A special phone number has been set up to respond to questions which
Rightholders may have concerning this Subscription Rights Agreement.
Rightholders should call (000) 000-0000 if they wish to discuss such
questions by telephone.
SUBSCRIPTION RIGHTS AGREEMENT
This SUBSCRIPTION RIGHTS AGREEMENT (the "Agreement"), dated for
reference purposes as of October 10, 1996, is made by and between Elsinore
Corporation, a Nevada corporation (the "Company"), and the persons (each a
"Rightholder" and collectively, the "Rightholders") entitled to stock
subscription rights under this Agreement pursuant to the terms of the Order
Confirming First Amended Plan Of Reorganization Proposed Jointly By The
Debtors And The Unofficial Bondholders Committee, entered on August 9, 1996
(the "Order"), in connection with the proceedings for reorganization under
Chapter 11 of Elsinore Corporation, et al., Case Nos. 95-24685 RCJ, 95-24686
RCJ, 95-24687 RCJ, 95-24688 RCJ, 95-24689 RCJ, and 95-24839 RCJ.
WHEREAS, the Bankruptcy Court, through the Order, authorized and
directed the Company and the Rightholders to enter into an agreement in the
form hereof;
NOW, THEREFORE, in compliance with the Order and in consideration of
the premises, covenants and agreements contained herein and for other good
and valuable consideration, the sufficiency and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the Company
agrees to issue to the Rightholders stock subscription rights, as
hereinafter described (each a "Right" and collectively, the "Rights"), to
purchase up to an aggregate of one million (1,000,000) shares (each a
"Share" and collectively, the "Shares") of Common Stock, par value $0.001
per share, of the Company (the "Common Stock").
Article 1. Definitions of Certain Terms
The terms "Allowed Claim," "Bankruptcy Court," "Bondholders
Committee," "Class 11 New Stock," "Class 13 New Stock," "Confirmation
Date," "Convertible Noteholders," "Elsinore Equity Holders," "Elsinore
Equity Interest," "FQI," "Old Elsinore Common Stock," "Unsecured
Creditors," "1993 Bondholders," and any other capitalized terms not defined
in this Agreement shall have the meanings specified in the First Amended
Plan of Reorganization Proposed Jointly By Debtors And The Unofficial
Bondholders Committee (the "Plan"), as confirmed by the Order.
Article 2. Allocation, Transfer and Form of Rights
2.1 Registration. The Rights shall be evidenced by certificates,
as described in Section 2.4 ("Rights Certificates"), which shall be
numbered and registered on the books of the Company when issued.
2.2 Allocation. Each Right shall constitute a right to
purchase one Share on the terms and conditions provided herein. The
Company shall distribute the Rights to five (5) different classes of
Rightholders (each a "Class" and collectively, the "Classes")
according to the following allocation:
Class Percentage of Rights Number of Rights and
and Shares Allocated Shares
to Class Allocated to Class
Elsinore Equity Holders 6.5% 65,000
Convertible Noteholders 3.5% 35,000
Unsecured Creditors of the Company 1% 10,000
Unsecured Creditors of FQI 1.5% 15,000
1993 Bondholders 87.5% 75,000
TOTAL 100% 1,000,000
2.3 Transfer. The Rights shall not be transferable or assignable,
except as provided in this Section and Section 3.1(b).
(a) If the Rightholders in any Class do not exercise
all of the Rights allocated to that Class by 5:00 p.m., Pacific
time, on December 13, 1996 (the "Termination Date"), such non-exercised
Rights shall be transferred automatically to the members
of the Bondholders Committee (the "Committee Members") in the
proportions specified in a Standby Commitment Agreement executed or
to be executed by the Company and the Committee Members pursuant to
the Plan (the "Standby Commitment"). The Standby Commitment
provides, or shall provide, for (i) a premium of additional shares
of Common Stock, up to a maximum of 250,000 shares (the "Stock
Premium"), to be issued to the Committee Members based upon the
percentage of the Rights in excess of 87.5% which they exercise and
(ii) the date by which Committee Members must exercise the Rights
transferred to them pursuant to this Section 2.3(a). Pursuant to
the Plan, the Stock Premium will come from a reduction in Class 11
New Stock, Class 13 New Stock or both, which would otherwise be
issued to Rightholders other than the 1993 Bondholders.
(b) In the event of a transfer of Rights pursuant to
this Section or Section 3.1(b), the Company shall (i) issue to the
transferee Rightholder a new Rights Certificate, registered in the
name of such transferee, evidencing such transferred Rights and (ii)
record on its books the cancellation of the Rights Certificate
registered in the name of the transferor Rightholder; provided,
however, that if for any reason the Company does not take the
aforesaid actions, the transfer of Rights provided for in this
Section or Section 3.1(b), as the case may be, shall nevertheless be
effective and binding on the Company, the transferor and the
transferee.
2.4 Rights Certificate. The form and content of the Rights
Certificates and the corresponding form of Election to Purchase Shares for
Rightholders in the Class of 1993 Bondholders (the "Group A Rightholders")
shall be substantially as set forth in Schedule 1. The form and content of
the Rights Certificates and the corresponding form of Election to Purchase
Shares for Rightholders in all Classes other than the 1993 Bondholders
(collectively, the "Group B Rightholders") shall be substantially as set
forth in Schedule 2. The Rights Certificates shall be executed on behalf
of the Company by its Chief Executive Officer, President or Chief Operating
Officer. The Rights Certificates shall be dated as of the date of
signature thereon by the Company, either upon initial issuance or upon
exchange, substitution or transfer pursuant to Section 2.3 or Section
3.1(b).
2.5 Legend on Shares. Each certificate for Shares initially issued
upon exercise of the Rights shall bear the following legend:
"No sale, transfer, pledge or other disposition
of these Shares shall be made except pursuant to
registration under the Securities Act of 1933, as
amended, and registration or qualification under
state securities laws or pursuant to an opinion of
counsel satisfactory to the issuer that such
registration is not required."
Any certificate issued at any time in exchange or in substitution for
any certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement
under the Securities Act of 1933, as amended, of the securities represented
thereby) shall also bear the above legend unless the Company receives an
opinion of counsel acceptable to the Company that registration or
qualification of the securities represented thereby under the laws referred
to therein is not required.
Article 3. Term of Rights; Exercise of Rights
3.1 Exercise Period and Procedures for Group A Rightholders. The
terms and conditions for the exercise of Rights by Group A Rightholders
shall be as provided in this Section 3.1.
(a) Subject to the terms of this Agreement and the Plan, each
Group A Rightholder can exercise its Rights at any time during the period
commencing at 9:00 a.m., Pacific time, on October 18, 1996, and ending at
5:00 p.m., Pacific Time, on the date specified in paragraph (b) of this
Section, and thereby purchase from the Company up to the number of whole
Shares which the Group A Rightholder may at that time be entitled to
purchase pursuant to paragraph (b). Such Rights can only be exercised by
surrendering to the Company, at its principal office in Las Vegas, Nevada,
the Rights Certificate together with (i) the accompanying Election to
Purchase form for Group A Rightholders duly completed and signed and (ii)
payment to the Company of the "Rights Price" (as specified in Article 6)
for the number of whole Shares which the Group A Rightholder is purchasing.
Payment of the Rights Price shall be made in cash or by certified or
cashier's check and shall be non-refundable.
(b) Each Group A Rightholder initially shall be entitled to
exercise the number of Rights which bears the same proportion to the
aggregate number of Rights allocated to the Class of 1993 Bondholders
pursuant to Section 2.2 as the Group A Rightholder's Allowed Claim bears to
the Allowed Claims of all Group A Rightholders. If any Group A
Rightholders do not exercise their initial allocation of Rights by November
22, 1996, such non-exercised Rights shall automatically be transferred to
the "Electing Group A Rightholders," which means the Group A Rightholders
who (i) fully exercised their initial allocation of Rights in accordance
with this Section and (ii) elected, by so indicating on the Election to
Purchase form submitted to the Company pursuant to paragraph (a) of this
Section, to exercise Rights that were not exercised by those Group A
Rightholders to whom such Rights were initially distributed. Such transfer
to the Electing Group A Rightholders shall be made in such manner as the
Company shall reasonably determine. The Electing Group A Rightholders may
then exercise such transferred Rights at any time up to 5:00 p.m., Pacific
time, on the Termination Date, in accordance with the procedures specified
in paragraph (a) of this Section.
3.2 Exercise Period and Procedures for Group B Rightholders.
Subject to the terms of this Agreement and the Plan, each Group B
Rightholder shall have the right at any time during the period commencing
at 9:00 a.m., Pacific time, on October 18, 1996 and ending on the
Termination Date, to subscribe for whole Shares up to the number of Shares
allocated to the Group B Rightholder's Class pursuant to Section 2.2. Such
subscription can only be made by surrendering to the Company, at its
principal office in Las Vegas, Nevada, the Rights Certificate together with
(i) the accompanying Election to Purchase form for Group B Rightholders
duly completed and signed and (ii) payment to the Company of the "Rights
Price" (as specified in Article 6) for the number of whole Shares for which
the Group B Rightholder is subscribing. Payment of the Rights Price shall
be made in cash or by certified or cashier's check and shall be
non-refundable, except as provided in Section 3.4. Oversubcriptions shall be
treated in the manner provided in Sections 3.3(b) and 3.4.
3.3 Issuance of Shares.
(a) Subject to the terms of this Agreement and the Plan, if a
Rightholder surrenders the Rights Certificate and pays the Rights Price in
accordance with Section 3.1(a) or 3.2, whichever is applicable, then as of
the Effective Date the Company shall issue and cause to be delivered to,
and in the name of, such Rightholder a certificate or certificates for the
number of duly authorized, fully paid and nonassessable whole Shares
specified in paragraph (b) of this Section (the "Issued Shares"). Such
certificate or certificates shall be deemed to have been issued and the
Rightholder named therein shall be deemed to have become a holder of the
Issued Shares as of the close of business on the Effective Date,
notwithstanding that the certificates representing such Issued Shares shall
not actually have been delivered by that time or that the stock transfer
books of the Company shall then be closed.
(b) For Group A Rightholders, the number of Issued Shares shall
be determined in accordance with Section 3.1(b). For Group B Rightholders,
if the number of Shares for which a Group B Rightholder subscribes under
Section 3.2 ("Subscribed Shares"), when aggregated with the total number of
Subscribed Shares for all other Group B Rightholders in the same Class,
does not exceed the aggregate number of Shares allocated to that Class
under Section 2.2, then the number of Issued Shares for the Group B
Rightholder shall equal that Group B Rightholder's number of Subscribed
Shares. If the aggregate number of Subscribed Shares for all Group B
Rightholders in a particular Class exceeds the aggregate number of Shares
allocated to that Class under Section 2.2, then the Company shall allocate
the Issued Shares among subscribing Group B Rightholders in that Class by
accepting in full the subscription of the Group B Rightholder in that class
who subscribes for the greatest number of shares. Following such
acceptance, if any Shares allocated to that Class remain available for
issuance, the Company will accept the subscription of the Group B
Rightholder in that Class who subscribes for the second greatest number of
Shares (to the extent that Shares allocated to that Class remain available
for issuance after the Company has accepted the larger subscription), and
so on according to this principle until the Company has accepted
subscriptions for all Shares allocated to that Class. If two (2) or more
Group B Rightholders in the same Class have the same number of Subscribed
Shares and are entitled to have their subscriptions accepted by the Company
according to this principle, then the number of Issued Shares for each of
those Group B Rightholders shall be in proportion to their respective
Allowed Claims (in any Class other than the Elsinore Equity Holders) or
their respective Elsinore Equity Interests (in the Class of Elsinore Equity
Holders).
3.4 Refund of Oversubscriptions. If the aggregate number of
Subscribed Shares for Group B Rightholders in any Class exceeds the number
of Shares allocated to that Class under Section 2.2, the Company shall
refund the subscription payments of Group B Rightholders to the extent that
their subscriptions are not accepted under Section 3.3(b). The Company
shall mail such refunds, in the form of checks, to the Group B Rightholders
within three (3) business days after the Company determines which
subscriptions of Group B Rightholders it will accept under Section 3.3(b).
Article 4. Mutilated or Missing Rights Certificate
In case a Rights Certificate is mutilated, lost, stolen or destroyed,
the Company shall, at the request of the Rightholder, issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Rights
Certificate, or in lieu of and in substitution for the Rights Certificate
lost, stolen or destroyed, a new Rights Certificate of like tenor and
representing an equivalent right or interest, but only upon receipt of
evidence satisfactory to the Company of such loss, theft or destruction of
such Rights Certificate and of a bond of indemnity, if requested, also
satisfactory to the Company in form and amount, and issued at the
applicant's cost. An applicant for such substitute Rights Certificate
shall also comply with such other reasonable regulations and pay such other
reasonable charges as the Company may prescribe.
Article 5. Reservation of Shares
The Company has reserved, and shall at all times so long as any
Rights remain outstanding, keep reserved, out of its authorized but
unissued Common Stock, such number of Shares as shall be subject to
purchase under the Rights. Every transfer agent for the Common Stock
issuable upon the exercise of the Rights shall be irrevocably authorized
and directed at all times to reserve such number of authorized Shares as
shall be requisite for such purpose. The Company shall keep a copy of this
Agreement on file with every transfer agent for the Common Stock issuable
upon the exercise of the Rights. The Company shall supply such transfer
agent(s) with duly executed stock and other certificates for such purpose.
Article 6. Subscription Price
The price per share at which Rights can be exercised (the "Rights
Price") is Five Dollars ($5.00).
Article 7. Fractional Interests
A fractional Right may only be exercised by a Rightholder together
with one or more other fractional Rights held by that Rightholder as a
result of transfers of Rights pursuant to Sections 2.3(a) or 3.1(b),
provided that such fractional Rights represent in the aggregate a whole
number of Rights. If a fractional Right can not be exercised, or is not
exercised, by a Rightholder, such fractional Right shall be deemed a
non-exercised Right and shall therefore be subject to the automatic transfer
provisions of Sections 2.3(a) or 3.1(b), as the case may be.
Article 8. Certain Highly Significant Risk Factors
(a) Definitions. Italicized terms in this Article 8 have the
meanings given to those terms as they appear elsewhere in this Agreement
with a capitalized first letter of each word.
(b) IMMEDIATE AND SUBSTANTIAL DILUTION OF INVESTMENT. Rightholders
WHO PURCHASE Shares UNDER THIS Agreement WILL INCUR IMMEDIATE AND SUBSTANTIAL
DILUTION IN THE NET TANGIBLE BOOK VALUE OF THOSE Shares. THE NET TANGIBLE
BOOK VALUE OF THE Company AS OF THE Effective Date, WITHOUT GIVING EFFECT TO
THE SALE AND ISSUANCE OF Shares PURSUANT TO THIS Agreement, IS NOT EXPECTED TO
EXCEED $1,259,000, OR APPROXIMATELY $0.31 PER SHARE OF Common Stock. THIS
EXPECTATION IS BASED ON EVIDENCE PRESENTED AT THE BANKRUPTCY COURT HEARINGS
ON CONFIRMATION OF THE Plan AND THE FINDINGS AND CONCLUSIONS OF THE
BANKRUPTCY COURT IN CONFIRMING THE Plan. BY GIVING EFFECT TO THE SALE OF
1,000,000 Shares AT $5.00 PER SHARE (THE Rights Price) PURSUANT TO THIS
Agreement, IT IS EXPECTED THAT THE PRO FORMA NET TANGIBLE BOOK VALUE OF THE
Company AS OF THE Effective Date WOULD NOT EXCEED $6,259,000 OR APPROXIMATELY
$1.25 PER SHARE OF Common Stock. THIS REPRESENTS AN IMMEDIATE DILUTION OF
$3.75 PER SHARE (OR 75% OF THE RIGHTS PRICE) TO Rightholders WHO EXERCISE THE
Rights UNDER THIS Agreement AT $5.00 PER SHARE.
MOREOVER, AT THE BANKRUPTCY COURT HEARINGS, THE ESTIMATED NET
TANGIBLE BOOK VALUE OF THE COMPANY AS OF THE EFFECTIVE DATE WAS BASED ON
THE ASSUMPTION THAT THE EFFECTIVE DATE WOULD BE SEPTEMBER 18, 1996. AS OF
THE DATE OF THIS AGREEMENT, HOWEVER, THE EFFECTIVE DATE IS EXPECTED TO BE
LATER THAN NOVEMBER 30, 1996. THIS MAY RESULT IN ADDITIONAL PRE-EFFECTIVE
DATE EXPENSES OF THE COMPANY WHICH, IN TURN, WOULD CAUSE THE COMPANY'S NET
TANGIBLE BOOK VALUE AS OF THE EFFECTIVE DATE TO BE LOWER THAN THE VALUE
ESTIMATED AT THE BANKRUPTCY COURT HEARINGS.
The following table illustrates the expected dilution in net tangible
book value per share as of the Effective Date for Rightholders who exercise
Rights. The figures reported in the table are qualified by reference to
the discussion above regarding the possible lower net tangible book value
resulting from an Effective Date which will be later than the date assumed
at the bankruptcy court hearings.
Rights Price $5.00
Expected net tangible book value per
share of the Common Stock as of the
Effective Date without giving effect
to the sale of Shares pursuant to
the exercise of all Rights $0.31
Deduct: Pro forma net tangible book
value per share of the Common Stock
as of the Effective Date after giving
effect to the sale of one million
Shares at $5.00 pursuant to the exercise
of all Rights 1.25
Dilution per share for Rightholders who exercise
their Rights at $5.00 per share $3.75
(c) Substantial Control by 1993 Bondholders. AFTER GIVING EFFECT TO THE
ISSUANCE OF Shares PURSUANT TO THIS Agreement, INCLUDING THE POSSIBLE ISSUANCE
OF Shares AND THE Stock Premium TO THE Committee Members PURSUANT TO SECTION 2.3
AND THE Standby Commitment, THE 1993 Bondholders ARE LIKELY TO HAVE AN OWNERSHIP
INTEREST AMOUNTING TO NINETY PERCENT (90%) OR MORE OF THE OUTSTANDING Common
Stock ("90% OWNERSHIP") OR VERY CLOSE TO 90% OWNERSHIP. IF THE 1993
Bondholders ACHIEVE 90% OWNERSHIP OR IF THEY, TOGETHER WITH OTHER OWNERS OF
Common Stock, ACHIEVE 90% OWNERSHIP, THEY MAY HAVE VIRTUALLY ABSOLUTE POWER
UNDER NEVADA LAW TO EFFECT A MERGER OF THE Company UNDER WHICH SHAREHOLDERS
OF THE Company (OTHER THAN THOSE WHO HAVE THE 90% OWNERSHIP) RECEIVE, IN
EXCHANGE FOR THEIR Common Stock, A CASH PAYMENT EQUAL TO THE FAIR VALUE OF
THE Common Stock. SUCH FAIR VALUE MAY BE SUBSTANTIALLY LESS THAN THE Rights
Price.
IN ADDITION, THE 1993 Bondholders WILL CONTROL VIRTUALLY ALL MATTERS
REQUIRING APPROVAL BY SHAREHOLDERS OF THE Company.
(d) 500,000 SHARES OF Common Stock ISSUABLE UNDER THE Plan TO Group B
Rightholders WILL BE REDUCED IF THE Group B Rightholders DO NOT FULLY EXERCISE
THEIR Rights. SEPARATE FROM THE Shares ISSUABLE UNDER THIS Agreement,
THE Plan PROVIDES FOR ISSUANCE OF AN AGGREGATE OF 4,000,000 SHARES OF Common
Stock TO Rightholders. OF THAT AMOUNT, 500,000 SHARES ARE ISSUABLE TO Group B
Rightholders. THOSE SHARES CONSIST OF 400,000 SHARES OF Class 13 New Stock AND
100,000 SHARES OF Class 11 New Stock, THE LATTER OF WHICH ARE ALLOCATED ONLY
TO THE Convertible Noteholders. THE Plan FURTHER PROVIDES THAT THE Stock
Premium FOR Committee Members, AS DESCRIBED IN SECTION 2.3 OF THIS Agreement,
WILL COME FROM A REDUCTION IN THE Class 13 New Stock OR Class 11 New Stock,
OR BOTH, IF THE Group B Rightholders DO NOT EXERCISE ALL 125,000 Rights
ALLOCATED TO THEIR RESPECTIVE Classes. FURTHERMORE, EVEN IF A Class OF Group
B Rightholders FULLY EXERCISES ITS SHARE OF THE 125,000 Rights, THE Class 13
New Stock ISSUABLE TO THAT CLASS MAY STILL BE REDUCED IF ANY OTHER Class OF
Group B Rightholders DOES NOT EXERCISE ITS RESPECTIVE SHARE OF THE 125,000
Rights.
(e) Rights ALLOCATED TO MOST Rightholders ARE A VERY SMALL PERCENTAGE
OF THE NUMBER OF SHARES TO BE OUTSTANDING ON THE Effective Date. THE NUMBER
OF OUTSTANDING SHARES OF Common Stock ON THE Effective Date IS EXPECTED TO BE
5,000,000. THE 1,000,000 Shares WHICH Rightholders COLLECTIVELY MAY PURCHASE
UNDER THIS Agreement HAVE BEEN ALLOCATED TO EACH Class AS SPECIFIED IN SECTION
2.2. BASED ON THAT ALLOCATION, THE MAXIMUM PERCENTAGE OF THE Company's
OUTSTANDING Common Stock AS OF THE Effective Date WHICH A Rightholder IN ANY
Class (OTHER THAN THE 1993 Bondholders) CAN ACQUIRE BY EXERCISING RIGHTS IS AS
FOLLOWS:
Elsinore Equity Holders 1.30%
Convertible Noteholders 0.70%
Unsecured Creditors of the Company 0.20%
Unsecured Creditors of FQI 0.30%
MOREOVER, A Rightholder CAN ONLY ACQUIRE THIS PERCENTAGE IF (i) THE
Rightholder SUBSCRIBES, AT $5.00 PER SHARE, FOR ALL OF THE Shares ALLOCATED TO
THE Rightholder's Class UNDER SECTION 2.2 (NOT FOR JUST THE Rightholder's
PROPORTIONATE SHARE OF THE ALLOCATION TO THAT Class), AND (ii) NO OTHER
Rightholder IN THE SAME Class SUBSCRIBES FOR ALL OF THE Shares ALLOCATED TO THAT
Class.
(f) THE Company IS REQUIRED BY A COURT ORDER TO OFFER THE SHARES
UNDER THIS AGREEMENT. THE Company IS REQUIRED UNDER THE TERMS OF THE Order
AND THE Plan TO ISSUE THE Rights AND OFFER Shares TO THE Rightholders
PURSUANT TO THIS Agreement. THE Company MAKES NO RECOMMENDATION THAT
Rightholders EXERCISE THE Rights. MOREOVER, THE Company MAKES NO
REPRESENTATIONS AS TO WHETHER THE Rights PRICE REPRESENTS THE PER SHARE VALUE
OF THE Common Stock OR AS TO THE LIKELIHOOD THAT Rightholders WHO EXERCISE THE
Rights WILL EVER RECOUP THEIR INVESTMENT.
Article 9. Certain Gaming Law Investment Considerations
The gaming operations of the Company (on a consolidated basis with
its subsidiaries) are subject to the Nevada Gaming Control Act, regulations
promulgated thereunder, and various local regulations. Consequently, any
beneficial holder of the Company's voting securities, regardless of the
number of shares owned, may be required to file an application, be
investigated, and have his suitability as a beneficial holder of the
Company's voting securities be determined if the Nevada Gaming Commission
(the "Commission") has reason to believe that such ownership would
otherwise be inconsistent with the declared policies of the State of
Nevada. The applicant must pay all costs of the investigation incurred by
the Commission, Nevada State Gaming Control Board, Xxxxx County Liquor
Gaming Licensing Board or City of Las Vegas in such an investigation. In
addition, the Xxxxx County Liquor Gaming Licensing Board has taken the
position that it has the authority to approve all persons owning or
controlling the stock of any corporation controlling a gaming license.
Any person who fails or refuses to apply for a finding of suitability
or a license within thirty (30) days after being ordered to do so by the
Commission or the Chairman of the Nevada State Gaming Control Board may be
found unsuitable. The same restrictions apply to a record owner if the
record owner, after request, fails to identify the beneficial owners. Any
stockholder found unsuitable and who holds, directly or indirectly, any
beneficial ownership of the common stock of a registered corporation (such
as the Company) beyond such period of time as may be prescribed by the
Commission may be guilty of a criminal offense. The Company is subject to
disciplinary action if, after it receives notice that a person is
unsuitable to be a stockholder or to have any other relationship with the
Company or its subsidiaries, the Company (i) pays that person any dividend
or interest on the voting securities of the Company, (ii) allows that
person to exercise, directly or indirectly, any voting right conferred
through securities held by that person, (iii) pays remuneration in any form
to that person for services rendered or otherwise, or (iv) fails to pursue
all lawful efforts to require such unsuitable person to relinquish his
voting securities for cash at fair market value.
Article 10. No Rights as a Shareholder
Nothing in this Agreement or in the Rights Certificates shall be
construed as conferring upon a Rightholder or its transferee any rights as
a shareholder of the Company, including the right to vote, receive
dividends, consent or receive notices as a shareholder with respect to any
meeting of shareholders for the election of directors of the Company or any
other matter (except that as of the Effective Date, Rightholders will have
the rights referred to in Section 3.3(a) to the extent they become entitled
to Issued Shares).
Article 11. Notices; Telephone Inquiries
Any notice to the Company pursuant to this Agreement shall be given
by hand delivery, first class mail (registered or certified, return receipt
requested), or overnight courier guaranteeing next business day delivery
addressed as follows:
Elsinore Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Attention: President
The date of each such notice shall be deemed, and the date on which
each such notice shall be deemed given shall be: at the time delivered, if
personally delivered or mailed; or the next business day after timely
delivery to the courier, if sent by overnight courier guaranteeing next
business day delivery.
The Company may from time to time change the address to which notices
to it are to be given hereunder by notice in accordance herewith to the
Rightholders.
Any inquiries which Rightholders wish to make by telephone concerning
the Agreement should be directed to the following special telephone number
which has been set up for this purpose: (000) 000-0000.
Article 12. Successors
Subject to the provisions of this Agreement restricting
transferability and assignability of the Rights, all the covenants and
provisions of this Agreement by or for the benefit of the Company or the
Rightholders shall bind and inure to the benefit of their respective
successors and permitted assigns.
Article 13. Governing Law
This Agreement, the Rights Certificate and the Rights shall be
governed by, and construed in accordance with, the laws of the State of
Nevada without regard to the conflict of laws principles thereof.
Article 14. Benefits of this Agreement
Nothing in this Agreement shall be construed to give to any person or
entity other than the Company and the Rightholders any legal or equitable
right, remedy or claim under this Agreement, and this Agreement shall be
for the sole and exclusive benefit of the Company and the Rightholders.
IN WITNESS WHEREOF, the Company has executed this Agreement as of
the day and year first above written.
COMPANY:
Elsinore Corporation, a Nevada corporation
By:
Name: Xxxxxx X. Xxxxxx
Title: President and
Chief Executive Officer
SCHEDULE 1
________________________________________
Name of Rightholder
RIGHTS TO PURCHASE UP TO SHARES OF
COMMON STOCK OF ELSINORE CORPORATION
(FOR "GROUP A RIGHTHOLDERS")
CLASS OF RIGHTHOLDER: 1993 Bondholders
THIS RIGHTS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED ("SECURITIES ACT"), OR UNDER ANY APPLICABLE STATE
SECURITIES LAWS, AND IT MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED,
PLEDGED, OR HYPOTHECATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS, OR WITHOUT
AN OPINION FROM COUNSEL, SATISFACTORY TO THE COMPANY, THAT AN EXEMPTION FROM
REGISTRATION IS AVAILABLE (EXCEPT IN THE CASE OF AN AUTOMATIC TRANSFER OF
THIS RIGHTS CERTIFICATE, AS SPECIFIED BELOW). TRANSFER OR ASSIGNMENT OF THIS
RIGHTS CERTIFICATE OR THE RIGHTS PROVIDED FOR HEREIN IS RESTRICTED AS
PROVIDED IN THE SUBSCRIPTION RIGHTS AGREEMENT DATED OCTOBER 10, 1996.
THIS CERTIFIES that the above-named person or entity (the
"Rightholder") is entitled, subject to the terms and conditions set forth
in this Rights Certificate and the Subscription Rights Agreement dated
October 10, 1996 (the "Rights Agreement") between Elsinore Corporation, a
Nevada corporation (the "Company"), and the "Rightholders" (as defined in
the Rights Agreement), to purchase from the Company up to
shares of Common Stock of the Company, $0.001 par value (the "Shares"), at
any time commencing at 9:00 a.m., Pacific time, on October 18, 1996 and
continuing up to 5:00 p.m., Pacific time, on (i) November 22, 1996 or
(ii) in the case of Rights transferred to the Rightholder pursuant to
Section 3.1(b) of the Rights Agreement, the "Termination Date" (as defined
in the Rights Agreement), at Five Dollars ($5.00) per Share (the "Rights
Price").
Subject to the terms and conditions set forth herein and in the
Rights Agreement, the rights provided for in this Rights Certificate (the
"Rights") may be exercised by the Rightholder, in whole or in part (but not
as to a fractional Right, unless exercised together with other fractional
Rights held by the Rightholder which represent, in the aggregate, a whole
number of Rights), by the surrender of this Rights Certificate with the
accompanying form of Election to Purchase duly executed, at the principal
office of the Company (or at such other address as the Company may
designate by notice in writing to the Rightholder in accordance with the
notice provisions of the Rights Agreement), together with payment to the
Company of the Rights Price in cash or by certified or cashier's check.
Shares so purchased shall be issued to the Rightholder as of the "Effective
Date" (as defined in the Rights Agreement).Nothing contained herein shall be
construed to confer upon the Rightholder, as such, any of the rights of a
shareholder of the Company. Subject to the automatic transfer provisions in
the next paragraph of this Rights Certificate, the Company may treat the
Rightholder as the absolute owner of this Rights Certificate for the purpose
of any exercise hereof and for all other purposes, and the Company shall not
be affected by any notice to the contrary.
THIS RIGHTS CERTIFICATE AND THE CORRESPONDING RIGHTS SHALL BE
AUTOMATICALLY TRANSFERRED, WITH NO PAYMENT TO THE RIGHTHOLDER IN EXCHANGE
FOR SUCH TRANSFER AND WITH NO ACTION ON THE PART OF THE RIGHTHOLDER IF,
AND TO THE EXTENT THAT, THE RIGHTS ARE NOT EXERCISED BY NOVEMBER 22, 1996
OR BY THE "TERMINATION DATE," WHICHEVER IS APPLICABLE ACCORDING TO THE
RIGHTS AGREEMENT.
Dated: October 10, 0000 Xxxxxxxx Corporation, a Nevada corporation
By:
Name: Xxxxxx X. Xxxxxx
Title: President and
Chief Executive Officer
ELSINORE CORPORATION
ELECTION TO PURCHASE
Elsinore Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: President
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the accompanying Rights Certificate for, and to purchase
thereunder, the number of Shares specified below. The undersigned has read,
understands and agrees to all of the terms and conditions of the
Rights Agreement. Without limiting the generality of the foregoing, the
undersigned fully understands the "Certain Highly Significant Risk Factors"
discussed in Article 8 of the Rights Agreement and is choosing to exercise
its rights hereunder with full knowledge of, and with full willingness to
bear, such risks and their consequences.
[CHECK ONE:]
In addition to the exercise of Rights as provided above, the undersigned
elects to exercise Rights that are not exercised by other 1993 Bondholders
(also referred to in the Rights Agreement as "Group A Rightholders") by
November 22, 1996.
The undersigned does NOT elect to exercise Rights that are not exercised
by other 1993 Bondholders.
Date: , 1996
Number of Shares Being Purchased: ___________________________________________
Name of Rightholder (Please print):
Address:
Social Security Number or Taxpayer Identification Number:
Signature:
SCHEDULE 2
RIGHT TO SUBSCRIBE FOR SHARES OF
COMMON STOCK OF ELSINORE CORPORATION
(FOR "GROUP B RIGHTHOLDERS")
CLASS OF RIGHTHOLDER:
[Check One]
NUMBER OF SHARES ALLOCATED TO EACH CLASS:
Elsinore Equity Holders 65,000
Convertible Noteholders 35,000
Unsecured Creditors of Elsinore Corporation 10,000
Unsecured Creditors of Four Queens, Inc. 15,000
THIS RIGHTS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED ("SECURITIES ACT"), OR UNDER ANY APPLICABLE STATE
SECURITIES LAWS, AND IT MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED,
OR HYPOTHECATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS, OR WITHOUT AN
OPINION FROM COUNSEL, SATISFACTORY TO THE COMPANY, THAT AN EXEMPTION FROM
REGISTRATION IS AVAILABLE (EXCEPT IN THE CASE OF AN AUTOMATIC TRANSFER OF
THIS RIGHTS CERTIFICATE, AS SPECIFIED BELOW). TRANSFER OR ASSIGNMENT OF THIS
RIGHTS CERTIFICATE OR THE RIGHTS PROVIDED FOR HEREIN IS RESTRICTED AS
PROVIDED IN THE SUBSCRIPTION RIGHTS AGREEMENT DATED OCTOBER 10, 1996.
THIS CERTIFIES that the above-named Rightholder (the "Rightholder") is
entitled, subject to the terms and conditions set forth in this Rights
Certificate and the Subscription Rights Agreement dated October 10, 1996
(the "Rights Agreement") between Elsinore Corporation, a Nevada corporation
(the "Company"), and the "Rightholders" (as defined in the Rights Agreement),
to subscribe for up to the number of shares of Common Stock of the
Company, $0.001 par value (the "Shares"), allocated to the Rightholder's
Class, as specified above, at any time commencing at 9:00 a.m., Pacific time, on
October 18, 1996 and continuing up to 5:00 p.m., Pacific time, on the
"Termination Date" (as defined in the Rights Agreement) at Five Dollars
($5.00) per Share (the "Rights Price").
Subject to the terms and conditions set forth herein and in the Rights
Agreement, the Rightholder may subscribe for all or less than all of the
Shares which are subject to the rights provided for in this Rights
Certificate (the "Rights") (but no fractional Shares) by presenting and
surrendering this Rights Certificate with the accompanying form of Election
to Purchase duly executed, at the principal office of the Company (or at such
other address as the Company may designate by notice in writing to the
Rightholder in accordance with the notice provisions of the Rights Agreement),
together with payment to the Company of the Rights Price in cash or by
certified or cashier's check. If a subscription is properly submitted to, and
accepted by the Company pursuant to the terms of the Rights Agreement, the
Shares so subscribed for will be issued to the Rightholder as of the
"Effective Date" (as defined in the Rights Agreement)., Nothing contained
herein shall be construed to confer upon the Rightholder, as such, any of the
rights of a shareholder of the Company.
Subject to the automatic transfer provisions in the next paragraph of this
Rights Certificate, the Company may treat the Rightholder as the absolute
owner of this Rights Certificate for the purpose of any exercise hereof and
for all other purposes, and the Company shall not be affected by any notice
to the contrary.
THIS RIGHTS CERTIFICATE AND THE CORRESPONDING RIGHTS SHALL BE AUTOMATICALLY
TRANSFERRED, WITH NO PAYMENT TO THE RIGHTHOLDER IN EXCHANGE FOR SUCH TRANSFER
AND WITH NO ACTION ON THE PART OF THE RIGHTHOLDER IF, AND TO THE EXTENT THAT,
THE RIGHTS ARE NOT EXERCISED BY THE "TERMINATION DATE," AS PROVIDED
IN THE RIGHTS AGREEMENT.
Dated: October 10, 0000 Xxxxxxxx Corporation, a Nevada corporation
By:
Name: Xxxxxx X. Xxxxxx
Title: President and
Chief Executive Officer
ELSINORE CORPORATION
ELECTION TO PURCHASE
Elsinore Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: President
Pursuant to the subscription rights represented by the accompanying Rights
Certificate, and subject to the terms of the Rights Agreement referenced
therein, the undersigned hereby irrevocably subscribes for the number of
Shares specified below. The undersigned acknowledges that if (i) the
aggregate number of Shares subscribed for by members of the undersigned's
Class exceeds the number of Shares allocated to that Class and (ii) the
undersigned has not subscribed for all the Shares allocated to the
undersigned's Class or is not otherwise the largest subscriber for Shares
allocated to that Class, then the undersigned's subscription might be
rejected by the Company. If, and to the extent that, the Company rejects
the subscription, the Company will refund the undersigned's subscription
payment in accordance with the Rights Agreement.
The undersigned has read, understands and agrees to all of the terms and
conditions of the Rights Agreement. Without limiting the generality of
the foregoing, the undersigned fully understands the "Certain Highly
Significant Risk Factors" discussed in Article 8 of the Rights Agreement and
is choosing to exercise the subscription rights hereunder with full
knowledge of, and with full willingness to bear, such risks and their
consequences.
Date: , 1996
Number of Shares Subscribed for: ____________________________________________
Name of Rightholder (Please print):
Address:
Social Security Number or Taxpayer Identification Number:
Signature:
