 17, 1999, there were no disputes between the
Company and KPMG as to matters of accounting principles or practices, financial
statement disclosure, or audit scope or procedure, which disagreements, if not
resolved to the satisfaction of KPMG, would have caused it to make a reference
to the subject matter of the disagreement in connection with its reports on the
financial statements for such periods. KPMG has furnished the Company with a
letter addressed to the Commission stating that it agrees with the above
statements.
The Company selected the firm of Deloitte & Touche LLP as independent
accountants for the Company's fiscal year ending December 31, 1999 to replace
KPMG. The Company's Board of Directors approved the selection of Deloitte
&Touche LLP as independent accountants upon recommendation of the Company's
Audit Committee.
A representative of Deloitte & Touche LLP is expected to be present at the
meeting and will have the opportunity to make a statement if such representative
so desires, and will be available to respond to appropriate questions.
2000 Annual Meeting of Stockholders
Stockholders who may wish to present proposals for inclusion in the Company's
proxy materials in connection with the 2000 Annual Meeting of Stockholders must
submit such proposals in writing to the Company's Secretary at the address shown
at the top of page 2 not later than May 28, 2000. In addition, to be properly
considered at the 2000 Annual Meeting of Stockholders, notice of any stockholder
proposals must be given to the Secretary in writing not less than 60 nor more
than 90 days prior to the meeting; provided, that in the event that less than 70
days notice of the meeting date is given to stockholders, proposals must be
received not later than the close of business on the tenth day following the day
on which notice of the annual meeting date was mailed or publicly disclosed. A
stockholder's notice to the Secretary must set forth for each matter proposed to
be brought before the annual meeting (a) a brief description of the matter the
stockholder proposes to bring before the annual meeting, (b) the name and home
address of the stockholder proposing such business, (c) the class and number of
shares of Common Stock beneficially owned by such stockholder, and (d) any
financial interest of such stockholder in such business.
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OTHER MATTERS
The Board of Directors does not intend to present or knows of any other business
which will be presented for consideration at the Annual Meeting.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1998 AS FILED WITH THE SEC WILL BE PROVIDED TO STOCKHOLDERS WITHOUT
CHARGE UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY AT 202 FREMONT
STREET, LAS VEGAS, NEVADA 89101.
By Order of the Board of Directors
Las Vegas, Nevada
September 24, 1999
