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 June 30, 1996
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 333-4402
Showboat Marina Casino Partnership
(Exact name of registrant as specified in its charter)
Indiana 35-1978576
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2001 E. Columbus Dr., East Chicago, Indiana 46410
(Address of principal executive offices) (Zip Code)
(219) 392-1111
(Registrant's telephone number, including area code)
Showboat Marina Finance Corporation
(Exact name of registrant as specified in its charter)
Nevada 88-0356197
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2001 E. Columbus Dr., East Chicago, Indiana 46410
(Address of principal executive offices) (Zip Code)
(219) 392-1111
(Registrant's telephone number, including area code)
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
requirement for the past 90 days. Yes [ ] No [X]
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Indicate the number of shares outstanding of each of the
issuers' classes of common stock, as of the latest practicable
date.
Showboat Marina Casino Partnership
Not applicable.
Showboat Marina Finance Corporation
1,000 shares of common stock, $1.00 par value as of
July 31, 1996.
2
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SHOWBOAT MARINA CASINO PARTNERSHIP (PARTNERSHIP)
(A Development Stage Entity)
AND
SHOWBOAT MARINA PARTNERSHIP (PREDECESSOR)
INDEX
PAGE
PART I FINANCIAL INFORMATION 4
ITEM 1. FINANCIAL STATEMENTS 4
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1996
AND MARCH 31, 1996 4
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
THREE MONTHS ENDED JUNE 30, 1996, THE PERIOD FROM
MARCH 29, 1996 (COMMENCEMENT OF DEVELOPMENT)
THROUGH MARCH 31, 1996 AND FOR THE PERIOD FROM
JANUARY 31, 1994 (INCEPTION) THROUGH JUNE 30, 1996 5
CONSOLIDATED STATEMENT OF PARTNERS CAPITAL PERIOD
FROM MARCH 29, 1996 (COMMENCEMENT OF DEVELOPMENT)
THROUGH JUNE 30, 1996 6
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
THREE MONTHS ENDED JUNE 30, 1996, THE PERIOD FROM
MARCH 29, 1996 (COMMENCEMENT OF DEVELOPMENT)
THROUGH MARCH 31, 1996, THE PERIOD FROM JANUARY
1, 1996 THROUGH MARCH 28, 1996 AND THE PERIOD
FROM JANUARY 31, 1994 (INCEPTION) THROUGH JUNE
30, 1996 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 12
PART II OTHER INFORMATION 16
ITEM 1. LEGAL PROCEEDINGS 16
ITEM 2. CHANGES IN SECURITIES 16
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 16
ITEM 5. OTHER INFORMATION 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 17
SIGNATURES 18
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PART I FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SHOWBOAT MARINA CASINO PARTNERSHIP
(A DEVELOPMENT STAGE ENTITY)
Consolidated Balance Sheet as of June 30, 1996 and March 31, 1996
ASSETS
June 30, March 31,
1996 1996
(Unaudited)
(in thousands)
<S> <C> <C>
Cash held in escrow $ 141,794 $ 157,295
Interest receivable 551 59
Property and equipment:
Land improvements 2,123 2,123
Furniture, fixtures and equipment 570 482
Construction in progress 35,803 16,251
Total property and equipment 38,496 18,856
Economic development costs 1,190 1,120
Other assets 2,761 2,752
$ 184,792 $ 180,082
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 2,769 $ 946
Accrued expenses 4,878 152
Long-term debt 140,000 140,000
Total liabilities 147,647 141,098
Commitments and contingencies
Partners' capital (includes deficit accumulated
during the development stage of $1,855,000 and
$16,000 at June 30, 1996 and March 31, 1996
respectively) 37,145 38,984
$ 184,792 $ 180,082
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
4
<PAGE>
SHOWBOAT MARINA CASINO PARTNERSHIP
(A Development Stage Entity)
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
ENDED JUNE 30, 1996, THE PERIOD FROM MARCH 29, 1996
(COMMENCEMENT OF DEVELOPMENT) THROUGH MARCH 31, 1996 AND FOR
THE PERIOD FROM JANUARY 31, 1994 (INCEPTION) THROUGH JUNE
30, 1996
For the
For the period from
For the period from January 31, 1994
three months March 29, 1996 (inception)
ended June through through
30, 1996 March 31, June 30, 1996
(Unaudited) 1996 (Unaudited)
(in thousands)
<S> <C> <C> <C>
Interest income $ 1,995 $ 59 $ 2,054
Interest expense 4,784 93 4,877
Less: Interest capitalized (950) (18) (968)
Net interest expense 3,834 75 3,909
Net loss accumulated
during the development
stage $(1,839) $ (16) $(1,855)
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
5
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SHOWBOAT MARINA CASINO PARTNERSHIP
(A Development Stage Entity)
<TABLE>
<CAPTION>
Consolidated Statement of Partners Capital
For the Period from March 29, 1996 (commencement of
development) through June 30, 1996
SHOWBOAT
SHOWBOAT MARINA
MARINA INVESTMENT
PARTNERSHIP PARTNERSHIP TOTAL
(UNAUDITED) (UNAUDITED) (UNAUDITED)
(in thousands)
<S> <C> <C> <C>
Balance at beginning of period $ - $ - $ -
Capital contributions 21,897 390 22,287
Net loss accumulated during the
development stage (1,836) (19) (1,855)
Transfer of net assets from
Showboat Marina Partnership 16,713 - 16,713
Balance at June 30, 1996 $ 36,774 $ 371 $ 37,145
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
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SHOWBOAT MARINA CASINO PARTNERSHIP (PARTNERSHIP)
(A Development Stage Entity)
AND
SHOWBOAT MARINA PARTNERSHIP (PREDECESSOR)
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows for the three months ended
June 30, 1996, the period from March 29, 1996 (commencement of
development) through March 31, 1996, the period from January 1,
1996 through March 28, 1996 and the period from January 31, 1994
(inception) through June 30 1996
PARTNERSHIP PREDECESSOR CUMULATIVE
PERIOD FROM
MARCH 29,
1996 PERIOD FROM PERIOD FROM
FOR THE (COMMENCE- JANUARY 1, JANUARY 31,
THREE MENT OF 1996 1994
MONTHS DEVELOPMENT) THROUGH (INCEPTION)
ENDED JUNE THROUGH MARCH 28, THROUGH
30, 1996 MARCH 31, 1996 JUNE 30,
(UNAUDITED) 1996 1996
(UNAUDITED)
(in thousands)
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net loss $ (1,839) $ (16) $ - $ (1,855)
Interest receivable (492) (59) - (551)
Licensing costs - - (276) (2,372)
Other assets (8) - (68) (389)
Accounts payable 1,823 - 443 2,769
Accrued expenses 4,726 152 - 4,878
Net cash provided by
(used in) operating 4,210 77 99 2,480
activities
Cash flows from investing
activities:
Economic development
costs (70) - (7) (1,190)
Purchase of land
improvements - - (286) (2,123)
Payments for
construction in (19,067) - (5,246) (29,698)
progress
Advance to affiliate - - (1)
Net cash used in
investing activities (19,225) - (5,738) (33,581)
Cash flows from financing
activities:
Proceeds from issuance
of notes payable, net (486) 134,931 (550) 133,895
of issuance costs
Loan from affiliate - - 28,118 -
Capital contributions - 22,287 (22,287) 39,000
Net cash provided by
financing activities (486) 157,218 5,281 172,895
Net increase (decrease)
in cash (15,501) 157,295 (358) 141,794
Cash at beginning of
period 157,295 - 359 -
Cash at end of period $ 141,794 $ 157,295 $ 1 $ 141,794
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
7
<PAGE>
SHOWBOAT MARINA CASINO PARTNERSHIP (PARTNERSHIP)
(A Development Stage Entity)
Notes to Consolidated Financial Statements
June 30, 1996
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
NATURE OF OPERATIONS
The accompanying consolidated financial statements present
the financial position, results of operations and cash flows
of Showboat Marina Casino Partnership (a development stage
entity) (Partnership) and its wholly owned subsidiary,
Showboat Marina Finance Corporation (Finance Corporation) as
of June 30, 1996 and March 31, 1996, and for the periods from
April 1, 1996, through June 30, 1996, and March 29, 1996
(commencement of development) through March 31, 1996. These
financial statements also present the cash flows of Showboat
Marina Partnership (Predecessor) for the period from
January 1, 1996 through March 28, 1996, and the cumulative
cash flows of the Partnership and the Predecessor from
January 31, 1994 (inception) through June 30, 1996. The
Predecessor had no operations through March 28, 1996 other
than development and licensing activities, the cost of which
were capitalized and subsequently contributed to the
Partnership as described below. Therefore a statement of
operations is not applicable.
Partnership is a general partnership and was formed as of
March 1, 1996 for the purpose of developing a riverboat
casino complex in East Chicago, Indiana to be operated on
Lake Michigan. The complex will consist of a gambling cruise
vessel and a land based support facility (East Chicago
Showboat). The East Chicago Showboat vessel is expected to
contain approximately 51,000 square feet of gaming space with
approximately 1,700 slot machines and approximately 86 table
games. The land based facility is expected to consist of a
pavilion, garage and surface parking. The pavilion will be
approximately 100,000 square feet and will include a
buffet/coffee shop, lounge, gift shop, ticket/promotions area
as well as administrative offices. The current design
includes a 1,000 space parking garage and 1,500 space surface
parking. The Partnership is currently evaluating the
expansion of the garage by 800 spaces and connecting the
garage directly to the pavilion prior to opening. Finance
Corporation was incorporated on March 7, 1996 to assist the
Partnership in financing the East Chicago Showboat. The
Predecessor was formed on January 31, 1994 and had been
developing the project prior to the formation of the
Partnership.
The Partnership is owned 99% by the Predecessor and 1% by
Showboat Marina Investment Partnership. The Partnership is
effectively owned 55% by Showboat, Inc. (Showboat) and 45% by
Waterfront Entertainment and Development, Inc. (Waterfront)
through various partnership interests.
The Predecessor applied for the sole riverboat gaming license
allocated to East Chicago, Indiana and was granted a
certificate of suitability (Certificate of Suitability) by
the Indiana Gaming Commission on January 8, 1996. On March
20, 1996, the Predecessor received approval to transfer the
Certificate of Suitability to the Partnership. As of March
27, 1996, the Predecessor contributed the Certificate of
Suitability, and on March 28, 1996 all of its
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assets (except for the capital stock of East Chicago Second
Century, Inc.), liabilities and obligations were contributed
to the Partnership.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been
consolidated or omitted. These consolidated financial
statements should be read in conjunction with the financial
statement and notes thereto included in the Partnership's
Amendment No. 2 to Registration Statement on Form S-4
effective July 11, 1996.
The accompanying unaudited consolidated financial statements
contain all adjustments which are only of a recurring nature,
in the opinion of management, necessary for a fair statement
of the results of the interim period. The results of
operations for the interim periods are not indicative or
results of operations for an entire year. Certain prior
period balances have been reclassified to conform to the
current period's presentation.
(2) LONG-TERM DEBT
On March 28, 1996, the Partnership and Finance Corporation
issued $140.0 million (Offering) in the aggregate principal
amount of 13 1/2% Series A First Mortgage Notes due 2003 (Old
Notes) through a private placement. In connection with the
Offering, the Partnership and Finance Corporation committed
to file a registration statement to register the
Partnership's and Finance Corporation's 13 1/2% Series B
First Mortgage Notes due 2003 (New Notes) and exchange the
Old Notes for the New Notes. All of the Old Notes were
exchanged for the New Notes on August 12, 1996. The form and
terms of the New Notes are identical in all material respects
to the Old Notes. Hereafter, the New Notes and Old Notes
shall be referred to as the Notes.
The proceeds from the Offering were approximately $134.4
million, net of underwriting discounts and commissions. The
net proceeds will be used to develop the East Chicago
Showboat. Interest is payable on the Notes semiannually on
March 15, and September 15 of each year commencing
September 15, 1996. The Notes will not be redeemable prior
to March 15, 2000, except as otherwise required by a gaming
authority. On and after March 15, 2000, the Notes will be
redeemable at the option of the Partnership, in whole or in
part, at redemption prices ranging from 106.750% in 2000
through 100.000% in 2002 and thereafter, as defined in the
Indenture for the Notes (the Note Indenture), plus accrued
and unpaid interest and liquidated damages, if any.
The Note Indenture places significant restrictions on the
incurrence of additional indebtedness, the creation of
additional liens on the collateral securing the Notes,
transactions with affiliates and payment of certain
restricted payments.
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(3) COMMITMENTS AND CONTINGENCIES
Atlantic Marine, Inc. has been retained to build and equip
the riverboat vessel. The current contract price is $38.5
million, but is subject to adjustments, if any, as set forth
in the contract.
Tonn & Blank, Inc., in joint venture with KLM Construction,
Inc., has been retained to build and construct the
approximately $34.0 million land based facilities of the East
Chicago Showboat. The general construction contract provides
for payment of a basic fee of $1.7 million and a general
conditions fee of $1.2 million for the general contractor
services. In addition, the joint venture may bid on the
subcontracts for construction at the East Chicago Showboat.
As of August 12, 1996 the joint venture has been selected as
the subcontractor for the construction of building concrete,
structural steel erection and pilecaps for the East Chicago
Showboat at a construction cost of approximately $2.6
million.
Luhr Bros., Inc., has been retained to build the breakwater,
mooring/fending bulkhead and to perform basin dredging
necessary for the marina operations of the East Chicago
Showboat. The contract is a fixed price contract for $14.5
million and is subject to adjustments based on design changes
related to the development.
Thompson Engineering has been retained to provide the
Partnership with basic services related to the reconstruction
and the construction phases of the development of the
riverboat casino complex. For basic services, the
Partnership shall compensate Thompson Engineering on a time
and materials basis estimated to be approximately $.9
million.
The Hillier Group has been retained by the Partnership as the
project architect for the pavilion, garage, water treatment
plant facade, vessel, and sitework. The Hillier Group will
provide the basic services related to the following five
phases of the development and construction of the Casino:
Schematic Design Phase, Design Development Phase,
Construction Documents Phase, Bidding or Negotiation Phase,
and the Construction phase. The compensation for these basic
services is time and materials estimated to be approximately
$2 million.
The Partnership has entered into numerous agreements and
financial commitments for the construction of leasehold
improvements as well as to promote the economic development
of the City of East Chicago that must be completed whether or
not an owner's license is issued to the Partnership. In the
event an owner's license is not issued, the fulfillment of
these commitments as well as the realization of the costs
already expended could have a material adverse impact on the
financial condition, results of operations and liquidity of
the Partnership.
(4) PARTNERS' CAPITAL
Showboat, beneficial owner of 55% of the Partnership, has
committed to a standby equity commitment of up to $30.0
million and a completion guarantee of up to $30.0 million.
The terms of these agreements are as follows:
The standby equity commitment provides that if during any of
the first three full four-quarter periods after the riverboat
is operating the Partnership's combined cash flow is less
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than $35.0 million for any such full fiscal four-quarter
period, Showboat will cause to be contributed additional
capital contributions that will result in net cash proceeds
to the Partnership of not less than the difference between
$35.0 million and the combined cash flow for the period;
provided, however, that in no event shall Showboat be
required to cause to be contributed more than $15.0 million
in respect of any one such full fiscal four-quarter period or
more than $30.0 million in the aggregate.
Showboat has also agreed to complete the East Chicago
Showboat so that it becomes operating and will guarantee the
payment of all project costs owing prior to such completion.
The completion guarantee will be subject to certain
limitations, qualifications and exceptions. This obligation
goes into effect only in the event there are insufficient
funds to meet the costs of developing, constructing and
opening the East Chicago Showboat and is limited to $30.0
million in the aggregate.
(5) RELATED PARTY TRANSACTIONS
As discussed in Note 3, the East Chicago Showboat has
entered into a construction contracts with Tonn & Blank,
Inc. in joint venture with KLM Construction, Inc. for the
purpose of serving as general contractors for the
development. Nikos Kefolidis, the President of KLM,
beneficially owns 3.0% of the Partnership.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
DEVELOPMENT ACTIVITIES
The operations of Showboat Marina Casino Partnership (the
"Partnership"), and of Showboat Marina Partnership (the
"Predecessor"), which contributed all of its assets (except for
the capital stock of East Chicago Second Century, Inc.) and
liabilities to the Partnership as of March 28, 1996, have been
limited to applying for appropriate gaming licenses and securing
the land for, arranging for construction of, finalizing the
design of, and developing and obtaining financing for a riverboat
gaming complex (the "East Chicago Showboat"). East Chicago
Showboat will contain approximately 51,000 square feet of gaming
space with approximately 1,700 slot machines and approximately 86
table games. The land based facility is expected to consist of a
pavilion, garage and surface parking. The pavilion will be
approximately 100,000 square feet and will include a
buffet/coffee shop, lounge, gift shop, ticket/promotions area as
well as administrative offices. The current design includes a
1,000 space parking garage and 1,500 space surface parking. The
Partnership is currently evaluating the expansion of the garage
by 800 spaces and connecting the garage directly to the pavilion
prior to opening. Subject to obtaining the necessary gaming
licenses, other permits and financing, the Partnership expects
gaming operations at East Chicago Showboat to commence by July 1,
1997.
RESULTS OF OPERATIONS
The Partnership is in the development stage and has capitalized
all costs, except for some interest expense. Accordingly, the
Partnership does not have any historical operating income. The
Finance Corporation is wholly-owned by the Partnership and was
incorporated to assist the Partnership in financing the East
Chicago Showboat. The capitalized costs consist primarily of
land improvements, economic development payments, vessel design
and legal, audit, consulting and design fees, financing and
commitment fees, interest on qualifying assets, and gaming
application fees, all associated with the development of East
Chicago Showboat. The Partnership anticipates that the results of
its first twelve months of operations will be adversely affected
by expensing of preopening costs and should not be indicative of
future operations. Future operating results will be subject to
significant business, economic, regulatory and competitive
uncertainties and contingencies, many of which are beyond the
control of the Partnership. While the Partnership believes that
East Chicago Showboat will be able to attract a sufficient number
of customers and achieve the level of activity necessary to
permit the Partnership and the Finance Corporation to meet their
payment obligations in connection with the Notes, there can be no
assurance with respect thereto.
MATERIAL CHANGES IN FINANCIAL CONDITION
Since its inception, the Partnership has met its capital
requirements through the $39.0 million capital contribution (the
"Capital Contribution") and the $134.4 million net proceeds from
the offering (the "Offering") of its 13 1/2% Series A First
Mortgage Notes due 2003 (the "Old Notes"). The $195.0 million
necessary to fund the design, development, construction,
equipping and opening of East Chicago Showboat is expected to be
derived from the Capital Contribution,
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the proceeds from the Offering, and approximately $16.0 million
of capital lease financing which capital lease financing is
currently being negotiated with third parties. Management
believes that it has sufficient sources of funds for the
construction of the East Chicago Showboat. The funds provided by
these sources are expected to be sufficient to develop and
commence operations of East Chicago Showboat. However, there can
be no assurance that such funds will be sufficient for the
development and construction of East Chicago Showboat. The
Partnership has entered into fixed price contracts for the
construction of the casino vessel and other portions of the East
Chicago Showboat. Fixed or guaranteed maximum price contracts are
subject to price adjustments if the plans and specifications are
changed. The unspent portion of the Capital Contribution and the
net proceeds of the Offering have been deposited into the Escrow
Account and invested in cash equivalents and will be disbursed
pursuant to the Escrow and Disbursement Agreement for the
construction of East Chicago Showboat. Showboat, Inc.
("Showboat") has entered into a completion guarantee (the
"Completion Guarantee") committing up to $30.0 million, subject
to certain exceptions, qualifications and limitations, to
complete the Minimum Facilities (as defined in the Completion
Guarantee). Showboat also provided the standby equity commitment
pursuant to which it has agreed to cause to be made up to an
aggregate of $30.0 million in additional capital contributions to
the Partnership during the first three Operating Years (as
defined in the standby equity commitment) if the Partnership's
Combined Cash Flow (as defined in the standby equity commitment)
does not reach $35.0 million in any one such Operating Year,
subject to certain terms and conditions; however, in no event
shall Showboat be required to contribute more than $15.0 million
in respect of any one such Operating Year.
The following table sets forth the estimated sources and uses of
funds for the construction of East Chicago Showboat through its
expected opening date of July 1, 1997 (in millions) as adjusted
through the first budget amendment effective as of June 18, 1996.
<TABLE>
<CAPTION>
SOURCES: USES<F1>:
<S> <C> <C> <C>
Capital Contribution $ 39.0 Casino vessel $ 46.0
Notes 140.0 Gaming and other equipment 17.2
Capital Lease Financing 16.0 Preopening expenses 18.0
Total Sources $195.0 Interest<F2> 16.6
Breakwater 16.4
Garage 10.2
Furniture, fixtures & 11.9
equipment
Contingency 12.0
Pavilion 13.6
Design and development fees 10.5
Economic development 5.9
incentives
Site improvements and 5.0
infrastructure
Offering discounts and 6.7
expenses
Bankroll and working capital 5.0
Total Uses $195.0
<FN>
<F1> The Partnership believes that the construction budget is
reasonable and the Partnership has entered into fixed or
guaranteed maximum price contracts (which are subject to price
adjustment if the plans and specifications are changed) for the
construction of a substantial portion of East Chicago Showboat.
Given the risks inherent in the construction process, however,
actual construction costs may be significantly higher.
<F2> Interest is net of interest income anticipated to be earned
on the funds in the Escrow Account. Assumes interest income of
4.0% on the cash balance in the Escrow Account.
</FN>
</TABLE>
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The Old Notes were issued under the Note Indenture dated as of
the Closing Date between the Partnership, the Finance Corporation
and American Bank National Association as Trustee (in such
capacity, the "Trustee" or "Registrar"). In connection with the
Offering, the Partnership and Finance Corporation committed to
file a registration statement to register the Partnership's
13 1/2% Series B First Mortgage Notes due 2003 (the
"New Notes") and exchange the Old Notes for the New Notes. The
Old Notes and the New Notes were exchanged as of August 12,
1996. The form and terms of the New Notes are identical in all
material respects to the form and terms of the Old Notes, except
that (i) the New Notes have been registered under the Securities
Act (ii) holders of New Notes are not be entitled to liquidated
damages which had been payable in the event that a registration
statement had not been filed and became effective as of a certain
date (iii) holders of New Notes will not be entitled to certain
rights intended for the holders of unregistered securities.
Hereafter, the Old Notes and the New Notes shall be referred
to as the Notes.
The Notes mature on March 15, 2003. Interest payment dates under
the Notes are March 15 and September 15, commencing September 15,
1996. The Notes are senior secured obligations of the
Partnership. The Notes rank PARI PASSU, or on a parity with, in
right of payment with all existing and future senior indebtedness
of the Partnership and senior in right of payment to all future
Subordinated Indebtedness of the Partnership. The Notes are
without recourse to the general partners of the Partnership or to
Showboat.
The Notes may be redeemed at the option of the Partnership, in
whole or in part, at any time on and after March 15, 2000, at the
redemption prices set forth in the Note Indenture, plus accrued
and unpaid interest and liquidated damages thereon, if any,
through the redemption date.
Upon a Change of Control, each holder of Notes will have the
right to require the Partnership to repurchase all or part of
such holder's Notes at a price equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest and
liquidated damages thereon, if any, to the date of repurchase.
The Note Indenture contains certain covenants that, among other
things, limit the ability of the Partnership and its Restricted
Subsidiaries to incur additional Indebtedness and issue
Disqualified Stock, pay dividends or make other distributions,
repurchase Equity Interests or Subordinated Indebtedness, engage
in certain lease transactions, create certain liens, enter into
transactions with affiliates, sell assets, issue or sell certain
Equity Interests of the Partnership's subsidiaries or enter into
certain mergers and consolidations.
Following the commencement of operations of East Chicago
Showboat, the Partnership expects to fund its operating debt
service and capital needs from operating cash flow. Based upon
the Partnership's anticipated future operations, management
believes that available cash flow from East Chicago Showboat's
future operations, together with the proceeds from the offering
and the capital contribution, will be adequate to meet the
Partnership's anticipated future requirements for working
capital, capital expenditures and scheduled payments of principal
of and interest and liquidated damages, if any, on the Notes for
the foreseeable future. No assurance can be given, however, that
operating cash flow will be sufficient for that purpose. The
Partnership intends to establish initial working capital reserves
to provide for anticipated short-term liquidity needs. Although
no additional financial is contemplated, the Partnership will
seek, if necessary and to the extent permitted under the
Indenture, additional financing through bank borrowings, debt or
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equity financings. There can be no assurance that additional
financing, if needed, will be available to the Partnership, or
that, if available, the financing will be on terms favorable to
the Partnership. There is no assurance that the Partnership's
estimate of its reasonably anticipated liquidity needs is
accurate or that new business developments or other unforeseen
events will not occur, resulting in the need to raise additional
funds.
COSTS EXPENDED TO DATE
Through June 30, 1996, approximately $42.4 million had been
expended on development of the East Chicago Showboat of which
approximately $2.4 million had been expended on licensing and
organizational costs, and approximately $1.2 million had been
expended on economic development costs as required by the
Company's letter agreement with the City of East Chicago.
SEASONALITY
The Partnership has no operating history. The Partnership
anticipates that activity at East Chicago Showboat will be
affected by weather conditions and that the heaviest activity
will be from May through September rather than October through
April when East Chicago experiences harsher weather.
Accordingly, the Partnership's results of operations may
fluctuate from quarter to quarter and the results for any fiscal
quarter may not be indicative of results for future fiscal
quarters.
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PART II Other Information
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
(a) None.
(b) On July 15, 1996, the Showboat Marina Casino Partnership and
Showboat Marina Finance Corporation (collectively, the "Company")
offered (the "Exchange Offer"), subject to certain terms and
conditions, to exchange $1,000 in principal amount of its 13 1/2%
Series B First Mortgage Notes due 2003 (the "New Notes") for each
$1,000 in principal amount of its outstanding 13 1/2% Series A
First Mortgage Notes due 2003 (the "Old Notes"), of which an
aggregate principal amount of $140.0 million was outstanding.
Under the terms of the Exchange Offer, the Company agreed to
accept for exchange any and all Old Notes that are validly
tendered prior to 5:00 p.m., New York City time, on August 12,
1996 and on such date all Old Notes were exchanged for the New
Notes. The Exchange Offer was subject to the terms and provisions
of the Registration Rights Agreement dated as of March 28, 1996
(the "Registration Rights Agreement") among the Company and
Donaldson, Lufkin & Jenrette Securities Corporation, Nomura
Securities International, Inc. and Bear, Stearns & Co. Inc.
(collectively the "Initial Purchasers").
The Old Notes were, and the New Notes also were, issued
under the Indenture dated as of March 28, 1996 between the
Company and American Bank National Association as Trustee (in
such capacity, the "Trustee" or "Registrar"). The form and terms
of the New Notes are identical in all material respects to the
form and terms of the Old Notes, except that (i) the New Notes
were registered under the Securities Act and, therefore, will not
bear legends restricting the transfer thereof, (ii) holders of
New Notes are not entitled to certain liquidated damages
otherwise payable under the Registration Rights Agreement in
respect of Old Notes held by such holders during any period in
which a registration statement has not been filed and/or is not
effective and (iii) holders of New Notes are not entitled to
certain rights under the Registration Rights Agreement intended
for the holders of unregistered securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
16
<PAGE>
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit
NUMBER DESCRIPTION
10.01 Agreement; General Contractor dated April 30, 1996 between
Showboat Marina Casino Partnership and Tonn & Blank, Inc.,
in Joint Venture with KLM Construction, Inc.
10.02 EJCDC - Standard Form of Agreement, as modified dated May
13, 1996 between Showboat Marina Casino Partnership and
Luhr Bros., Inc.
27.01 Financial Data Schedule.
(b) REPORTS ON FORM 8-K
None.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrants have duly caused this report to be
signed on their behalf by the undersigned thereunto duly
authorized.
SHOWBOAT MARINA CASINO
PARTNERSHIP, an Indiana general
partnership
By: SHOWBOAT MARINA INVESTMENT By: SHOWBOAT MARINA
PARTNERSHIP, an Indiana PARTNERSHIP, an Indiana
general partnership, a general partnership, a
general partner general partner
By: SHOWBOAT INDIANA By: SHOWBOAT INDIANA
INVESTMENT LIMITED INVESTMENT LIMITED
PARTNERSHIP, a Nevada PARTNERSHIP, a Nevada
limited partnership, a limited partnership, a
general partner general partner
By: SHOWBOAT INDIANA, INC., a By: SHOWBOAT INDIANA, INC., a
Nevada corporation, its Nevada corporation, its
general partner general partner
By: /s/ By: /s/
J. Keith Wallace J. Keith Wallace
President and Chief President and Chief
Executive Officer Executive Officer
By: /s/ By: /s/
Joseph G. O'Brien III Joseph G. O'Brien III
Vice President Finance and Vice President Finance and
Chief Financial Officer Chief Financial Officer
By: WATERFRONT ENTERTAINMENT By: WATERFRONT ENTERTAINMENT
AND DEVELOPMENT, INC., an AND DEVELOPMENT, INC., an
Indiana corporation, a Indiana corporation, a
general partner general partner
By: /s/ By: /s/
Michael A. Pannos Michael A. Pannos
President President
By: /s/ By: /s/
Thomas S. Cappas Thomas S. Cappas
Treasurer (principal Treasurer (principal
financial officer) financial officer)
18
<PAGE>
SHOWBOAT MARINA FINANCE
CORPORATION, a Nevada
corporation
By: /s/
Michael A. Pannos
Secretary
By: /s/
Joseph G. O'Brien, III
Vice President Finance and
Chief Financial Officer
19
<PAGE>
EXHIBIT INDEX
Exhibit Page
NUMBER DESCRIPTION NO.
10.01 Agreement; General Contractor dated April 30, 1996 21
between Showboat Marina Casino Partnership and
Tonn & Blank, Inc., in Joint Venture with KLM
Construction, Inc.
10.02 EJCDC - Standard Form of Agreement, as modified 46
dated May 13, 1996 between Showboat Marina
Casino Partnership and Luhr Bros., Inc.
27.01 Financial Data Schedule. 58
20
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the consolidated
financial statements of Showboat Marina Casino Partnership for the period from
April 1, 1996 through June 30, 1996, and is qualified in its entirety by
references to such financial statements.
</LEGEND>
<CIK> 0001013788
<NAME> SHOWBOAT MARINA CASINO PARTNERSHIP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 141,794
<SECURITIES> 0
<RECEIVABLES> 551
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 142,345
<PP&E> 38,496
<DEPRECIATION> 0
<TOTAL-ASSETS> 184,792
<CURRENT-LIABILITIES> 7,647
<BONDS> 140,000
0
0
<COMMON> 0
<OTHER-SE> 37,145
<TOTAL-LIABILITY-AND-EQUITY> 184,792
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (1,995)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,834
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,839)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
(AIA DOC. A111, STANDARD FORM &, AS MODIFIED)
(COST OF WORK PLUS A FEE)
AGREEMENT; GENERAL CONTRACTOR
(NO LIEN CONTRACT)
THIS AGREEMENT
made as of the 30th day of April in the year of Nineteen Hundred
and Ninety-Six (1996).
BETWEEN the Owner: Showboat Marina Casino Partnership
An Indiana general partnership
2001 East Columbus Drive
East Chicago, IN 46312
and the Contractor: Tonn & Blank, Inc., in Joint Venture with KLM
Construction, Inc.
126 E. Fifth Street
Michigan City, IN 46360-3307
The Project is: East Chicago Showboat/Landside Improvements
(Site Work, Pavilion and Parking Garage)
See Legal Description Exhibit "I"
3401 Aldis Avenue
East Chicago, IN 46312
The Architect is: Hillier Group
500 Alexander Park CN-23
Princeton, NJ 08540
For and in consideration of the terms, conditions and covenants
set-out herein, the Owner and Contractor agree as set forth
below.
ARTICLE 1
THE CONTRACT DOCUMENTS
The Contract Documents consist of this Agreement, Conditions of
the Contract, (General Supplemental and other Conditions)
Drawings, Specifications, Addenda issued prior to
28
<PAGE>
execution of this Agreement, and such other documents all as
listed in this Agreement and Modifications issued after execution
of this Agreement; these form the Contract, and are as fully a
part of the Contract as if attached to this Agreement or repeated
herein. The Contract represents the entire and integrated
agreement between the parties hereto and supersedes prior
negotiations, representations or agreements, either written or
oral.
ARTICLE 2
THE WORK OF THIS CONTRACT
2.1 The Contractor shall execute the entire Work described in the
Contract Documents, except to the extent specifically indicated
in the Contract Documents to be the responsibility of others, or
as follows:
The Project is a new marina casino for Showboat consisting
of site work to prepare for the buildings and grounds; a pavilion
building at approximately 100,000 s.f. and parking garage at
approximately 350,000 s.f. The pavilion will be two story on
pile foundation with steel construction and dryvit shell. The
parking garage will be four stories on pile foundation with
reinforced concrete decks and columns and precast shell. The
pavilion will provide connecting bridges to the marina and
parking garage. The interior work will include complete tenant
improvements, including installation of owner supplied finish
materials and equipment.
2.2 Contractor's duties shall include interior construction
services, including coordination and installation of all Showboat
Development Company interior improvements and finish work. The
Work shall include, but not be specifically limited to,
installation of furniture, floor, finishes, wall covering,
casework, shelving, storage systems, fixtures and equipment as
specified on construction documents.
2.2.1 The Contractor shall furnish only skilled and properly
trained staff for the performance of the Work. The key members
of the Contractor's staff shall be persons agreed to in advance
with the Owner and identified in the "Schedule of Key Personnel"
attached hereto and incorporated herein as EXHIBIT E.
2.2.2 Such key members of the Contractor's staff shall not be
changed without the written consent of the Owner, unless such
person becomes unable to perform any required duties due to
death, disability, or termination of employment with the
Contractor. If a key member is no longer capable of performing
in the capacity described in Exhibit E, the Owner and the
Contractor shall agree on a mutually acceptable substitute.
29
<PAGE>
2.2.3 During the performance of the Work and until the Owner
determines these services are no longer needed, the Contractor
shall keep the superintendent at the Project site, fully
authorized to act on behalf of the Contractor, unless otherwise
agreed to in advance by the Owner.
ARTICLE 3
3.1 The Contractor accepts the relationship of trust and
confidence established by this Agreement and Covenants with the
Owner to cooperate with the Architect and utilize the
Contractor's best skill, efforts and judgment in furthering the
interests of the Owner; to furnish efficient business
administration and supervision; to make best efforts to furnish
at all times an adequate supply of workers and materials; and to
perform the Work in the best way and most expeditious and
economical manner consistent with the interests of the Owner.
The Owner agrees to exercise best efforts to enable the
Contractor to perform the Work in the best way and most
expeditious manner by furnishing and approving in a timely way
information required by the Contractor and making payments to the
Contractor in accordance with requirements of the Contract
Documents.
3.2 Contractor shall coordinate and actively work with Owner's
minority relations consultant to identify capable sub-contractors
and vendors that will be included on a qualified bid list.
Report to Owner monthly as specified by local and state municipal
requirements.
ARTICLE 4
DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
4.1 The date of commencement is the date from which the Contract
Time of Subparagraph 4.2 is measured; it shall be the date of
this Agreement, as first written above, unless a different date
is stated below or provision is made for the date to be fixed in
a notice to proceed issued by Owner.
Notice to Proceed approximately April 15, 1996.
4.2 The Contractor shall achieve Substantial Completion of the
entire Work not later than April 15, 1997, subject to adjustments
of this Contract Time as provided in the Contract Documents.
Contractor shall complete all work including obtaining the
necessary occupancy and use permits within the Contractor's
control, and turn over these areas to the Owner for the Owner's
exclusive use. Roadways, sitework, parking garage and pavilion
to be open for business April 16, 1997.
4.2.1 In addition, the Contractor shall complete all site work,
site utilities, paving, utilities to the vessel bulkhead,
utilities to the pavilion building, and the parking garage.
Also, the Contractor
30
<PAGE>
shall complete the entire building envelope (core and shell)
including roofing, mounting of HVAC units and delivery of the
elevators and escalators for the pavilion, whatever applies to
closing-up the parking garage including delivery of elevators and
the connecting links from the pavilion to the garage and from the
pavilion to the vessel not later than NOVEMBER 20, 1996.
4.3 The basis for determining the date of Substantial Completion,
April 15, 1997, and the date of November 20, 1996 is the timely
completion of final Construction Drawings by the Architect as per
the April 1, 1996 Progress Schedule, attached hereto as Exhibit
"H".
ARTICLE 5
CONTRACT SUM
5.1 The Owner shall pay the Contractor in current funds for the
Contractor's performance of the Contract the Contract Sum
consisting of the Cost of Work as defined in Article 7 and the
Contractor's Fee determined as follows:
The Contractor shall receive a basic fee, of $1.7 million
for that portion of the cost of the Work, including changes in
the Work which are incurred or paid by the Contractor during
performance of the Work (the contractor's fee). Consequently, the
total amount earned by the Contractor as the fee may increase or
decrease, depending upon the nature of any changes in the Work,
but the basis of the Contractor's fee shall always remain $1.7
million of the final cost of the Work including changes.
A. Tonn & Blank Inc./KLM Construction, Inc. Joint Venture,
Fee is $1,700,000.00
B. This Fee is payable as follows:
(1) $200,000.00 at the time of execution of this
Agreement, the balance payable in twelve (12) equal monthly
payments of $125,000.00 each month without retainage.
(2) Monthly payments of Contractor's Fee shall be made
at same time as the first progress Payment of each month.
C. Contractor's Incentive (Bonus).
In the event Contractor performs and achieves Substantial
Completion of the Work of this Contract prior to April 15, 1997,
then in such event Owner shall pay Contractor, in addition to all
other sums due, on Incentive Fee in an amount equal to $75,000.00
for each week prior to April
31
<PAGE>
15, 1997 Substantial Completion is achieved, and provided
Contractor has completed the Work not by use of any Budgetary
Monies.
5.2 Also, the Owner's intent is to maintain a fixed fee of $1.7
million for any additional work performed causing the cost of the
work not to exceed a budget of up to $40 million. Any additional
cost of work exceeding $40 million will be negotiated including
fee.
5.2.1 The Contractor shall submit to the Owner the complete list
of General Conditions and costs for review and approval prior to
site mobilization.
5.2.2 The following alternates, which are described in Contract
Documents, may be accepted by the Owner in writing; provided,
however, that the Contractor shall furnish the Owner with no less
than fourteen (14) days' prior written notice of the date upon
which any of the alternates set forth in this Subparagraph 5.2.2
must be accepted by the Owner in order for this Contractor to
perform the Work covered by such alternates for the price set
forth in this Subparagraph 5.2.2 and without any adjustment to a
milestone date or in the Contract Time.
5.2.3 The Contractor shall establish unit prices for
subcontractors as specifically requested in the contract
documents or by the Owner.
ARTICLE 6
CHANGES IN THE WORK
6.2.1 Increased costs for items set forth in Article 7 which
result from changes in the Work shall become part of the cost of
THE WORK.
ARTICLE 7
COSTS TO BE REIMBURSED
7.1 The term Cost of the Work shall mean costs necessarily
incurred by the Contractor in the proper performance of the Work.
Such costs shall be at rates not higher than the standard paid at
the place of the Project except with prior consent of the Owner.
The Cost of the Work shall include only the items set forth in
this Article 7.
7.1.1 LABOR COSTS
7.1.1.1 Wages of construction workers directly employed by the
Contractor to perform the construction of the Work at the site
or, with the Owner's agreement, at off-site workshops.
32
<PAGE>
7.1.1.2 Wages or salaries of the Contractor's supervisory and
administrative personnel when stationed at the Site with the
Owner's Agreement. See Article 14.3.5.
7.1.1.3 Wages and salaries of the Contractor's supervisory or
administrative personnel engaged, at factories, workshops or on
the road, in expediting the production or transportation of
materials or equipment required for the Work, but only for that
portion of their time required for the Work. See Article 14.11.
7.1.1.4 Costs paid or incurred by the Contractor for taxes,
insurance , contributions, assessments and benefits required by
law or collective bargaining agreements and, for personnel not
covered by such agreements, customary benefits such as sick
leave, medical and health benefits, holidays, vacations and
pensions, provided such costs are based on wages and salaries
included in the Cost of the Work under Clauses 7.1.1.1 through
7.1.1.3.
7.1.2 SUBCONTRACT COSTS
Payments made by the Contractor to Subcontractor in accordance
with the requirements of the subcontracts.
7.1.3 COSTS OF MATERIALS AND EQUIPMENT INCORPORATED IN THE
COMPLETED CONSTRUCTION
7.1.3.1 Costs, including transportation, of materials and
equipment incorporated or to be incorporated in the completed
construction.
7.1.3.2 Costs of materials described in the preceding Clause
7.1.3.1 in excess of those actually installed but required to
provide reasonable allowance for waste and for spoilage. Unused
excess materials, if any, shall be handed over to the Owner at
the completion of the Work or, at the Owner's option, shall be
sold by the Contractor; amounts realized, if any, from such sales
shall be credited to the Owner as a deduction from the Cost of
the Work.
7.1.4 COSTS OF OTHER MATERIALS AND EQUIPMENT, TEMPORARY
FACILITIES AND RELATED ITEMS
7.1.4.1 Costs, including transportation, installation,
maintenance, dismantling and removal of materials, supplies,
temporary facilities, machinery, equipment, and hand tools not
customarily owned by the construction workers, which are provided
by the Contractor at the site and fully consumed in the
performance of the Work; and cost less salvage value on such
items if not fully
33
<PAGE>
consumed, whether sold to others or retained by the Contractor.
Cost for items previously used by the Contractor shall mean fair
market value.
7.1.4.2 Rental charges of all necessary machinery and equipment,
exclusive of hand tools, used at the site of the Work, whether
rented from the Contractor or others, including installation,
minor repairs and replacements, dismantling, removal,
transportation and delivery costs thereof. Rental charges shall
be consistent with those generally prevailing in the location of
the Project. Rates and quantities of equipment rented shall be
subject to the Owner's prior approval and accounted for to the
Owner monthly as an attachment to the Application for Payment.
Rental charges shall not exceed purchase price of machinery and
equipment.
7.1.4.3 Costs of removal of debris from the site.
7.1.4.4 Costs of telegrams and long-distance telephone calls,
postage and parcel delivery charges, telephone service at the
site and reasonable petty cash expenses of the site office.
7.1.4.5 That portion of the reasonable travel and subsistence
expenses of the Contractor's personnel incurred while traveling
in discharge of duties connected with the Work. Only personnel
noted in Article 14.11 will be reimbursed.
7.1.5 MISCELLANEOUS COSTS
7.1.5.1 That portion directly attributable to this Contract of
premiums for insurance and bonds.
7.1.5.2 Sales, use or similar taxes imposed by a governmental
authority which are related to the Work and for which the
Contractor in liable.
7.1.5.3 Fees and assessments for the building permit and for
other permits, licenses and inspections for which the Contractor
is required by the Contract Documents to pay.
7.1.5.4 Fees of testing laboratories for tests required by the
Contract Documents, except those related to defective or
nonconforming Work for which reimbursement is excluded by
Subparagraph 13.5.3 of the general Conditions or other provisions
of the Contract Documents and which do not fall within the scope
of Subparagraphs 7.2.2 through 7.2.4 below.
7.1.5.5 Royalties and license fees paid for the use of a
particular design, process or product required by the Contract
Documents, the cost of defending suits or claims for infringement
of patent rights arising from such requirement by the Contract
Documents; payments made in accordance with legal judgments
against the Contractor resulting from such suits or claims and
34
<PAGE>
payments or settlements made with the Owner's consent;
provided, however, that such costs of legal defenses, judgment
and settlements shall not be included in the calculation of the
Contractor's Fee or of a guaranteed maximum Price, if any, and
provided that such royalties, fees and costs are not excluded by
the last sentence of Subparagraph 3.17.1 of the General
Conditions or other provisions of the Contract Documents.
7.1.5.6 Deposits lost for causes other than the Contractor's
fault or negligence.
7.1.6 OTHER COSTS
7.1.6.1 Other costs incurred in the performance of the Work if
and to the extent approved in advance in writing by the Owner.
7.1.6.2 See Exhibit D
7.2 EMERGENCIES: REPAIRS TO DAMAGED, DEFECTIVE OR NONCONFORMING
WORK
The Cost of the Work shall also include costs described in
Paragraph 7.1 which are incurred by the Contractor:
7.2.1 In taking action to prevent threatened damage, injury or
loss in case of an emergency affecting the safety of persons and
property, as provided in Paragraph 10.3 of the General
Conditions.
7.2.2 In repairing or correcting Work damaged or improperly
executed by construction workers in the employ of the Contractor,
provided such damage or improper execution did not result from
the fault or negligence of the Contractor or the Contractor's
foremen, engineers or superintendents, or other supervisory,
administrative or managerial personnel of the Contractor.
7.2.3 In repairing damaged Work other than that described in
Subparagraph 7.2.2, provided such damage did not result from the
fault or negligence of the Contractor or the Contractor's
personnel, and only to the extent that the cost of such repairs
is not recoverable by the Contractor from others and the
Contractor is not compensated therefor by insurance or otherwise.
7.2.4 In correcting defective or nonconforming Work performed or
supplied by a Subcontractor or material supplier and not
corrected by them, provided such defective or nonconforming Work
did not result from the fault or neglect of the Contractor of the
Contractor's personnel adequately to supervise and direct the
Work of the Subcontractor or material supplier, and only to the
extent
35
<PAGE>
that the cost of correcting the defective or nonconforming Work
is not recoverable by the Contractor from the Subcontractor or
material supplier.
ARTICLE 8
COSTS NOT TO BE REIMBURSED
8.1 The Cost of the Work shall not include:
8.1.1 Salaries and other compensation of the Contractor's
personnel stationed at the Contractor's principal office or
offices other than the site office, except as specifically
provided in clauses 7.1.1.2 and 7.1.1.3 or as may be provided in
Article 14.
8.1.2 Expenses of the Contractor's principal office and offices
except other than the site office.
8.1.3 Overhead and general expenses, except as may be expressly
included in Article 7.
8.1.4 The Contractor's capital expenses, including interest on
the Contractor's capital employed for the Work.
8.1.5 Rental costs of machinery and equipment, except as
specifically provided in Clause 7.1.4.2.
8.1.6 Except as provided in Subparagraphs 7.2.2 through 7.2.4 and
Paragraph 13.5 of this Agreement, costs due to the fault or
negligence of the Contractor, Subcontractors, anyone directly or
indirectly employed by any of them, or for whose acts any of them
may be liable, including but not limited to costs for the
correction of damaged, defective or nonconforming Work, disposal
and replacement of materials and equipment incorrectly ordered or
supplied, and making good damage to property not forming part of
the Work.
8.1.7 Any cost not specifically and expressly described in
Article 7.
8.1.7.1 See Exhibit D
8.1.8 Costs which would cause the Guaranteed Maximum Price, if
any, to be exceeded.
8.1.9 Bonuses paid to the Contractor's personnel or
subcontractors.
ARTICLE 9
DISCOUNTS, REBATES AND REFUNDS
36
<PAGE>
9.1 Cash discounts obtained on payments made by the Contractor
shall accrue to the Owner if (1) before making the payment, the
Contractor included them in an Application for Payment and
received payment therefore from the Owner, or (2) the Owner has
deposited funds with the Contractor with which to make payments;
otherwise, cash discounts shall accrue to the Contractor. Trade
discounts, rebates, refunds and amounts received from sales of
surplus materials and equipment shall accrue to the Owner, and the
Contractor shall make provisions so that they can be secured.
9.2 Amounts which accrue to the Owner in accordance with the
provisions of Paragraph 9.1 shall be credited to the Owner as a
deduction from the Cost of the Work.
ARTICLE 10
SUBCONTRACTS AND OTHER AGREEMENTS
10.1 Those portions of the Work that the Contractor does not
customarily perform with the Contractor's own personnel shall be
performed under subcontracts or by other appropriate agreements
with the Contractor. The Contractor shall obtain bids from
Subcontractors and from suppliers of materials or equipment
fabricated especially for the Work and shall deliver such bids to
the Architect. The Owner will then determine, with the advice of
the Contractor and subject to the reasonable objection of the
Architect, which bids will be accepted. The Owner may designate
specific persons or entities from whom the Contractor shall
obtain bids; however, if a Guaranteed Maximum Price has been
established, the Owner may not prohibit the Contractor from
obtaining bids from others. The Contractor shall not be required
to contract with anyone to whom the Contractor has reasonable
objection.
10.2 If a Guaranteed Maximum Price has been established and a
specific bidder among those whose bids are delivered by the
Contractor to the Architect (1) is recommended to the Owner by
the Contractor; (2) is qualified to perform that portion of the
Work; and (3) has submitted a bid which conforms to the
requirements of the Contract Documents without reservations or
exceptions, but the Owner requires that another bid be accepted;
then the Contractor may require that a Change Order be issued to
adjust the Guaranteed Maximum Price by the difference between the
bid of the person or entity recommended to the Owner by the
Contractor and the amount of the subcontract or other agreement
actually signed with the person or entity designated by the
Owner.
10.3 Subcontracts or other agreements shall conform to the
payment provisions of Paragraphs 12.7 and 12.8, and shall not be
awarded on the basis of cost plus a fee without the prior consent
of the Owner.
37
<PAGE>
10.4 Except as otherwise agreed in writing by both parties
hereto, the Contractor must competitively bid any trade Work on a
lump sum basis that the Contractor wishes to perform with the
Contractor's own forces, or through an Affiliate, and shall
obtain no less than two (2) additional bids from qualified
Subcontractors acceptable to the Owner. The Contractor, or an
Affiliate, shall be permitted to perform such trade Work on a
lump sum basis only if the Owner consents thereto in writing at
THE OWNER'S DISCRETION.
ARTICLE 11
ACCOUNTING RECORDS
11.1 The Contractor shall keep full and detailed accounts and
exercise such controls as may be necessary for proper financial
management under this Contract; the accounting and control
systems shall be satisfactory to the Owner. The Owner and the
Owner's accountants shall be afforded access to the Contractor's
records, books, correspondence, instructions, drawings, receipts,
subcontracts, purchase orders, vouchers, memoranda and other data
relating to this Contract, and the Contractor shall preserve
these for a period of three years after final payment, or for
such longer period as may be required by law.
ARTICLE 12
PROGRESS PAYMENTS
12.1 Based upon Application for Payment submitted to the
Architect by the Contractor and Certificates for Payment issued
by the Architect, the Owner shall make progress payments on
account of the Contract Sum to the Contractor as provided below
and elsewhere in the Contract Documents.
12.2 The period covered by each Application for Payment is the
first half of the calendar month immediately preceding the second
half of the month in which the Application for Payment is
received. On or before the 28th day and the 12th day of the
month immediately preceding a semi-month in which the Contractor
will submit an Application of Payment, the Owner, the Architect
and the Contractor shall meet to review a preliminary draft of
such Application for Payment prepared by the Contractor. The
Contractor shall revise the Draft in accordance with any
objection or recommendation of either the Owner or the Architect
that is consistent with the requirements of the Contract
Documents. Such revised Draft shall be resubmitted by the
Contractor to the Owner as the application for Payment. The
Contractor shall also submit with each Application for Payment: a
written narrative describing the basis for any item set forth in
the Application for Payment that does not conform to the final
Draft as agreed to by the Owner, Architect and Contractor. The
Owner has the right to audit the draft for any inconsistencies
prior to the final application for payment.
38
<PAGE>
12.3 Provided an Application for Payment is received by the
Architect and the Owner not later than the first business day
after the lst and 15th day of the month, the Owner shall make
payment to the Contractor not later than the fifth (5th) business
day of the month after the Architect and Owner receive the
Application for Payment. If the Contractor errs in preparation
of the Application for Payment, the Contractor may be required to
resubmit, which shall restart the time calculations for the
Owners payment. Owner will use best effort to facilitate
PAYMENT.
12.4 With each Application for Payment the Contractor shall
submit payrolls, and any other evidence required by the Owner or
Architect to demonstrate that cash disbursements already made by
the Contractor on account of the Cost of the Work equal or exceed
(1) progress payments already received by the Contractor; less
(2) that portion of those payments attributable to the
Contractor's Fee; plus (3) payrolls for the period covered by the
present Application for Payment; plus (4) retainage provided in
Subparagraph 12.7.1 and 12.7.2, applicable to prior progress
payments. In addition to other required items, each Application
for Payment shall be accompanied by the following, all in form
and substance satisfactory to the Owner and in compliance with
applicable Indiana statutes:
(1) A duly executed and acknowledged Contractor's Sworn
Statement showing a payment certificate indicating the value in
dollars of the cumulative prior payments for each subcontractor
and/or vendors.
(2) Payment Certificate to be signed by authorized company
officer, sealed with Indiana Corporate seal and notarized.
[12.5 is intentionally omitted]
12.6 CONTRACTS WITHOUT A GUARANTEED MAXIMUM PRICE
12.6.1 Applications for Payment shall show the Cost of the Work
actually incurred by the Contractor through the end of the period
covered by the Application for Payment and for which the
Contractor has made or intends to make actual payment prior to
the next Application for Payment.
B Sum, less amounts, if any, for incomplete Work and unsettled
claims; and, if final completion of the entire Work is thereafter
materially delayed through no fault of the Subcontractor, add any
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additional amounts payable on account of Work of the
Subcontractor in accordance with Subparagraph 9.10.3 of the
General Conditions.
Upon certification of the Architect of the satisfactory, timely
completion of 50% of the "Work," there shall be no further
deduction of "Retainage" from subsequent progress payments. The
determination of "timely completion of 50% of the work" by the
Architect shall be based on the Architects's judgment of the
Contractor's ability to substantially complete all of the work by
the date set out in retainage and may do so at any time after
completion of 50% of the work.
The Subcontract Sum is the total amount stipulated in the
subcontract to be paid by the Contractor to the Subcontractor
for the Subcontractor's performance of the subcontract.
12.7.6 Refer to Exhibit C for other provisions pertaining to
Subcontractor releases and payments.
12.7.7 All Subcontractors shall be subject to a ten percent (10%)
retainage unless otherwise specifically agreed to or requested by
the Owner. Partial release of retention shall not be made by the
Contractor to any Subcontractor unless approved by the Owner and
all Owner close-out documentation required by the Contract
Documents and the General Conditions of this Agreement have been
completed and submitted to the Architect and Owner for approval.
12.7.8 All "Retainage" deducted by Owner from Progress Payments
shall be deposited with an Escrow Agent pursuant to a Retainage
Escrow Agreement and paid to Contractor pursuant to Article 9 of
the General Conditions and the terms and conditions of the
RETAINAGE ESCROW AGREEMENT.
12.8 Except with the Owner's prior approval, the Contractor shall
not make advance payments to suppliers for materials or equipment
which have not been delivered and stored at the site.
12.9 In taking action on the Contractor's Application for
Payment, the Architect shall be entitled to rely on the accuracy
and completeness of the information furnished by the Contract and
shall not be deemed to represent that the Architect has made a
detailed examination, audit or arithmetic verification of the
documentation submitted in accordance with paragraph 12.4 or
other supporting data; that the Architect has made exhaustive or
continuous on-site inspections or that the Architect has made
examinations to ascertain how or for what purposes the Contractor
has used amounts previously paid on account of the Contract.
Such examinations, audits and
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verifications, if required by the owner, will be performed by the
Owner's accountants acting in the sole interest of the Owner.
ARTICLE 13
FINAL PAYMENT
13.1 Final payment shall be made by the Owner to the Contractor
when (1) the Contract has been fully performed by the Contractor
except for the Contractor's responsibility to correct defective
or nonconforming Work, as provided in Subparagraph 12.2.2 of the
General Conditions, and to satisfy other requirements, if any,
which necessarily survive final payment; (2) a final Application
for Payment and a final accounting for the Cost of the Work have
been submitted by the Contractor and reviewed by the Owner's
accountants; and (3) a final Certificate for Payment has then
been issued by the Architect; such final payment shall be made by
the owner not more than 30 days after the issuance of the
Architect's final Certificate for Payment, or as follows:
13.2 The amount of the final payment shall be calculated as
follows:
13.2.1 Take the sum of the Cost of the Work substantiated by the
Contractor's final accounting; and the Contractor's Fee;
13.2.2 Subtract amounts, if any, for which the Architect
withholds, in whole or n part, a final Certificate for Payment as
provided in Subparagraph 9.5.1 of the General Conditions or other
provisions of the Contract Documents.
13.2.3 Subtract the aggregate of previous payments made by the
Owner.
If the aggregate of previous payments made by the Owner exceeds
the amount due the Contractor, the Contractor shall reimburse the
difference to the Owner.
13.3 The Owner's accountants will review and report in writing on
the Contractor's final accounting within 30 days after delivery
of the final accounting to the Architect by the Contractor.
Based upon such Cost of the Work as the Owner's accountants
report to be substantiated by the Contractor's final accounting,
and provided the other conditions of Paragraph 13.1 have been
met, the Architect will, within seven days after receipt of the
written report of the Owner's accountants, either issue to the
Owner a final Certificate for Payments with a copy to the
Contractor, or notify the Contractor and Owner in writing of the
Architect's reasons for
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withholding a certificate as provided in Subparagraph 9.5.1 of
the General Conditions. The time periods stated in Paragraph
13.3 supersede those stated in Subparagraph 9.4.1 of the General
Conditions.
13.4 If the Owner's accountants report the Cost of the work as
substantiated by the Contractor's final accounting to be less
than claimed by the Contractor, the Contractor shall be entitled
to demand arbitration of the disputed amount without a further
decision of the Architect. Such demand for arbitration shall be
made by the Contractor within 30 days after the Contractor's
receipt of a copy of the Architects's final Certificate for
payment; failure to demand arbitration within this 30-day period
shall result in the substantiated amount reported by the Owner's
accountants becoming binding on the Contractor. Pending a final
resolution by arbitration, the Owner shall pay the Contractor the
amount certified in the Architect's final Certificate for
Payment.
13.5 If, subsequent to final payment and at the Owner's request,
the Contractor incurs costs described in Article 7 and not
excluded by Article 8 to correct defective or nonconforming Work,
the Owner shall reimburse the Contractor such costs and the
Contractor's Fee applicable thereto on the same basis as if such
costs had been incurred prior to final payment, but not in excess
of the Guaranteed Maximum Price, if any. If the Contractor has
participated in savings as provided in paragraph 5.2, the amount
of such savings shall be recalculated and appropriate credit
given to the Owner in determining the net amount to be paid by
the Owner to the Contractor.
ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 Where reference is made in this Agreement to a provision of
the General Conditions or another Contract Document, the
reference refers to that provision as amended or supplemented by
other provisions of the Contract Documents.
14.2 Payments due and unpaid under the Contract shall bear
interest from the date payment is due at the rate of Prime Rate
plus 2%.
14.3 COMPLIANCE WITH INDIANA RIVERBOAT GAMBLING STATUTE AND THE
COMMISSION'S RULES. Contractor, for itself, and for all its
subcontractors, materialmen, and suppliers, does now hereby agree
to acquaint themselves with and fully comply with the
requirements, terms, conditions,
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prohibitions and obligations of the Indiana Riverboat Gambling
Statute and the Rules of the Indiana Gaming Commission as they
may apply to them.
Contractor is fully aware and acknowledges that: The Indiana
Gaming Commission reserves the right to disapprove and cancel any
contract or transaction that does not comply with the Indiana
Riverboat Gambling Statute or the Commission's rules or that does
not maintain the integrity of the industry.
Contractor will fully cooperate with and voluntarily comply with
all requests and inquiries from the Indiana Gaming Commission or
its staff that relate, directly or indirectly, to this Agreement.
14.4 This Contract may be disapproved or canceled by the Indiana
Gaming Commission.
14.5 NO LIEN CONTRACT. Contractor agrees that they will pay
promptly and in full, as and when they become due and payable,
all bills and claims for labor performed and materials and
machinery supplied by all subcontractors journeymen, materialmen,
suppliers, mechanics, and labors and by any and all other
persons, firms and corporations, in the construction, execution
and performance of the "Work".
Further, Contractor for themselves and for all their
subcontractors, journeymen, materialmen suppliers, mechanics and
laborers and all other persons, performing labor and furnishing
materials or machinery for the "Work", agree as follows:
a) no lien or notice of lien shall in any event or
circumstance attach to, or be claimed or filed against the "Work"
or any part thereof or against the Real Estate (Exhibit C) or any
part thereof;
b) the right to take or claim a mechanic's lien on the
"Work" or the Real Estate, or any part thereof, is specifically
waived;
c) all contracts with Subcontractors, journeymen, suppliers,
materialmen, mechanics and
laborers will be no lien contracts.
14.6 Antidiscrimination. In the hiring of employees for the
performance of the "Work", neither the Contractor nor any of
their Subcontractors nor any person acting on their behalf, shall
by reason of race, religion, color, sex, national origin or
ancestry, discriminate against any person who is qualified and
available to perform the work to which such employment relates.
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Neither the Contractor, nor any of its Subcontractors nor any
person on their behalf shall, in any manner, discriminate against
or intimidate any employee hired for the performance of work
under their contract on account of race, religion, color, sex,
national origin or ancestry.
Contractor and its Subcontractors shall fully comply with all
state and federal laws regarding equal employment opportunities.
Contractor shall cooperate with and assist Owner to fully comply
with the Indiana Riverboat Gambling Statute as it relates to
minority business enterprise, womens' business enterprises,
minority and local hiring.
14.7 Preferential Hiring. The Contractor, on behalf of itself
and its Subcontractors shall make every reasonable effort to hire
and employ qualified residents of the City of East Chicago,
Indiana, to perform the work required by their contracts.
Qualified residents are those bona fide residents of the City of
East Chicago possessing the necessary skills and union or trade
memberships required to perform the work for which they are
employed. This preferential hiring requirement does not apply to
Contractor's and subcontractor's permanent staff.
Owner will cooperate with and assist Contractor and its
subcontractors in their good faith effort to comply with
preferential hiring. Contractor and its subcontractors will
consult any "availability lists" of qualified residents
established by Owner or the City of East Chicago.
14.8 Reports. Contractor and its subcontractors will timely
complete and submit reports to Owner of such manpower
requirements and manpower utilization as Owner may reasonably
require.
14.9 The Contractor shall dispose of hazardous waste in a manner
approved by applicable governmental laws. Other waste material
shall be disposed of in an economic manner with a serious
consideration and effort being given to recycling.
14.10 Contractor's final payment will be released only after the
close-out requirements stipulated in Section 01700 of the Project
Manual/Bid Permit Set) are complete. After Final Pay Request,
ten percent (10%) of the Contractor's fee shall be retained by
Owner or other appropriate measures to protect the interests of
the Owner until remaining items, if any, of the original contract
are competed and final payment certificates are supplied to Owner
from the Contractor, Subcontractor and material suppliers.
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14.11 Refers to Articles 7.1.1.2, 7.1.1.3, 7.1.4.5 - The
following wages or salaries and travel expense for project
supervisory personnel are reimbursed as project costs while on
the project site or on travel specifically related to the work of
the project.
On-site project supervisory and administrative personnel.
General Superintendent, Construction Manager.
14.12 The Contractor shall issue selected portions of each
subcontract including clarifications and modifications to the
Contract Documents, contract amounts, and other information
requested by the Owner to interpret the contracts.
14.13 It is recognized that some of the work may be done as
directed by the Owner's designated representative(s) rather than
the Architect.
14.14 Owner shall pay prevailing insurance rates only. If
Contractor participates in special programs, such as workmen's
compensation "RETRO" program, the additional cost associated with
THESE PROGRAMS WILL NOT BE REIMBURSE.
14.15 The Contractor shall at all time during the term of this
Agreement provide to Owner a list of the name and business
address of its supervisory employees, suppliers, materialmen and
subcontractors currently involved in the Work. Such list shall
be in the form and manner required by Owner.
14.16 The Contract shall be governed by the law of the State of
Indiana and is intended to conform in all respect to the
applicable statute of the State of Indiana.
14.17 Any notice, demand or other communication under this
Contract by any party to the other shall be sufficiently given or
delivered if it is mailed by Registered or Certified Mail,
postage pre-paid, return receipt requested, or delivered
personally, and addressed to the Owner, Contractor and Architect
as their names and addresses appear on the first page of this
Contract.
In addition; the parties agree to provide all those Notices and
reports to persons and entities, not parties to this Contract as
are required by the Indiana Gaming Statutes and rules of the
Indiana Gaming Commission and as may be required by any financing
documents of Owner. Owner shall notify Contractor in writing of
any such Notice or reporting requirements.
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14.18 Insurance, Limits. The Insurance required of Contractor
pursuant to Article 11 of the General Conditions shall be written
for not less than the limits of liability as parties may agree by
separate written document. (See Exhibit "A")
14.19 Owner warrants that it has completed its financing of that
part of the Project that includes the Work to be performed under
this Contract and that funds, sufficient to pay the sum due under
this Contract are being held by a Trustee awaiting disbursement
under the Contract.
14.20 The Owner considers all information about the project
proprietary and confidential. The Contractor and his employees
shall not disclose any information to others about the project,
or any prior Showboat project without first obtaining written
approval of the Owner. Others would include, but not be limited
to other retailers, developers, architects and engineers, members
of the media, researchers, Contractors, prospective clients, and
other similar parties. Information would include construction
costs, development costs, construction and building systems,
copies of drawings and specifications, typical Showboat
construction procedures and sequences, and other similar
information.
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14.21 The Contractor shall not prepare and release publicity or
meet with members of the media and discuss any aspect of their
relationship with the Owner without the prior written consent of
the Owner. The Contractor may disclose the name, size, and
location, along with photographs of completed work under contract
without prior approval. The Contractor must submit for Owner's
approval copies of all publicity materials prepared by the
Contractor about Showboat projects.
14.22 The Contractor shall advise all his employees and
subcontractors about these contract provisions and regularly
assure Owner that they are being met.
ARTICLE 15
TERMINATION OR SUSPENSION
15.1 The Contract may be terminated by the Contractor as provided
in Article 14 of the General Conditions; however, the amount to
be paid to the Contractor under Subparagraph 14.1.2 of the
General Conditions shall not exceed the amount the Contractor
would be entitled to receive under Paragraph 15.3.
15.2 If a Guaranteed Maximum Price is established in Article 5,
the Contract may be terminated by the Owner for cause as provided
in Article 14 of the General Conditions; however, the amount, if
any, to be paid to the Contractor under Subparagraph 14.2.4 of
the General Conditions shall not cause the Guaranteed Maximum
Price to be exceeded, or shall it exceed the amount the
Contractor would be entitled to receive under Paragraph 15.3
below.
15.3 If no Guaranteed Maximum Price is established in Article 5,
the Contract may be terminated by the Owner for cause as provided
in Article 14 of the General Conditions; however, the Owner shall
then pay the Contractor an amount calculated as follows:
15.3.1 Take the Cost of the work incurred by the Contractor to
THE DATE OF TERMINATION.
15.3.2 Add the Contractor's Fee computed upon the Cost of the
Work to the date of termination at the rate stated in Paragraph
5.1 or, if the Contractor's Fee is stated as a fixed sum in that
Paragraph, an amount which bears the same ratio to that fixed-sum
Fee as the Cost of the Work at the time of termination bears to a
reasonable estimate of the probable Cost of the Work upon its
completion.
15.3.3 Subtract the aggregate of previous payments made by the
Owner.
The Owner shall also pay the Contractor fair compensation, either
by purchase or rental at the election of the Owner, for any
equipment owned by the Contractor which the Owner elects to
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retain and which is not otherwise included in the Cost of the
Work under Subparagraph 15.3.1. To the extent that the Owner
elects to take legal assignment of subcontracts and purchase
orders (including rental agreements), the Contractor shall, as a
condition of receiving the payments referred to in this Article
15, execute and deliver all such papers and take all such steps,
including the legal assignment of such subcontracts and other
contractual rights of the Contractor, as the Owner may require
for the purpose of fully vesting in the Owner the rights and
benefits of the Contractor under such subcontracts or purchase
orders.
15.4 The Work may be suspended by the Owner as provided in
Article 14 of the General Conditions; in such case, the
Guaranteed Maximum Price, if any, shall be increased as provided
in Subparagraph 14.3.2 of the General Conditions except that the
term "cost of performance of the Contract" in that Subparagraph
shall be understood to mean the Cost of the Work and the term
"profit" shall be understood to mean the Contractor's Fee as
described in Paragraph 5.1 and 6.3 of this Agreement.
ARTICLE 16
ENUMERATION OF CONTRACT DOCUMENTS
16.1 The Contract Documents, except for Modification issued after
execution of this Agreement, are enumerated as follows:
16.1.1 The Agreement is this executed Agreement being, AIA
Document A111, 1987 Edition, as modified.
16.1.2 The General Conditions are the General Conditions of the
Contract for Construction, AIA Document A201, 1987 Edition, as
modified.
16.1.3 The Supplementary and other Conditions of the Contract are
those
to be completed in accordance with schedule for consultant
deliverables.
16.1.4 The Specifications are those
to be completed in accordance with schedule for consultant
deliverables.
16.1.5 The Drawings are those
to be completed in accordance with schedule for consultant
deliverables.
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16.1.6 The addenda, if any, are as follows:
those to be completed in accordance with schedule for
consultant deliverables.
16.1.7 Other Documents, if any, forming part of the Contract
Documents are as follows:
DOCUMENT TITLE PAGES
AIA Document A201 General Conditions, 1987 Edition,
as Modified 24
Exhibit A Insurance 2
Exhibit B Additional Reporting Req. 1
Exhibit C Subcontractor Releases and Payments 1
Exhibit D Fee and General Conditions Summary
Table 2
Exhibit E Project Personnel List 1
Exhibit F Contractor's Application for Payment
Package 6
Exhibit G Contractor's Fire Prevention
Responsibilities for the Project 3
During Construction.
Exhibit H April 1, 1996 Progress Schedule and 3
Schedule For Consultant Deliverables
Exhibit I Legal Description 2
This Agreement is entered into as of the day and year first
written above and is executed in at least three original copies
of which one is to be delivered to the Contractor, one to the
Architect for use in the administration of the Contract, and the
remainder to the Owner.
OWNER CONTRACTOR
Showboat Marino Casino Tonn & Blank, Inc. In Joint
Partnership Venture with KLM CONSTRUCTION,
INC.
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BY: /s/ BY: /s/
J. Keith Wallace W.S. (Bill) Mueller
Authorized Signator Chairman PRESIDENT
Tonn & Blank, Inc. and
authorized signator for
Joint Venture
Prepared by: Richard J. Lesniak
Attorney At Law
1802 E. Columbus Drive
East Chicago, IN 46312
(219)398-6200
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EXHIBIT C
SUBCONTRACTOR RELEASES AND PAYMENTS
1. Contractor agrees to release all payments to Subcontractors
or Suppliers within seven (7) business days of payment from
Owner. Any payments made to Contractor, but not so released will
accrue interest ("Fee") at the rate of prime rate plus 2%. "Fee"
payments together with a summary report will be made to the Owner
within 30 days from the end of each calender quarter for the
immediately preceding calender quarter. "Fee" payments made
after this 30 days will incur additional interest.
2. With the final bill, Contractor will give Owner a list of all
Subcontractor retentions yet to be paid listing the
Subcontractor(s) and Supplier(s) and category code. When ready
for release, Contractor will invoice Owner for the retention.
3. Contractor agrees to submit a separate Certificate of
Insurance, insuring the product at its location of fabrication
until delivery, and a payment certificate for any deposit monies
required for materials.
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(EJCDC - STANDARD FORM OF AGREEMENT, AS MODIFIED)
THIS AGREEMENT is made as of the 13th day of May in the year 1996
by and between Showboat Marina Casino Partnership (hereinafter
called OWNER) and Luhr Bros., Inc. (hereinafter called
CONTRACTOR).
OWNER and CONTRACTOR, for and in consideration of the mutual
covenants hereinafter set forth, agree as follows:
Article 1. WORK.
CONTRACTOR shall complete all Work as specified or indicated in
the Contract Documents. The Work is generally described as
follows:
Breakwaters, Basin Dredging, and,
Mooring/Fendering Bulkhead
The Project for which the Work under the Contract Documents may
be the whole or only a part is generally described as follows
East Chicago Showboat/Harbor Development
See Legal Description, Exhibit "__"
3401 Aldis Avenue
East Chicago, IN 46312
Article 2. ENGINEER.
The Project has been designed by: W.F. Baird & Associates, 2981
Yarmouth Greenway, Madison, WI 53711 for Breakwaters and Basin
Dredging, and,
Thompson Engineering, Water Resources Division, 3707 Cottage Hill
Road, Mobile, AL 36691 for Mooring/Fendering Bulkhead, and Shore
Services, who are hereinafter called ENGINEER and who are to act
as OWNER's representative, assume all duties and responsibilities
and have the rights and authority assigned to ENGINEER in the
Contract Documents in connection with completion of the Work
assigned to each of them, respectively, in accordance with the
Contract Documents, drawn and composed by each of them,
respectively.
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Article 3. CONTRACT TIME.
3.1. The Work will be substantially completed, particularly that
part of the Work required for safe operation of and safe mooring
of the vessel, on or before December 1, 1996, and completed for
final payment in accordance with paragraph 14.13 of the General
Conditions on or before April 15, 1997.
3.2 Liquidated Damages. OWNER and CONTRACTOR recognize that time
is of the essence of this Agreement and that OWNER will suffer
financial loss if the Work is not completed within the times
specified in paragraph 3.1 above, plus any extensions thereof
allowed in accordance with Article 12 of the General Conditions.
They also recognize the delays, expense and difficulties involved
in proving in a legal or arbitration proceeding the actual loss
suffered by OWNER if the Work is not completed on time.
Accordingly, instead of requiring any such proof, OWNER and
CONTRACTOR agree that as liquidated damages for delay (but not as
a penalty) CONTRACTOR shall pay OWNER Two Thousand dollars
($2,000.00) for each day that expires after the time specified in
paragraph 3.1 for Substantial Completion until the Work is
substantially complete. After Substantial completion if
CONTRACTOR shall neglect, refuse or fail to complete the
remaining Work within the Contract Time or any proper extension
thereof granted by OWNER, CONTRACTOR shall pay OWNER One Thousand
dollars ($1,000.00) for each day that expires after the time
specified in paragraph 3.1 for completion and readiness for final
payment.
Article 4. CONTRACT PRICE.
4.1. OWNER shall pay CONTRACTOR for completion of the Work in
accordance with the Contract Documents in current funds as
follows:
The Sum of $14,511,850.50, as set out in Contractor's Cost
Proposal of April 29, 1996, attached hereto as Exhibit "A",
subject to additions or deductions for Stone used for Breakwaters
based upon Unit Prices and volumes or amounts as stated in
Exhibit "A".
All Change Orders shall be based upon the Unit Prices stated
in Exhibit "A" wherever possible.
Article 5. PAYMENT PROCEDURES.
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CONTRACTOR shall submit Applications for Payment in accordance
with Article 14 of the General Conditions. Applications for
Payment will be processed by ENGINEER as provided in the General
Conditions.
5.1 Progress Payments. OWNER shall make progress payments on
account of the Contract Price on the basis of CONTRACTOR's
Applications for Payment as recommended by ENGINEER, on or about
the 15th day and last day of each month during construction as
provided below. All progress payments will be on the basis of the
progress of the Work measured by the schedule of values
established in paragraph 2.9 of the General Conditions (and in
the case of Unit Price Work based on the number of units
completed) or, in the event there is no schedule of values, as
provided in the General Requirements.
5.1.1. Prior to Substantial Completion, progress payments
will be made in an amount equal to the percentage indicated
below, but, in each case, less the aggregate of payments
previously made and less such amounts as ENGINEER shall
determine, or OWNER may withhold, in accordance with paragraph
14.7 of the General Conditions.
100% of Work completed.
100% of materials and equipment not incorporated in the Work
(but delivered, suitably stored and accompanied by documentation
satisfactory to OWNER as provided in paragraph 14.2 of the
General Conditions).
5.1.2 Upon Substantial Completion, in an amount sufficient to
increase total payments to CONTRACTOR to 100% of the Contract
Price, less such amounts as ENGINEER shall determine, or OWNER
may withhold, in accordance with paragraph 14.7 of the General
Conditions.
5.2 Final Payment. Upon final completion and acceptance of the
Work in accordance with paragraph 14.13 of the General
Conditions, OWNER shall pay the remainder of the Contract Price
as recommended by ENGINEER as provided in said paragraph 14.13.
Article 6. INTEREST.
All moneys not paid when due as provided in Article 14 of the
General Conditions shall bear interest at the maximum rate
allowed by law at the place of the Project, or 8% whichever is
Less.
Article 7. CONTRACTOR'S REPRESENTATIONS.
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In order to induce OWNER to enter into this Agreement CONTRACTOR
make the following representations:
7.1. CONTRACTOR has familiarized itself with the nature and
extent of the Contract Documents, Work, site, locality, and all
local conditions and Laws and Regulations that in any manner may
affect cost, progress, performance or furnishing of the Work.
7.2. CONTRACTOR has studied carefully all reports of explorations
and tests of subsurface conditions and drawings of physical
conditions which are identified in the Supplementary Conditions
as provided in paragraph 4.2 of the General Conditions, and
accepts the determination set forth in paragraph SC-4.2 of the
Supplementary Conditions, of the extent of the technical data
contained in such reports and drawings upon which CONTRACTOR is
entitled to rely.
7.3. CONTRACTOR has obtained and carefully studied (or assumes
responsibility for obtaining and carefully studying) all such
examinations, investigations, explorations, tests, reports and
studies (in addition to or to supplement those referred to in
paragraph 7.2 above) which pertain to the subsurface or physical
conditions at or contiguous to the site or otherwise may affect
the cost, progress, performance or furnishing of the Work as
CONTRACTOR considers necessary for the performance or furnishing
of the Work at the Contract Price, within the Contract Time and
in accordance with the other terms and conditions of the Contract
Documents, including specifically the provisions of paragraph 4.2
of the General Conditions; and no additional examinations,
investigations, explorations, tests, reports, studies or similar
information or data are or will be required by CONTRACTOR for
such purposes.
7.4. CONTRACTOR has reviewed and checked all information and data
shown or indicated on the Contract Documents with respect to
existing Underground Facilities at or contiguous to the site and
assumes responsibility for the accurate location of said
Underground Facilities. No additional examinations,
investigations, explorations, tests, reports, studies or similar
information or data in respect of said Underground Facilities are
or will be required by CONTRACTOR in order to perform and furnish
the Work at the Contract Price, within the Contract Time and in
accordance with the other terms and conditions of the Contract
Documents, including specifically the provisions of paragraph 4.3
of the General Conditions.
7.5. CONTRACTOR has correlated the results of all such
observations, examinations, investigations, explorations, tests,
reports and studies with the terms and conditions of the Contract
Documents.
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7.6. CONTRACTOR has given ENGINEER written notice of all
conflicts, errors or discrepancies that he has discovered in the
Contract Documents and the written resolution thereof by ENGINEER
is acceptable to CONTRACTOR.
Article 8. CONTRACT DOCUMENTS.
The Contract Documents which comprise the entire agreement
between OWNER and CONTRACTOR concerning the Work consist of the
following:
8.1. This Agreement (pages 1 to ______, inclusive).
8.2 Exhibit "A" to this Agreement (pages _____ to _____,
inclusive).
8.3. General Conditions (pages 1 to 42, inclusive). (see Project
Manual, April 1996)
8.4. Supplementary Conditions (pages _____ to _____ inclusive).
8.5. Specifications bearing the title Showboat/East Chicago
Casino Breakwaters and Basin Dredging and consisting of 7
divisions and _____ pages, as listed in table of contents of See
Project Manual, April, 1996.
8.6. Specification for Bulkhead in Four (4) Sections: Piling,
Concrete, Earthwork and Miscellaneous - prepared by Thompson
Engineering.
8.7. Drawings RE: Breakwater and Basin Dredging, No's 9455-1
through 9455-19, both inclusive, prepared by Baird & Associates,
Ltd, dated April 8, 1996.
8.8. Drawings RE: Showboat Marina Casino Dock and Mooring
Structure, East Chicago, IN, prepared by Thompson Engineering, as
per Drawing Index with General Notes, attached hereto as
Exhibit "B".
8.9. The following which may be delivered or issued after the
Effective Date of the Agreement and are not attached hereto:
8.9.1. Final Construction Drawings for Breakwaters and Basin
Dredging issued by Baird & Associates to replace Drawings listed
in paragraph 8.7.
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8.9.2. Those Specifications listed in paragraph 8.6 and those
Drawings listed in paragraph 8.8 to be prepared by Thompson
Engineering have not been completed nor delivered to Contractor
at time of execution of this Agreement.
8.9.3. All Written Amendments and other documents amending,
modifying, or supplementing these Contract Documents pursuant to
paragraph 3.4 and 3.5 of the General Conditions.
There are no Contract Documents other than those listed above in
this Article 8. The Contract Documents may only be amended,
modified or supplemented as provided in paragraphs 3.4 and 3.5 of
the General Conditions.
Article 9. MISCELLANEOUS.
9.1. Terms used in this Agreement which are defined in Article 1
of the General Conditions will have the meanings indicated in the
General Conditions.
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9.2. No assignment by a party hereto of any rights under or
interest in the Contract Documents will be binding on another
party hereto without the written consent of the party sought to
be bound; and specifically but without limitation moneys that may
become due and moneys that are due may not be assigned without
such consent (except to the extent that the effect of this
restriction may be limited by law), and unless specifically
stated to the contrary in any written consent to an assignment no
assignment will release or discharge the assignor from any duty
or responsibility under the Contract Documents.
9.3. OWNER and CONTRACTOR each binds itself, its partners,
successors, assigns and legal representatives to the other party
hereto, its partners, successors, assigns and legal
representatives in respect of all covenants, agreements and
obligations contained in the Contract Documents.
Article 10. OTHER PROVISIONS.
10.1 Compliance with Indiana Riverboat Gambling Statute and the
Commission's Rules. Contractor, for itself, and for all its
subcontractors, materialmen, and suppliers, does now hereby agree
to acquaint themselves with and fully comply with the
requirements, terms, conditions, prohibitions and obligations of
the Indiana Riverboat Gambling Statute and the Rules of the
Indiana Gaming Commission as they may apply to them.
Contractor is fully aware and acknowledges that: The Indiana
Gaming Commission reserves the right to disapprove and cancel any
contract or transaction that does not comply with the Indiana
Riverboat Gambling Statute or the Commission's rules or that does
not maintain the integrity of the industry.
Contractor will fully cooperate with and voluntarily comply with
all requests and inquiries from the Indiana Gaming Commission or
its staff that relate, directly or indirectly, to this Agreement.
10.2 This Contract may be disapproved or canceled by the Indiana
Gaming Commission.
10.3 NO LIEN CONTRACT. Contractor agrees that they will pay
promptly and in full, as and when they become due and payable,
all bills and claims for labor performed and materials and
machinery supplied by all subcontractors journeymen, materialmen,
suppliers, mechanics, and
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labors and by any and all other persons, firms and corporations,
in the construction, execution and performance of the "Work".
Further, Contractor for themselves and for all their
subcontractors, journeymen, materialmen suppliers, mechanics and
laborers and all other persons, performing labor and furnishing
materials or machinery for the "Work", agree as follows:
a) no lien or notice of lien shall in any event or
circumstance attach to, or be claimed or filed against the "Work"
or any part thereof or against the Real Estate (Exhibit C) or any
part thereof;
b) the right to take or claim a mechanic's lien on the
"Work" or the Real Estate, or any part thereof, is specifically
waived;
c) all contracts with Subcontractors, journeymen, suppliers,
materialmen, mechanics and laborers will be no lien contracts.
10.4 Antidiscrimination. In the hiring of employees for the
performance of the "Work", neither the Contractor nor any of
their Subcontractors nor any person acting on their behalf, shall
by reason of race, religion, color, sex, national origin or
ancestry, discriminate against any person who is qualified and
available to perform the work to which such employment relates.
Neither the Contractor, nor any of its Subcontractors nor any
person on their behalf shall, in any manner, discriminate against
or intimidate any employee hired for the performance of work
under their contract on account of race, religion, color, sex,
national origin or ancestry.
Contractor and its Subcontractors shall fully comply with all
state and federal laws regarding equal employment opportunities.
Contractor shall cooperate with and assist Owner to fully comply
with the Indiana Riverboat Gambling Statute as it relates to
minority business enterprise, women's business enterprises,
minority and local hiring.
10.5 Preferential Hiring. The Contractor, on behalf of itself
and its Subcontractors shall make every reasonable effort to hire
and employ qualified residents of the City of East Chicago,
Indiana, to perform the work required by their contracts.
Qualified residents are those bona fide
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residents of the City of East Chicago possessing the necessary
skills and union or trade memberships required to perform the
work for which they are employed. This preferential hiring
requirement does not apply to Contractor's and subcontractor's
permanent staff.
Owner will cooperate with and assist Contractor and its
subcontractors in their good faith effort to comply with
preferential hiring. Contractor and its subcontractors will
consult any "availability lists" of qualified residents
established by Owner or the City of East Chicago.
10.6 Reports. Contractor and its subcontractors will timely
complete and submit reports to Owner of such manpower
requirements and manpower utilization as Owner may reasonably
require.
10.7 The Contractor shall at all time during the term of this
Agreement provide to Owner a list of the name and business
address of its supervisory employees, suppliers, materialmen and
subcontractors currently involved in the Work. Such list shall
be in the form and manner required by Owner.
10.8 The Contract shall be governed by the law of the State of
Indiana and is intended to conform in all respect to the
applicable statute of the State of Indiana.
10.9 Any notice, demand or other communication under this
Contract by any party to the other shall be sufficiently given or
delivered if it is mailed by Registered or Certified Mail,
postage pre-paid, return receipt requested, or delivered
personally, and addressed to the Owner, Contractor and Architect
as their names and addresses appear on the first page of this
Contract.
In addition; the parties agree to provide all those Notices and
reports to persons and entities, not part to this Contract as are
required by the Indiana Gaming Statutes and rules of the Indiana
Gaming Commission and as may be required by any financing
documents of Owner. Owner shall notify Contractor in writing of
any such Notice or reporting requirements.
10.10 Insurance, Limits. The Insurance required of
Contractor pursuant to Article 11 of the General Conditions shall
be written for not less than the limits of liability as parties
may agree by separate written document, but in no case shall such
limits be less than Twenty Million ($20,000,000.00) aggregate for
liability coverage.
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10.11 Owner warrants that it has completed its financing of
that part of the Project that includes the Work to be performed
under this Contract and that funds, sufficient to pay the sum due
under this Contract are being held by a Trustee awaiting
disbursement under the Contract.
IN WITNESS WHEREOF, OWNER and CONTRACTOR have signed this
Agreement in triplicate. One counterpart each has been delivered
to OWNER, CONTRACTOR and ENGINEER. All portions of the Contract
Documents have been signed or identified by OWNER and CONTRACTOR
or by ENGINEER on their behalf.
This Agreement will be effective as of the date and year first
stated above and executed by the Parties as indicated.
OWNER Showboat Marina CONTRACTOR Luhr Bros., Inc.
Casino Partnership
By: /s/ By: /s/
J. Keith Wallace,
Authorized Signatory
Attest
Address for giving notices
2001 Columbus Drive P.O. Box 50
East Chicago, Indiana 46312 Columbia, Illinois 62236-0050
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STATE OF INDIANA )
SS:
COUNTY OF LAKE )
Before me, a Notary Public in and for said County and State,
personally appeared J. Keith Wallace, the authorized signatory of
Showboat Marina Casino Partnership, a general partnership
organized and existing under the laws of the State of Indiana,
and acknowledged the execution of the foregoing Contract as such
authorized signatory acting for and on behalf of said
partnership.
Witness my hand and Notarial Seal this _______ day of May,
1996.
My Commission Expires:
Richard J. Lesniak
4/13/98 Notary Public
Resident of Lake County
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STATE OF )
SS:
COUNTY OF )
Before me a Notary Public in and for said County and State,
personally appeared ____________________ of Luhr Bros. Inc., and
acknowledged the execution of the foregoing Contract as such
authorized signatory acting for and on behalf of said
Corporation.
Witness my hand Notarial Seal this _______ day of May, 1996.
My Commission Expires:
Notary Public
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