SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended September 30, 2000
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from _______ to ________
Commission File Number 1-7831
ELSINORE CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 88 0117544
(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
202 FREMONT STREET, LAS VEGAS, NEVADA 89101
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number (Including Area Code): 702/385-4011
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety (90) days.
YES X NO
APPLICABLE ONLY TO ISSUERS, INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES X NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
TITLE OF STOCK NUMBER OF SHARES
CLASS DATE OUTSTANDING
Common November __, 2000 4,993,965
Elsinore Corporation and Subsidiaries
Form 10-Q
For the Quarter Ended September 30, 2000
INDEX
PART I. FINANCIAL INFORMATION: PAGE
Item 1. Unaudited Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets at 4-5
September 30, 2000 and December 31, 1999
Condensed Consolidated Statements of Operations 6-7
for the Three Months Ended September 30, 2000 and
Three Months Ended September 30, 1999
Condensed Consolidated Statements of Income 8-9
for the Nine Months Ended September 30, 2000 and
Nine Months Ended September 30, 1999
Condensed Consolidated Statement of Shareholders' 10
Equity for the Nine Months Ended September 30, 2000
Condensed Consolidated Statements of Cash Flows for 11-12
the Nine Months Ended September 30, 2000 and
Nine Months Ended September 30, 1999
Notes to Condensed Consolidated Financial Statements 13-17
Item 2. Management's Discussion and Analysis of 17-28
Financial Condition and Results of
Operations
Item 3. Quantitative and Qualitative Disclosures 28
About Market Risk
PART II. OTHER INFORMATION:
Item 4. Submission of Matters to a Vote of Security
Holders __
Item 6. Exhibits and Reports on Form 8-K 30
SIGNATURES 31
PART 1. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
<TABLE>
<CAPTION>
Elsinore Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
September 30, 2000 and December 31, 1999
Unaudited
(Dollars in Thousands)
September 30, December 31,
2000 1999
------------------- ---------------------
Assets
Current Assets:
<S> <C> <C>
Cash and cash equivalents $4,277 $3,547
Accounts receivable, less allowance for
doubtful accounts of $260 and $249,
respectively 725 694
Inventories 326 594
Prepaid expenses 1,307 1,187
------------------- ---------------------
Total current assets 6,635 6,022
------------------- ---------------------
Property and equipment, net 39,264 40,815
Reorganization value in excess of amounts
allocable to identifiable 294 313
assets
Other assets 1,683 1,643
------------------- ---------------------
Total assets $47,876 $48,793
=================== =====================
</TABLE>
<TABLE>
<CAPTION>
Elsinore Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (continued)
September 30, 2000 and December 31, 1999
Unaudited
(Dollars in Thousands)
September 30, December 31,
2000 1999
------------------- ---------------------
Liabilities and Shareholders' Equity
Current liabilities:
<S> <C> <C>
Accounts payable $942 $1,803
Accrued interest 132 735
Accrued expenses 4,515 4,573
Current portion of long-term debt 1,313 2,079
------------------- ---------------------
Total current liabilities 6,902 9,190
------------------- ---------------------
Long-term debt, less current portion 13,295 14,264
------------------- ---------------------
Total liabilities 20,197 23,454
------------------- ---------------------
Commitments and contingencies
Shareholders' equity:
6% cumulative convertible preferred stock, no
par value. Authorized, issued and
outstanding 50,000,000 shares. Liquidation
preference of $20,225 and $19,366, at
September 30, 2000 and December 31, 1999,
respectively. 20,225 19,366
Common stock, $.001 par value per share.
Authorized 100,000,000 shares. Issued
and outstanding 4,993,965 shares. 5 5
Additional paid-in capital 7,411 8,270
Retained earnings (accumulated deficit) 38 (2,302)
------------------- ---------------------
Total shareholders' equity 27,679 25,339
------------------- ---------------------
Total liabilities and shareholders'
equity $47,876 $48,793
=================== =====================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<TABLE>
<CAPTION>
Elsinore Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
Unaudited
(Dollars in Thousands)
Three Three
Months Months
Ended Ended
September 30, September 30,
2000 1999
------------------- ---------------------
Revenues, net:
<S> <C> <C>
Casino $8,613 $9,672
Hotel 2,120 1,789
Food and beverage 2,355 2,204
Other 1,235 475
------------------- ---------------------
Total revenues 14,323 14,140
Promotional allowances (1,001) (628)
------------------- ---------------------
Net revenues 13,322 13,512
------------------- ---------------------
Costs and expenses:
Casino 3,094 3,608
Hotel 2,256 2,250
Food and beverage 1,625 1,755
Taxes and licenses 1,361 1,338
Selling, general and
administrative 2,437 2,578
Rents 1,026 994
Depreciation and
amortization 978 804
Interest 460 470
Merger and litigation costs 98 382
------------------- ---------------------
Total costs and
expenses 13,335 14,179
------------------- ---------------------
Net loss before income taxes and
undeclared dividends on cumulative
convertible Preferred Stock (13) (667)
Benefit from income taxes - (18)
------------------- ---------------------
Net loss before
undeclared dividends on cumulative
convertible Preferred Stock (13) (649)
Undeclared dividends on
cumulative convertible Preferred
Stock 381 270
------------------- ---------------------
Net loss applicable
to common shares $(394) $(919)
=================== =====================
</TABLE>
<TABLE>
<CAPTION>
Elsinore Corporation and Subsidiaries
Condensed Consolidated Statements of Operations (continued)
Unaudited
Three Three
Months Months
Ended Ended
September 30, September 30,
2000 1999
------------------- ---------------------
Basic and diluted loss
per share:
<S> <C> <C>
Basic loss per share $(.08) $(.19)
=================== =====================
Weighted average number of
common shares outstanding 4,993,963 4,929,313
=================== =====================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<TABLE>
<CAPTION>
Elsinore Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
Unaudited
(Dollars in Thousands)
Nine Nine
Months Months
Ended Ended
September 30, September 30,
2000 1999
------------------- ---------------------
Revenues, net:
<S> <C> <C>
Casino $27,933 $30,390
Hotel 7,170 6,307
Food and beverage 7,700 7,147
Other 4,210 2,276
------------------- ---------------------
Total revenues 47,013 4,612
Promotional allowances (3,389) (2,664)
------------------- ---------------------
Net revenues 43,624 43,456
------------------- ---------------------
Costs and expenses:
Casino 9,563 10,604
Hotel 6,669 6,600
Food and beverage 5,098 5,140
Taxes and licenses 4,354 4,435
Selling, general and
administrative 8,223 7,930
Rents 3,103 2,970
Depreciation and
amortization 2,878 2,418
Interest 1,311 1,474
Merger and litigation costs 85 775
------------------- ---------------------
Total costs and
expenses 41,284 42,346
------------------- ---------------------
Net income before income taxes and
undeclared dividends on cumulative
convertible Preferred Stock 2,340 1,110
Provision for income taxes - 22
------------------- ---------------------
Net income before
undeclared dividends on cumulative
convertible Preferred Stock 2,340 1,088
Undeclared dividends on
cumulative convertible Preferred
Stock 954 810
------------------- ---------------------
Net income applicable
to common shares $1,386 $278
=================== =====================
</TABLE>
<TABLE>
<CAPTION>
Elsinore Corporation and Subsidiaries
Condensed Consolidated Statements of Operations (continued)
Unaudited
Nine Nine
Months Months
Ended Ended
September 30, September 30,
2000 1999
------------------- ---------------------
Basic and diluted income
per share:
<S> <C> <C>
Basic income per share $.28 $.06
=================== =====================
Weighted average number of
common shares outstanding 4,993,963 4,929,313
=================== =====================
Diluted income per share $.02 $.01
=================== =====================
Weighted average number of
common and common
equivalent shares
outstanding 97,993,963 97,993,963
=================== =====================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<TABLE>
<CAPTION>
Elsinore Corporation and Subsidiaries
Condensed Consolidated Statements of Shareholders' Equity
Nine Months Ended September 30, 2000
(Dollars in thousands)
Unaudited
Common Stock Preferred Stock
---------------- ------------------
Retained
Earnings Total
Out- Out- Additional (Accumu- Share-
Standing Standing Paid-In- lated holders'
Shares Amount Shares Amount Capital Deficit) Equity
--------- ------ ---------- ------- ---------- --------- --------
Balance,
January 1,
<S> <C> <C><C> <C> <C> <C> <C>
2000 4,929,313 $5 50,000,000 $19,366 $8,270 ($2,302) $25,339
Common stock
issue 64,652
Net income 2,340 2,340
Undeclared
preferred
stock
dividends 859 (859) -
--------- ------ ---------- ------- ---------- --------- --------
Balance,
September 30,
2000 4,993,965 $5 50,000,000 $20,225 $7,411 $38 $27,679
========= ====== ========== ======= ========== ========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<TABLE>
<CAPTION>
Elsinore Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Unaudited
(Dollars in Thousands)
Nine Nine
Months Months
Ended Ended
September 30, September 30,
2000 1999
------------------- ---------------------
Cash flows from operating activities:
<S> <C> <C>
Net income $2,340 $1,088
Adjustments to reconcile
net income to net
cash provided by
operating activities:
Depreciation and
amortization 2,878 2,418
Changes in assets and
liabilities:
Accounts receivable (31) -
Inventories 268 108
Prepaid expenses (120) (166)
Other assets (21) (111)
Accounts payable (861) 121
Accrued expenses (58) 791
Accrued interest (603) (2,442)
------------------- ---------------------
Net cash provided by
operating activities 3,792 1,807
------------------- ---------------------
Cash flows used in investing
activities - capital
expenditures (1,268) (1,624)
------------------- ---------------------
Cash flows used in financing
activities - principal
payments on long-term debt (1,794) (1,643)
------------------- ---------------------
Net increase (decrease) in
Cash and cash equivalents 730 (1,460)
Cash and cash equivalents at
beginning of period 3,547 5,604
------------------- ---------------------
Cash and cash equivalents at
end of period $4,277 $4,144
=================== =====================
</TABLE>
<TABLE>
<CAPTION>
Elsinore Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (continued)
Unaudited
(Dollars in Thousands)
Nine Months Nine Months
Ended Ended
September 30, September 30,
2000 1999
----------------- -----------------
(Dollars in (Dollars in
thousands) thousands)
Supplemental disclosure of non-cash
investing and financing activities:
Equipment purchased with capital
<S> <C> <C>
lease financing $59 $585
Supplemental disclosure of cash activities:
Cash paid for interest $1,969 $3,915
Cash paid for income taxes 2 54
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Elsinore Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2000
(Unaudited)
1. Summary of Significant Accounting Policies
(a) Principles of Consolidation
The consolidated financial statements include the accounts of Elsinore
Corporation and its wholly-owned subsidiaries. All material intercompany
balances and transactions have been eliminated in consolidation.
(b) Basis of Presentation
The Company has prepared the accompanying financial statements without audit,
pursuant to rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in the financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to such
rules and regulations. It is suggested that this report be read in conjunction
with the Company's audited consolidated financial statements included in the
annual report for the year ended December 31, 1999. In the opinion of
Management, the accompanying financial statements contain all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
Company's financial position as of September 30, 2000, the results of operations
for the three months ended September 30, 2000 and September 30, 1999, the
results of operations for the nine months ended September 30, 2000 and September
30, 1999, and the results of operations and cash flows for the nine months ended
September 30, 2000 and September 30, 1999. The operating results and cash flows
for these periods are not necessarily indicative of the results that will be
achieved for the full year or for future periods.
(c) Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires Management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Significant estimates used by
the Company include the estimated useful lives for depreciable and amortizable
assets, the estimated allowance for doubtful accounts receivable, the estimated
valuation allowance for deferred tax assets, and estimated cash flows used in
assessing the recoverability of long-lived assets. Actual results may differ
from those estimates.
(d) Recently Issued Accounting Standards
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB
101 clarifies existing accounting principles related to revenue recognition in
financial statements. The Company is required to comply with the provisions of
SAB 101 by the fourth quarter of 2000. Due to the nature of the Company's
operations, Management does not believe that SAB 101 will have a significant
impact on the Company's financial statements.
(e) Net Income Per Common Share
Basic per share amounts are computed by dividing net income by average shares
outstanding during the period. Diluted per share amounts are computed by
dividing net income by average shares outstanding plus the dilutive effect of
common share equivalents. The effect of the warrants outstanding to purchase
1,125,000 shares of common stock were not included in diluted per share
calculations during the three and nine month periods ended September 30, 1999
since the exercise price of such warrants was greater than the average price of
the Company's common stock during these periods. Since the Company incurred a
net loss for the three month periods ended September 30, 2000 and 1999, the
effect of common stock equivalents was anti-dilutive. Therefore, only basic per
share amounts are presented.
<TABLE>
<CAPTION>
Nine Months Ended
September 30, 2000
-------------------------------------------------
Income Shares Per Share
Amounts
Basic EPS:
Net income available to
<S> <C> <C> <C>
common shareholders $1,386,000 4,993,963 $0.28
Effect of Dilutive Securities:
Cumulative convertible
preferred stock 954,000 93,000,000 (0.25)
Diluted EPS:
--------------- --------------- ---------------
Net income available to
common shareholders
plus assumed conversions $2,340,000 97,993,963 $0.03
=============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
September 30, 2000
-------------------------------------------------
Income Shares Per Share
Amounts
Basic EPS:
Net income available to
<S> <C> <C> <C>
common shareholders $278,000 4,929,313 $0.06
Effect of Dilutive Securities:
Cumulative convertible
preferred stock 810,000 93,000,000 (0.05)
Common stock required to
be issued to shareholders - 64,650 -
Diluted EPS:
--------------- --------------- ---------------
Net income available to
common shareholders
plus assumed conversions $1,088,000 97,993,963 $0.01
=============== =============== ===============
</TABLE>
2. Income Taxes
The Company's effective tax rate will be approximately 0% until its net
operating losses expire or are used.
3. Commitments and Contingencies
Riviera Gaming Management - Elsinore ("RGME") managed the Four Queens Casino in
accordance with a Management Arrangement among the Company, Four Queens, Inc.
and RGME effective April 1, 1997 (the "Management Arrangement"). RGME received
an annual fee of $1 million in equal monthly installments. The Management
Arrangement terminated on December 31, 1999.
The Company is a party to litigation involving a proposed merger with R&E Gaming
Corp. as discussed in Note 4 below.
The Company is a party to other claims and lawsuits. Management believes that
such matters are either covered by insurance, or if not insured, will not have a
material adverse effect on the financial statements of the Company taken as a
whole.
4. Proposed Merger
In the first half of 1997, Elsinore and Mr. Allen E. Paulson ("Paulson")
commenced discussions which culminated in an Agreement and Plan of Merger (the
"Merger Agreement"), dated as of September 15, 1997, between Elsinore and
entities controlled by Paulson, namely R&E Gaming Corp. ("R&E") and Elsinore
Acquisition Sub, Inc. ("EAS"), to acquire by merger (the "Merger") the
outstanding Common Stock for $3.16 per share in cash plus an amount of
additional consideration in cash equal to the daily portion of the accrual on
$3.16 at 9.43% compounded annually, from June 1, 1997 to the date immediately
preceding the date such acquisition is consummated. The Merger Agreement
provided for EAS to merge into Elsinore, and Elsinore to become a wholly owned
subsidiary of R&E.
Contemporaneously with the Merger Agreement, R&E executed an Option and Voting
Agreement (the "Option Agreement") with MWV, on behalf of the MWV Accounts which
owned 94.3% of the outstanding Common Stock prior to the Recapitalization. Under
certain conditions and circumstances, the Option Agreement provided for, among
other things, (i) the grant by the MWV Accounts to R&E of an option to purchase
all of their Common Stock; (ii) an obligation by R&E to purchase all of the MWV
Accounts' Common Stock, and (iii) the MWV Accounts to vote their Common Stock in
favor of the Merger Agreement. Elsinore's shareholders approved the Merger
Agreement at a special meeting of shareholders held on February 4, 1998.
Paulson also entered into discussions with Riviera to acquire a controlling
interest in that company as well. Riviera owns and operates the Riviera Hotel
and Casino in Las Vegas and is the parent corporation of RGME. On September 16,
1998, R&E and Riviera Acquisition Sub, Inc. ("RAS") (another entity controlled
by Paulson) entered into an Agreement and Plan of Merger (the "Riviera Merger
Agreement") with Riviera, which provided for the merger of RAS into Riviera (the
"Riviera Merger"), and for Riviera to become a wholly owned subsidiary of R&E.
R&E also entered into an Option and Voting Agreement with certain Riviera
shareholders, including MWV acting on behalf of the MWV Accounts, containing
terms similar to those described above with respect to the Option Agreement.
The Merger Agreement contained conditions precedent to consummation of the
Merger, including (i) the Option Agreement being in full force and effect and
MWV having complied in all respects with the terms thereof, (ii) all necessary
approvals from gaming authorities and (iii) consummation of the Riviera Merger.
On March 20, 1998, Elsinore was notified by R&E, through Paulson, that it was
R&E'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 Elsinore of the Merger
Agreement, violations of law and misrepresentations by MWV in connection with
the Option and Voting Agreement 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. Thereafter, in April 1998, Paulson, R&E, EAS and
certain other entities filed a lawsuit against eleven defendants, including
Elsinore and MWV (Paulson, et al. v Jeffries & Company et al.) (the "Paulson
lawsuit"). On January 25, 2000, the Court granted Plaintiffs' motion for leave
to file a Fourth Amended Complaint. Plaintiffs' allegations in the Fourth
Amended Complaint against the Company include breach of the Merger Agreement by
Elsinore, as well as fraud and various violations of the federal securities laws
in connection with the proposed merger. Plaintiffs are seeking (i) unspecified
actual damages in excess of $20 million, (ii) $20 million in exemplary damages,
and (iii) rescission of the Merger Agreement and other relief. The lawsuit was
filed in the United States District Court for the Central District of
California.
On March 1, 2000, the Company filed its Answer to the Fourth Amended Complaint,
denying the material allegations thereof. In addition, the Company alleged
various counterclaims against Plaintiffs for breach of the Merger Agreement,
fraud and violations of the federal securities laws. On May 5, 2000, the Company
filed its First Amended Counterclaims. The counterclaims seek specific
performance of the Merger Agreement, compensatory damages, punitive damages and
other relief. On June 6, 2000, Plaintiffs filed their Answer to the First
Amended Counterclaims.
Discovery is only now beginning, and the Company is currently unable to form an
opinion as to the amount of its exposure, if any. Mr. Paulson passed away
earlier this year, and the effect on the lawsuit, if any, of his death is
uncertain. 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.
5. Subsequent Events
On October 6, 2000, Palm Springs East, Limited Partnership ("PSELP"), a
subsidiary of the Company, entered into a release and settlement agreement (the
"Agreement") with the 29 Palms Band of Mission Indians (the "Tribe") regarding
the settlement of a promissory note (the "Note") owed by the Tribe to PSELP. The
Note was originally entered into by and between PSELP and the Tribe on October
8, 1996 for the aggregate amount of $9,000,000. Pursuant to the terms of the
Agreement, the Tribe is required to pay PSELP an aggregate amount of $3,500,000.
In addition, pursuant to the terms of the Agreement, PSELP and the Tribe agreed
to release each other and their respective affiliates from any and all
liability, obligations rights, claims demands, actions or causes of action
relating to the Note.
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operation
This discussion and analysis should be read in conjunction with the Condensed
Consolidated Financial Statements and notes thereto set forth elsewhere herein.
The following tables set forth certain operating information for the Company for
the three months ended September 30, 2000 and 1999 and the nine months ended
September 30, 2000 and 1999. Revenues and promotional allowances are shown as a
percentage of net revenues. Departmental costs are shown as a percentage of
departmental revenues. All other percentages are based on net revenues.
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
September 30, 2000 September 30, 1999
(Dollars in (Dollars in
thousands) % thousands) %
----------- ---------- ----------- ----------
Revenues, net:
<S> <C> <C> <C> <C>
Casino $8,613 66.7% $9,672 71.6%
Hotel 2,120 16.4% 1,789 13.2%
Food & beverage 2,355 18.2% 2,204 16.3%
Other 1,235 9.3% 475 3.5%
----------- ---------- ----------- ----------
Total revenue 14,323 107.5% 14,140 104.6%
Promotional allowances (1,001) (7.5%) (628) (4.6%)
----------- ---------- ----------- ----------
Net revenues 13,322 100.0% 13,512 100.0%
----------- ---------- ----------- ----------
Costs and expenses:
Casino 3,094 35.9% 3,608 37.3%
Hotel 2,256 106.4% 2,250 125.8%
Food and beverage 1,625 69.0% 1,755 79.6%
Taxes and licenses 1,361 10.5% 1,338 9.9%
Selling, general and
administrative 2,437 18.3% 2,578 19.1%
Rents 1,026 7.7% 994 7.4%
Depreciation and
amortization 978 7.6% 804 6.0%
Interest 460 3.6% 470 3.5%
Merger and litigation costs 98 .8% 382 2.8%
----------- ---------- ----------- ----------
Total costs and expenses 13,335 100.1% 14,179 104.9%
----------- ---------- ----------- ----------
Net loss before income
taxes and undeclared
dividends on cumulative (13) (.1%) (667) (4.9%)
convertible Preferred Stock
Benefit from income taxes - - (18) (.1%)
----------- ---------- ----------- ----------
Net loss before
undeclared dividends on
cumulative convertible
Preferred Stock (13) (.1%) (649) (4.8%)
Undeclared dividends on
cumulative convertible
Preferred Stock 381 2.9% 270 2.0%
Net loss applicable ----------- ---------- ----------- ----------
to common shares (394) (3.0%) (919) (6.8%)
----------- ---------- ----------- ----------
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
September 30, 2000 September 30, 1999
(Dollars in (Dollars in
thousands) % thousands) %
----------- ---------- ----------- ----------
Other Data:
Net income applicable
<S> <C> <C> <C> <C>
to common shares (394) (3.0%) (919) (6.8%)
Interest 460 3.6% 470 3.5%
Benefit from Income taxes - - (18) (.1%)
Depreciation and amortization 978 7.6% 804 6.0%
Rents 1,026 7.7% 994 7.4%
Merger and litigation costs 98 .8% 382 2.8%
Undeclared dividends 381 2.9% 270 2.0%
----------- ---------- ----------- ----------
Earnings before interest,
taxes, depreciation and
amortization, rents, merger
and litigation costs, and
undeclared dividends (EBITDA $2,549 19.1% $1,983 14.7%
=========== ========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 2000 September 30, 1999
(Dollars in (Dollars in
thousands) % thousands) %
----------- ---------- ----------- ----------
Revenues, net:
<S> <C> <C> <C> <C>
Casino $27,933 64.6% $30,390 69.9%
Hotel 7,170 16.6% 6,307 14.5%
Food & beverage 7,700 17.8% 7,147 16.4%
Other 4,210 9.7% 2,276 5.2%
----------- ---------- ----------- ----------
Total revenue 47,013 107.8% 46,120 106.1%
Promotional allowances (3,389) (7.8%) (2,664) (6.1%)
----------- ---------- ----------- ----------
Net revenues 43,624 100.0% 43,456 100.0%
----------- ---------- ----------- ----------
Costs and expenses:
Casino 9,563 34.2% 10,604 34.9%
Hotel 6,669 93.0% 6,600 104.6%
Food and beverage 5,098 66.2% 5,140 71.9%
Taxes and licenses 4,354 10.1% 4,435 10.2%
Selling, general and
administrative 8,223 18.9% 7,930 18.2%
Rents 3,103 7.1% 2,970 6.8%
Depreciation and
amortization 2,878 6.7% 2,418 5.6%
Interest 1,311 3.0% 1,474 3.4%
Merger and litigation costs 85 0.2% 775 1.8%
----------- ---------- ----------- ----------
Total costs and expenses 41,284 94.6% 42,346 97.4%
----------- ---------- ----------- ----------
Net income before income
taxes and undeclared
dividends on cumulative 2,340 5.4% 1,110 2.6%
convertible Preferred Stock
Provision for income taxes - - 22 0.1%
----------- ---------- ----------- ----------
Net income before
undeclared dividends on
cumulative convertible
Preferred Stock 2,340 5.4% 1,088 2.5%
Undeclared dividends on
cumulative convertible
Preferred Stock 954 2.2% 810 1.9%
Net income applicable ----------- ---------- ----------- ----------
to common shares 1,386 3.2% 278 0.6%
----------- ---------- ----------- ----------
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 2000 September 30, 1999
(Dollars in (Dollars in
thousands) % thousands) %
----------- ---------- ----------- ----------
Other Data:
Net income applicable
<S> <C> <C> <C> <C>
to common shares 1,386 3.2% 278 0.6%
Interest 1,311 3.0% 1,474 3.4%
Income taxes - - 22 .1%
Depreciation and amortization 2,878 6.7% 2,418 5.6%
Rents 3,103 7.1% 2,970 6.8%
Merger and litigation costs 85 0.2% 775 1.8%
Undeclared dividends 954 2.2% 810 1.9%
----------- ---------- ----------- ----------
Earnings before interest,
taxes, depreciation and
amortization, rents, merger
and litigation costs, and
undeclared dividends (EBITDA) $9,716 22.3% $8,747 20.1%
=========== ========== =========== ==========
Cash flows provided by
operating activities $3,792 $1,807
=========== ===========
Cash flows used in investing
activities ($1,268) ($1,624)
=========== ===========
Cash flows used in financing
activities ($1,794) ($1,643)
=========== ===========
</TABLE>
EBITDA consists of earnings before interest, taxes, depreciation and
amortization, rents, merger and litigation costs, and undeclared dividends.
While EBITDA should not be construed as a substitute for operating income or a
better indicator of liquidity than cash flow from operating activities, which
are determined in accordance with generally accepted accounting principles
("GAAP"), it is included herein to provide additional information with respect
to the ability of the Company to meet its future debt service, capital
expenditure, and working capital requirements. Although EBITDA is not
necessarily a measure of the Company's ability to fund its cash needs,
Management believes that certain investors find EBITDA to be a useful tool for
measuring the ability of the Company to service its debt. EBITDA margin is
EBITDA as a percent of net revenues. The Company's definition of EBITDA may not
be comparable to other companies' definitions.
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED
TO THREE MONTHS ENDED SEPTEMBER 30, 1999
REVENUES
Net revenues decreased by approximately $190,000, or 1.4%, from $13,512,000
during the 1999 period, to $13,322,000 for the 2000 period. This decrease was
primarily due to a decline of casino revenues, as discussed below, partially
offset by payments received under a settlement agreement with the Twenty-Nine
Palms Band of Mission Indians (the "Band").
Casino revenues decreased by approximately $1,059,000, or 10.9%, from $9,672,000
during the 1999 period to $8,613,000 during the 2000 period. This decrease was
primarily due to a $571,000, or 100%, decrease in slot promotion revenue, a
$510,000, or 6.8%, decrease in slot machine revenue, and a $57,000, or 11.5%,
decrease in keno revenue, partially offset by a $66,000, or 4.7%, increase in
table games revenue. The decrease in slot promotion revenue was due to the
termination of a license agreement on December 1, 1999, regarding a promotional
program known as $40 of Slot Play for $20SM ("$40 for $20"). The decrease in
slot machine revenue is attributable to a decrease in hold percentage of 0.13%
and a decrease in slot coin-in of $5,943,000 or 4.8%. The increase in table
games revenue is attributable to an increase in drop of $2,920,000, or 30.5%,
offset by a decrease in the win percentage of 2.9%.
Hotel revenues increased by approximately $331,000, or 18.5%, from $1,789,000
during the 1999 period to $2,120,000 during the 2000 period. This increase was
primarily due to an increase in the average daily room rate of $6.09, from
$26.70 in the 1999 period to $32.79 in the 2000 period, while room occupancy, as
a percentage of total rooms available for sale, decreased from 96.6%, for the
1999 period, to 92.9%, for the 2000 period. Cash room revenue increased
$336,000, or 25.6%, from the 1999 period.
Food and beverage revenues increased approximately $151,000, or 6.9%, from
$2,204,000 during the 1999 period to $2,355,000 during the 2000 period. This
increase was primarily due to an increase in cash food sales as a result of a an
increase in covers.
Other revenues increased by approximately $760,000, or 160.0%, from $475,000
during the 1999 period to $1,235,000 during the 2000 period. This increase was
primarily due to payments received under a settlement agreement with the Band.
Promotional allowances increased by approximately $373,000, or 59.4%, from
$628,000 during the 1999 period to $1,001,000 during the 2000 period due to an
increase in complimentary rooms, food, and beverage resulting from an increase
in casino complimentaries due, in part, to increased play in the casino.
DIRECT COSTS AND EXPENSES OF OPERATING DEPARTMENTS
Total direct costs and expenses of operating departments, including taxes and
licenses, decreased by approximately $615,000, or 6.9%, from $8,951,000 for the
1999 period to $8,336,000 for the 2000 period primarily due to the termination
of the $40 for $20 slot promotion on December 1, 1999.
Casino expenses decreased $514,000, or 14.2%, from $3,608,000 during the 1999
period to $3,094,000 during the 2000 period, and expenses as a percentage of
revenue decreased from 37.3% to 35.9%, due primarily to the termination of the
slot promotion, as discussed above.
Hotel expenses increased by approximately $6,000, or 0.3% from $2,250,000 during
the 1999 period to $2,256,000 during the 2000 period, and expenses as a
percentage of revenues decreased from 125.8% to 106.4%, primarily due to the
allocation of hotel costs, associated with complimentary room sales, to the
casino department.
Food and beverage costs and expenses decreased by approximately $130,000, or
7.4%, from $1,755,000 during the 1999 period to $1,625,000 during the 2000
period, and expenses as a percentage of revenues decreased from 79.6% to 69.0%,
primarily due to the allocation of food and beverage costs, associated with
complimentary food and beverage sales, to the casino department.
Taxes and licenses increased $23,000, or 1.7%, from $1,338,000 in the 1999
period to $1,361,000 in the 2000 as a result of corresponding decreases in
casino revenues.
OTHER OPERATING EXPENSES
Selling, general and administrative expenses decreased $141,000, from $2,578,000
during the 1999 period to $2,437,000 during the 2000 period, and as a percentage
of total net revenues, expenses decreased from 19.1% to 18.3% primarily due to
the termination of a Management Arrangement between RGME and the Company.
The Company believes that city-wide competition for experienced employees may
increase employee turnover and lead to increased payroll costs.
EBITDA
Earnings before interest, taxes, depreciation and amortization, rents, merger
and litigation costs, and undeclared dividends ("EBITDA") increased by
approximately $480,000, or 24.2%, from $1,983,000 during the 1999 period to
$2,463,000 during the 2000 period. The increase was due primarily to a reduction
in expenses as discussed above.
While EBITDA should not be construed as a substitute for operating income or a
better indicator of liquidity than cash flow from operating activities, which
are determined in accordance with GAAP, it is included herein to provide
additional information with respect to the ability of the Company to meet its
future debt service, capital expenditure and working capital requirements.
Although EBITDA is not necessarily a measure of the Company's ability to fund
its cash needs, Management believes that certain investors find EBITDA to be a
useful tool for measuring the ability of the Company to service its debt. EBITDA
margin is EBITDA as a percent of net revenues. The Company's definition of
EBITDA may not be comparable to other companies' definitions.
OTHER EXPENSES
Rent expense increased by approximately $32,000, or 3.2%, from $994,000 during
the 1999 period to $1,026,000 during the 2000 period, due primarily to
corresponding annual Consumer Price Index ("CPI") increases for land lease
agreements.
Depreciation and amortization increased by approximately $174,000, or 21.6% from
$804,000 during the 1999 period to $978,000 during the 2000 period, primarily
due to the acquisition of new equipment and the completion of a room remodel
project.
Interest expense decreased by approximately $10,000, or 2.1% from $470,000
during the 1999 period to $460,000 for the 2000 period, due to the payoff of
certain bankruptcy notes that resulted from the February 28, 1997 Plan of
Reorganization.
During 2000, the Company incurred approximately $98,000 in merger and litigation
costs related to the Company's non-binding letter of intent with PDS Financial
Corporation ("PDS") which terminated on April 19, 2000.
NET LOSS BEFORE PROVISION FOR INCOME TAXES AND UNDECLARED DIVIDENDS ON
CUMULATIVE CONVERTIBLE PREFERRED STOCK
As a result of the factors discussed above, the Company experienced a net loss
before provision for income taxes and undeclared dividends on cumulative
convertible preferred stock in the 2000 period of $12,000 compared to a net loss
of $667,000 in the 1999 period, an improvement of $655,000 or 98.2%.
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED
TO NINE MONTHS ENDED SEPTEMBER 30, 1999
REVENUES
Net revenues increased by approximately $168,000, or 0.4%, from $43,456,000
during the 1999 period, to $43,624,000 for the 2000 period. This increase was
primarily due to payments received under a settlement agreement with the Band,
offset partially by a decrease in casino revenues, as discussed below.
Casino revenues decreased by approximately $2,457,000, or 8.1%, from $30,390,000
during the 1999 period to $27,933,000 during the 2000 period. This decrease was
primarily due to a $2,012,000, or 100%, decrease in slot promotion revenue, a
$570,000, or 2.5%, decrease in slot machine revenue, and a $93,000, or 18.6%,
decrease in keno revenue, partially offset by a $218,000, or 4.5%, increase in
table games revenue. Slot promotion revenue decreased due to the termination of
a license agreement on December 1, 1999, for the $40 for $20 slot promotion. The
decrease in slot machine revenue is attributable to a decrease in hold
percentage of 0.06% and a decrease in slot coin-in of $5,564,000 or 1.4%. The
increase in table games revenue is attributable to an increase in drop of
$9,088,000, or 27.4%, partially offset by a decrease in the win percentage of
2.6%.
Hotel revenues increased by approximately $863,000, or 13.7%, from $6,307,000
during the 1999 period to $7,170,000 during the 2000 period. This increase was
primarily due to an increase in the average daily room rate of $6.09, from
$31.17 in the 1999 period to $37.26 in the 2000 period, while room occupancy, as
a percentage of total rooms available for sale, decreased from 96.8%, for the
1999 period, to 92.7%, for the 2000 period. Cash room revenue increased
$853,000, or 18.0%, from the 1999 period.
Food and beverage revenues increased approximately $553,000, or 7.7%, from
$7,147,000 during the 1999 period to $7,700,000 during the 2000 period. This
increase was primarily due to an increase in food revenues as a result of an
increase in covers and a higher average check. An increase in complimentary
beverages given to patrons during their play in the casino also attributed to
the revenue increase. In addition, cash beverage revenue increased as a result
of a higher average check.
Other revenues increased by approximately $1,934,000, or 85.0%, from $2,276,000
during the 1999 period to $4,210,000 during the 2000 period. This increase was
primarily due to payments received under a settlement agreement with the Band.
Promotional allowances increased by approximately $725,000, or 27.23%, from
$2,664,000 during the 1999 period to $3,389,000 during the 2000 period due to an
increase in complimentary rooms, food, and beverage resulting from an increase
in casino complimentaries due, in part, to increased play in the casino.
DIRECT COSTS AND EXPENSES OF OPERATING DEPARTMENTS
Total direct costs and expenses of operating departments, including taxes and
licenses, decreased by approximately $1,095,000, or 4.1%, from $26,779,000 for
the 1999 period to $25,684,000 for the 2000 period primarily due to the
termination of the $40 for $20 slot promotion on December 1, 1999.
Casino expenses decreased $1,041,000, or 9.8%, from $10,604,000 during the 1999
period to $9,563,000 during the 2000 period, and expenses as a percentage of
revenue decreased from 34.9% to 34.2%, due primarily to the termination of the
slot promotion as discussed above.
Hotel expenses increased by approximately $69,000, or 1.0% from $6,600,000
during the 1999 period to $6,669,000 during the 2000 period, however expenses as
a percentage of revenues decreased from 104.6% to 93.0%, primarily due to the
allocation of hotel costs, associated with complimentary room sales, to the
casino department.
Food and beverage costs and expenses decreased by approximately $42,000, or
0.8%, from $5,140,000 during the 1999 period to $5,098,000 during the 2000
period, and expenses as a percentage of revenues decreased from 71.9% to 66.2%,
primarily due to the allocation of food and beverage costs, associated with
complimentary food and beverage sales, to the casino department.
Taxes and licenses decreased $81,000, or 1.8%, from $4,435,000 in the 1999
period to $4.354,000 in the 2000 period as a result of corresponding decreases
in casino revenues.
OTHER OPERATING EXPENSES
Selling, general and administrative expenses increased $293,000, or 3.7%, from
$7,930,000 during the 1999 period to $8,223,000 during the 2000 period, and as a
percentage of total net revenues, expenses increased from 18.2% to 18.9% due
primarily to the implementation of a slot promotion in February 2000.
The Company believes that city-wide competition for experienced employees may
increase employee turnover and lead to increased payroll costs.
EBITDA
EBITDA, as defined, increased by approximately $883,000, or 10.1%, from
$8,747,000 during the 1999 period to $9,630,000 during the 2000 period. The
increase was due primarily to a reduction in expenses as discussed above.
OTHER EXPENSES
Rent expense increased by approximately $133,000, or 4.5%, from $2,970,000
during the 1999 period to $3,103,000 during the 2000 period, due primarily to
corresponding annual CPI increases for land lease agreements.
Depreciation and amortization increased by approximately $460,000, or 19.0% from
$2,418,000 during the 1999 period to $2,878,000 during the 2000 period,
primarily due to the acquisition of new equipment and the completion of a room
remodel project.
Interest expense decreased by approximately $163,000, or 11.1% from $1,474,000
during the 1999 period to $1,311,000 for the 2000 period, due primarily to the
payoff of certain bankruptcy notes that resulted from the February 28, 1997 Plan
of Reorganization.
During 2000, the Company incurred approximately $85,000 in merger and litigation
costs. Approximately $466,000 was incurred as a result of litigation costs
related to the Paulson Merger Agreement which was offset by a reimbursement from
the Company's directors' and officers' insurance carrier in the amount of
$489,000. Approximately $108,000 was incurred as a result of costs associated
with the Company's non-binding letter of intent with PDS, which was terminated
on April 19, 2000.
NET INCOME BEFORE PROVISION FOR INCOME TAXES AND UNDECLARED DIVIDENDS ON
CUMULATIVE CONVERTIBLE PREFERRED STOCK
As a result of the factors discussed above, the Company experienced net income
before provision for income taxes and undeclared dividends on cumulative
convertible preferred stock in the 2000 period of $2,340,000 compared to a net
income of $1,110,000 in the 1999 period, an improvement of $1,230,000 or 110.8%.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents of approximately $4.3 million at
September 30, 2000, as compared to approximately $3.5 million at December 31,
1999.
For the first nine months of 2000, the Company's net cash provided by operating
activities was $3,792,000 compared to $1,807,000 in 1999. EBITDA, as defined,
for the first nine months of 2000 and 1999, was $9.6 million and $8.7 million,
respectively. While EBITDA should not be construed as a substitute for operating
income or a better indicator of liquidity than cash flow from operating
activities, which are determined in accordance with GAAP, it is included herein
to provide additional information with respect to the ability of the Company to
meet its future debt service, capital expenditure and working capital
requirements. Although EBITDA is not necessarily a measure of the Company's
ability to fund its cash needs, management believes that certain investors find
EBITDA to be a useful tool for measuring the ability of the Company to service
its debt. EBITDA margin is EBITDA as a percent of net revenues. The Company's
definition of EBITDA may not be comparable to other companies' definitions.
Significant debt service on the Company's 12.83% Mortgage Notes ("Existing
Notes") is paid in August and February, during each fiscal year, which
significantly affects the Company's cash and cash equivalents in the second and
fourth quarters and should be considered in evaluating cash increases or
decreases in the second and fourth quarters. Scheduled interest payments on the
Notes and other indebtedness is $1.9 million in 2000, declining to $1.8 million
in 2003. Management believes that sufficient cash flow will be available to
cover the Company's debt service for the next twelve months and enable
investment in forecasted capital expenditures of approximately $2.1 million for
2000. The Company's ability to service its debt is dependent upon future
performance, which will be affected by, among other things, prevailing economic
conditions and financial, business and other factors, certain of which are
beyond the Company's control.
The Existing Notes are due in full on August 20, 2001. The Company has recently
entered into a Third Supplemental Indenture in which New Notes were exchanged
for the Existing Notes in the same principal amount. The New Notes have the same
terms, provisions, and conditions as the Existing Notes, except that the New
Notes are due in full on October 20, 2003 ("Notes"). The Notes are redeemable by
the Company at any time at 100% of par, without premium.
The Company is required to make an offer to purchase all Notes at 101% of face
value upon any "Change of Control" as defined in the indenture governing the
Notes. The indenture also provides for mandatory redemption of the Notes by the
Company upon order of the Nevada Gaming Authorities. The Notes are guaranteed by
Elsub Management Corporation, Four Queens, Inc. and Palm Springs East Limited
Partnership and are collateralized by a second deed of trust on, and a pledge
of, substantially all the assets of the Company and the guarantors.
Cash flow from operations is not expected to be sufficient to pay the $11
million of principal of the Notes at maturity on October 20, 2003, in the event
of a Change of Control, or upon a mandatory redemption. Accordingly, the ability
of the Company to repay the Notes at maturity, upon a Change of Control, or upon
a mandatory redemption, will be dependent upon its ability to refinance the
Notes. There can be no assurance that the Company will be able to refinance the
principal amount of the Notes on favorable terms or at all.
The Note Agreement executed in connection with the issuance of the Notes, among
other things, places significant restrictions on the incurrence of additional
indebtedness by the Company, the creation of additional liens on the collateral
securing the Notes, transactions with affiliates and payment of certain
restricted payments. In order for the Company to incur additional indebtedness
or make a restricted payment, the Company must, among other things, meet a
specified consolidated fixed charges coverage ratio and have earned $1.0 million
in EBITDA. The Ratio is defined as the ratio (the "Ratio") of aggregate
consolidated EBITDA to the aggregate consolidated fixed charges for the
twelve-month reference period. As of the reference period ended September 30,
2000 the Ratio was 4.06 to 1.00 and the Company was in compliance. The Company
must also maintain a minimum amount of consolidated net worth not less than an
amount equal to its consolidated net worth on the Effective Date of the Plan,
less $5 million. Pursuant to covenants applicable to the Company's Notes and
Third Supplemental Indenture, the Company is required to maintain a minimum
consolidated fixed charges coverage ratio of 1.25 to 1.00.
Management considers it important to the competitive position of the Four Queens
Casino that expenditures be made to upgrade the property. Uses of cash included
capital expenditures of $1,268,000 and $1,624,000 in the first nine months of
2000 and 1999, respectively. Management has forecasted capital expenditures to
be $2.1 million for the year 2000. The Company expects to finance such capital
expenditures from cash on hand, cash flow, and slot lease financing. Based upon
current operating results and cash on hand, the Company estimates it has
sufficient operating capital to fund its operations and capital expenditures for
the next twelve months. The Company's ability to make such expenditures is
dependent upon future performance, which will be affected by, among other
things, prevailing economic conditions and financial, business and other
factors, certain of which are beyond the Company's control.
RGME managed the Four Queens Casino in accordance with the Management
Arrangement among the Company, Four Queens, Inc. and RGME effective April 1,
1997. RGME received an annual fee of $1 million in equal monthly installments.
The Management Arrangement terminated on December 31, 1999.
RECENTLY ISSUED ACCOUNTING STANDARDS
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB
101 clarifies existing accounting principles related to revenue recognition in
financial statements. The Company is required to comply with the provisions of
SAB 101 by the fourth quarter of 2000. Due to the nature of the Company's
operations, Management does not believe that SAB 101 will have a significant
impact on the Company's financial statements.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain forward-looking statements. Certain information included in this
Form 10-Q and other materials filed with the Securities and Exchange Commission
(as well as information included in oral statements or other written statements
made or to be made by the Company) contains statements that are forward looking,
such as statements relating to business strategies, plans for future development
and upgrading, operating expense, capital spending, financing and restructuring
sources, existing and expected competition and the effects of regulations. Such
forward-looking statements involve important known and unknown risks and
uncertainties that could cause actual results and liquidity to differ materially
from those expressed or anticipated in any forward-looking statements. Such
risks and uncertainties include, but are not limited to, those related to
effects of competition, leverage and debt service, financing and refinancing
needs or efforts, general economic conditions, changes in gaming laws or
regulations (including the legalization of gaming in various jurisdictions),
risks related to development and upgrading activities, uncertainty of casino
customer spending and vacationing in hotel/casinos in Las Vegas, occupancy rates
and average room rates in Las Vegas, the popularity of Las Vegas as a convention
and trade show destination, and other factors described from time to time in the
Company's reports filed with the Securities and Exchange Commission, including
the Company's Report on Form 10-K for the year ended December 31, 1999.
Accordingly, actual results may differ materially from those expressed in any
forward-looking statement made by or on behalf of the Company. Any
forward-looking statements are made pursuant to the Private Securities
Litigation Reform Act of 1995, and, as such, speak only as of the date made. The
Company undertakes no obligation to revise publicly these forward-looking
statements to reflect subsequent events or circumstances.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The Company's financial instruments include cash and long-term debt. At
September 30, 2000 the carrying values of the Company's financial instruments
approximated their fair values based on current market prices and rates. It is
the Company's policy not to enter into derivative financial instruments. The
Company does not currently have any significant foreign currency exposure since
it does not transact business in foreign currencies. Due to this, the Company
believes it does not have significant overall currency exposure at September 30,
2000.
Elsinore Corporation and Subsidiaries
Other Information
PART II. OTHER INFORMATION
Item 4. Annual Meeting Held on October 17, 2000.
On October 17, 2000, the Company held its Annual Meeting of Shareholders. John
C. "Bruce" Waterfall, Jeffrey T. Leeds, and S. Barton Jacka were re-elected as
Directors of the Company and Donald A. Hinkle was elected. Out of the 4,993,965
shares of Common Stock and 50,000,000 of Preferred Stock, entitled to vote at
such meeting, there were present in person or by proxy 54,646,439 shares. The
voting results were as follows:
<TABLE>
<CAPTION>
Name For % Against % Withheld %
---- ---------- --- ------- --- -------- ---
<S> <C> <C> <C> <C> <C> <C>
John C. "Bruce" Waterfall 54,646,439 100 0 0 0 0
Jeffrey T. Leeds 54,646,439 100 0 0 0 0
S. Barton Jacka 54,646,439 100 0 0 0 0
Donald A. Hinkle 56,646,439 100 0 0 0 0
</TABLE>
Item 6. Exhibits and Reports
(a) Exhibits
27.1 Financial Data Schedule
10.58 Third Supplemental Indendture
(b) Form 8-K filed during this quarter
(1) No reports on Form 8-K were filed during the period.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto authorized.
ELSINORE CORPORATION
(Registrant)
By: /s/ Jeffrey T. Leeds
JEFFREY T. LEEDS, President
and Chief Executive Officer
By: /s/ Gina L. Contner
GINA L. CONTNER, Assistant
Secretary and Principal
Financial and Accounting Officer
Dated: November , 2000
EXHIBIT 10.58
-----------------------------------------------------------------------
ELSINORE CORPORATION
as Issuer
and
THE GUARANTORS NAMED HEREIN
TO
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
---------------------------
THIRD SUPPLEMENTAL
INDENTURE
Dated as of October 31, 2000
Supplement to Amended and Restated Indenture
Dated as of March 3, 1997
---------------------------
-----------------------------------------------------------------------
THIRD SUPPLEMENTAL INDENTURE (this "Third Supplemental Indenture"), dated as of
October 31, 2000, 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 (the "1997
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.
The 1997 Indenture was amended by the First Supplemental Amended and Restated
Indenture, dated as of September 18, 1997, by and among the Company, the
Guarantors and the Trustee, and the Second Supplemental Indenture, dated
September 29, 1998, by and among the Company, the Guarantors and the Trustee
(the "Second Supplemental Indenture"; the 1997 Indenture, as so amended, being
the "Indenture"). Capitalized terms used in this Third Supplemental Indenture
without definition shall have the meanings assigned thereto in the Indenture as
amended hereby.
Immediately prior to the effectiveness of the Second Supplemental Indenture, the
Company redeemed Notes in the aggregate principal amount of $18,896,000.
Pursuant to the Second Supplemental Indenture, the remaining Notes were
exchanged for new Notes with an interest rate of 12.83%.
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
extend the Stated Maturity of the Notes from August 20, 2001 to October 20,
2003. On the Third Supplemental Indenture Effective Date, the Company shall
issue New Notes in the aggregate principal amount of $11,104,000 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 the Stated
Maturity shall be October 20, 2003. 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 Third 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 Third 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 Third
Supplemental Indenture and the Trustee is accepting this Third 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 Third 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
SECTION 1. The Definition of "Existing Notes" in Section 1.1 of the Indenture is
hereby amended by deleting it in its entirety and substituting the following
therefor:
"Existing Notes" means Company's 12.83% Second Mortgage Notes due 2001 issued
pursuant to this Indenture prior to the Third Supplemental Indenture Effective
Date.
SECTION 2. Section 1.1 of the Indenture is hereby amended by adding thereto the
following definition of "Third Supplemental Indenture Effective Date", which
shall be inserted in proper alphabetical order:
"Third 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 Third Supplemental Indenture by the
Company, as Issuer, the Guarantors, and the Trustee, dated as of October 31,
2000, which amends this Indenture, have been satisfied or waived in writing.
SECTION 3. The Definition of "New Notes" in Section 1.1 of the Indenture is
hereby amended by deleting it in its entirety and substituting the following
therefor:
"New Notes" means the Company's 12.83% Second Mortgage Notes due 2003, issued
pursuant to this Indenture on and after the Third Supplemental Indenture
Effective Date.
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 Third Supplemental Indenture
Effective Date, the Existing Notes and (ii) on and after the Third Supplemental
Indenture Effective Date, the New Notes, as amended or modified from time to
time in accordance with the terms hereof.
SECTION 5. The Definition of "Stated Maturity" in Section 1.1 of the Indenture
is hereby amended and restated in its entirety to read as follows:
"Stated Maturity" when used with respect to any Security, means October 20,
2003.
Part II: AMENDMENTS TO TERMS RELATING TO SECURITIES
SECTION 6. Section 2.3 of the Indenture is hereby amended by deleting the fifth
paragraph in its entirety and substituting the following paragraph therefor:
"On the Third 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 7. 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 8. No Third Party Beneficiaries.
Nothing in this Third 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 9. Effect on Indenture.
This Third 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 10. Third Supplemental Indenture Effective Date.
The Third Supplemental Indenture Effective Date shall occur on the date that
each of the following conditions precedent has been satisfied:
(i) The Company and the Guarantors listed therein shall have executed and
delivered to the Trustee for its acceptance an Acknowledgement and Confirmation
of Pledge Agreement substantially in the form of Annex II hereto.
(ii) The Guarantors listed therein shall have executed and delivered an
Acknowledgement and Confirmation of Guaranty to the Trustee for its acceptance
substantially in the form of Annex III hereto.
(iii) Four Queens, Inc., and the Trustee shall have executed and delivered a
Third Modification of Subordinated Deed of Trust substantially in the form of
Annex IV hereto.
(iv) Morrison & Forester, special counsel to the Company, shall have delivered
to the Trustee its favorable legal opinion stating that the execution of this
Third Supplemental Indenture is authorized or permitted by the Indenture.
(v) The Trustee shall have received a written consent by the Holders of the
Existing Notes, consenting to the substance of this Third Supplemental
Indenture.
(vi) The Company shall have delivered to the Trustee an Officers' Certificate
stating that the conditions precedent to the Third 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 11. Confirmation of Lien.
Promptly after the Third Supplemental Indenture Effective Date, the Company will
cause Four Queens to record the Third Modification of Subordinated Deed of Trust
substantially in the form of Annex IV hereto, 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 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 12. Trustee Disclaimer.
The Trustee has accepted the amendment of the Indenture effected by this Third
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 Third Supplemental Indenture or any of the terms
or provisions hereof and shall incur no liability or responsibility in respect
of the validity thereof.
SECTION 13. Integration
This Third 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 14. Severability.
In case any provision in or obligation under this Third 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 15. Headings
Section and subsection headings in this Third Supplemental Indenture are
included herein for convenience of reference only and shall not constitute a
part of this Third Supplemental Indenture for any other purpose or be given any
substantive effect.
SECTION 16. Governing Laws.
This Third 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.]
This Third 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 Third
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/ T.J. Sandell
Name: T.J. Sandell
Title: Authorized Officer
Attest:____________________
GUARANTORS: ELSUB MANAGEMENT CORPORATION
By: /s/ S. Barton Jacka
Name: S. Barton Jacka
Title: President
FOUR QUEENS, INC.
By: /s/ John C. "Bruce" Waterfall
Name: John C. "Bruce" Waterfall
Title: President
PALM SPRINGS EAST, LIMITED PARTNERSHIP
By: Elsub Management Corporation,
General Partner
By: /s/ S. Barton Jacka
Name: S. Barton Jacka
Title: President
ANNEX I
EXHIBIT B
[FORM OF SECOND MORTGAGE NOTE]
ELSINORE CORPORATION
12.83% SECOND MORTGAGE NOTE
DUE 2003
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 October 20,
2003.
Interest Payment Dates: February 28, August 31,and at maturity.
Record Dates: February 15, August 15, and 15 days prior to maturity.
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:____________________________
STATE OF ________ )
) ss:
COUNTY OF _______ )
On this ____ day of _________________, 2000, before me, the undersigned, a
Notary Public in and for the County of ________, State of ________, duly
commissioned and sworn, personally appeared _________________ personally known
to me, or proved to me on the basis of satisfactory evidence, to be the
_____________ 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.
WITNESS my hand and official seal.
_____________________________
NOTARY PUBLIC
My commission expires on
_____________________________
[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:
ELSINORE CORPORATION
12.83% Second Mortgage Note
due 2003
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 and at the Stated Maturity (each, an "Interest Payment Date"), commencing
February 28, 1999. Interest on the Securities will accrue 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 the First Supplemental Amended and Restated
Indenture, dated as of September 18, 1997, the Second Supplemental Indenture,
dated September 29, 1998, and the Third Supplemental Indenture, dated October
31, 2000, 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.
[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)
ANNEX II
ACKNOWLEDGMENT AND CONFIRMATION
OF PLEDGE AGREEMENT
This ACKNOWLEDGEMENT AND CONFIRMATION OF PLEDGE AGREEMENT (this
"Acknowledgement") is dated as of October 31, 2000, 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 Third Supplemental Indenture, dated as of the date
hereof (the "Third Supplemental Indenture"), by and between Elsinore Corporation
("Company"), a Nevada corporation, the Guarantors listed therein, and Trustee.
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 "1997 Indenture"),
dated as of March 3, 1997, which 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 1997 Indenture was later amended by the First Supplemental
Amended and Restated Indenture, dated as of September 18, 1997, and the Second
Supplemental Indenture, dated September 29, 1998 (the "Second Supplemental
Indenture"; the 1997 Indenture, as so amended, being the "Indenture").
Immediately prior to the effectiveness of the Second Supplemental Indenture, the
Company redeemed Amended and Restated Notes in the aggregate principal amount of
$18,896,000. Pursuant to the Second Supplemental Indenture, the remaining
Amended and Restated Notes were exchanged for new Amended and Restated Notes
bearing interest at 12.83%.
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, have entered into
the certain Third 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 Third Supplemental Indenture). The
Indenture, as modified by the Third Supplemental Indenture, is referred to
herein as the "Amended Indenture." Capitalized terms used herein without
definition have the meanings assigned thereto in the Amended 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 Third 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 they have reviewed the terms and provisions
of the Third Supplemental Indenture, and each other document delivered in
connection therewith. Pledgors hereby consent to the execution and delivery of
the Third 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 Third 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 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 Indenture, the
Third Supplemental Indenture or any other agreement or document shall be deemed
to require the consent of the Pledgors to any future amendments to the Amended
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]
IN WITNESS WHEREOF, each of the undersigned Pledgors has caused this
Acknowledgement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first written above.
ELSINORE CORPORATION
By: _________________________________
Name:
Title:
ELSUB MANAGEMENT CORPORATION
By: _________________________________
Name:
Title:
PALM SPRINGS EAST, LIMITED PARTNERSHIP
By: ELSUB MANAGEMENT CORPORATION,
its general partner
By: ___________________________
Name:
Title:
Accepted this __st day of _________, 2000
U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee
By: ____________________
Name:
Title: Authorized Officer
Attest: ____________________
ANNEX III
ACKNOWLEDGMENT AND CONFIRMATION OF GUARANTY
This ACKNOWLEDGEMENT AND CONFIRMATION OF GUARANTY (this "Acknowledgement") is
dated as of October 31, 2000, 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
Third Supplemental Indenture, dated as of the date hereof (the "Third
Supplemental Indenture"), by and between Elsinore Corporation, a Nevada
corporation ("Company"), the Guarantors listed therein, and Trustee.
PRELIMINARY STATEMENTS
A. Company has heretofore entered into that certain Amended and Restated
Indenture, dated as of March 3, 1997, by and between Company, the Guarantors
listed therein, and Trustee (the "1997 Indenture"). The 1997 Indenture was later
amended by the First Supplemental Amended and Restated Indenture, dated as of
September 18, 1997, and the Second Supplemental Indenture, dated September 29,
1998 (the "Second Supplemental Indenture"; the 1997 Indenture, as so amended,
being the "Indenture"). Immediately prior to the effectiveness of the Second
Supplemental Indenture, the Company redeemed Notes in the aggregate principal
amount of $18,896,000. Pursuant to the Second Supplemental Indenture, the
remaining Notes were exchanged for new Notes bearing interest at 12.83%.
B. The Company and Trustee, as Trustee under the Indenture, have entered into
the certain Third Supplemental Indenture pursuant to which, among other things,
all outstanding Notes issued under the Indenture will be exchanged for New Notes
(as defined in the Third Supplemental Indenture). The Indenture, as modified by
the Third Supplemental Indenture, is referred to herein as the "Amended
Indenture." Capitalized terms used herein without definition have the meanings
assigned thereto in the Amended Indenture.
C. Guarantors desire expressly to confirm the foregoing matters and to
acknowledge for purposes of clarification that all obligations of Company under
the Third 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 Third 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 Third 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 Third 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
Third Supplemental Indenture or any other agreement or document shall be deemed
to require the consent of such Guarantor to any future amendments to the Third
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]
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: ___________________________
Name:
Title:
FOUR QUEENS, INC.
By: ___________________________
Name:
Title:
PALM SPRINGS EAST, LIMITED PARTNERSHIP
By: ELSUB MANAGEMENT CORPORATION,
its general partner
By: ___________________________
Name:
Title:
Accepted this __st day of __________, 2000
U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee
By: ____________________
Name:
Title: Authorized Officer
Attest: ____________________
ANNEX IV
THIRD MODIFICATION OF SUBORDINATED DEED OF TRUST
This THIRD MODIFICATION OF SUBORDINATED DEED OF TRUST (this "Modification"), is
entered into as of October 31, 2000, by and between 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 F below
("Beneficiary"). All capitalized words not otherwise defined herein are used as
defined in the Amended Indenture.
Recitals
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 dated as of March 3, 1997 (the "1997 Indenture"), providing, among
other things, for the issuance of amended and restated Notes in the aggregate
principal amount of $30,000,000 bearing interest at 13 1/2% with a stated
maturity date of August 20, 2001 (the "Existing Second Mortgage Notes"). The
1997 Indenture was amended by the First Supplemental Amended and Restated
Indenture, dated as of September 18, 1997, and the Second Supplemental
Indenture, dated September 29, 1998 (the "Second Supplemental Indenture"; the
1997 Indenture, as so amended, being the "Indenture"). Immediately prior to the
effectiveness of the Second Supplemental Indenture, the Company redeemed
Existing Second Mortgage Notes in the aggregate principal amount of $18,896,000.
Pursuant to the Second Supplemental Indenture, the remaining Existing Second
Mortgage Notes were exchanged for new Existing Second Mortgage Notes bearing
interest at 12.83%.
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").
E. The Trustor and the Beneficiary have executed that certain Second
Modification of Subordinated Deed of Trust, dated as of September 29, 1998,
filed in the Official Records of Clark County, Nevada on October 13, 1998, as
Instrument No. 493 in Book 98013 (the "Second Modification of Deed of Trust").
Pursuant to the Second Modification of Deed of Trust, the Deed of Trust was
amended to secure all obligations under the Indenture and the Existing Second
Mortgage Notes.
F. The Company and the Beneficiary, as Trustee under the Indenture, have entered
into that certain Third Supplemental Indenture, dated as of October 31, 2000
(the "Third Supplemental Indenture"), pursuant to which, among other things, all
Existing Second Mortgage Notes issued and outstanding 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 a stated maturity date of
October 20, 2003. The Indenture, as modified by the Third Supplemental
Indenture, is referred to herein as the "Amended Indenture."
G. 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 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.]
IN WITNESS WHEREOF, the Trustor and the Beneficiary have caused this Third
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: ____________________________
Name:
Title:
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 _________________, 2000, before me, the undersigned, a
Notary Public in and for the County of Clark, State of Nevada, duly commissioned
and sworn, personally appeared ___________________ known to me to be the
_____________ of FOUR QUEENS, INC., whose name is subscribed to the within
instrument, and who acknowledged to me that he/she executed the same freely and
voluntarily and for the use and purposes therein mentioned.
_____________________________
NOTARY PUBLIC
STATE OF ________ )
) ss:
COUNTY OF _______ )
On this ____ day of _________________, 2000, 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
ELSINORE CORPORATION
12.83% SECOND MORTGAGE NOTE
DUE 2003
CUSIP No.: 290308 AD 7
No. 1 $11,104,000
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 Cede & Co. or
registered assigns, the principal sum of 11,104,000 Dollars, on October 20,
2003.
Interest Payment Dates: February 28, August 31,and at maturity.
Record Dates: February 15, August 15, and 15 days prior to maturity.
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: /s/ Jeffrey T. Leeds
JEFFREY T. LEEDS, President
and Chief Executive Officer
STATE OF ________ )
) ss:
COUNTY OF _______ )
On this ____ day of _________________, 2000, before me, the undersigned, a
Notary Public in and for the County of ________, State of ________, duly
commissioned and sworn, personally appeared _________________ personally known
to me, or proved to me on the basis of satisfactory evidence, to be the
_____________ 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.
WITNESS my hand and official seal.
_____________________________
NOTARY PUBLIC
My commission expires on
_____________________________
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:
ELSINORE CORPORATION
12.83% Second Mortgage Note
due 2003
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 and at the Stated Maturity (each, an "Interest Payment Date"), commencing
February 28, 1999. Interest on the Securities will accrue 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 the First Supplemental Amended and Restated
Indenture, dated as of September 18, 1997, the Second Supplemental Indenture,
dated September 29, 1998, and the Third Supplemental Indenture, dated October
31, 2000, 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.
[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)
THIRD MODIFICATION OF SUBORDINATED DEED OF TRUST
This THIRD MODIFICATION OF SUBORDINATED DEED OF TRUST (this "Modification"), is
entered into as of October 31, 2000, by and between 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 F below
("Beneficiary"). All capitalized words not otherwise defined herein are used as
defined in the Amended Indenture.
Recitals
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 dated as of March 3, 1997 (the "1997 Indenture"), providing, among
other things, for the issuance of amended and restated Notes in the aggregate
principal amount of $30,000,000 bearing interest at 13 1/2% with a stated
maturity date of August 20, 2001 (the "Existing Second Mortgage Notes"). The
1997 Indenture was amended by the First Supplemental Amended and Restated
Indenture, dated as of September 18, 1997, and the Second Supplemental
Indenture, dated September 29, 1998 (the "Second Supplemental Indenture"; the
1997 Indenture, as so amended, being the "Indenture"). Immediately prior to the
effectiveness of the Second Supplemental Indenture, the Company redeemed
Existing Second Mortgage Notes in the aggregate principal amount of $18,896,000.
Pursuant to the Second Supplemental Indenture, the remaining Existing Second
Mortgage Notes were exchanged for new Existing Second Mortgage Notes bearing
interest at 12.83%.
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").
E. The Trustor and the Beneficiary have executed that certain Second
Modification of Subordinated Deed of Trust, dated as of September 29, 1998,
filed in the Official Records of Clark County, Nevada on October 13, 1998, as
Instrument No. 493 in Book 98013 (the "Second Modification of Deed of Trust").
Pursuant to the Second Modification of Deed of Trust, the Deed of Trust was
amended to secure all obligations under the Indenture and the Existing Second
Mortgage Notes.
F. The Company and the Beneficiary, as Trustee under the Indenture, have entered
into that certain Third Supplemental Indenture, dated as of October 31, 2000
(the "Third Supplemental Indenture"), pursuant to which, among other things, all
Existing Second Mortgage Notes issued and outstanding 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 a stated maturity date of
October 20, 2003. The Indenture, as modified by the Third Supplemental
Indenture, is referred to herein as the "Amended Indenture."
G. 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 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.]
IN WITNESS WHEREOF, the Trustor and the Beneficiary have caused this Third
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/ John C. "Bruce" Waterfall
Name: John C. "Bruce" Waterfall
Title: President
U.S. BANK TRUST NATIONAL ASSOCIATION,
a national association, as Beneficiary
By: /s/ T.J. Sandell
Name: T.J. Sandell
Title: Vice President
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On this 30th day of October, 2000, before me, the undersigned, a Notary Public
in and for the County of New York, State of New York, duly commissioned and
sworn, personally appeared John C. "Bruce" Waterfall 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.
/s/ Joann McNiff
NOTARY PUBLIC
STATE OF MINNESOTA )
) ss:
COUNTY OF HENNEPIN )
On this 31st day of October, 2000, before me, the undersigned, a Notary Public
in and for the County of Hennepin, State of Minnesota, duly commissioned and
sworn, personally appeared T.J. Sandell known to me to be the Vice President 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.
/s/ Catherine M. Hegg
NOTARY PUBLIC
ACKNOWLEDGMENT AND CONFIRMATION
OF PLEDGE AGREEMENT
This ACKNOWLEDGEMENT AND CONFIRMATION OF PLEDGE AGREEMENT (this
"Acknowledgement") is dated as of October 31, 2000, 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 Third Supplemental Indenture, dated as of the date
hereof (the "Third Supplemental Indenture"), by and between Elsinore Corporation
("Company"), a Nevada corporation, the Guarantors listed therein, and Trustee.
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 "1997 Indenture"),
dated as of March 3, 1997, which 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 1997 Indenture was later amended by the First Supplemental
Amended and Restated Indenture, dated as of September 18, 1997, and the Second
Supplemental Indenture, dated September 29, 1998 (the "Second Supplemental
Indenture"; the 1997 Indenture, as so amended, being the "Indenture").
Immediately prior to the effectiveness of the Second Supplemental Indenture, the
Company redeemed Amended and Restated Notes in the aggregate principal amount of
$18,896,000. Pursuant to the Second Supplemental Indenture, the remaining
Amended and Restated Notes were exchanged for new Amended and Restated Notes
bearing interest at 12.83%.
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, have entered into
the certain Third 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 Third Supplemental Indenture). The
Indenture, as modified by the Third Supplemental Indenture, is referred to
herein as the "Amended Indenture." Capitalized terms used herein without
definition have the meanings assigned thereto in the Amended 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 Third 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 they have reviewed the terms and provisions
of the Third Supplemental Indenture, and each other document delivered in
connection therewith. Pledgors hereby consent to the execution and delivery of
the Third 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 Third 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 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 Indenture, the
Third Supplemental Indenture or any other agreement or document shall be deemed
to require the consent of the Pledgors to any future amendments to the Amended
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]
IN WITNESS WHEREOF, each of the undersigned Pledgors has caused this
Acknowledgement 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
Accepted this __st day of__________, 2000
U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee
By: /s/ T.J. Sandell
Name: T.J. Sandell
Title: Authorized Officer
Attest: /s/ Mark Robiatti
ACKNOWLEDGMENT AND CONFIRMATION OF GUARANTY
This ACKNOWLEDGEMENT AND CONFIRMATION OF GUARANTY (this "Acknowledgement") is
dated as of October 31, 2000, 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
Third Supplemental Indenture, dated as of the date hereof (the "Third
Supplemental Indenture"), by and between Elsinore Corporation, a Nevada
corporation ("Company"), the Guarantors listed therein, and Trustee.
PRELIMINARY STATEMENTS
A. Company has heretofore entered into that certain Amended and Restated
Indenture, dated as of March 3, 1997, by and between Company, the Guarantors
listed therein, and Trustee (the "1997 Indenture"). The 1997 Indenture was later
amended by the First Supplemental Amended and Restated Indenture, dated as of
September 18, 1997, and the Second Supplemental Indenture, dated September 29,
1998 (the "Second Supplemental Indenture"; the 1997 Indenture, as so amended,
being the "Indenture"). Immediately prior to the effectiveness of the Second
Supplemental Indenture, the Company redeemed Notes in the aggregate principal
amount of $18,896,000. Pursuant to the Second Supplemental Indenture, the
remaining Notes were exchanged for new Notes bearing interest at 12.83%.
B. The Company and Trustee, as Trustee under the Indenture, have entered into
the certain Third Supplemental Indenture pursuant to which, among other things,
all outstanding Notes issued under the Indenture will be exchanged for New Notes
(as defined in the Third Supplemental Indenture). The Indenture, as modified by
the Third Supplemental Indenture, is referred to herein as the "Amended
Indenture." Capitalized terms used herein without definition have the meanings
assigned thereto in the Amended Indenture.
C. Guarantors desire expressly to confirm the foregoing matters and to
acknowledge for purposes of clarification that all obligations of Company under
the Third 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 Third 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 Third 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 Third 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
Third Supplemental Indenture or any other agreement or document shall be deemed
to require the consent of such Guarantor to any future amendments to the Third
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]
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/ John C. "Bruce" Waterfall
Name: John C. "Bruce" Waterfall
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
Accepted this __st day of_______, 2000
U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee
By: /s/ T.J. Sandell
Name: T.J. Sandell
Title: Authorized Officer
Attest: /s/ Mark Robiatti
GUARANTY
For value received, FOUR QUEENS, INC., a Nevada corporation, hereby
unconditionally guarantees to the Holder of the Security upon which this
Guaranty is endorsed the due and punctual payment, as set forth in the Indenture
pursuant to which such Security and this Guaranty were issued, of the principal
of, premium (if any) and interest on such Security when and as the same shall
become due and payable for any reason according to the terms of such Security
and Article XIII of the Indenture. The Guaranty of the Security upon which this
Guaranty is endorsed will not become effective until the Trustee signs the
certificate of authentication on such Security.
FOUR QUEENS, INC.
By: /s/ John C. "Bruce" Waterfall
Name: John C. "Bruce" Waterfall
Title: President
Attest: /s/ Joann McNiff
GUARANTY
For value received, ELSUB MANAGEMENT CORPORATION, a Nevada corporation, hereby
unconditionally guarantees to the Holder of the Security upon which this
Guaranty is endorsed the due and punctual payment, as set forth in the Indenture
pursuant to which such Security and this Guaranty were issued, of the principal
of, premium (if any) and interest on such Security when and as the same shall
become due and payable for any reason according to the terms of such Security
and Article XIII of the Indenture. The Guaranty of the Security upon which this
Guaranty is endorsed will not become effective until the Trustee signs the
certificate of authentication on such Security.
ELSUB MANAGEMENT CORPORATION
By: /s/ S. Barton Jacka
Name: S. Barton Jacka
Title: President
Attest: /s/ Carolyn L. Smith
GUARANTY
For value received, PALM SPRINGS EAST, LIMITED PARTNERSHIP, a Nevada limited
partnership, hereby unconditionally guarantees to the Holder of the Security
upon which this Guaranty is endorsed the due and punctual payment, as set forth
in the Indenture pursuant to which such Security and this Guaranty were issued,
of the principal of, premium (if any) and interest on such Security when and as
the same shall become due and payable for any reason according to the terms of
such Security and Article XIII of the Indenture. The Guaranty of the Security
upon which this Guaranty is endorsed will not become effective until the Trustee
signs the certificate of authentication on such Security.
PALM SPRINGS EAST, LIMITED PARTNERSHIP
By: ELSUB MANAGEMENT CORPORATION,
its general partner
By: /s/ S. Barton Jacka
Name: S. Barton Jacka
Title: President
Attest: /s/ Carolyn L. Smith
INDEX TO EXHIBITS
27.1 Financial Data Schedule
