EXHIBIT 10.46
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ELSINORE CORPORATION
CAPITAL CONTRIBUTION AGREEMENT
Dated as of September 29, 1998
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CAPITAL CONTRIBUTION AGREEMENT
This CAPITAL CONTRIBUTION AGREEMENT (this "Agreement") is
dated as of September 29, 1998 and entered into by and between ELSINORE
CORPORATION, a Nevada corporation ("Elsinore"), and THE INVESTMENT ACCOUNTS
LISTED ON THE SIGNATURE PAGES HEREOF (each, a "Fund" and, collectively, the
"Funds").
R E C I T A L S
WHEREAS, the Funds own approximately 94.3% of the issued and
outstanding shares of common stock of Elsinore;
WHEREAS, the parties hereto have reached an agreement pursuant
to which (i) the Funds will make a cash contribution to the capital of Elsinore
in the amount of $4,901,070; and (ii) simultaneously with the receipt of such
capital contribution, Elsinore will use such funds, together with other funds of
Elsinore, to purchase or redeem in full certain outstanding mortgage notes which
were issued by the corporation.
NOW, THEREFORE, in consideration of the foregoing, and the
agreements, covenants and conditions contained herein and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
DEFINITIONS
1.1 Certain Defined Terms
In addition to the terms defined in the text of this
Agreement, the following terms used in this Agreement shall have the following
meanings:
"Agreement" means this Capital Contribution Agreement, dated
as of September 29, 1998, as it may be amended, amended and restated or
otherwise modified or supplemented from time to time.
"Closing Date" means the date on or before September 30, 1998
on which the conditions set forth in Section 7 hereof shall have been satisfied
and the Transactions shall have been consummated.
"First Mortgage Note Purchase Agreement" means an agreement
between Elsinore and the holders of the First Mortgage Notes pursuant to which
such holders agree to sell their First Mortgage Notes to Elsinore and to
terminate their rights under that certain Amended and Restated Intercreditor
Agreement dated as of March 3, 1997, by and among First Trust National
Association, a national association, as Trustee under the Indenture, Elsinore,
Four Queens, Inc., a Nevada Corporation, Olympia Gaming Corporation, a Nevada
Corporation, Elsub Management Corporation, a Nevada corporation, Palm Springs
East, Limited Partnership, the Senior Lenders listed on the signature pages
thereof, and First Trust National Association, as collateral agent for the
Senior Lenders, relating to the priority of the lien securing the First Mortgage
Notes.
"Intercreditor Agreement" means that certain Amended and
Restated Intercreditor Agreement dated as of March 3, 1997, by and among U.S.
Bank Trust National Association (f/k/a First Trust National Association), as
trustee under the Indenture (as defined therein), Elsinore, Four Queens, Inc., a
Nevada corporation, Olympia Gaming Corporation, a Nevada corporation, Elsub
Management Corporation, a Nevada corporation, and Palm Springs East, Limited
Partnership, as Guarantors, the entities listed as Senior Lenders on the
signature pages thereof (the "Senior Lenders") and U.S. Bank Trust National
Association (f/k/a First Trust National Association), as collateral agent for
the Senior Lenders.
"Lien" means any lien, mortgage, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest).
"Merger Agreement" has the meaning assigned thereto in Section 3.
"Morgens, Waterfall" means Morgens, Waterfall, Vintiadis & Co., Inc.
"Non-MWV Second Mortgage Note Purchase Agreement" means an
agreement between Elsinore and the holders of the Non-MWV Second Mortgage Notes
pursuant to which such holders agree to sell their Second Mortgage Notes to
Elsinore.
"Non-MWV Second Mortgage Notes" means the $896,000 original
aggregate principal amount of Second Mortgage Notes held by Persons other than
the Funds, which were issued under the Indenture prior to the amendment thereof
by the Second Supplemental Indenture, dated as of September 29, 1998, among
Elsinore, Elsub Management Corporation, Four Queens, Inc., and the Trustee.
"Option Agreement" means that certain Option and Voting
Agreement, dated as of September 15, 1997, by and between R&E Gaming Corp., as
purchaser, and Morgens, Waterfall, on behalf of the Funds, as seller.
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
"Transaction Documents" means this Agreement, the First
Mortgage Note Purchase Agreement and the Non-MWV Second Mortgage Note Purchase
Agreement.
"Transactions" means the transactions pursuant to which the
Transaction Documents will be executed and delivered by the parties thereto and
the First Mortgage Notes and the Non-MWV Second Mortgage Notes will be purchased
or redeemed.
"Subsidiary" means any corporation, association partnership or
other business entity of which more than 50% of the total voting power of shares
of stock or partnership shares entitled to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more of the other Subsidiaries of that
Person or a combination thereof.
1.2 Other Definitional Provisions
References to "Sections" and "subsections" shall be to
Sections and subsections, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in subsection 1.1 may, unless
the context otherwise requires, be used in the singular or the plural depending
on the reference.
Section 2. AGREEMENT TO CONSUMMATE TRANSACTIONS
Subject to the prior or concurrent satisfaction of the
conditions to effectiveness contained in Section 7, on the Closing Date each of
the parties hereto shall perform its agreements set forth below.
2.1 Contribution to Capital of Elsinore
The Funds will contribute $4,901,070 in cash to Elsinore as a capital
contribution.
2.2 Purchase or Redemption of First Mortgage Notes and Non-MWV Second
Mortgage Notes
Elsinore will:
(i) purchase all First Mortgage Notes pursuant to the First Mortgage Note
Purchase Agreement, and pay all principal, interest and prepayment premium, if
any, payable in respect thereof; and
(ii) purchase all Non-MWV Second Mortgage Notes pursuant to the Non-MWV Second
Mortgage Note Purchase Agreement and pay all principal, interest and prepayment
premium, if any, payable in respect thereof.
2.3 Further Assurances.
Elsinore and the Funds each hereby acknowledges each of the
agreements of the parties contained in this Section 2 and agrees that they shall
execute and deliver each of the Transaction Documents to which it is a party and
take all such other reasonable actions as may be necessary or advisable to
effectuate the agreements contained herein.
Section 3. CANCELLATION OF FIRST MORTGAGE NOTES AND NON-MWV-SECOND MORTGAGE
NOTES.
Elsinore will cancel all First Mortgage Notes purchased by it
pursuant to the First Mortgage Note Purchase Agreement contemporaneously with
the purchase thereof and, upon the purchase of all such First Mortgage Notes,
all obligations under the First Mortgage Note Agreement and the First Mortgage
Notes shall be deemed to be paid in full. Promptly thereafter, (i) Elsinore will
notify U.S. Bank Trust National Association that all obligations under the
Senior Lender Documents (as "Senior Lender Documents" is defined in the
Intercreditor Agreement) have been paid in full and that the Intercreditor
Agreement is terminated and (ii) Elsinore will reconvey that certain deed of
trust made by Four Queens, Inc. a Nevada corporation ("Four Queens"), which
secures the obligations under the First Mortgage Notes, recorded on October 14,
1994 in Book 594014 as Document No. 00611 in the official records of Xxxxx
County, Nevada. Elsinore shall not sell or reissue the Non-MWV-Second Mortgage
Notes purchased by it pursuant to the Non-MWV Second Mortgage Note Purchase
Agreement. Not more than 30 days after the Closing Date, Elsinore shall deliver
all Non-MWV Second Mortgage Notes to the Trustee for cancellation pursuant to
Section 2.12 of the Indenture.
Section 4. APPLICATION BY ELSINORE OF CAPITAL CONTRIBUTION
Elsinore has entered into that certain Agreement and Plan of
Merger by and among R&E Gaming Corp., Elsinore Acquisition Sub, Inc., and
Elsinore Corporation, dated as of September 15, 1997 (the "Merger Agreement").
Morgens, Waterfall on behalf of the Funds has entered into the Option Agreement.
Elsinore shall apply a portion of the capital contribution made by the Funds
hereunder in the amount of $2,936,550, plus interest thereon from the date such
capital contribution is made at a rate of 10% per annum, as a setoff and payment
made in respect of any damage, judgment, order or liability of any kind or
nature in law, equity or other, that Elsinore or any party claiming by, though
or under Elsinore now owns or at any time heretofore has owned or held against
the Funds or any person or entity controlling or managing the Funds, which are
based upon or arise out of or in connection with any matter, cause or thing at
any time or anything done, omitted or suffered to be done or omitted in any way
relating to the Merger Agreement or the Option Agreement, and the transactions
contemplated thereby. Nothing in this Section 3 shall be deemed to be an
admission of liability by either party hereto or a waiver or release of any
claim by either party hereto.
Section 5. APPLICATION OF FUNDS RECEIVED UNDER MERGER AGREEMENT
Elsinore hereby agrees that any payments received by it,
whether voluntary or in satisfaction of a judgment, in respect of amounts owed
under Section 6.2(c) of the Merger Agreement, shall not be distributed to
Elsinore's public stockholders unless a pro rata share of such amounts is
distributed to all of Elsinore's stockholders, including the Funds.
Section 6 REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties of all Parties
Elsinore and each Fund each severally represents and warrants
to the other party hereto that it has the corporate or partnership power and
authority to execute, deliver and perform this Agreement and each of the other
Transaction Documents to which it is a party and to perform its obligations
hereunder and thereunder, and has taken all necessary corporate or partnership
action to authorize the execution, delivery and performance by it of this
Agreement and each of the other Transaction Documents to which it is a party and
to consummate the transactions contemplated hereby and thereby.
6.2 Additional Representations and Warranties of Elsinore.
A. Elsinore represents and warrants to each Fund that:
(i) No Conflict. The execution, delivery and performance by Elsinore of the
Transaction Documents to which they are a party and the consummation of the
Transactions do not and will not (a) violate any provision of any law or any
governmental rule or regulation (including any gaming law, rule or regulation)
applicable to Elsinore or any of its Subsidiaries, the certificate or articles
of incorporation or bylaws of Elsinore or any of its Subsidiaries, or any order,
judgment or decree of any court or other agency of government binding on
Elsinore or any of its Subsidiaries; (b) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
material contractual obligation of Elsinore or any of its Subsidiaries; (c)
result in or require the creation or imposition of any Lien upon any of the
properties or assets of Elsinore or any of its Subsidiaries (other than any
Liens created under any of the Transaction Documents in favor of the Trustee or
the Funds); or (d) require any approval of stockholders or any approval or
consent of any Person under any contractual obligation of Elsinore or any of its
Subsidiaries, except for such approvals or consents which will be obtained on or
before the Closing Date and disclosed in writing to the Funds.
(ii) Governmental Consents. The execution, delivery and performance by Elsinore
of the Transaction Documents to which they are a party and the consummation of
the transactions contemplated thereby do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body (including any gaming regulatory authority). (iii) Binding Obligation. Each
of the Transaction Documents has been duly executed and delivered by Elsinore
listed on the signature pages thereof and is the legally valid and binding
obligation of Elsinore, enforceable against Elsinore in accordance with its
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
Section 7. CONDITIONS TO EFFECTIVENESS
Sections 2, 3, 4 and 5 of this Agreement shall become
effective upon the satisfaction of all of the conditions set forth in this
section:
7.1 Delivery of Elsinore Documents
On or before the Closing Date, Elsinore shall have delivered,
or caused to be delivered, to the Funds, or to Morgens, Waterfall on behalf of
the Funds, the following, each, unless otherwise noted, dated the Closing Date:
A. Certified copies of the certificate or articles of incorporation of Elsinore,
together with a good standing certificate from the Secretary of State of its
jurisdiction of incorporation dated a recent date prior to the Closing Date;
B. Copies of the bylaws of Elsinore certified as of the Closing Date by
Elsinore's, corporate secretary or an assistant secretary;
C. Resolutions of the board of directors of Elsinore, approving and authorizing
the execution, delivery and performance of the Transaction Documents to which it
is a party, certified as of the Closing Date by the corporate secretary or an
assistant secretary of Elsinore as being in full force and effect without
modification or amendment;
D. Signature and incumbency certificates of the officers of Elsinore executing
the Transaction Documents to which it is a party;
E. Executed originals of the Transaction Documents to which Elsinore is a party;
and
F. Such other documents as Morgens, Waterfall, on behalf of the Funds, may
reasonably request.
7.2 Prepayment or Redemption of First Mortgage Notes
On or before the Closing Date, Elsinore shall purchase all
First Mortgage Notes, and pay all principal and accrued and unpaid interest, if
any, payable in respect thereof and cancel such First Mortgage Notes, and
terminate the Intercreditor Agreement relating thereto.
7.3 Prepayment or Redemption of Non-MWV Second Mortgage Notes
On or before the Closing Date, Elsinore shall purchase all
Non-MWV Second Mortgage Notes and pay all principal, interest and prepayment
premium, if any, payable in respect thereof.
7.4 Legal Opinions.
On the Closing Date, the Funds shall have received the favorable legal
opinion of Xxxxxxxx & Xxxxxxxx, LLP, substantially in the form of Exhibit A
hereto, and the favorable legal opinion of Xxxxxx & Silver, Ltd, substantially
in the form of Exhibit B hereto.
7.5 Corporate and Partnership Proceedings
On or before the Closing Date, all corporate, partnership and
other proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by the Funds and its counsel shall be reasonably satisfactory in form
and substance to the Funds and its counsel, and Morgens, Waterfall, on behalf of
the Funds, and its counsel shall have received all such counterpart originals or
certified copies of such documents as they may reasonably request.
7.6 Other Matters
Elsinore shall have performed in all material respects all
agreements which this Agreement provides shall be performed on or before the
Closing Date except as otherwise disclosed to and agreed to in writing by the
Funds.
Section 8. MISCELLANEOUS
8.1 Survival of Representations
The representations and warranties of the parties hereto shall
survive the consummation of the Transactions.
8.2 Integration
This Agreement (including the Schedules and Exhibits hereto)
constitutes the entire agreement with respect to the subject matter hereof, and
supersedes all other prior agreements and understandings, both oral and written,
among the parties with respect to the subject matter hereof.
8.3 Counterparts; Effectiveness
This Agreement may be executed in any number of counterparts
(including telecopy counterparts), and by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. This Agreement shall become effective upon the execution and
delivery of a counterpart hereof by each of Elsinore and the Funds.
8.4 Severability.
In case any provision in or obligation under this Agreement
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.
8.5 Liability
The obligations and liabilities of the Funds under this
Agreement shall be several, to the extent of each Fund's respective percentage
ownership interest of issued and outstanding shares of common stock of Elsinore,
and not joint. Elsinore has designated Morgens, Waterfall as its agent for the
sole purpose of receiving communications from, and sending communications to,
the Funds in connection with this Agreement. None of Morgens, Waterfall, Xxxx X.
Waterfall, or Xxxxx X. Xxxxxx individually, nor any officers, directors,
employees, agents, or controlling persons of Morgens, Waterfall, shall have any
obligations or liabilities under or in connection with this Agreement by reason
of the foregoing or for any other reason.
8.6 Expenses
Irrespective of whether the Transactions have been
consummated, Elsinore shall pay all costs and expenses that it incurs with
respect to the negotiation, execution, delivery and performance of this
Agreement. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorney's fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
8.7 Notices
Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given shall be in writing
and may be personally served, telexed or sent by telefacsimile or United States
mail or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
business days after depositing it in the United States mail with postage prepaid
and properly addressed. For the purposes hereof, the address of each party
hereto shall be as set forth under such party's name below, or such other
address as shall be designated by such party in a written notice delivered to
the other parties hereto.
if to Elsinore:
Elsinore Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
Fax: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxx
if to the Funds:
Morgens, Waterfall, Vintiadis & Co., Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx XxXxxx, Esq.
8.8 Public Announcements.
Each of the parties hereto agrees that it will not issue any
press release or otherwise make any public statement with respect to this
Agreement or the transactions contemplated hereby without the prior consent of
the other party, which consent shall not be unreasonably withheld or delayed;
provided, however, that such disclosure can be made without obtaining such prior
consent if (i) the disclosure is required by law, and (ii) the party making such
disclosure has first used its reasonable best efforts to consult with the other
party about the form and substance of such disclosure.
8.9 Expenses.
Each party shall bear its own expenses and costs incurred in
connection with this Agreement and the Transactions.
8.10 Governing Law
This Agreement shall be deemed to be made under, shall be
governed by and shall be construed and enforced in accordance with the internal
laws of the State of New York, without regards to conflicts of laws provisions.
8.11 Headings
Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
[Remainder of page intentionally left blank.]
WITNESS, the due execution hereof by the respective duly
authorized general partner or officer of the undersigned as of the date first
written above.
ELSINORE CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: President
FUNDS:
BETJE PARTNERS
ENDOWMENT RESTART LLC
MORGENS WATERFALL INCOME PARTNERS, L.P.
PHOENIX PARTNERS, L.P.
MWV EMPLOYEE RETIREMENT PLAN GROUP TRUST
RESTART PARTNERS, L.P.
RESTART PARTNERS II, L.P.
RESTART PARTNERS III, L.P.
RESTART PARTNERS IV, L.P.
RESTART PARTNERS V, L.P.
By: /s/ Xxxx X. "Xxxxx" Waterfall
Name: Xxxx X. "Xxxxx" Waterfall
Title: Authorized Signatory
EXHIBIT A
FORM OF LEGAL OPINION OF XXXXXXXX & XXXXXXXX LLP
EXHIBIT B
FORM OF LEGAL OPINION OF XXXXXX & SILVER, LTD.
