SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest October 13, 1995
event reported)
SHOWBOAT, INC.
(Exact name of Registrant as specified in charter)
Nevada
(State or other jurisdiction of incorporation)
1-7123 88-0090766
(Commission File Number) (IRS Employee Identification No.)
2800 Fremont Street, Las Vegas, Nevada 89104
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (702) 385-9123
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
Item 5. OTHER EVENTS
Showboat Lemay, Inc. ("Showboat Lemay"), a wholly-owned
subsidiary of Showboat, Inc. (the "Company"), owns an 80%
interest in Southboat Limited Partnership, a Missouri limited
partnership ("Southboat"). Showboat Lemay is the sole general
partner of Southboat. On or about October 13, 1995, Southboat
entered into a lease and development agreement (the "Lease") with
the St. Louis County Port Authority, a public body corporate and
politic of the State of Missouri ("SLCPA") for the lease of an
approximately 29-acre parcel of real property located along the
Mississippi River in the Lemay area of St. Louis County, Missouri
(the "Premises"). Subject to obtaining a Missouri gaming
license, Southboat anticipates constructing, developing and
operating a dockside riverboat casino and permanently-moored
barge gaming facility (collectively, the "Project") on the
Premises. On October 17, 1995, Southboat submitted an
application to the Missouri Gaming Commission for the necessary
gaming licenses to operate the Project.
The term of the Lease shall commence, if at all, on the
date (i) the Missouri Gaming Commission commences the
investigation of Southboat for a Missouri gaming license; and
(ii) Southboat has obtained all permits or licenses issued by the
U.S. Army Corps of Engineers and other governmental bodies
necessary to enable Southboat to commence construction of the
Project. The term of the Lease shall be for 99 years. Fees and
rent for the Premises are payable by Southboat as follows: a
$500,000 acceptance fee after the due diligence period; (ii) a
$750,000 security deposit on the commencment date of the Lease;
(iii) a $2.5 million fee on the commencement date of the Lease;
(iv) a $2.5 million fee on the opening date of the Project;
(v) beginning on the commencement date and continuing until the
opening date of the Project, rent in the amount of $2.0 million
per annum payable in equal monthly installments; and (vi)
beginning on the opening date of the Project and continuing until
the expiration of the term of the Lease, the greater of 4% of
adjusted gross receipts or Minimum Rent (as defined below).
"Minimum Rent" means $3.0 million during the first 12-month
period occurring after the opening of the Project; $2.8 million
during the second 12-month period; $2.6 million during the third
12-month period; $2.4 million during the fourth 12-month period;
$2.2 million during the fifth 12-month period; and $2.0 million
beginning on the fifth anniversary of the opening of the Project
and continuing through the 15th lease year (the "Guarantee
Period"). In addition to rent, Southboat is responsible for
payment of all costs, charges, fees and expenses and other sums
incurred in connection with Southboat's ownership, leasing,
construction, development, management and operation of the
Project, including, without limitation, fees, utility charges,
sewage disposal charges, real estate, ad valorum, sales and use
taxes, insurance and special assessments.
Southboat has a period of 120 days from the date of
execution of the Lease to perform, at its sole cost and expense,
certain due diligence in connection with the following areas: (i)
condition of SLCPA's title to the Premises; (ii) required
rezoning of the Premises to be obtained by St. Louis County;
(iii) environmental condition of the Premises; and (iv) scope and
quality of certain off-site improvements. If Southboat, in its
discretion, determines that the Premises are not acceptable with
respect to any of the above-referenced items and SLCPA fails to
cure same, Southboat, subject to certain conditions, may
terminate the Lease without any further obligation or liability.
In addition, both Southboat and SLCPA have the right to terminate
the Lease (i) if investigation by the Missouri Gaming Commission
has not commenced within 14 months of the execution of the Lease
or Southboat reasonably determines that the Commission will not
commence investigation before such time, or (ii) upon the
occurrence of certain other enumerated events, including an event
of default as provided
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in the Lease. If the Lease is terminated by SLCPA as a result
of an event of default by Southboat, Southboat is responsible to
SLCPA for the damages sustained by SLCPA.
The Company is the guarantor of the Lease and has
executed an unconditional guarantee for Southboat's payment of
Minimum Rent for the Guarantee Period of 15 years and Southboat's
timely completion of construction of, and payment for, all
improvements and installations in connection with Southboat's
development of the Project on the Premises. If Southboat fails
to pay any monthly installment of Minimum Rent,or if the Lease is
terminated at any time within the Guarantee Period due to an
event of default, the Company must pay the full sum of unpaid
Minimum Rent due SLCPA under the Lease for the remainder of the
Guarantee Period.
A predecessor of Southboat and Showboat Operating
Company, a wholly-owned subsidiary of the Company, entered into a
Management Agreement (including an Administrative Services
Agreement and Trademark License Agreement) dated May 2, 1995,
whereby Showboat Operating Company, or its assigns ("SBOC")
agreed to manage the proposed gaming operations at the Project.
SBOC will receive an aggregate management fee equal to 5 1/4% of
gross gaming revenues net of all gaming taxes, plus an incentive
management fee equal to (i) 20% of earnings between $30.0 to
$35.0 million before any interest expense, income taxes, capital
lease rent, depreciation and amortization, and (ii) 10% of
earnings in excess of $35.0 million before any interest expense,
income taxes, capital lease rent, depreciation and amortization.
Pursuant to Section 23.02 of the Management Agreement, the
Management Agreement was automatically assigned to Southboat
upon the execution of its Agreement of Limited Partnership.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
Not Applicable.
(c) Exhibits.
EXHIBIT DESCRIPTION
NO.
10.01 Agreement of Limited Partnership of Southboat Limited
Partnership, a Missouri limited partnership, effective
as of May 1, 1995, by and between Showboat Lemay, Inc.
and Futuresouth, Inc.
10.02 Management Agreement dated May 2, 1995, by and between
Southboat Partnership (a predecessor of Southboat
Limited Partnership) and Showboat Operating Company;
Administrative Services Agreement dated May 2, 1995,
by and between Southboat Partnership and Showboat
Operating Company; and Trademark License Agreement dated
May 2, 1995, by and between Southboat Partnership and
Showboat, Inc.
10.03 Lease and Development Agreement dated October 13,
1995, by and between the St. Louis County Port
Authority and Southboat Limited Partnership.
10.04 Escrow Agreement dated October 13, 1995, by and
between the St. Louis County Port Authority, Southboat
Limited Partnership, Showboat, Inc. and Boatmen's
Trust Company.
10.05 Guarantee of Minimum Rent dated October 13, 1995, by
Showboat, Inc.
10.06 Guarantee of Completion dated October 13, 1995, by
Showboat, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
SHOWBOAT, INC.
(Registrant)
Dated: October 26, 1995 By: /s/
H. Gregory Nasky
Executive Vice President and Secretary
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
NO.
10.01 Agreement of Limited Partnership of Southboat Limited
Partnership, a Missouri limited partnership, effective
as of May 1, 1995, by and between Showboat Lemay, Inc.
and Futuresouth, Inc.
10.02 Management Agreement dated May 2, 1995, by and between
Southboat Partnership (a predecessor of Southboat
Limited Partnership) and Showboat Operating Company;
Administrative Services Agreement dated May 2, 1995, by
and between Southboat Partnership and Showboat
Operating Company; and Trademark License Agreement dated
May 2, 1995, by and between Southboat Partnership and
Showboat Inc.
10.03 Lease and Development Agreement dated October 13, 1995,
by and between the St. Louis County Port Authority and
Southboat Limited Partnership.
10.04 Escrow Agreement dated October 13, 1995, by and between
the St. Louis County Port Authority, Southboat Limited
Partnership, Showboat, Inc. and Boatmen's Trust Company.
10.05 Guarantee of Minimum Rent dated October 13, 1995, by
Showboat, Inc.
10.06 Guarantee of Completion dated October 13, 1995, by
Showboat, Inc.
<PAGE>
EXHIBIT 10.01
<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP
OF
SOUTHBOAT LIMITED PARTNERSHIP
A MISSOURI LIMITED PARTNERSHIP
<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP
OF
SOUTHBOAT LIMITED PARTNERSHIP
A MISSOURI LIMITED PARTNERSHIP
TABLE OF CONTENTS
PAGE
ARTICLE I 1
1.01 Adjusted Capital Account Deficit 1
1.02 Adjusted Capital Contribution 2
1.03 Affiliate 2
1.04 Cash Available for Distribution 3
1.05 Casino 3
1.06 Casino Facilities 4
1.07 Code 4
1.08 Commission 4
1.09 Depreciation 4
1.10 General Partner 4
1.11 Gross Asset Value 5
1.12 Gross Revenue 6
1.13 Initial Capital Contribution 6
1.14 Interest 6
1.15 Limited Partner 6
1.16 Majority Interest 6
1.17 Minimum Gain 6
1.18 Net Profits and Losses 7
1.19 Non-recourse Deductions 8
1.20 Opening 8
1.21 Original General Partner 8
1.22 Original Limited Partner 8
1.23 Partner 8
1.24 Partner's Capital Contribution 8
1.25 Partnership 8
1.26 Partnership Property 8
1.27 Project 9
1.28 Regulations 9
1.29 Riverboat 9
1.30 Southboat Property 9
ARTICLE II 10
2.01 Agreement of Limited Partnership 10
2.02 Amendment to Certificate of Limited
Partnership 10
2.03 Fictitious Business Name Statement 10
2.04 Name 10
2.05 Purpose 10
2.06 Term 10
<PAGE>
2.07 Principal Place of Business 11
2.08 Title to Property 11
ARTICLE III 12
3.01 Original General Partner 12
3.02 Original Limited Partner 12
3.03 No Interest on Capital Contributions 13
3.04 Withdrawal of Capital Contributions 13
3.05 Capital Accounts 13
3.06 Limited Liability and Capacity of
Limited Partners 15
3.07 Additional Capital Contributions 15
3.08 Failure to Contribute 19
ARTICLE IV 21
4.01 Partner's Loans to the Partnership 21
4.02 Loans to the Partnership 21
4.03 General Partner Advances and
Affiliate Loans 21
4.04 Loans from the Partnership 22
ARTICLE V 22
5.01 Allocations and Distributions Among
Limited Partners 22
5.02 Net Profits 22
5.03 Net Losses 23
5.04 Special Allocations 23
5.05 Curative Allocations 24
5.06 Other Allocation Rules 24
5.07 Tax Allocations Code Section 704(c) 25
5.08 Certain Elections 25
ARTICLE VI 26
6.01 Operating Distributions 26
6.02 Distributions Upon Dissolution or
Liquidation 27
6.03 Restoration of Capital Account 27
6.04 Distributions to Owners of Record 28
ARTICLE VII 28
7.01 Fiscal Year of Partnership 28
7.02 Books and Records 28
7.03 Tax Returns and Reports to Partners 30
ARTICLE VIII 31
8.01 Authority of General Partner 31
8.02 Duties of the General Partner 31
8.03 Rights of the Limited Partners 33
8.04 Partnership Meetings 34
8.05 Activities of Partners 34
8.06 Liability of General Partner 39
8.07 Indemnification of General Partner 40
8.08 Representations 40
8.09 Right to Rely Upon the Authority of
<PAGE>
the General Partner 41
ARTICLE IX 41
9.01 Bank Accounts 41
9.02 Expenses of the Partnership 41
ARTICLE X 42
10.01 Transfer of a Limited Partner's Interest 42
10.02 Effectiveness of Substitution 43
10.03 Further Limitations of Transfers 44
10.04 Put/Call Option 44
ARTICLE XI 47
11.01 Cessation 47
11.02 Withdrawal of a General Partner 48
11.03 Participation of a New General Partner 49
11.04 Payment to Withdrawing General Partner 49
ARTICLE XII 50
12.01 Force Majeure Defined 50
12.02 Actions to Resolve Force Majeure Events 51
ARTICLE XIII 51
13.01 Events of Dissolution 51
13.02 Winding-Up of Partnership Business 52
13.03 Distribution of Partnership Property Upon
Dissolution 53
13.04 Assets Other Than Cash 53
13.05 Capital Account Adjustments 53
ARTICLE XIV 53
ARTICLE XV 54
15.01 Limited Power of Attorney 54
15.02 Amendment 55
15.03 Foreign Gaming Licenses 56
15.04 Binding Effect; Further Instruments 56
15.05 Headings 56
15.06 Gender and Number 56
15.07 Severability 56
15.08 Partial Invalidity 57
15.09 Cooperation with Gaming Authorities 57
15.10 Confidentiality 58
15.11 Waiver of Action for Partition 58
15.12 Governing Law 58
15.13 Arbitration; Attorneys' Fees and Costs 58
15.14 Integration 59
15.15 Counterparts 60
15.16 No Broker/Finder 60
15.17 Exhibits 60
15.18 Stockholders 60
15.19 Futuresouth Room and Signing Privileges 60
<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP
OF
SOUTHBOAT LIMITED PARTNERSHIP
A MISSOURI LIMITED PARTNERSHIP
This Agreement of Limited Partnership of Southboat
Limited Partnership, a Missouri Limited Partnership
("Agreement"), is made as of this ____ day of May 1995
("Date of this Agreement"), by and among SHOWBOAT LEMAY,
INC. a Nevada corporation (hereinafter referred to as the
"Original General Partner" or the "General Partner"),
FUTURESOUTH, INC., a Missouri corporation (hereinafter
referred to as the "Original Limited Partner" or the
"Limited Partner").
RECITALS
The parties hereto have joined together for the purpose
of forming a limited partnership pursuant to the Uniform
Limited Partnership Act under the laws of the state of
Missouri, upon the terms and conditions and for the purposes
hereinafter set forth.
The parties desire to form a limited partnership on the
terms and conditions set forth herein to design, develop,
construct, own and operate a riverboat casino project, as
further described herein, to be located on approximately
twenty-nine (29) acres at the St. Louis County Port
Authority site in Lemay, Missouri (the "Riverboat Casino
Site"), for the other purposes set forth herein.
NOW, THEREFORE, in consideration of the mutual promises
made herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, and in addition to terms
defined elsewhere herein, the following terms shall have the
following meanings:
1.01 ADJUSTED CAPITAL ACCOUNT DEFICIT
Adjusted Capital Account Deficit means, with
respect to any Partner, the deficit balance, if any, in such
Partner's capital account as of the end of the relevant
fiscal year, after giving effect to the following
adjustments:
(a) Credit to such capital account any
amounts which such Partner is obligated to restore
(pursuant to any provision of this Agreement, pursuant
to the terms of such Partner's promissory note, if any,
or otherwise) or is deemed
<PAGE>
to be obligated to restore pursuant to the penultimate
sentence of Regulations Section 1.704-2(g)(1) and
1.704-2(i)(5); and
(b) Debit to such capital account the items
described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) and
(6) of the Regulations.
The foregoing definition of Adjusted Capital
Account Deficit is intended to comply with the provisions of
Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
1.02 ADJUSTED CAPITAL CONTRIBUTION
As of any date, a Partner's Capital Contribution
adjusted as follows:
(a) Increased by the amount of any
Partnership liabilities which, in connection with
distributions pursuant to Section 6.01 or Section 6.02
hereof, are assumed by such Partner or are secured by
any Partnership Property distributed to such Partner;
and
(b) Reduced by the amount of cash and the
Gross Asset Value of any Partnership Property
distributed to such Partner pursuant to Section 6.01 or
Section 6.02 hereof, and the amount of any liabilities
of such Partner assumed by the Partnership or which are
secured by any property contributed by such Partner to
the Partnership.
In the event any Partner transfers all or any
portion of his Interest in accordance with the terms of this
Agreement, his transferee shall succeed to the Adjusted
Capital Contribution of the transferor to the extent it
relates to the transferred Interest.
1.03 AFFILIATE
(i) Any person ("first person") directly or
indirectly controlling, controlled by, or under common
control with a second person, or owning or controlling 10%
or more of the outstanding securities of that second person;
(ii) any officer, director, partner or member of the
immediate family of that first person; and (iii) if that
second person is an officer, director or partner, any
company for which that second person acts in that capacity.
"Person" includes any individual, partnership, corporation,
limited liability company, association or other legal
entity. The term "control" (including the terms "controlled
by" and "under common control with") means the possession,
direct or indirect, of the power to direct or cause the
direction of the management and policies of a person,
whether through the ownership of voting securities, by
contract, or otherwise.
<PAGE>
1.04 CASH AVAILABLE FOR DISTRIBUTION
Total Gross Revenues generated by the Partnership
Property and miscellaneous sources, including, without
limitation, cash proceeds from (a) any loan secured by the
Partnership Property, (b) a sale or refinancing of all or
part of the Partnership Property remaining after retirement
of debt secured by such Partnership Property and all
expenses relating to the transaction and retention of
reasonable reserves, and (c) net condemnation proceeds; less
cash expenditures (including but not limited to, fees for
services and commissions to the General Partner or any
Affiliate of the General Partner, debt service, (including
but not limited to repayment of loans to the Partnership in
accordance with the terms and conditions of this Agreement),
and operating expenses and amounts set aside for reserves,
but not including any amount which, if distributed, would
cause a default of any covenant contained in any financing
agreement between the General Partner, any Affiliate thereof
or the Partnership and a third party lender; provided,
however, that no covenant in any financing agreement shall
restrict distributions to the Original Limited Partner in
any manner which is different from the restrictions which
are imposed on distributions to the General Partner. The
foregoing restriction on covenants in financing agreement
shall not limit the right of any Partner to receive priority
distributions which are repayments of any loan which the
Partner has made to the Partnership provided that the
creation of such loan and such repayment is in accordance
with the provisions of this Agreement.
1.05 CASINO
Those areas reserved for the operation of slot
machines, table games and any other legal forms of gaming
permitted under the laws of the State of Missouri, and
ancillary service areas, including reservations and
admissions, cage, vault, count room, surveillance room and
any other room or area or activities therein regulated or
taxed by the state of Missouri by reason of gaming
operations.
1.06 CASINO FACILITIES
All equipment and other property used in
connection with the ownership and operation of the Casino
and anything used in connection with or in support of the
Casino including, but not limited to, docks, barges, piers,
restaurants, entertainment facilities, gaming areas, cages,
vehicular parking area(s), working areas, restrooms,
administrative offices for, but not limited to, accounting,
purchasing, and management information services (including
offices for Showboat management personnel), and any
associated warehouse areas.
<PAGE>
1.07 CODE
The Internal Revenue Code of 1986, as amended,
codified as Title 26 of the U.S. Code.
1.08 COMMISSION
The Missouri Gaming Commission.
1.09 DEPRECIATION
For each fiscal year or other period, an amount
equal to the depreciation, amortization or other cost
recovery deduction allowable with respect to an asset for
such year or other period, except that if the Gross Asset
Value of an asset differs from its adjusted basis for
federal income tax purposes at the beginning of such year or
other period, depreciation shall be an amount which bears
the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization or other cost
recovery deduction for such year or other period bears to
such beginning adjusted tax basis; provided, however, that
if the federal income tax depreciation, amortization, or
other cost recovery deduction for such year is zero,
depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method
selected by the General Partner.
1.10 GENERAL PARTNER
Showboat Lemay, Inc., a Nevada corporation, or any
individual, partnership, corporation, limited liability
company, association, or other legal entity or person that
succeeds it as the General Partner of the Partnership or
becomes an additional General Partner thereof, pursuant to
the terms and conditions of this Agreement.
1.11 GROSS ASSET VALUE
With respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any
asset contributed by a Partner to the Partnership shall
be the gross fair market value of such asset, as
determined by the contributing Partner and the
Partnership.
(b) The Gross Asset Values of all Partnership
assets shall be adjusted to equal their respective
gross fair market values, as determined by the General
Partner, as of the following times:
(i) The acquisition of an additional
Interest in the Partnership (other than as
otherwise provided herein) by any new or existing
Partner in exchange for more than a de minimis
capital contribution;
<PAGE>
(ii) The distribution by the Partnership
to a Partner of more than a de minimis amount of
Partnership Property as consideration for an
Interest in the Partnership if the General Partner
reasonably determines that such adjustment is
necessary or appropriate to reflect the relative
economic interests of the Partners in the
Partnership; and
(iii) The liquidation of the Partnership
within the meaning of Regulations Section 1.704-
1(b)(2)(ii)(g).
(c) The Gross Asset Value of any Partnership
assets distributed to any Partner shall be the gross
fair market value of such asset on the date of
distribution.
(d) The Gross Asset Values of Partnership
assets shall be increased (or decreased) to reflect any
adjustment to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b),
but only to the extent that such adjustments are taken
into account in determining capital accounts pursuant
to Regulations Section 1.704-1(b)(2)(iv)(m) and Section
5.04(d) (Code Section 734(b) or Code Section 743(b)
adjustments) hereof; provided, however, that gross
asset values shall not be adjusted pursuant to this
Section 1.11(d) to the extent the General Partner
determines that an adjustment pursuant to Section
1.11(b) is necessary or appropriate in connection with
a transaction that would otherwise result in an
adjustment pursuant to this Section 1.11(d).
If the Gross Asset Value of an asset has been
determined or adjusted pursuant to Section 1.11(a), (b) or
(d) hereof, such gross asset value shall thereafter be
adjusted by the depreciation taken into account with respect
to such asset for purposes of computing profits and losses.
1.12 GROSS REVENUE
All of the revenue from the ownership and
operation of the Project.
1.13 INITIAL CAPITAL CONTRIBUTION
Nineteen Million Five Hundred Thousand Dollars
($19,500,000) contributed by the Original General Partner,
in cash or contributed equipment, goods or services
("Initial Capital Contribution of the Original General
Partner" or "Original General Partner's Capital
Contribution"), and Five Hundred Thousand Dollars ($500,000)
contributed by the Original Limited Partner in cash
("Initial Capital Contribution of the Original Limited
Partner" or "Original Limited Partner's Capital
Contribution").
1.14 INTEREST
<PAGE>
The proportionate interest of a Partner in the
profits, losses, and capital of the Partnership.
1.15 LIMITED PARTNER
An individual, partnership, corporation, limited
liability company, association, or other legal entity which
is admitted to the Partnership as a Limited Partner.
1.16 MAJORITY INTEREST
Any combination of Interests (as defined above)
that, in the aggregate, constitutes more than fifty percent
(50%) of all Interests.
1.17 MINIMUM GAIN
The meaning set forth in Section 1.704-2(b) of the
Regulations.
1.18 NET PROFITS AND LOSSES
For each fiscal year or other period, an amount
equal to the Partnership's taxable income or loss for such
year or period, determined in accordance with Code Section
703(a) (for this purpose, all items of income, gain, loss or
deduction required to be stated separately pursuant to Code
Section 703(a)(l) shall be included in taxable income or
loss) with the following adjustments:
(a) Any income of the Partnership that is
exempt from federal income tax or not otherwise taken
into account in computing Net Profits or Net Losses
pursuant to this Section 1.18, shall be added to such
taxable income or loss;
(b) Any expenditures of the Partnership
described in Code Section 705(a)(2)(B) or treated as
Code Section 705(a)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Net Profits
or Losses pursuant to this Section 1.18 shall be
subtracted from such taxable income or loss;
(c) In the event the Gross Asset Value of any
Partnership Property is adjusted pursuant to Section
1.11(b) or Section 1.11(d) hereof, the amount of such
adjustment shall be taken into account as gain or loss
from the disposition of such asset for purposes of
computing Net Profits or Net Losses;
(d) Gain or loss resulting from any
disposition of any Partnership Property with respect to
which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross
Asset Value of the Partnership Property disposed of,
notwithstanding that the adjusted tax
<PAGE>
basis of such Partnership Property differs from its
Gross Asset Value;
(e) In lieu of the depreciation, amortization
and other cost recovery deductions taken into account
in computing such taxable income or loss, there shall
be taken into account depreciation for such fiscal year
or other period, computed in accordance with Section
1.09 hereof; and
(f) Notwithstanding any other provision of
this Section 1.18, any items which are specially
allocated pursuant to Sections 5.04 or 5.05 hereof,
shall not be taken into account in computing Net
Profits or Losses.
1.19 NON-RECOURSE DEDUCTIONS
The meaning set forth in Regulations Section 1.704-
2(c). The amount of Non-recourse Deductions for a
Partnership fiscal year equals the net increase, if any, in
the amount of Minimum Gain during the fiscal year determined
according to Regulations Section 704-2(d)(1).
1.20 OPENING
The date the Project opens to the public for
business for gaming activities by paying customers.
1.21 ORIGINAL GENERAL PARTNER
Showboat Lemay, Inc., a Nevada corporation.
1.22 ORIGINAL LIMITED PARTNER
Futuresouth, Inc. a Missouri corporation.
1.23 PARTNER
Any participant in the Partnership either as a
General Partner or a Limited Partner.
1.24 PARTNER'S CAPITAL CONTRIBUTION
The Initial Capital Contribution, Supplemental
Capital Contributions and Additional Capital Contributions
of each Partner as set forth in Article III hereof.
1.25 PARTNERSHIP
Southboat Limited Partnership, a Missouri limited
partnership.
<PAGE>
1.26 PARTNERSHIP PROPERTY
The Partnership's interest in the Southboat
Property, and such other property, whether real or personal,
as may from time to time belong to the Partnership.
1.27 PROJECT
The riverboat casino development, and associated
amenities and facilities, to be acquired, designed,
developed, constructed, owned and operated on the Southboat
Property, which Project is more particularly depicted and
described in the Response to Request for Proposal ("RFP")
submitted to the St. Louis County Port Authority on or about
March 17, 1995 which is incorporated by reference into this
Agreement as though fully set forth at length herein, as the
same may be changed from time to time in accordance with the
provisions of this Agreement; provided, however, that the
Original Limited Partner understands and agrees that changes
have been made to the Project as set forth in the RFP, which
changes do not materially modify the Project as described
and depicted in the RFP.
1.28 REGULATIONS
The regulations promulgated by the U.S. Treasury
under the Code.
1.29 RIVERBOAT
The riverboat facility, including any barge or
barges, and any and all other amenities and facilities used
in connection therewith, to be owned and operated by the
Partnership at the Riverboat Casino Site, in conjunction
with the Casino and Casino Facilities, including, but not
limited to, the barge(s), facilities and other amenities, as
the same may be changed from time to time in accordance with
the provisions of this Agreement.
1.30 SOUTHBOAT PROPERTY
The real property consisting of approximately 29
acres located at the St. Louis County Port Authority
development site in Lemay, Missouri, which property shall be
leased and developed by the Partnership from St. Louis
County Port Authority under the terms and conditions set
forth in that certain Lease Agreement dated _______________,
1995 (the "Lease"), which Lease is by this reference
incorporated herein as though it were an exhibit attached
hereto.
<PAGE>
ARTICLE II
FORMATION AND ORGANIZATION MATTERS
2.01 AGREEMENT OF LIMITED PARTNERSHIP
The Original General Partner and the Original
Limited Partner agree to form a limited partnership pursuant
to the provisions of the Uniform Limited Partnership Act,
under the laws of the state of Missouri, and upon the terms
and conditions set forth in this Agreement.
2.02 AMENDMENT TO CERTIFICATE OF LIMITED PARTNERSHIP
The General Partner shall file an amendment to the
Certificate of Limited Partnership in the office of the
Secretary of State of Missouri when required.
2.03 FICTITIOUS BUSINESS NAME STATEMENT
The General Partner shall execute and promptly
cause to be filed in the office of the Secretary of State of
Missouri, and in such other offices as may be required, a
Fictitious Business Name Statement, or such other document
which may be required, with respect to the name of the
Partnership and with respect to any other fictitious names
used by the Partnership in carrying out its purposes.
2.04 NAME
The name of the Partnership shall be Southboat
Limited Partnership.
2.05 PURPOSE
The purposes of the Partnership are to (a)
acquire, design, develop, construct, own and operate the
Project, (b) to acquire, lease, sell, or otherwise dispose
of other properties used or useful in connection with the
foregoing, (c) carry on any other activities necessary or
incidental to the foregoing, and (d) engage in any other
business if such business is approved and agreed upon
unanimously by the Partners prior to entering into such
business.
2.06 TERM
The term of the Partnership shall commence upon
the filing of the Partnership Certificate of Limited
Partnership in the office of the Missouri Secretary of State
and shall continue until either (i) December 31, 2094; (ii)
the sale of the Project; or (iii) the sale of all or
substantially all of the Partnership property and Project,
unless the life of the Partnership shall be terminated or
extended pursuant to law or any provision of this Agreement
(the "Initial Term"). The term of the Partnership shall be
continued for successive one-year terms after December 31,
2094
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until terminated as provided herein (the "Renewal
Term(s)"). In the event that the Partnership fails to
successfully negotiate and enter into the Lease as set forth
herein, or otherwise fails to acquire exclusive use and
occupancy of the Riverboat Casino Site or other alternative
site acceptable to the Original General Partner, whether by
deed, lease or otherwise, the Partnership shall terminate.
If the General Partner desires that the Partnership
terminate upon the expiration of the Initial Term of the
Partnership or any Renewal Term thereafter, the General
Partner shall give written notice to the other Partner(s) of
its intention to cause such termination at least ninety (90)
days prior to the end of the Initial Term or any Renewal
Term thereafter. If there shall be more than one General
Partner, all General Partners shall agree to the termination
of the Partnership, unless one General Partner holds a
Majority Interest of the Partnership, then such General
Partner may give the notice of termination of Partnership
set forth herein. The Partnership shall terminate
thereafter at the end of the Initial Term or such Renewal
Term, as the case may be, and shall thereafter be liquidated
in accordance with the provisions hereof.
2.07 PRINCIPAL PLACE OF BUSINESS
The location of the principal place of business of
the Partnership shall be in the metropolitan area of St.
Louis, Missouri, as shall be designated by the General
Partner in its sole and absolute discretion, or at such
other place as the General Partner may from time to time
determine.
2.08 TITLE TO PROPERTY
Legal title to all Partnership Property shall be
taken and at all times held in the name of the Partnership,
and none of the right, title or interest therein shall be
held in the name of any Partner. A Partner may be a lessor
or sublessor of property which is leased to the Partnership,
so long as such property which is to be leased to the
Partnership is of a kind and type which is usually and
customary leased by business operations reasonably
equivalent to the Project, upon the written consent of the
General Partner, which consent may be unreasonably withheld.
ARTICLE III
CAPITAL CONTRIBUTIONS
3.01 ORIGINAL GENERAL PARTNER
The Original General Partner's Initial Capital
Contribution shall be Nineteen Million Five Hundred Thousand
Dollars ($19,500,000), in cash (including but not limited to
monies expended on behalf of the Partnership for expenses
and services, incurred at any time after January 1, 1995, in
furtherance of the Project) or in equipment, goods or
services contributed by the
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Original General Partner (including but not limited to
such equipment, goods and services contributed by the
Original General Partner at any time after January 1, 1995,
in furtherance of the Project provided such services were
performed after January 1, 1995.)
In addition to the Original General Partner's
Initial Capital Contribution, but not as a capital
contribution,the Original General Partner shall arrange for
such funds, up to a total maximum of One Hundred Seven
Million Nine Hundred Thousand Dollars ($107,900,000),
(including the Initial Capital Contribution of the Original
General Partner and the Initial Capital Contribution of the
Original Limited Partner), as shall be necessary for the
design, development, construction and operation of the
Project. Of such $107.9 million, the Original General
Partner shall borrow Seventy Five Million Dollars
($75,000,000) on behalf of the Partnership for the Project.
Such financing shall be the sole obligation of the
Partnership, and neither the Original General Partner nor
the Original Limited Partner, nor any Affiliate thereof,
shall assume any liability therefor. The remainder of the
Original General Partner's funding obligation shall be in
the form of equipment financing in such amounts, upon such
terms and in such manner as the General Partner shall
determine, in its sole and absolute discretion. Any and all
such equipment financings shall be the sole obligation of
the Partnership, and neither the Original General Partner
not the Original Limited Partner, not any Affiliate thereof,
shall assume any liability therefor.
The Interest of the Original General Partner in
the Partnership shall be eighty percent (80%).
3.02 ORIGINAL LIMITED PARTNER
The Original Limited Partner's Initial Capital
Contribution shall be cash in the amount of Five Hundred
Thousand Dollars ($500,000) on the date of Opening. The
Interest of the Limited Partner in the Partnership shall be
twenty percent (20%).
3.03 NO INTEREST ON CAPITAL CONTRIBUTIONS
Capital contributions to the Partnership shall not
bear interest.
3.04 WITHDRAWAL OF CAPITAL CONTRIBUTIONS
Except as expressly provided in this Agreement, no
part of the contributions of any Partner to the capital of
the Partnership may be withdrawn by such Partner without the
prior written consent of the General Partner. The Partners
shall not have the right to receive property, other than
cash, in return for their Capital Contributions, but this
shall not be construed to limit the Partners' rights to
receive their respective Interest of any property
distribution made pursuant to this Agreement. If the
Original General Partner shall withdraw its contribution to
the
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capital of the Partnership, or any portion thereof, then
the Original Limited Partner shall have the right to
withdraw its contribution to the capital of the Partnership,
or any portion thereof, on a pro rata basis.
3.05 CAPITAL ACCOUNTS
There shall be established and maintained on the
books of the Partnership a separate capital account for each
Partner. The Partnership shall maintain such capital
accounts in accordance with the capital account maintenance
rules of Regulations Section 1.704-1(b)(2)(iv), as such
rules may be amended from time to time. Unless otherwise
required by such rules, the capital account of each Partner
shall be maintained for such Partner in accordance with the
following provisions:
(a) To each Partner's capital account there
shall be credited such Partner's Initial Capital
Contribution, such Partner's distributive share of
profits and any items in the nature of income or gain
which are specially allocated pursuant to Section 5.04
or Section 5.05 hereof, and the amount of any
Partnership liabilities assumed by such Partner or
which are secured by any Partnership Property
distributed to such Partner;
(b) To each Partner's capital account there
shall be debited the amount of cash and the Gross Asset
Value of any Partnership Property distributed to such
Partner pursuant to any provision of this Agreement,
such Partner's distributive share of losses and any
items in the nature of expenses or losses which are
specially allocated pursuant to Section 5.04 or Section
5.05 hereof, and the amount of any liabilities of such
Partner assumed by the Partnership or which are secured
by any property contributed by such Partner to the
Partnership;
(c) In the event any Interest in the
Partnership is transferred in accordance with the terms
of this Agreement, the transferee shall succeed to the
capital account of the transferor to the extent it
relates to the transferred interest;
(d) In determining the amount of any
liability for purposes of Article V, there shall be
taken into account Code Section 752(c) and any other
applicable provision of the Code and Regulations.
The foregoing provisions and the other provisions
of this Agreement relating to the maintenance of capital
accounts are intended to comply with Regulations Section
1.704-1(b)(2)(iv), and shall be interpreted and implied in a
manner consistent with such Regulations. In the event the
General Partner shall determine that it is prudent to modify
the manner in which the capital accounts, or any debits or
credits thereto (including, without limitation,
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debits or credits relating to liabilities which are secured
by contributed or distributed property or which are assumed
by the Partnership or the General Partner) are computed in
order to comply with such Regulations, the General Partner
may make such modification, provided that it is not likely
to have a material adverse effect on the amount
distributable to any Partner pursuant to Section 6.02 hereof
upon the dissolution of the Partnership. The General
Partner also shall (i) make any adjustments that are
necessary or appropriate to maintain the agreed ratios
between the Capital Accounts of the General Partner and the
Limited Partner(s) and the amount of Partnership capital
reflected on the Partnership's balance sheet, as computed
for book purposes, in accordance with Regulations Section
1.704-1(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might
otherwise cause this Agreement not to comply with
Regulations Section 1.704-1(b).
Notwithstanding the foregoing, the General Partner
shall at all times during the term of this Partnership,
maintain a minimum capital account balance of an amount
equivalent to no less than one percent (1%) of the aggregate
of all capital accounts.
3.06 LIMITED LIABILITY AND CAPACITY OF LIMITED PARTNERS
No Limited Partner shall be liable for any
obligation of the Partnership, or any General Partner or any
other Limited Partner. No Limited Partner, in his capacity
as Limited Partner, shall take part in the management of the
business of the Partnership or transact any business for or
in the name of the Partnership (except as otherwise provided
in this Agreement). No Limited Partner shall have the power
to sign for or to bind the Partnership, at any time or under
any circumstances, unless expressly authorized by the
General Partner. No salary shall be paid to any Limited
Partner, except as may be specifically designated by the
General Partner. No Limited Partner shall have a
Partnership drawing account. No Limited Partner shall be
entitled to any distribution from the Partnership or to
withdraw on demand any part of his Capital Contribution
except as specifically provided in this Agreement.
3.07 ADDITIONAL CAPITAL CONTRIBUTIONS
Subject to the terms and conditions of this
Agreement, at such time as the General Partner determines,
in its reasonable judgment, that additional capital
("Additional Capital Contribution") is required by the
Partnership in order to accomplish or further the purposes
of the Partnership as set forth in Section 2.05 hereof, the
General Partner may require an Additional Capital
Contribution by all Partners. The obligation of the
Original Limited Partner to make such Additional Capital
Contributions shall be limited to Additional Capital
Contributions for the following purposes and subject to the
following limitations:
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(i) If the cost of the Project exceeds One
Hundred Twenty Million Dollars ($120,000,000.00). As of the
Execution Date of this Agreement, as hereinafter defined,
the General Partner represents and warrants to the Original
Limited Partner that, to its best knowledge, information and
belief after making inquiry, the cost of the Project the
Partnership presently intends to construct will not exceed
One Hundred Twenty Million Dollars ($120,000,000.00).
(ii) If cash flow from operation of the
Project is negative. Any demand for Additional Capital
Contribution pursuant to this clause may be made only on an
annual basis after the close of the fiscal year.
(iii) If there is change in the scope of the
Project which requires additional capital, an Additional
Capital Contribution pursuant to this subparagraph (iii) may
be required only if either: (a) the Original Limited Partner
executes a written consent to the Additional Capital
Contribution, or (b) if the change in scope and demand for
Additional Capital Contribution with respect thereto occurs
after the tenth anniversary of the date ("Tenth Anniversary
Date") upon which the Project opens to the public for gaming
("Project Opening Date"), or (c) if the change in scope and
demand for Additional Capital Contribution with respect
thereto occurs after the fifth anniversary of the date
("Fifth Anniversary Date") of the Project Opening Date, but
before the Tenth Anniversary Date, the General Partner
demonstrates (whether to the reasonable satisfaction of the
Original Limited Partner, as set forth below, or as
determined by binding arbitration) that the proposed change
in scope is economically viable for the Project and the
Partnership; provided, however, that if the General Partner
so demonstrates such economic viability on or before seven
and one-half years after the Project Opening Date, the
Interest of the Original Limited Partner may only be diluted
as specifically set forth herein.
(iv) A "change in the scope of the Project"
for the purposes of this Agreement shall mean any increase
in the overall gross square footage area of the Project.
Any demand for Additional Capital Contribution with respect
to a change in scope of the Project shall be required to be
made concomitantly with the change in scope; provided,
however, that the foregoing shall not affect the right of
the General Partner to make demand for Additional Capital
Contributions at a later time for unanticipated expenses and
cost overruns associated with such change in the scope of
the Project. If the Project shall become a land-based
gaming facility, such change from a riverboat cruising
gaming facility to a land-based gaming facility shall
automatically constitute a "change in the scope of the
Project" for the purposes of this Agreement. Before the
Tenth Anniversary Date, the General Partner shall have the
right to make any changes in the scope of the Project which
it determines necessary, appropriate, expedient, or in the
best interests of the Project and the Partnership, in its
sole and absolute discretion. If the General Partner
determines to
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make a change in the scope of the Project on or before the
Fifth Anniversary Date, then the General Partner shall so
notify the Original Limited Partner of the change in scope
but the Original Limited Partner shall have no obligation
to make any Additional Capital Contributions wit respect to
any changes in the scope of the Project on or before the
Fifth Anniversary Date, nor shall the Original Limited
Partner have its Interest diluted for failure to make any
Additional Capital Contribution with respect to any changes
in the scope of the Project on or before the Fifth
Anniversary Date; provided, however, that the refusal of the
Original Limited Partner (including absence of consent due
to omission or inaction) to make any Additional Capital
Contribution with respect to any change in the scope of the
Project shall not affect in any manner whatsoever the right
of the General Partner to make the change in the scope of
the Project, and to the extent that such change in the scope
of the Project may be financed, to cause such financing for
the change in the scope of the Project to be the obligation
of the Partnership.
(v) If the General Partner determines to
make a change in the scope of the Project from the Fifth
Anniversary Date up to and including the Tenth Anniversary
Date, then the General Partner shall demonstrate to the
reasonable satisfaction of the Original Limited Partner that
the proposed change in the scope of the Project is
economically viable for the Project and the Partnership. If
the General Partner shall so demonstrate to the reasonable
satisfaction of the Original Limited Partner, then the
General Partner shall have the right to require the Original
Limited Partner make its pro rata share of the Additional
Capital Contribution based upon its Interest for such
purpose. If the General Partner and the Original Limited
Partner do not agree that the General Partner has
demonstrated to the reasonable satisfaction of the Original
Limited Partner that the proposed change in the scope of the
Project is economically viable for the Project and the
Partnership, then either or both Partners may submit the
dispute to arbitration in accordance with the provisions of
Section 15.13(b) hereof. If the General Partner
demonstrates the economic viability of the proposed change
in the scope of the Project as set forth above, whether to
the reasonable satisfaction of the Original Limited Partner
or as a result of binding arbitration, and such
demonstration occurs on or before seven and one-half years
after Project Opening, if the Original Limited Partner
refuses to make its pro rata share of the Additional Capital
Contribution with respect to such change in the scope of the
Project the Original Limited Partner's Interest shall be
diluted in accordance with the provisions of this Agreement,
but in no event shall the Interest of the Original Limited
Partner be diluted to less than five percent (5%) of the
total Interest of the Partnership.
(vi) The Original General Partner and the
Original Limited Partner understand and agree that the
Original General Partner may in its sole and absolute
discretion, determine to construct a hotel as part of the
Project and the addition of a hotel facility to the Project
automatically shall constitute a
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change in the scope of the Project, except as otherwise
specifically provided herein. If the General Partner
determines to develop, construct and operate a hotel
facility before the Fifth Anniversary Date, the General
Partner shall give written notice thereof to the Original
Limited Partner and then, unless the Original Limited
Partner consents thereto in writing (which consent shall
include the Original Limited Partner's agreement to
contribute its pro rata share of the Additional Capital
Contribution required for the hotel facility), the
Partnership itself shall not undertake the development,
construction and operation of a hotel facility. In such
event, the General Partner shall have the right to cause an
Affiliate, or any other legal entity, to undertake the
development, construction and operation of the hotel
facility. In such event, the hotel facility shall not be
part of the Project for the purposes of this Agreement.
Under such circumstances, neither the Partnership, nor any
other Partner (other than the General Partner and/or its
Affiliate or other legal entity created for the purpose of
developing, constructing and operating the hotel facility)
shall have any right, title or interest in, or claim to, the
hotel facility, the furniture, fixtures or equipment
therein, or any amenities or facilities associated
therewith, or any revenues derived therefrom. If the hotel
facility is developed, constructed and operated separate
from the Partnership and the Project as described above, any
agreements entered into by and between the Partnership and
the owner or operator of the hotel facility shall be subject
to the provisions of Section 8.05(a) hereof, to the extent
that such provision relates to arms length transactions.
If, after the Fifth Anniversary Date, but before
the passage of seven and one-half years from Project
Opening, the General Partner demonstrates (whether to the
reasonable satisfaction of the Original Limited Partner or
as a result of binding arbitration), that the development,
construction and operation of a hotel facility, or any other
change in the scope of the Project is economically viable
for the Partnership and the Project, then the General
Partner may require an Additional Capital Contribution be
made by each Partner, including the Original Limited Partner
pro rata on the basis of each Partner's Interest; provided,
however, that if the Original Limited Partner refuses to
make such Additional Capital Contribution and, accordingly
its Interest is diluted as set forth herein, in no event
shall the Interest of the Original Limited Partner be
diluted to less than five percent (5%) of the total Interest
of the Partnership.
(vii) Subject to the limitations contained
in the preceding subsections of this Section 3.07, any and
all Additional Capital Contributions shall be made by all
Partners, including but not limited to the Original Limited
Partner, in proportion to the Partners' Interest.
Notwithstanding the foregoing, the Original Limited Partner
may elect to either contribute its share of the Additional
Capital Contribution or to have its Interest diluted in the
manner set forth in Section 3.08, but subject to the
provisions of this Section 3.07. If any Partner shall fail
to make any
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Additional Capital Contribution, then the General Partner
shall have the right, subject to the provisions of this
Agreement, to acquire, on behalf of the Partnership, such
additional capital as may be required, from whatever
sources, in whatever amounts, and upon whatever terms
and conditions, the General Partner deems necessary and
appropriate in its business judgment to meet the needs of
the Partnership.
3.08 FAILURE TO CONTRIBUTE
If any Partner should fail to make any Additional
Capital Contribution which such Partner is required to make
pursuant to the terms and conditions of this Agreement, on
or before the date such Additional Capital Contribution is
due ("Non-Contributing Partner"), then the General Partner
may, at any time thereafter while the contribution remains
unpaid, serve written notice ("Notice of Demand") upon the
Non-Contributing Partner requiring it to make the Additional
Capital Contribution, together with all costs and expenses
that may have been incurred by the Partnership by reason of
the non-payment. The Notice of Demand shall specify a date
(which shall be not less then thirty (30) days, nor more
than sixty (60) days after the date of the Notice) upon
which, and the place at which, the Additional Capital
Contribution and such costs and expenses are to be paid. In
the event of the non-payment of the Additional Capital
Contribution on such date and at such place, the General
Partner shall have the right but not the obligation to:
(a) First, loan to the Partnership an amount
equal to the Non-Contributing Partner's required
Additional Capital Contribution. The amount so loaned,
together with any corresponding Capital Contribution
made by the Contributing Partner(s) for its (their
respective) own account(s) shall be considered loans to
the Partnership and shall be repaid by the Partnership
to such Contributing Partner(s) with interest thereon
at an annual rate six percentage points above the rate
shown in the WALL STREET JOURNAL (or its successor
publication) from time to time as the prime rate for
money center banks, but with the floor at twelve
percent (12%) per annum, which rate shall be determined
on the first day of each month and shall be applied to
the loan balance for the month. However, in no event
shall the interest rate exceed the maximum lawful rate.
Such interest shall be payable quarterly. Any loan
made pursuant to this provision shall be repaid by the
Partnership upon demand by the Partner(s) making the
loan to the extent that funds shall be available for
such repayment. In any event, such loan shall be
repaid before any distributions of cash or return of
Capital Contributions to the Partners are made, but
after repayment of loans incurred under Section 4.03;
or
(b) Second, advance to the Partnership an
amount equal to the Non-Contributing Partner's required
Additional Capital Contribution not made by the Non-
Contributing Partner
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as an additional capital contribution by the
Contributing Partner. The amount so advanced shall be
considered an Additional Capital Contribution by the
Partner advancing the funds which shall have the
effect of increasing the advancing Partner's Interest
in the Partnership, and decreasing the Non-Contributing
Partner's Interest on a pro rata basis in the
Partnership. If the Non-Contributing Partner is the
Original Limited Partner, then the Interest of the
Non-Contributing Partner shall be computed as set forth
hereinafter, subject, however, to the limitation
concerning dilution set forth in Section 3.07, if
applicable. Following the Non-Contributing Original
Limited Partner's failure to make a required Additional
Capital Contribution, its Interest in the Partnership
shall be reduced to a fraction in which the numerator
is the sum of the Non-Contributing Original Limited
Partner's Capital Contributions plus Three Million
Five Hundred Thousand Dollars ($3,500,000.00) and the
denominator is the sum of all Partners' Capital
Contributions. The other Partner's Interest in the
Partnership shall be changed to a fraction equal to 1
minus the fraction representing the Non-Contributing
Partner's newly calculated Interest in Partnership.
For the purposes of this subsection, only equity
contributions and not debt shall be considered in
determining a Partner's Capital Contribution; or
(c) Third, seek Additional Capital
Contributions by admitting additional General or Limited
Partners, in the sole and absolute discretion of the
Original General Partner. To the extent that the Original
General Partner shall deem it necessary and appropriate to
admit additional Partners for the purpose of raising such as
additional capital (provided that the Interests of the
Partners shall not be affected in a manner different than
such Interests would be affected if the additional capital
was provided pursuant to Section 3.08(b) above), the
Original General Partner shall have the right to amend and
modify this Limited Partnership Agreement, as the Original
General Partner may deem necessary and appropriate, in its
sole and absolute discretion, to accommodate the terms and
conditions of such additional financing.
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ARTICLE IV
LOANS
4.01 PARTNER'S LOANS TO THE PARTNERSHIP
Except as provided above, no Partner shall lend or
advance money to, on behalf of or for the Partnership's
benefit without the prior written consent of the General
Partner. If any Partner shall make loans or lend money to
the Partnership or advance money on its behalf, the amount
of any such loan or advance shall not be an increase in the
Partner's Capital Account or Interest, nor shall it entitle
such Partner to any increase in its share of the
distributions of the Partnership, nor subject such Partner
to any greater proportion of the losses which the
Partnership may sustain. The amount of any such loan or
advance shall be a debt due from this Partnership to such
Partner, at such rate and upon such terms and conditions as
shall be reasonably determined by the General Partner. Such
loan shall be evidenced in writing by a promissory note or
other document of indebtedness. Any loan made pursuant to
this provision shall be repaid in accordance with the
payment schedule and term of the loan as shall be reasonably
specified by the General Partner.
4.02 LOANS TO THE PARTNERSHIP
If, at any time, the General Partner determines
that funds are reasonably necessary for maintaining and
protecting the assets of the Partnership, conducting its
business, or making capital improvements (or similar
expenditures) or expanding the scope of the Project, the
General Partner is authorized (but not obligated) to borrow
the needed funds on the Partnership's behalf on commercially
reasonable terms existing at the time of the borrowing, and
all or any portion of the Partnership Property may be
pledged or conveyed as security for the indebtedness.
4.03 GENERAL PARTNER ADVANCES AND AFFILIATE LOANS
From time to time, the General Partner and/or its
Affiliates may advance to the Partnership such funds as
shall be required for the business expenses or other
obligations of the Partnership. Such loan or advance shall
become an obligation and liability of the Partnership, shall
be evidenced in writing by a promissory note (whether
secured or unsecured by Partnership Property) or other
document of indebtedness and shall bear interest at an
annual rate six percentage points above the rate shown in
the WALL STREET JOURNAL (or its successor publication) from
time to time as the prime rate for money center banks, but
with a floor of twelve percent (12%) per annum, which rate
shall be determined on the first day of each month and shall
be applied to the loan balance for the month. Such interest
shall be payable quarterly, and otherwise be subject to the
terms and conditions as shall be provided in such note or
document. The General Partner and/or its Affiliates shall
not require a prepayment charge or penalty on any
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such loan. The General Partner and/or its Affiliates shall
not provide permanent financing for the Partnership. With
respect to any loans or advances made by the General
Partner and/or its Affiliates pursuant to any section
hereof, such Partner or party shall be entitled to receive
repayment thereof prior to any distributions to the Limited
Partners, including distributions pursuant to the provisions
herein.
4.04 LOANS FROM THE PARTNERSHIP
No loans shall be made from the Partnership to any
Partner.
ARTICLE V
ALLOCATIONS OF PROFITS AND LOSSES
5.01 ALLOCATIONS AND DISTRIBUTIONS AMONG LIMITED
PARTNERS
Allocations and distributions to the Limited
Partner(s) shall be allocated to or distributed amongst each
Limited Partner pro rata on the basis of such Limited
Partner's Interest in the Partnership.
5.02 NET PROFITS
After giving effect to the any special allocations
set forth herein, Net Profits for any fiscal year shall be
allocated as follows:
(a) First, one hundred percent (100%) to the
General Partner in an amount equal to the excess, if
any, of (i) the cumulative Net Losses allocated to the
General Partner pursuant to Section 5.03(b) hereof for
all prior fiscal years, over (ii) the cumulative Net
Profits allocated to the General Partner pursuant to
this Section 5.02(a) for all prior fiscal years; and
(b) The balance, if any, one hundred percent
(100%) to the Partners in proportion to their
respective Interests.
5.03 NET LOSSES
After giving effect to the special allocations set
forth in Section 5.04 and 5.05 hereof, Net Losses for any
fiscal year shall be allocated as follows:
(a) First, one hundred percent (100%) to the
Partners in proportion to their respective Interests,
provided that Net Losses shall not be allocated
pursuant to this Section 5.03(a) to the extent such
allocations would cause any Limited Partner to have an
Adjusted Capital Account Deficit at the end of any
fiscal year; and
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(b) The balance, if any, one hundred percent
(100%) to the General Partner.
5.04 SPECIAL ALLOCATIONS
(a) QUALIFIED INCOME OFFSET. Except as
provided in Section 5.04(b) hereof, in the event any
Partner who is not a General Partner unexpectedly
receives any adjustments, allocations or distributions
described in Regulations Section 1.704-
l(b)(2)(ii)(d)(4), (5) or (6) items of Partnership
income and gain shall be specially allocated to each
such Partner in an amount and manner sufficient to
eliminate, to the extent required by the Regulations,
the Adjusted Capital Account Deficit of such Partner as
quickly as possible.
(b) MINIMUM GAIN CHARGEBACK. Notwithstanding
any other provision of this Section 5.04, if there is a
net decrease in Partnership Minimum Gain, as defined in
the Regulations, during any Partnership fiscal year,
each Partner who would otherwise have an Adjusted
Capital Account Deficit at the end of such year shall
be specially allocated items of Partnership income and
gain for such year (and, if necessary subsequent years)
in an amount and manner sufficient to eliminate such
Adjusted Capital Account Deficit as quickly as
possible. The items to be so allocated shall be
determined in accordance with Regulations Section 1.704-
2(b). This Section 5.04(b) is intended to comply with
the minimum gain chargeback requirement in such section
of the Regulations and shall be interpreted
consistently therewith.
(c) NON-RECOURSE DEDUCTIONS. Non-recourse
deductions for any fiscal year or other period shall be
allocated eighty percent (80%) to the General Partner
and twenty percent (20%) to the Limited Partner(s) in
proportion to its/their respective Interests.
(d) CODE SECTION 754 ADJUSTMENTS. To the
extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) or
Code Section 743(b) is required, pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m), to be taken
into account in determining capital accounts, the
amount of such adjustment to the capital accounts shall
be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss ( if the
adjustment decreases such basis) and such gain or loss
shall be specially allocated to the Partners in the
manner consistent with the manner in which their
capital accounts are required to be adjusted pursuant
to such section of the Regulations.
5.05 CURATIVE ALLOCATIONS
The allocations set forth in Sections 5.03(b),
5.04(a), 5.04(b) and 5.04(c) (the "Regulatory Allocations")
are intended to
<PAGE>
comply with certain requirements of Regulations Section
1.704-1(b). Notwithstanding any other provisions of this
section (other than the Regulatory Allocations), the
Regulatory Allocations shall be taken into account in
allocating other profits, losses and items of income, gain,
loss and deduction among the Partners so that, to the extent
possible, the net amount of such allocations of other
profits, losses and other items and the regulatory
allocations to each Partner shall be equal to the net amount
that would have been allocated to each such Partner if the
regulatory allocations had not occurred.
5.06 OTHER ALLOCATION RULES
(a) Generally, all Net Profits and Net Losses
allocated to the General and Limited Partner(s)
pursuant to Sections 5.01 through 5.05 hereof, are in
turn allocated among the Limited Partner(s) in
proportion to the Interest held. In the event Limited
Partners are admitted to the Partnership on different
dates during any fiscal year, the Net Profits (or Net
Losses) allocated to the Limited Partners for each such
fiscal year shall be allocated among the Limited
Partners in proportion to the Interest each holds from
time to time during such fiscal year in accordance with
any convention permitted by law and selected by the
General Partner.
(b) For purposes of determining the Net
Profits, Net Losses or any other items allocable to any
period, Net Profits, Net Losses and any other such
items shall be determined on a daily, monthly or other
basis, as determined by the General Partner using any
permissible method under Code Section 706 and the
Regulations thereunder.
(c) Except as otherwise provided in this
Agreement, all items of Partnership income, gain, loss,
deduction and any other allocation not otherwise
provided for shall be divided among the Partners in the
same proportion as they share Net Profits or Net
Losses, as the case may be, for the year.
(d) The Partners are aware of the income tax
consequences of the allocations made by this Article V
and hereby agree to be bound by the provisions of this
Article V in reporting their share of Partnership
income and loss for income tax purposes.
5.07 TAX ALLOCATIONS CODE SECTION 704(C)
In accordance with Code Section 704(c) and the
Regulations thereunder, income, gain, loss and deduction
with respect to any property contributed to the capital of
the Partnership shall, solely for tax purposes, be allocated
among the Partners so as to take into account any variation
between the adjusted basis of such property to the
Partnership for federal income tax purposes and its initial
Gross Asset Value (computed in accordance with Section 1.11
hereof). In the event the Gross Asset
<PAGE>
Value of any Partnership asset is adjusted pursuant to
Section 1.11(b) or 1.11(d) hereof, subsequent allocations of
income, gain, loss and deduction with respect to such asset
shall take account of any variation between the adjusted
basis of such asset for federal income tax purposes and its
Gross Asset Value in the same manner as under Code Section
704(c) and the regulations thereunder. Any elections or
other decisions relating to such allocations shall be made
by the General Partner in any manner that reasonably
reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section 5.07 are solely for
purposes of federal, state and local taxes and shall not
affect, or in any way be taken into account in computing,
any person's capital account or share of profits, losses,
other items or distributions pursuant to any provision of
this Agreement.
5.08 CERTAIN ELECTIONS
Where a distribution of property is made in the
manner provided in Code Section 734 or where a transfer of a
Partnership Interest permitted by this Agreement is made in
the manner provided in Code Section 743, the General Partner
shall have the sole and absolute discretion to file or not
to file on behalf of the Partnership, upon any Partner's
written request, an election under Code Section 754 in
accordance with the procedures set forth in the applicable
Regulations. Except insofar as an election pursuant to Code
Section 754 has been made with respect to the Interest of
any Partner, the determination of profits, losses,
distributions, and capital accounts shall be made as
provided for in this Agreement. With respect to any Partner
whose Interest has been affected by an election pursuant to
Code Section 754, appropriate adjustments shall be made with
respect to the determination of profits, losses,
distributions, and capital accounts. Each Partner agrees to
promptly provide the General Partner with all information
necessary to give effect to such election.
ARTICLE VI
DISTRIBUTIONS
6.01 OPERATING DISTRIBUTIONS
The General Partner shall distribute Cash
Available for Distribution from time to time, but at least
as frequently as quarterly, to the extent that there shall
be any Cash Available for Distribution, in such amounts and
at such times as the General Partner may determine;
provided, however, that the aggregate amount of each such
distribution shall be that amount which the General Partner
reasonably determines is not required to be retained by the
Partnership to meet the reasonably foreseeable cash
requirements and needs of the business and activities of the
Partnership and to establish an adequate reserve for the
payment of Partnership liabilities and contingencies, or
otherwise is restricted as a result of the covenants of
third party financing. The Original
<PAGE>
General Partner covenants and agrees that it shall use its
best efforts to distribute to the Original Limited Partner
amounts sufficient to pay the tax liability of the Original
Limited Partner, as incurred, in any given tax year;
provided, however, that the best efforts of the Original
General Partner in this regard shall not require it to
compromise in any respect its reasonable business judgment
with regard to the cash flow, reserves, debt coverage and
other expense needs of the Project, considering the terms,
covenants, and conditions otherwise set forth in this
Agreement. All distributions made pursuant to this Section
6.01 shall be made in cash and shall be divided among the
Partners as follows:
(a) First, to reimburse the General Partner
for all out-of-pocket expenses incurred by the General
Partner on behalf of the Partnership concerning the
Project which have not previously been reimbursed to
the General Partner, including, without limitation,
legal and other professional fees incurred to organize
the Partnership;
(b) The balance, if any, one hundred percent
(100%) among the Partners in proportion to each
Partner's respective Interest in effect at the time the
distribution is made.
6.02 DISTRIBUTIONS UPON DISSOLUTION OR LIQUIDATION
Upon dissolution or liquidation of the
Partnership, cash and any other assets being distributed in-
kind shall be distributed in the following order of
priority:
(a) First, to the payment and discharge of
all of the Partnership's debts and liabilities
(including any Partners who are creditors of the
Partnership) and including the establishment of any
necessary contingency reserves;
(b) Second, to the General Partner to the
extent the amounts described in Section 6.01 have not
previously been satisfied; and
(c) The balance, if any, to the Partners, in
proportion to their positive capital accounts as of the
date of such distribution, after giving effect to all
contributions, distributions and allocations for all
periods, including the period during which such
distribution occurs.
<PAGE>
6.03 RESTORATION OF CAPITAL ACCOUNT
Distributions made pursuant to Section 6.01 or
Section 6.02 shall not be made in violation of Regulations
Section 1.704-1(b)(2)(ii)(b). If the General Partner's
capital account has a deficit balance (after giving effect
to all contributions, distributions and allocations for all
taxable years, including the year during which such
liquidation occurs), such General Partner shall contribute
to the capital of the Partnership the amount necessary to
restore such deficit balance to zero in compliance with
Regulations Section 1.704-1(b)(2)(ii)(b)(3). If any Limited
Partner has a deficit balance in his capital account (after
giving effect to all contributions, distributions and
allocations for all taxable years, including the year during
which such liquidation occurs), such Limited Partner shall
have no obligation to make any contribution to the capital
of the Partnership with respect to such deficit, and such
deficit shall not be considered a debt owed to the
Partnership or any other Person for any purpose whatsoever.
In the discretion of the General Partner, a pro
rata portion of the distributions that would otherwise be
made to the Partners pursuant to Section 6.02 may be:
(a) distributed to a trust established for
the benefit of the Partners for the purposes of
liquidating Partnership assets, collecting amounts owed
to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the
Partnership or of the General Partner arising out of or
in connection with the Partnership. The assets of any
such trust shall be distributed to the Partners from
time to time, in the reasonable discretion of the
General Partner, in the same proportions as the amount
distributed to such trust by the Partnership would
otherwise have been distributed to the General and
Limited Partner(s) pursuant to this Agreement; or
(b) withheld to provide a reasonable reserve
for Partnership liabilities (contingent or otherwise)
and to reflect the unrealized portion of any
installment obligations owed to the Partnership,
provided that such withheld amounts shall be
distributed to the Partners as soon as practicable.
6.04 DISTRIBUTIONS TO OWNERS OF RECORD
Distributions shall be made only to persons who,
according to the books and records of the Partnership, are
the owners of record on a date to be determined by the
General Partner with respect to each distribution. Neither
the General Partner nor the Partnership shall incur any
liability for making distributions in accordance with the
preceding sentence.
<PAGE>
ARTICLE VII
BOOKS AND RECORDS, ACCOUNTING, AND TAXES
7.01 FISCAL YEAR OF PARTNERSHIP
The fiscal year of Partnership shall end on June
30 of each year for purposes of both Partnership accounting
and income tax reporting.
7.02 BOOKS AND RECORDS
The Partnership shall maintain full and accurate
books and records at its principal place of business, as
required under the Missouri Uniform Limited Partnership
laws, and all Partners shall have the right to inspect and
copy, at the Partner's expense, such books and records
during ordinary business hours. The Original Limited
Partner shall have the right to audit the books and records
of the Partnership, upon no less than thirty (30) days
notice to the General Partner, during regular business
hours, at such offices where the Partnership books and
records are located, or at such other location as the
General Partner may specify, at the Original Limited
Partner's sole cost and expense. The right of the Original
Limited Partner to conduct such audit is expressly
conditioned upon the designation by the Original Limited
Partner of a certified public accountant ("CPA") as the sole
and exclusive agent of the Original Limited Partner for the
purpose of examining the Partnership books and records and
conducting such audit. Before permitting such CPA to
commence conduct of such audit, the General Partner may
require such CPA to sign a confidentiality agreement, which
Confidentiality Agreement is attached hereto and
incorporated by reference herewith as Exhibit ___. The
members of the Board of Directors of the Original Limited
Partner shall have the right to receive a copy of the audit,
and copies of any documents which the CPA has obtained in
the course of conducting the audit; provided, however, that
each of the members of the Board of Directors of the Limited
Partner shall execute the Board of Directors Confidentiality
Agreement, which is attached hereto and incorporated by
reference herewith as Exhibit ___. Notwithstanding the
foregoing, CPA may disclose to the Original Limited Partner
whether the CPA has determined as a result of such audit
that a discrepancy as specifically described below in this
Section 7.02 exists, the magnitude of such discrepancy and
such other information as is required for the CPA to amend
the tax return of the Original Limited Partner. The General
Partner shall have no obligation whatsoever to permit
photocopies to be made of the books and records of the
Partnership. Except with regard to the limitation set forth
above concerning permitting photocopies of the books and
records of the Partnership, the Original Limited Partner
does not waive, and hereby reserves, any and all rights to
information concerning the Partnership as provided for under
applicable law, including but not limited to, the provisions
of Sections 359.011 et. seq. of the Missouri Revised Uniform
Limited Partnership Act, as amended. Under no circumstances
shall the
<PAGE>
Original Limited Partner audit the books and records of
the Partnership more frequently than once a year. If any
such audit conducted by the Original Limited Partner shall
reveal a discrepancy which affects either the amount which
should have been distributed to the Original Limited
Partner or the amounts reported on the Original Limited
Partner's Internal Revenue Service Form 1065, Schedule K-1
in an amount in excess of five percent (5%) of the amount
distributed or reported on the Schedule K-1, then the
Partnership shall pay the reasonable costs and expenses
associated with such audit together with the reasonable
costs and expenses incurred by the Original Limited Partner
to amend the Original Limited Partner's tax return if such
tax return was filed based upon such erroneous information
received from the General Partner, and only if such tax
return was not filed based upon other sources of income from
other business interests of the Original Limited Partner.
The General Partner shall maintain such books and records
under the accrual method of accounting and shall have the
authority to determine the necessary federal, state and
local tax return elections as the General Partner deems
advisable and in the best interests of the Partnership. The
books shall be closed at the end of each fiscal year.
In addition to the foregoing audit right, the Original
Limited Partner shall have the right, upon one occasion, at
a date and time mutually agreeable to the Original General
Partner and the Original Limited Partner (which shall not
constitute its once a year audit of the Partnership's books
and records) to have its CPA travel to the office of the
Original General Partner in Atlantic City, New Jersey in
order to review the organizational expenses (including, but
not limited to attorneys' fees) of the Partnership for the
purpose of determining (1) the Partnership books and records
with regard to such organizational expenses have been set up
in accordance with generally accepted accounting principles;
(2) that the organizational expenses reflected therein are
expenses of a kind, type and nature as are reasonably
recorded as organizational expenses for the Partnership in
accordance with generally accepted accounting principles;
and (3) that such expenses were reasonably related to
forwarding the interests of the Partnership or were expended
on behalf of the Partnership. Such examination and
determination by the CPA expressly shall not include any
judgment with regard to the amount or amounts of such
organizational expenses, whether by individual expense item
or collectively with regard to the total amount of such
organizational expenses. Within thirty (30) days after the
completion of such review, the CPA objects to any
organizational expense of the Partnership, the General
Partner shall not treat such expense as an organizational
expense, or any other expense, of the Partnership. The
General Partner shall pay for the travel, lodging, meals and
ground transportation incurred by such CPA in connection
with such review.
Notwithstanding the foregoing, the Partners expressly
understand and agree that, the General Partner shall not
have any obligation at any time, nor under any
circumstances, to provide any Partner with any books,
records, information or other documentation
<PAGE>
in any form whatsoever, which the General Partner, in its
sole and absolute discretion, deems to be proprietary,
containing any trade secret, or containing information which
may be business sensitive in light of the competitive
environment of the Project and the Partnership.
7.03 TAX RETURNS AND REPORTS TO PARTNERS
The General Partner shall make a reasonable effort
to deliver to each Partner as soon as reasonably possible,
but in no event later than March 15th of each year, a copy
of each Partner's Internal Revenue Service Form 1065,
Schedule K-l, or such successor form, to be filed with the
Partner's own tax return. A copy of the income tax returns
of the Partnership shall be available to any Partner upon
reasonable request to the General Partner. The General
Partner shall provide the Limited Partner(s) with quarterly
unaudited financial statements and annual audited financial
statements of the Partnership.
ARTICLE VIII
POWERS AND OBLIGATIONS OF PARTNERS
8.01 AUTHORITY OF GENERAL PARTNER
The General Partner shall have full, exclusive,
and complete authority to direct and manage the affairs of
the Partnership with all rights and powers generally
conferred by law together with those that are necessary or
appropriate for the overall management and control of the
Partnership's business, as required under the Missouri
Uniform Limited Partnership Laws.
8.02 DUTIES OF THE GENERAL PARTNER
The General Partner will use its best efforts to
carry out the purpose, business, and objectives of the
Partnership and will devote such time to Partnership
business as is reasonably required. The General Partner
will use its best efforts to reasonably assure the efficient
management and operation of the Partnership and will fully
discharge its fiduciary duties to the Partnership and the
Limited Partner(s). The General Partner will use its best
efforts to cause the Partnership to comply with its
obligations under the Lease described above, and the
Partnership shall perform its obligations under the Lease
according to the terms and conditions thereof. Without
limiting the generality of the foregoing, and in addition to
all other duties imposed by law of this Agreement, the
General Partner is obligated to:
(a) Subject to the provisions hereof, act in
a fiduciary manner regarding the Partnership, the
Limited Partner(s) and the Partnership Property;
(b) File and publish all certificates,
statements, or other documents required by law for the
formation and
<PAGE>
operation of the Partnership and for the conduct of its
business in all appropriate jurisdictions; provided,
however, that performance will be excused whenever the
Limited Partner(s) refuse to cooperate and their
cooperation is required in order to perform these
duties;
(c) Furnish the Limited Partner(s) with the
reports and information specified in this Agreement;
(d) Maintain complete books of account and
records regarding Partnership operations and business
affairs;
(e) Keep all books and records of the Part
nership available for inspection and audit by the
Limited Partners or their representatives;
(f) Use best efforts to maintain the status
of the Partnership as a "partnership" for federal
income tax purposes;
(g) File all federal, state, or local tax
returns and reports and make all other filings which
are required by law or governmental agencies on a
timely basis;
(h) Use reasonable efforts to operate the
business of the Partnership;
(i) Cause the Partnership at all times to
maintain insurance (including liability insurance) in
the amounts against the risks as are generally
maintained for comparable property and business;
(j) Invest the funds of the Partnership
(including reserves) that are not distributed to the
Partners and temporarily are not, in the General
Partner's opinion, required for the conduct of the
Partnership's business in (a) governmentally insured
interest-bearing savings accounts, (b) short-term
governmental obligations, or (c) certificates of
deposit of a commercial bank or savings and loan
association having at least $10,000,000 of assets;
(k) Act as the "tax matters Partner" of the
Partnership pursuant to Code Section 6231(a)(7) and
cause the Partnership to make such timely federal,
state and local income tax elections as may be in the
best interests of the Partnership;
(l) Make all decisions concerning the scope of
the Project, and operational aspects of the Partnership and
execute and deliver all contracts, deeds, and other
instrumentation in connection therewith;
(m) Borrow money on behalf of the Partnership in
amounts up to one hundred percent (100%) of the fair market
<PAGE>
value of Partnership Property and execute and deliver in the
name of the Partnership notes evidencing the same and
mortgages, deeds of trust, and any other security
instruments securing the same. The signature of the General
Partner shall be sufficient to bind the Partnership and all
the Partners as to the execution of any documents concerning
the Partnership's acquisition, development, rental and/or
sale of any or all the Partnership Property or the execution
of any mortgages, deeds of trust, or any other security
instruments securing any borrowing by the Partnership;
(n) Pay from Partnership assets all expenses of
organizing and conducting the business of the Partnership,
including, without limitation, legal and accounting fees;
(o) Execute any and all instruments and take any
and all other action necessary or desirable to carry out the
purposes and business of the Partnership;
(p) Employ, at the expense of the Partnership,
such consultants, accountants, attorneys, brokers, escrow
agents, property managers and other professionals as the
General Partner shall deem necessary or desirable, some of
whom may also be employed by the General Partner itself; and
(q) Assume the overall duties imposed on a
general partner by the Uniform Limited Partnership laws of
the state of Missouri.
8.03 RIGHTS OF THE LIMITED PARTNERS
(a) Except as otherwise specifically provided in
this Agreement, the Limited Partners shall have the right to
vote only upon the following matters:
(i) The admission of additional General
Partner(s) or Limited Partner(s); provided, however,
that if the Interest of any such additional General
Partner(s) or Limited Partner(s) shall be allocated
only from the Interest of the Original General Partner,
the Limited Partners shall have no right to vote on the
admission of such Partner;
(ii) The dissolution and winding up of the
Partnership;
(iii) The removal of a General Partner, as
specifically provided herein; or
(iv) The sale, exchange or other transfer of
all or substantially all of the assets of the
Partnership.
<PAGE>
(b) No Limited Partner may own more than a twenty
percent (20%) Interest in the Partnership, without the prior
written approval of the Original General Partner, which
approval may be unreasonably withheld.
(c) Notwithstanding any other provision of this
Agreement, but subject to the provisions of Sections 3.07
and 3.08, no additional General Partner(s) or Limited
Partner(s) shall be admitted to the Partnership in any
manner which dilutes the Original Limited Partner's Interest
in the Partnership except (i) with the Original Limited
Partner's consent or (ii) as a result of the failure of the
Original Limited Partner to make its pro rata contribution
of Additional Capital Contributions to the extent the
Original Limited Partner is required to make such Additional
Capital Contributions pursuant and subject to the terms and
conditions of this Agreement.
8.04 PARTNERSHIP MEETINGS
The Partnership may, in the General Partner's
discretion, hold annual meetings for any reason. Partnership
meetings may be held when and where designated by the Original
General Partner in the State of Missouri. If the General Partner
shall not have held an annual meeting, the Original Limited
Partner shall have the right to request and call an annual
meeting by sending such written request to the General Partner.
An annual meeting shall be held within thirty (30) days of the
date upon which the General Partner receives such written
request, at a location in the St. Louis metropolitan area. The
General Partner shall provide written notice to the other
Partners at least ten (10) days before the date of such meeting
specifying the date, time and location of such meeting.
8.05 ACTIVITIES OF PARTNERS
(a) It is expressly understood that any Partner,
any Affiliate or any stockholder of any Partner may engage in any
business, investment, or profession, and neither the Partnership
nor any other Partner shall have any rights in and to said
business, profession or investment, or in the income or profits
derived therefrom by reason of this Agreement. The fact that a
Partner, or a person or an entity that is an Affiliate of or
related to such Partner, is directly or indirectly interested in
or connected with any person, firm, or corporation employed by
the Partnership to render services or perform a service or to
sell or to buy merchandise or other property shall not prohibit
the General Partner from employing or contracting with such
person, firm, or corporation or from dealing with him or it, and
neither the Partnership nor the Partners shall have any rights in
or to any income or profits derived therefrom.
With respect to any matter, business or
transaction involving the Partnership or the Project, the General
Partner shall
<PAGE>
not enter into any agreement, contract, commitment, undertaking,
or understanding with any person, including but not limited to
any Partner, any Affiliate of any Partner, or any stockholder
of any Partner or any Affiliate, unless such agreement,
contract, commitment, undertaking, or understanding with any such
person is entered into in good faith and upon an arm's length
basis, upon terms and conditions no less favorable to the
Partnership than are commercially available to the
Partnership from other customarily available sources.
(b) The Partners understand and agree that the
Partners and their respective Affiliates may be interested,
directly or indirectly, in various other businesses and
undertakings, including without limitation, gaming businesses
outside the greater metropolitan area of St. Louis, Missouri and
the State of Missouri, and non-gaming businesses in St. Louis or
elsewhere, not included in or related to the Partnership
("Unrelated Businesses"). The Partners hereby agree that the
creation of the Partnership and the assumption by each Partner of
its duties hereunder shall be without prejudice to its right (or
the right of its Affiliates) to have Unrelated Businesses and to
receive and enjoy the profits or compensation therefrom;
provided, however, that if any Partner acquires knowledge that
such Partner, any Affiliate or any stockholder in such Partner is
or shall become directly or indirectly employed by, interested in
or affiliated or connected with any person, firm, or entity of
any kind, type or nature whatsoever which is involved in the
gaming business in any manner whatsoever ("Other Gaming
Business"), such Partner, Affiliate or stockholder in any
Partner, as the case may be, shall notify the General Partner in
writing immediately and disclose the nature of the employment,
interest, affiliation or connection with the Other Gaming
Business. Upon the written request of the General Partner, each
Partner shall be obligated, no more frequently than once a year,
to make inquiry of all its Affiliates and stockholders concerning
whether such Affiliate or stockholders are directly or indirectly
employed by, interested in or affiliated or connected with in any
manner whatsoever any Other Gaming Business. Within thirty (30)
days after such written request by the General Partner, each
Partner shall report in writing to the General Partner the
results of such inquiry. Upon such disclosure, the General
Partner, in its sole and absolute discretion, may request such
Partner, Affiliate or stockholder to sign a confidentiality
agreement, substantially similar in form to the Board of
Directors Confidentiality Agreement attached hereto and
incorporated by reference herewith, stating that such party shall
not disclose any information concerning the Partnership or the
Project, or general business matters related thereto which may
have or shall come into such party's knowledge or possession by
reason of its role as Partner, or Affiliate or stockholder
thereof, to such Other Gaming Business. The Original Limited
Partner shall use its best efforts to cause each of its
Affiliates and stockholders to execute a confidentiality
agreement substantially in the form of the Board of Directors
Confidentiality Agreement within six months of the Execution Date
of this Agreement. For the purposes of this section
<PAGE>
the term "best efforts" shall not require the payment of money
or other consideration, to cause any such Affiliate or
stockholder to sign any such confidentiality agreement, nor shall
it require the Original Limited Partner to institute any legal
proceedings to compel execution of the Confidentiality Agreement,
nor shall the Original Limited Partner be required to take any
action to remove such stockholder as a stockholder from the
Original Limited Partner. The failure of any such Affiliate or
stockholder to sign such confidentiality agreement shall not
constitute a breach or default under this Agreement by the
Original Limited Partner. At the expiration of such six month
period, the Original Limited Partner shall deliver to the General
Partner all of the executed Confidentiality Agreements, together
with a list of any stockholder or Affiliate who has refused
to execute such Confidentiality Agreement.
If the party who is employed by, interested in, or
affiliated or connected with any such Other Gaming Business is a
member of the Board of Directors (or any other similar management
position without regard to the form of the legal entity of the
Partner) of any Limited Partner, then the General Partner shall
have the right to require that such party be removed from the
Partner's Board of Directors. For the purposes of this
provision, a party shall not be considered to be "interested in
or affiliated or connected with" any Other Gaming Business as a
result of the fact that such party owns stock (or other security)
in an Other Gaming Business which is a publicly-held corporation,
so long as such party's holdings do not exceed five percent (5%)
of the then issued and outstanding stock of such Other Gaming
Business.
(c) The Partners agree that the Original General
Partner, and its Affiliates are pursuing gaming opportunities
throughout the United States and other jurisdictions and may
pursue other gaming opportunities in Missouri, so long as such
gaming opportunities are not within the boundaries of the Non-
Compete Zone, which for purposes of this Agreement shall be
defined to mean upon any property located south of the River Des
Peres to the St. Louis County boundary. No Partner, nor any
Affiliate or stockholder of any Partner, or any Affiliate
thereof, shall pursue or become involved in any manner whatsoever
with any gaming venture within the Non-Compete Zone; provided,
however, that no Partner, Affiliate or stockholder of any Partner
shall be prevented from providing non-gaming related services
(e.g. construction services) to an Other Gaming Business. The
Partners understand and agree that any such involvement in any
gaming venture within the Non-Compete Zone may have serious
detrimental consequences to the Project. The Original Limited
Partner shall cause each member of its Board of Directors to
agree in writing for the benefit of the Partnership that such
Board member shall not pursue or become involved in any manner
whatsoever with any Other Gaming Business within the Non-Compete
Zone (the "Non-Compete Agreement") during the term of such member
on the Board of Directors, and for a period of one year
thereafter. Additionally, the Original Limited Partner shall use
its best efforts to cause each of its stockholders, and
<PAGE>
any Affiliates of the Original Limited Partner, to execute a Non-
Compete Agreement within six months after the Execution Date of
this Agreement. The Non-Compete Agreement shall be prepared by
the Original General Partner, in accordance with the terms and
conditions of this provision, subject to reasonable review and
approval of the Original Limited Partner. At the expiration of
such six month period, the Original Limited Partner shall deliver
to the General Partner all executed Non-Compete Agreements,
together with a list of any Affiliates or stockholders of the
Original Limited Partner who have refused to execute the Non-
Compete Agreement. The Partners understand and agree that, for
the purposes of this provision, the "best efforts" of the
Original Limited Partner shall not require the Original Limited
Partner to pay monies to its stockholders or Affiliates to obtain
the execution of such Non-Compete Agreement, nor shall the
Original Limited Partner be required to institute legal
proceedings to compel execution of the Non-Compete Agreement.
The failure of any stockholder or Affiliate of the Original
Limited Partner to sign such Non-Compete Agreement shall not
constitute a breach or default by the Original Limited Partner
under this Agreement. The Original Limited Partner covenants and
agrees that, if the Original General Partner shall determine, in
its reasonable business judgment, that a stockholder or
stockholders of the Original Limited Partner are taking or have
taken actions which constitute a conflict of interests with or
are, or may materially and adversely impact upon the best
interests of the Project or the Partnership, the Original Limited
Partner shall use its best efforts, taking any and all actions
necessary and appropriate to cause such stockholder to cease such
activity. The term "best efforts" as used in the preceding
sentence shall have the same meaning, and be subject to the same
limitations as set forth above.
(d) Neither the General Partner nor any Affiliate
shall be obligated to present any particular investment
opportunity to the Partnership, even if the opportunity is of a
character that, if presented to the Partnership, could be taken
by the Partnership, and subject to Section 8.05(c) above the
General Partner shall have the right to take for its own account
or to recommend to others any investment opportunity.
(e) Each Partner covenants and agrees to use its
best efforts to diligently obtain all state and local licenses,
including but not limited to gaming licenses, necessary to
conduct the gaming operations of the Project. The Limited
Partner agrees to use its best efforts to provide to the General
Partner, upon such General Partner's request as soon as
reasonably possible in order to allow the General Partner
adequate time to review and analyze the information provided, but
in no event later than the sooner to occur of (i) when such
information is required to be provided to any licensing authority
or (ii) within thirty (30) days of the date after receipt of such
request, any and all copies of applications, reports, letters and
documents filed with or provided to the state and local licensing
authorities, including but not limited to any applications,
reports, letters and other documents
<PAGE>
submitted concerning any individual associated with
the Limited Partner in any manner whatsoever. In the
event that the Original General Partner, as a result
of any communication or action by the Missouri Gaming
Commission or on the basis of consultations with its counsel
and/or other professional advisors, reasonably believes in good
faith that the Commission is likely to (i) fail to license and/or
approve the Partnership or its Affiliates to own and operate the
Project, and/or any gaming related business; (ii) grant required
gaming licensing and/or approval only upon terms and conditions
which are unacceptable to the General Partner; (iii)
significantly delay the licensing and/or approval contemplated by
this Agreement; or (iv) revoke any existing license or casino
operating contract of the Partnership, any Partner, or any
Affiliate, or any stockholder of any Partner due to concerns of
any aspect of suitability of any such party, then such party
shall divest itself of its Interest in the Partnership, the
respective Partner or Affiliate. The General Partner shall
notify the Limited Partner of such concerns promptly, together
with a statement of the action required to resolve such
suitability concerns. If such suitability concerns relate to one
or more stockholders or other Affiliates of the Limited Partner,
the Limited Partner shall take such action as may be necessary to
disassociate such stockholder(s) or other Affiliates from the
Limited Partner as soon as practical, after the General Partner
notified the Limited Partner of such concerns; unless the Gaming
Commission requires such removal within a specified period in
which event such stockholder shall be removed within the
specified period; provided, however, that if after thirty (30)
days, the Limited Partner has not effectuated the disassociation,
the General Partner shall have the right to demand that the
Limited Partner effectuate such disassociation within five (5)
days thereafter. If the Limited Partner fails to take the
required action, then the General Partner may purchase the entire
Interest of the Limited Partner at a purchase price equal to the
return of the Capital Contribution of the Limited Partner. If,
however, the events described above arise from concerns with
respect to the suitability of a Partner ("Selling Party"), then
the entire Interest of such Partner may be purchased by the other
Partner(s) at a purchase price equal to the return of the Capital
Contribution of such Partner in its original form.
(f) The Original Limited Partner represents and
warrants that it is a Missouri corporation, duly incorporated,
validly existing and in good standing under the laws of the State
of Missouri. The Original Limited Partner further represents and
warrants that, it has now and will continue to have for the term
of the Partnership, such rights and remedies under its Articles
of Incorporation, Bylaws, Stockholders' Agreement or otherwise,
to enable the Original Limited Partner to effect the remedies
which may be required pursuant to various terms and conditions of
this Agreement.
(g) Limited Partner acknowledges that Affiliates
of the Original General Partner have been granted licenses and
approvals by various state and/or municipal regulatory agencies
<PAGE>
(collectively, "Regulatory Agency") in order to conduct their
respective businesses. If Original General Partner is informed,
or otherwise learns, that any Regulatory Agency may (i) fail to
license, approve and/or renew the ownership or operation of the
Affiliate(s) business; (ii) fail to grant or renew any required
or requested licenses or approvals; (iii) grant and/ore renew any
required or requested licenses approvals upon terms and
conditions which are unacceptable to the Affiliate(s); (iv)
significantly delay the licensing, approval and/or renewal sought
by the Affiliate(s); (v) revoke and/or condition any existing or
contemplated license, approval or order; or (vi) discipline, in
any manner, the Affiliate(s), based, in whole or in part, upon
the Partnership, any of the Partners, any Affiliate or any
individual or entity directly or indirectly related thereto, then
such party shall divest itself of its Interest in, or
relationship to, the Partnership, the respective Partner or
Affiliate within such period of time as determined by Original
General Partner in its sole and absolute discretion.
No Partner, Affiliate, or other individual or
entity directly or indirectly related thereto, shall do, or cause
to be done, any act or omission which may jeopardize any licenses
or approvals held by the Original General Partner's Affiliates or
subject such entities to any form of disciplinary action;
provided, however, that if a stockholder of the Original Limited
Partner shall do, or cause to be done, any act or omission which
may jeopardize any licenses or approvals held by the Original
General Partner's Affiliates or subject such entities to any form
of disciplinary action, then the sole remedy of the General
Partner shall be to require immediate removal of such stockholder
as a stockholder in the Original Limited Partner.
8.06 LIABILITY OF GENERAL PARTNER
The General Partner shall not be liable in damages or
otherwise to the Partnership or the Limited Partner(s), or any of
them, for any loss suffered by it or them, or any of them, in
connection with the activities of the Partnership; provided,
however, where such loss or liability arises out of any action or
inaction of the General Partner:
(a) The General Partner must have determined, in
good faith, that its course of conduct was in the best
interests of the Partnership, and
(b) The course of conduct producing the loss or
liability must not have constituted willful misconduct by
the General Partner.
The General Partner shall not be personally liable
for the return of any capital of any Limited Partner, or for the
return of any other contribution to the Partnership made by any
Limited Partner, other than loans made pursuant to this
Agreement.
<PAGE>
8.07 INDEMNIFICATION OF GENERAL PARTNER
The Partnership shall indemnify and hold harmless the
General Partner from and against any and all loss, liability,
claim, damage, and the like, including reasonable attorneys'
fees, suffered by a General Partner solely by virtue of its
acting as General Partner in this Partnership in connection with
any activity of the Partnership. The provisions of this Section,
to hold the General Partner harmless and indemnify the General
Partner, shall be enforceable only against and out of the assets
of the Partnership and not against or out of the assets of the
Limited Partners, or any of them, individually.
The Partnership shall indemnify and hold harmless the
Limited Partner from and against any and all loss, liability,
claim, damage, and the like, including reasonable attorneys'
fees, suffered by the Limited Partner solely by virtue of its
status as a Limited Partner in the Partnership. The provisions
of this Section, to hold the Limited Partner harmless and
indemnify the Limited Partner, shall be enforceable only against
and out of the assets of the Partnership and not against or out
of the assets of the General Partner(s), their respective
Affiliates, or any of them, individually.
8.08 REPRESENTATIONS
Each of the Partners acknowledges and agrees (i) that
no representation or promise not expressly contained in this
Agreement has been made by any other Partner or by any of such
Partner's agents, employees, or representatives; (ii) that this
Agreement is not being entered into on the basis of, or in
reliance on, any promise or representation, expressed or implied,
other than such as is set forth expressly in this Agreement;
(iii) that each Partner has had the opportunity to be represented
by counsel of said Partner's choice in this matter, including the
negotiations and transactions that preceded the execution of this
Agreement; and (iv) that each Partner, or counsel representing
such Partner has read this Agreement and agrees to be bound by
the terms contained herein. Each Limited Partner acknowledges
that the legal counsel for the Partnership and the General
Partner does not represent the Limited Partners in this
Agreement.
<PAGE>
8.09 RIGHT TO RELY UPON THE AUTHORITY OF THE GENERAL PARTNER
No person dealing with the General Partner shall be
required to determine its authority to make any commitment or
undertaking on behalf of the Partnership nor to determine any
fact or circumstance bearing upon the existence of its authority.
In addition, no purchaser of any property or interest owned by
the Partnership shall be required to determine the sole and
exclusive authority of a General Partner to sign and deliver on
behalf of the Partnership any such instrument of transfer or to
see to the application or distribution of revenues or proceeds
paid or credited in connection therewith, unless such purchaser
shall have received written notice affecting the same.
ARTICLE IX
BANK ACCOUNTS
9.01 BANK ACCOUNTS
All funds of the Partnership shall be deposited in the
name of the Partnership in such bank account or accounts as shall
be determined by the General Partner. All withdrawals therefrom
shall be made upon checks signed on behalf of the Partnership by
such individuals as may be designated from time to time by the
General Partner. The General Partner shall not make deposits in
or issue any checks against the Partnership bank account without
full, proper, and complete supporting records.
9.02 EXPENSES OF THE PARTNERSHIP
All operating and administrative expenses of the
Partnership shall be billed directly to the Partnership, in the
name of the Partnership, and shall be paid by the Partnership
from funds received by it.
ARTICLE X
TRANSFER OF A PARTNERSHIP INTEREST
10.01 TRANSFER OF A LIMITED PARTNER'S INTEREST
No Limited Partner shall voluntarily or involuntarily
sell, transfer, assign, gift, encumber, pledge, or convey
(collectively, for purposes of this Article X, "Transfer") all or
any part of his Interest in the Partnership, except as provided
herein.
(a) In the event a Limited Partner ("Transferring
Partner") desires to Transfer all or any part of such
Partner*s Interest, he shall so notify the General Partner
in writing and submit to the General Partner such
information
<PAGE>
("Transferee Notice") concerning the proposed Transfer,
transferee, consideration, and terms and conditions
relating thereto as the General Partner may require in
its sole discretion. Within five (5) days after receiving
the Transfer Notice, the General Partner will transmit such
notice to the remaining Limited Partners who, for a ten
(10)-day period after receiving the Transfer Notice, shall
have the option to acquire all or part of the Interest
proposed to be transferred. After such ten (10)-day period,
the remaining Interest proposed to be transferred which
has not been acquired by the other Limited Partners may be
transferred by the Transferring Partner upon the terms and
conditions contained in the Transfer Notice.
(b) Any transferee acquiring an Interest pursuant
to Section 10.01(a) above shall be entitled to be admitted
to the Partnership as a substituted Limited Partner, and
this Agreement shall be amended to reflect such admission
provided that the following conditions are complied with:
(i) The General Partner approves the form
and content of the instrument of assignment;
(ii) The Transferring Partner and the
transferee and their spouses, if necessary, execute and
acknowledge such other instrument or instruments as the
General Partner may deem necessary or desirable to
effectuate such admission;
(iii) The transferee acknowledges all the
terms and provisions of this Agreement as the same may
have been amended and agrees to be bound by the same;
(iv) The transferee pays or obligates
himself to the General Partner for all reasonable
expenses connected with such admission including, but
not limited to, legal fees and costs (i.e. the cost of
filing and publishing any amendment to this Agreement
or to the Certificate of Limited Partnership to
effectuate such admission);
(v) The transferee provides the Partnership,
if required by the General Partner, proof of the
investment intent and financial status of the
transferee; and
(vi) If requested, the transferring Limited
Partner shall provide an opinion from counsel
acceptable to the General Partner that the transfer
will not violate the registration requirements of
applicable state or federal securities laws, and
otherwise complies with all applicable federal and
state securities laws.
(c) Upon the death or legal incompetency of an
individual Limited Partner, his personal representative
shall
<PAGE>
have all the rights of a Limited Partner for the
purpose of settling or managing the Limited Partner's
estate, and such power as the decedent or incompetent
possessed to designate a successor as a transferee of his
interest in the Partnership, and to join with such
transferee in making an application to substitute such
transferee as a Limited Partner. The estate of a deceased
Limited Partner shall be liable for the decedent's
liabilities as a Limited Partner. Upon the bankruptcy,
insolvency, dissolution, or other cessation of the
existence, as a legal entity, of a non-individual Limited
Partner, the authorized representative of such entity shall
have the rights of a Limited Partner for the purpose of
effecting the orderly disposition of the Interest of said
Limited Partner.
(d) In the event of the Transfer of all or any
part of the Interest of any Limited Partner, for the fiscal
year during which the Transfer occurs, the share of Net
Profit or Net Loss or any item of income, gain, loss,
deduction, or credit of the Partnership allocable to the
Interest transferred shall be allocated between the
transferror and the transferee in accordance with the
provisions of Code Sections 706(c) and 706(d).
10.02 EFFECTIVENESS OF SUBSTITUTION
The failure to obtain the requisite approvals and
consents to the substitution of an assignee as a Limited Partner
of the Partnership shall not affect the validity or effectiveness
of any such instrument as an assignment to an assignee of the
right to receive that share of the profits or other compensation
by way of income, or the return of contributions, to which his
assignor would otherwise be entitled and which were assigned,
provided a duly executed and acknowledged written instrument of
assignment in proper form and substance, the terms of which are
not in contravention of any of the provisions of this Agreement,
is filed with the Partnership. However, an assignee of a Limited
Partner who has not obtained the requisite approvals and consents
has no right to require any information or account of the
Partnership transactions or to inspect the Partnership books, or
to vote on any matters as to which a Limited Partner would be
entitled to vote. Such an assignee of a Limited Partner is only
entitled to receive the share of the profits or other
compensation by way of income, or the return of capital
contributions, to which the assignor would otherwise be entitled.
In the event of the admission of a Partner, a permitted
withdrawal of a Partner, or transfer by a Partner, this Agreement
promptly will be amended as necessary to reflect any changes in
the profit and loss allocations of Partners, to reflect the
capital contributions of the newly admitted Partner or the
withdrawal of capital by any withdrawing Partner, and to set
forth any new provisions or to amend any existing provisions of
this Agreement that may be necessary or desirable in light of the
admission of a Partner or Transfer by a Partner. In the event
such an amendment of this Agreement is required, such newly
admitted
<PAGE>
Partner or withdrawing Partner shall bear all costs associated
with such amendment.
10.03 FURTHER LIMITATIONS OF TRANSFERS
No Transfer shall be permitted if: (i) the proposed
Transfer or the proposed transferee will, or could, impair the
ability of the Partnership to be taxed as a Partnership under the
federal income tax laws; (ii) the Transfer will, or could, cause
the Partnership's tax year to close, or the Partnership to
terminate, for federal income tax purposes, or impair the
validity of the Partnership under Missouri law; or (iii) such
transfer would cause the Partnership to be in default under the
any Partnership Loan. Any purported Transfer in violation of the
terms of this Section 10.03 shall be null and void and of no
force and effect.
10.04 PUT/CALL OPTION
By complying with the provisions of this Section 10.04,
the Original General Partner or the Original Limited Partner (the
"Initiating Partner") shall have the right at any time after a
date which is no sooner than ten (10) years after the Project
Opening Date to cause the other Partner (a "non-Initiating
Partner") to either (i) purchase such Initiating Partner's entire
Interest in the Partnership, or (ii) sell such non-Initiating
Partner's entire Interest in the Partnership to such Initiating
Partner. An Initiating Partner desiring to invoke the provisions
of this Section 10.04 shall give written notice, in the manner
provided herein, to the non-Initiating Partner of the Initiating
Partner's intention to invoke the provisions hereof (the
"Put/Call Notice").
The Put/Call Notice shall set forth the cash price for
a one percent interest in the Partnership, provided that (i) in
no event shall the cash price for the entire Original General
Partner's Interest based upon the percentage of Interest as of
the Date of this Agreement, be less than Sixteen Million Dollars
($16,000,000.00), adjusted as necessary on a pro rata basis based
upon any transfers of the Original General Partner's Interest
after the Date of this Agreement [i.e. if the Original General
Partner transfers one-half of its entire Interest the sixteen
million ($16,000,000) would be adjusted to eight million dollars
($8,000,000)], and (ii) in no event shall the cash price for the
entire Original Limited Partner's Interest based upon the
percentage of Interest as of the Date of this Agreement be less
than Four Million Dollars ($4,000,000.00), adjusted as necessary
on a pro rata basis based upon any transfers of the Original
Limited Partner's Interest after the Date of this Agreement other
than a transfer or reduction of the Original Limited Partner's
Interest as a result of its failure to meet a call for an
Additional Capital Contribution [i.e. if the Original Limited
Partner transfers one-half of its entire Interest the four
million dollars ($4,000,000) would be adjusted to two million
dollars ($2,000,000]. Delivery of the Put/Call Notice shall
constitute an irrevocable offer by the Initiating Partner (x) to
sell such Initiating Partner's entire
<PAGE>
interest in the Partnership, at a price equal to the price set
forth in the Put/Call Notice for a one percent interest
in the Partnership multiplied by the percentage
Interest in Partnership Capital owned by the Initiating
Partner, and (y) to purchase the entire Interest
in the Partnership of the non-Initiating Partner at a price
equal to the price set forth in the Put/Call Notice
multiplied by the respective percentage Interest in Partnership
Capital owned by the non-Initiating Partner. The terms of the
purchase or sale shall be as set forth herein.
Beginning upon receipt of the Put/Call Notice, a non-
Initiating Partner shall have a period of nine (9) months (the
"Acceptance Period") in which to elect to purchase such
Initiating Partner's Interest in the Partnership or sell such non-
Initiating Partner's entire Interest in the Partnership to the
Initiating Partner. Failure by a non-Initiating Partner to
respond to the Put/Call Notice within the Acceptance Period shall
conclusively be deemed an acceptance by such non-Initiating
Partner of the Initiating Partner's offer to purchase the entire
Interest in the Partnership of the non-Initiating Partner.
The closing of any purchase and sale occurring pursuant
to the provisions of this Section 10.04 shall occur on the
thirtieth (30th) day succeeding the expiration of the Acceptance
Period ("Closing Date") at the office of the Partnership, or at
such sooner time and/or other place as may be agreed upon by the
Partners. Payment must be in full and in cash, cashier's check,
or wire transfer of "good funds." Neither (i) failure by a
Partner obligated to sell such Partner's entire Interest in the
Partnership hereunder to appear at the closing, execute and
deliver any documents or instruments necessary or incident to the
transfer and sale of such Partner's entire Interest in the
Partnership, or to take any acts necessary or incident to the
transfer and sale thereof, or (ii) actions taken by any such
Partner in hinderance or delay of the transactions contemplated
hereby, shall affect the closing of the sale of such Partner's
entire Interest in the Partnership. In order to effectuate the
provisions of this Section 10.04, each Partner hereby irrevocably
appoints the other Partner as such Partner's true and lawful
attorney-in-fact (which appointment the Partners acknowledge
constitutes a power coupled with an interest) for the limited
purposes of (i) receipting for the purchase price on behalf of
the Partner obligated to sell its entire interest in the
Partnership hereunder, (ii) executing and delivering any
documents, instruments or consents necessary or appropriate to
the transfer and sale thereof, and (iii) taking all actions
necessary and appropriate to the consummation of the transfer and
sale thereof.
In the event of the failure by any Partner obligated to
purchase the entire Interest in the Partnership of any other
Partner ("Acquiring Partner") pursuant hereto to appear at the
closing, to deliver the purchase price at the closing, or to
execute and deliver any documents or instruments necessary or
incident to the transfer and sale contemplated hereby, the
Partner
<PAGE>
who otherwise would have sold their entire Interest in
the Partnership ("Disposing Partner") shall have a period of five
(5) days following the Closing Date within which to elect, by
written notice to the Acquiring Partner who failed to perform, to
purchase such Acquiring Partner's entire Interest in the
Partnership at the price determined as if the Disposing Partner
originally elected to purchase such Interest pursuant to the
Put/Call Notice. If such Disposing Partner so elects, the
closing of the sale contemplated by this paragraph shall occur at
the office of the Partnership on the tenth (10th) day succeeding
the date of the Notice referred to in this paragraph. If such
Disposing Partner does not so elect in a timely fashion, then the
Acquiring Partner shall automatically be deemed to have
transferred and assigned to the Disposing Partner, and does
hereby transfer and assign to the Disposing Partner, one-half
(1/2) of the entire Interest of the Acquiring Partner in the
Partnership for the purchase price of one dollar ($1.00); and all
of the Partners hereby irrevocably consent to such transfer and
assignment free and clear of all of the restrictions set forth in
Article X of this Agreement except for the provisions of
subparagraph (d) of Article X which shall apply to any such
transfer and assignment.
ARTICLE XI
TERMINATION OF THE GENERAL PARTNER
11.01 CESSATION
The General Partner shall immediately cease to act in
such capacity if any one of the following events shall occur;
(a) An order for relief against the General
Partner is entered under Chapter 7 of the federal bankruptcy
law, or the General Partner: (i) makes a general assignment
for the benefit of creditors, (ii) files a voluntary
petition under the federal bankruptcy law, (iii) files a
petition, answer, or any other application, motion or
pleading seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or
similar relief under any statute, law, or regulation, (iv)
files an answer, response or any other pleading admitting or
failing to contest the material allegations of a petition
filed against the General Partner in any proceeding of this
nature, (v) consents to or acquiesces in the conversion of a
case filed under Chapter 7 of the federal bankruptcy law to
Chapter 11 of the federal bankruptcy law, or (vi) seeks,
consents to, or acquiesces in the appointment of a trustee,
receiver, or liquidator of the General Partner or of all or
any substantial part of its properties.
(b) If within sixty (60) days after the
commencement of any proceeding against the General Partner
seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief
<PAGE>
under any statute, law, or regulation, the proceeding has
not been dismissed; OR if within sixty (60) days after the
appointment (without the General Partner's consent or
acquiescence) of a trustee, receiver, or liquidator of the
General Partner or of all or any substantial part of its
properties, such appointment is not vacated or stayed; OR
within sixty (60) days after the expiration of any such
stay, the appointment is not vacated.
(c) In the case of a General Partner who is an
individual, either of the following: (i) the death of that
Partner or (ii) the entry by a court of competent
jurisdiction of an order adjudicating the Partner
incompetent to manage the General Partner's person or
estate.
(d) In the case of a General Partner who is
acting as a General Partner by virtue of being a trustee of
a trust, the termination of the trust (but not merely the
substitution of a new trustee, in which case the new trustee
automatically becomes the new General Partner).
(e) In the case of a General Partner that is a
separate partnership, the dissolution of the separate
partnership.
(f) In the case of a General Partner that is a
corporation, the filing of a certificate of dissolution, or
its equivalent, for the corporation.
(g) In the case of a General Partner that is an
estate, the distribution by the fiduciary of the estate's
entire interest in the Partnership.
Upon such cessation, if there is a remaining General
Partner or General Partners, then the business of the Partnership
shall continue to be conducted by the remaining General
Partner(s) in accordance with this Agreement. If upon such
cessation there is no remaining General Partner, then the
Partnership shall thereafter only conduct activities necessary to
wind up its affairs, unless within ninety (90) days after the
date of the event that caused such cessation, all the Limited
Partners elect in writing or vote to continue the Partnership
pursuant to applicable Missouri Limited Partnership laws. If an
election to continue the Partnership is made, then a successor
General Partner may be selected and approved by a vote of all the
Limited Partners, and the Partnership shall continue in
accordance with the provisions of this Agreement.
11.02 WITHDRAWAL OF A GENERAL PARTNER
Upon the retirement or withdrawal of the General
Partner, if there is a remaining General Partner or General
Partners, then the business of the Partnership shall continue to
be conducted by the remaining General Partner(s) in accordance
with this Agreement. Unless required to do so by a licensing
authority or unless, as a
<PAGE>
result of action threatened by a competent authority
having jurisdiction over the General Partner, or any
Affiliate thereof, the General Partner determines that it
must retire or withdraw immediately or face unacceptable risk of
loss with regard to its gaming licenses or damage to its business
reputation generally, the General Partner shall not retire or
withdraw without giving the Limited Partner at least ninety (90)
days prior written notice of the General Partner's intent to
withdraw. If upon such retirement or withdrawal there is no
remaining General Partner, then the Partnership shall thereafter
only conduct activities necessary to wind up its affairs, unless
within three hundred and sixty-five (365) days after the date of
the General Partner's notice of retirement or withdrawal, sixty
percent (60%) or more of the Interest of the then existing
Limited Partners elect in writing or vote to continue the
Partnership pursuant to applicable Missouri Limited Partnership
laws. If an election to continue the Partnership is made, then a
successor General Partner may be selected and approved by a vote
of sixty percent (60%) or more of the Interests of the then
existing Limited Partners, and the Partnership shall continue in
accordance with the provisions of this Agreement. In the event
the General Partner retires or withdraws because it is required
to do so by a licensing authority or as a result of action
threatened by a competent authority having jurisdiction over the
General Partner or any Affiliate thereof, the General Partner
determines that it must retire or withdraw immediately or face
unacceptable risk of loss with regard to its gaming licenses or
damage to its business reputation generally, then no remaining
General Partner of Limited Partner shall have any claim against
such withdrawing or retiring General Partner, for damages or
otherwise.
11.03 PARTICIPATION OF A NEW GENERAL PARTNER
Any new or substitute General Partner serving in the
place of a former General Partner shall have no interest in the
share of Partnership capital, profits, and losses previously
vested in the Original General Partner, with the prior written
consent of the Original General Partner, which consent may be
unreasonably withheld or delayed. A new or additional General
Partner may only participate in the capital, profits, and losses
allocated under this Agreement immediately after the admission of
such new General Partner, and the amount of such Interest shall
be determined by the Original General Partner in its reasonable
business discretion.
<PAGE>
11.04 PAYMENT TO WITHDRAWING GENERAL PARTNER
Unless the Limited Partner votes to liquidate the
Partnership upon the withdrawal or retirement of the General
Partner (it being agreed that the Limited Partner shall have the
right to have the Partnership liquidated upon the General Partner
withdrawing or retiring). The Partnership shall pay to the
withdrawing General Partner all amounts then accrued and owing to
him, together with an amount equal to the then present fair
market value of the withdrawing General Partner's interest in
income, gains, losses, deductions, credits, distributions, and
capital determined by agreement of the withdrawing General
Partner and any remaining General Partners. If there are no
remaining General Partners or if they cannot agree within thirty
(30) days following the effective date of termination of the
General Partner, the purchase price to be paid by the Partnership
shall be the fair market value of such interest determined by
appraisal. The withdrawing General Partner shall appoint an
appraiser who is a member of the Appraisal Institute of the
American Association of Real Estate Appraisers (an "MAI"
appraiser) and the appraiser so appointed shall determine the
fair market value of the withdrawing General Partner's interest.
The appraiser's determination shall be final and binding upon the
General Partner(s), the Limited Partner(s), the Partnership and
their successors in interest. The costs and expenses of all such
appraisal shall be borne by the Partnership. The purchase shall
be consummated within thirty (30) days following (i) the date of
receipt by the Partnership of the appraisal or (ii) the date of
agreement in writing by the withdrawing General Partner and the
Partnership with respect to the fair market value of the
withdrawing General Partner's interest in the Partnership.
ARTICLE XII
FORCE MAJEURE
12.01 FORCE MAJEURE DEFINED
The following events are beyond the control of any
Partner (a "Force Majeure Event"):
a. The passage of material new legislation which
reduces the projected internal rate of return to the Original
General Partner for the Project by more than thirty percent
(30%), before taxes, compared to the projection of the Original
General Partner;
b. An increase in the cost of the Project which
exceeds the Initial Capital Budget by more than twenty-five
percent (25%);
c. The receipt of material new conditions imposed
by the St. Louis County Port Authority, St. Louis County or the
<PAGE>
Missouri Gaming Commission or any other governmental entity which
may have regulatory authority over the Partnership, the Partners
or the Project, which reduces the projected internal rate of
return to the Original General Partner by more than twenty-five
percent (25%), before taxes, compared to the projections of the
Original General Partner;
d. A delay in the Opening of the Project for more
than one hundred eighty (180) days after the Opening date has
been established by the Original General Partner or a closure of
the Project after Opening for more than one hundred eighty (180)
days;
e. Any other event which materially alters the
assumptions and underlying facts upon which this Agreement is
based and which is reasonably expected by the Original General
Partner to reduce the projected internal rate of return to the
Original General Partner by more than thirty percent (30%),
before taxes compared to the projections of the Original General
Partner;
f. Fire or other casualty, national emergency,
condemnation, enemy action, civil commotion, strikes, lockouts,
inability to obtain labor or materials, war or national defense
preemptions, acts of God, energy shortages, or any other similar
causes beyond the reasonable control of any party.
12.02 ACTIONS TO RESOLVE FORCE MAJEURE EVENTS
No General Partner shall be deemed to be in default of
the performances of its duties under this Agreement to the extent
that such duties cannot reasonably be performed as a result of
such Force Majeure Event from the date upon which the Force
Majeure Event first exists until the date upon which (1) the
General Partner determines that the Force Majeure Event may be
resolved and is able to take such actions as are necessary and
appropriate to resolve such Force Majeure Event; (2) the General
Partner determines that the Force Majeure Event cannot be
resolved but determines not to terminate this Agreement and
abandon the Project; or (3) the General Partner determines that
the Force Majeure Event cannot be resolved and elects to
terminate this Agreement and abandon the Project. If the General
Partner determines that the Force Majeure Event cannot be cured
or cannot otherwise reasonably be expected to be resolved within
thirty (30) days, then the General Partner may elect to terminate
this Agreement and abandon the Project.
ARTICLE XIII
DISSOLUTION OF PARTNERSHIP
13.01 EVENTS OF DISSOLUTION
The Partnership shall be dissolved and terminated upon
the first to occur of the following events:
<PAGE>
(a) Upon the occurrence of an event described in
Section 11.01 above, (if there is no remaining General
Partner), unless the Limited Partners elect to continue the
Partnership and a new General Partner is elected under the
provisions hereof;
(b) Upon retirement or withdrawal by the General
Partner (if there is no remaining General Partner), unless
the Limited Partners elect to continue the Partnership and a
new General Partner is elected under the provisions of
hereof;
(c) The expiration of the term of the
Partnership;
(d) Except as otherwise provided in this
Agreement, by operation of law;
(e) Upon the sale by the Partnership of all or
substantially all the Partnership Property and the final
distribution of the proceeds thereof (whether the same be
cash, notes, or other property);
(f) Upon the occurrence of a Force Majeure Event,
at the election of the General Partner;
(g) Upon the written consent of the General Partner; or
(h) The termination of the Lease or Development Agreement.
13.02 WINDING-UP OF PARTNERSHIP BUSINESS
(a) Upon termination of the Partnership upon the
occurrence of any of the events described in Section 13.01
above, the Partnership shall be dissolved, and the General
Partner shall take full account of the Partnership's assets
and liabilities. The receivables of the Partnership shall
be collected and its assets liquidated as promptly as is
consistent with obtaining the fair value thereof upon
dissolution. The Partnership shall engage in no further
business thereafter other than as necessary to develop,
maintain or market the Partnership Property on an interim
basis, collect its receivables, and liquidate its assets.
(b) Upon completion of winding up the
Partnership's affairs and the dissolution of the
Partnership, the General Partner shall cause to be prepared,
executed, and filed with the Secretary of State of Missouri,
a Certificate of Cancellation of Certificate of Limited
Partnership or any certificate required by any amendment of
such provision or successor provision.
<PAGE>
13.03 DISTRIBUTION OF PARTNERSHIP PROPERTY UPON DISSOLUTION
Upon dissolution or liquidation of the Partnership, the
proceeds realized upon sale and liquidation of the Partnership
Property shall be applied and distributed in accordance with the
provisions hereof.
13.04 ASSETS OTHER THAN CASH
Assets other than cash that are distributed in kind
shall be distributed on the basis of (i) in the case of notes
receivable, their then fair market value, and (ii) in the case of
real estate or in the case of other assets, their then fair
market value as determined by an independent appraiser appointed
by the General Partner. As necessary, distributions in kind will
be made to the Partners as tenants-in-common, or in trust as
provided in Section 6.03, hereof. If Partnership Property should
be sold, and a portion of the consideration for such sale should
be notes or other evidences of indebtedness, then such notes or
other evidences of loans may be sold or hypothecated to realize
funds for distribution to the Partners including at a discount
from the face value thereof. Sale or hypothecation of evidences
of indebtedness constituting substantially all the assets of the
Partnership may be accomplished only with the same consent of the
Partners as is necessary for the sale of substantially all the
Partnership Property. It is agreed that such sale or borrowing
on the security of said notes or other evidence of indebtedness
affects the basic structure of the Partnership.
13.05 CAPITAL ACCOUNT ADJUSTMENTS
To the extent not otherwise recognized to the
Partnership, the amount by which the fair market value of any
property to be distributed in kind to the Partners exceeds (or is
less than) the basis of such property shall be allocated as gain
(or loss) to the Partners' capital accounts as if such property
had been sold. Such property shall then be distributed at its
fair market value with appropriate adjustments made to the
capital accounts of the Partners receiving it.
ARTICLE XIV
NOTICES
Any notice which may be or is required to be given
hereunder shall be deemed given three (3) days after such notice
has been deposited, by registered or certified mail, in the
United States mail, addressed to the Partnership or the Partners
at the addresses set forth after their respective names below, or
at such different addresses as to the Partnership or any Partner
as it shall have theretofore advised the other parties in
writing:
Partnership: Southboat Limited Partnership
<PAGE>
c/o Showboat Lemay, Inc.,
General Partner
_________________________
_________________________
with a copy to: _________________________
_________________________
_________________________
Futuresouth Futuresouth, Inc.
3630 S. Geyer Road
St. Louis, Missouri 63127
Attention: Dennis P. Long
with a copy to: Riezman & Blitz
120 S. Central Avenue
10th Floor
Clayton, Missouri 63105
Attention: Richard M. Riezman
Showboat: Showboat Development Company
3720 Howard Hughes Parkway
Las Vegas, Nevada 89109
Attention: H. Gregory Nasky
with a copy to: Kummer Kaempfer Bonner & Renshaw
Seventh Floor
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
Attention: John N. Brewer
ARTICLE XV
MISCELLANEOUS PROVISIONS
15.01 LIMITED POWER OF ATTORNEY
Each Limited Partner, by the Limited Partner's
execution of this Agreement, irrevocably constitutes and appoints
the General Partner as such Limited Partner's true and lawful
attorney-in-fact and agent, with full power and authority in such
Limited Partner's name, place, and stead to execute, acknowledge
and deliver and to file or record in any appropriate public
office (i) any certificate or other instrument that may be
necessary, desirable, or appropriate to qualify or to continue
the Partnership as a Limited Partnership or to transact business
as a Limited Partnership in any jurisdiction in which the
Partnership conducts business; (ii) any amendment to this
Agreement or to any certificate or other instrument that may be
necessary, desirable, or appropriate including an amendment to
reflect the admission of a Partner, the withdrawal of a Partner,
or the transfer of all or any part of the interest of a Partner
in the Partnership or any additional capital contributions or
withdrawal of capital contributions made by a
<PAGE>
Partner, all in accordance with the provisions of
this Agreement; (iii) any certificates or instruments
that may be appropriate, necessary, or desirable to
reflect the dissolution and termination of the Partnership;
and (iv) any certificates necessary to comply with the
provisions of this Agreement. This power of attorney shall
be deemed to be coupled with an interest and shall survive a
subsequent bankruptcy, death, adjudication of incompetence,
disability, incapacity, dissolution, or termination of the
Limited Partner as well as the transfer by the Limited Partner of
the Interest in the Partnership. Notwithstanding the existence
of this power of attorney, each Limited Partner agrees to join in
the execution, acknowledgment, and delivery of the instruments
referred to above if requested to do so by the General Partner.
This power of attorney to the General Partner is a limited power
of attorney that does not authorize the General Partner to act on
behalf of a Limited Partner except to execute the documents
described in this paragraph.
15.02 AMENDMENT
Subject to Section 15.01 above, an amendment to this
Agreement may be made only in writing and signed by the General
Partner. Notwithstanding the foregoing, this Agreement may be
amended from time to time by the General Partner without the
consent of any of the Limited Partners (i) to add to the
representations, duties, or obligations of the General Partner or
its Affiliates or to surrender any right or power granted to the
General Partner or its Affiliates herein, for the benefit of the
Limited Partners; (ii) to cure any ambiguity, to correct or
supplement any provision that may be inconsistent with any other
provision, or to make any other provisions with respect to
matters or questions arising under this Agreement that will not
be inconsistent with the provisions of this Agreement; (iii) to
reflect reductions in the capital contributions of the Limited
Partners resulting from the return of capital to the Limited
Partner(s) in accordance with the requirements of this Agreement;
(iv) to delete or add any provision of this Agreement required to
be so deleted or added by the staff of the Securities and
Exchange Commission or state securities officials, which addition
or deletion is deemed by the official to be for the benefit or
protection of the Limited Partner(s); (v) to elect for the
Partnership to be governed by any successor Missouri statute
governing limited partnerships; and (vi) as otherwise provided
for pursuant to this Agreement. The General Partner shall notify
the Limited Partner(s) within a reasonable time of the adoption
of any amendment. Notwithstanding anything to the contrary
contained in this Agreement, this Agreement may not be amended
without the consent of all Partners to be adversely affected by
an amendment that (i) converts a Limited Partner into a General
Partner; or (ii) affects the status of the Partnership as a
Partnership for federal income tax purposes.
<PAGE>
15.03 FOREIGN GAMING LICENSES
If the Original General Partner determines, at its sole
and absolute, that any of its gaming licenses in other
jurisdictions may be adversely affected or in jeopardy as a
result of its status as a Partner, the Original General Partner
have the option at any such time to sell its Interest. In the
event of a sale by the Original General Partner of its Interest
under this section, the Management Agreement shall terminate.
15.04 BINDING EFFECT; FURTHER INSTRUMENTS
This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective heirs,
personal representatives, successors, and assigns. The parties
hereto agree for themselves and for their heirs, personal
representatives, successors, and assigns to execute any and all
instruments in writing that may be necessary or proper to carry
out the purposes and intent of this Agreement.
15.05 HEADINGS
The headings of the paragraphs of this Agreement are
inserted solely for convenience of reference and are not a part
of or intended to govern, limit, or aid in the construction of
any term or provision hereof.
15.06 GENDER AND NUMBER
Whenever required by the context, the singular shall be
deemed to include the plural, and the plural shall be deemed to
include the singular, and the masculine, feminine, and neuter
genders shall each be deemed to include the other.
15.07 SEVERABILITY
In the event that any provision or any portion of any
provision contained in this Agreement is unenforceable, the
remaining provisions, and in the event that a portion of any
provision is unenforceable, the remaining portion of such
provision, shall nevertheless be carried into effect.
15.08 PARTIAL INVALIDITY
If any term, covenant, or condition of this Agreement
or the application thereof to any person or circumstance shall,
to any extent, be invalid or unenforceable, the remainder of this
Agreement or the application of such term, covenant, or condition
to persons or circumstances, other than those as to which it is
held invalid or unenforceable, shall not be affected thereby, and
each term, covenant, or condition of this Agreement shall be
valid, enforced to the full extent permitted by law.
<PAGE>
15.09 COOPERATION WITH GAMING AUTHORITIES
The Partners shall use their best efforts to cause
their respective officers, directors, stockholders, and employees
to provide gaming authorities in the jurisdiction in which the
Partnership, or any Partner currently does business, and the
authorities of any other jurisdiction in which the Partnership or
any Partner presently may have or may in the future have gaming
operations with such documents and information necessary for the
Partnership or the Original General Partner to (i) obtain the
approval of such authorities to conduct gaming operations, and
(ii) maintain the Original General Partner's and its Affiliates
gaming licenses. The Limited Partner understands and agrees that
the Original General Partner's and the Original General Partner's
Affiliates good standing with such gaming authorities may be
adversely affected by any honesty and integrity deficiencies in
the operations of persons or entities with whom or with which the
Original General Partner or its Affiliates becomes associated,
including the Limited Partner. The Limited Partner agrees to
conduct itself, its business and maintain its association so as
not to jeopardize the Original General Partner's or the Original
General Partner's Affiliates licenses and good standing in all
jurisdictions. Moreover, the Limited Partner represents,
warrants, covenants and agrees that its, principals, officers,
directors, and stockholders are persons who have conducted their
respective business dealing with honesty and integrity.
15.10 CONFIDENTIALITY
Each Partner agrees for itself and its respective
Affiliates, agents, representatives and consultants to hold in
strictest confidence and not to disclose to any person, entity,
party, firm or corporation (other than agents or representatives
of such Partner who are also bound by this paragraph) without the
prior express consent of the General Partner (except as such
disclosures are required in applications or by applicable gaming
and securities laws) any of the other Partner's confidential
data, whether related to the Project or to general business
matters, which shall come into their possession or knowledge,
except to the extent such information shall already be part of
the public domain. In addition, each Partner agrees that it
shall cause all documents, drawings, plans or other materials
developed by another Partner in connection with the Project to be
returned to the other Partner in the event of termination of this
Agreement and that the other Partner shall not make use of such
information in connection with the Project or any other
undertaking by that Partner without the prior express written
consent of the other Partner, which may reasonably entail the
reimbursement to that Partner of its costs, direct and indirect,
incurred in pursuing this Agreement, and the affiliated
agreements.
<PAGE>
15.11 WAIVER OF ACTION FOR PARTITION
During the term of the Partnership and during any
period of winding up and dissolution of the Partnership, each of
the Partners irrevocably waives any right that he may have to
maintain any action for partition as to the Partnership Property.
15.12 GOVERNING LAW
The Partnership shall be governed and this Agreement
shall be construed in accordance with the internal laws, and not
the law of conflicts, of the State of Missouri applicable to
agreements made and to be performed in such state.
15.13 ARBITRATION; ATTORNEYS' FEES AND COSTS
(a) In the event any dispute should arise between
the parties hereto as to the validity, construction,
enforceability, or performance of this Agreement or any of its
provisions, such dispute shall be settled by arbitration before
an American Arbitration Association panel. Said arbitration
shall be conducted at St. Louis, Missouri, in accordance with the
commercial rules then in use by the American Arbitration
Association. The decision of the arbitrator shall be final and
may be entered as a judgment by a court of competent
jurisdiction. The unsuccessful party to such arbitration shall
pay to the successful party all reasonable costs and expenses,
including reasonable attorneys' fees, incurred therein by such
successful party. The successful party shall be determined by
the arbitrator.
(b) Notwithstanding the foregoing, if a dispute
arises under Section 3.07 as to whether the General Partner has
demonstrated to the reasonable satisfaction of the Original
Limited Partner that a proposed change in the scope of the
Project is economically viable for the Project and the
Partnership, such dispute shall be arbitrated under the
provisions of this subsection (b). In such event, the
arbitration shall be conducted in the greater St. Louis, Missouri
metropolitan area, before a panel of three arbitrators to be
agreed upon by the Partners. There shall be an arbitration
hearing on the dispute with thirty (30) days after a Partner
gives notice to the other Partner that it seeks to arbitrate the
dispute. At such arbitration hearing, the subject matter of the
hearing shall be confined and limited to the sole issue whether
the General Partner has demonstrated that the proposed change in
the scope of the Project is economically viable for the Project
and the Partnership. At such arbitration hearing, each Partner
shall have the opportunity to present a written and oral
statement of its position on the dispute, and the other Partner
shall have the opportunity to respond to the same. Any written
statement to be presented at the arbitration hearing shall be
submitted to the arbitrators and the other Partner no later than
ten (10) days before the date of the commencement of the
arbitration hearing. The arbitrator shall render a written
decision with an explanation of the reasons for such decision
<PAGE>
within ten (10) days after the date upon which the hearing is
concluded, and a copy of such written decision shall be provided
to each Partner. The decision of the arbitrator shall be final
and conclusive determination concerning the right of the General
Partner to require an Additional Capital Contribution for the
purpose of the proposed change in the scope of the Project,
binding upon all of the Partners. The unsuccessful party to such
arbitration shall pay to the successful party all reasonable
costs and expenses of the successful party associated with such
arbitration, including but not limited to attorneys' fees.
15.14 INTEGRATION
This Agreement sets forth the entire agreement among
the parties with regard to the subject matter hereof. All
agreements, covenants, representations, and warranties, express
and implied, oral and written, of the parties with regard to the
subject matter hereof are contained herein, in the Exhibits
hereto, and in the documents referred to herein or implementing
the provisions hereof. No other agreements, covenants,
representations, or warranties, express or implied, oral or
written, have been made by either party to the other as to the
subject matter of this Agreement. All prior and contemporaneous
conversations, negotiations, possible and alleged agreements and
representations, covenants, and warranties as to the subject
matter hereof are waived, merged herein, and superseded hereby.
15.15 COUNTERPARTS
This Agreement may be executed in counterparts and all
counterparts so executed shall constitute one Agreement binding
on all the parties. It shall not be necessary for each party to
execute the same counterpart.
15.16 NO BROKER/FINDER
Each Partner represents and warrants to the other that
it has not engaged any broker, agent or other person for whose
commission(s) or finders fee the other Partner may be held
liable. Each Partner hereto covenants and agrees to indemnify
and hold the other Partner harmless at all times in respect of
any and all liabilities, actions, suits, proceedings, demands,
assessments, judgments costs, and expenses, including but not
limited to attorneys' fees and costs, arising from, by reason of
or in connection with any fees, finders fees, commissions, or
other compensation which shall be alleged to be due to any
broker, finder, agent, person or other party ("Fee Claimant") in
connection with this Project or the transactions related thereto,
if the Fee Claimant is found to have been engaged by either
Partner or if such services are found to have been provided at
the request of either Partner.
<PAGE>
15.17 EXHIBITS
Exhibits referred to in this Agreement are incorporated
by reference into this Agreement.
15.18 STOCKHOLDERS
In those sections of this Agreement in which reference
is made to "stockholders" of any Partner, the term "stockholders"
shall be deemed to mean any owner of any equity interest in any
legal entity which may be a Partner of this Partnership,
including but not limited to members of a limited liability
company, partners in any general partnership, any owner or owners
of a sole proprietorship or otherwise.
15.19 FUTURESOUTH ROOM AND SIGNING PRIVILEGES
The General Partner shall cause to be designed and
constructed adjacent to the Casino a VIP room with capacity for
one hundred (100) people. The General Partner also shall cause
to be designed and constructed adjacent to such VIP room a
private, furnished room which shall be known as the "Futuresouth
Room". The Futuresouth Room shall available for the use of the
Original Limited Partner for private meetings, social gatherings
and other uses, which use of the Futuresouth Room shall be at no
cost or expense to the Original Limited Partner. The Original
Limited Partner shall have signing privileges for food and
beverage at the Project up to Five Thousand Dollars ($5,000.00) a
month, which food and beverage shall be charged to the Original
Limited Partner at cost. Such food and beverages costs and
expenses shall be paid in full by the Original Limited Partner to
the Partnership on or before the end of each fiscal quarter.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement on this ____ day of September, 1995 (the "Execution
Date of this Agreement") in multiple originals as of the date
first written hereinabove.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION
WHICH MAY BE ENFORCED BY THE PARTIES.
GENERAL PARTNER:
Showboat Lemay, Inc.
a Nevada corporation,
By:/s/H. Gregory Nasky
H. Gregory Nasky, Secretary
LIMITED PARTNER:
Futuresouth, Inc.
a Missouri corporation
By:/s/Dennis P. Long
Dennis P. Long, President
<PAGE>
EXHIBIT 10.02
<PAGE>
MANAGEMENT AGREEMENT
<PAGE>
MANAGEMENT AGREEMENT
TABLE OF CONTENTS
PAGE
ARTICLE 1. RECITALS AND DEFINITIONS 2
ARTICLE 2. APPOINTMENT/TERM/OPTION TO EXTEND TERM 10
Section 2.01 Appointment. 10
Section 2.02 Term. 10
Section 2.03 Opening the Casino. 10
ARTICLE 3. OWNER AND MANAGER DEVELOPMENT OBLIGATIONS
DURING DEVELOPMENT TERM 11
Section 3.01 Construction of Riverboat/Compliance
with Law. 11
Section 3.02 Engagement of Manager As Consultant. 12
Section 3.03 Preliminary Plans and Specifications. 12
Section 3.04 Pre-Opening Committee. 12
Section 3.05 Obligations during Development Term. 13
Section 3.06 Construction. 13
Section 3.07 Pre-Opening Services by Manager. 13
Section 3.08 Payment of Pre-Opening Expenses. 14
ARTICLE 4. OPERATIONS 14
Section 4.01 Accounting Procedures and Services
Books and Records. 14
Section 4.02 Owner's Access to Gaming Financial Records.15
Section 4.03 Audits. 15
Section 4.04 Monthly Financial Statements. 16
Section 4.05 Expenses. 16
Section 4.06 Standards. 16
Section 4.07 Plans and Budgets. 19
Section 4.08 Management. 21
Section 4.09 Bank Accounts. 21
Section 4.10 Credit. 22
Section 4.11 Owner's Advances. 22
Section 4.12 Special Events. 24
Section 4.13 Cooperation of Owner and Manager. 24
Section 4.14 Financing Matters. 25
Section 4.15 Conflict of Interest/Non-Competition. 27
ARTICLE 5. MANAGEMENT FEE 28
Section 5.01 Payments to Manager. 28
ARTICLE 6. MANAGER'S RIGHT OF FIRST REFUSAL TO MANAGE
RIVERBOAT 28
<PAGE>
ARTICLE 7. TAXES AND ASSESSMENTS, AND PAYMENTS TO THE
RIVERBOAT AUTHORITIES 29
Section 7.01 Payment of Taxes and Assessments. 29
Section 7.02 Exceptions. 30
ARTICLE 8. USE AND OCCUPANCY OF THE CASINO 30
Section 8.01 Uses. 30
Section 8.02 Name. 30
ARTICLE 9. MAINTENANCE AND REPAIRS 31
Section 9.01 Owner's Maintenance and Repairs. 31
ARTICLE 10. INSURANCE AND INDEMNITY 32
Section 10.01 Owner Insurance Obligations. 32
Section 10.02 Parties Insured. 35
Section 10.03 Approved Insurance Companies. 36
Section 10.04 Approval of Insurance Coverage. 36
Section 10.05 Failure to Obtain Required Insurance. 36
Section 10.06 Waiver of Subrogation. 37
Section 10.07 Mutual Cooperation. 37
Section 10.08 Delivery of Insurance Policies. 37
Section 10.09 Indemnification by Manager. 38
Section 10.10 Indemnification by Owner. 39
Section 10.11 Selection of Counsel/Conduct of Litigation.40
ARTICLE 11. CASUALTY 40
ARTICLE 12. TAKING OF THE RIVERBOAT 41
Section 12.01 Definitions. 41
Section 12.02 Entire Taking of the Support Areas. 42
Section 12.03 Duty to Restore. 43
ARTICLE 13. DISPOSITION OF INSURANCE PROCEEDS AND AWARDS 43
Section 13.01 Trustee. 43
Section 13.02 Deposits of Insurance Proceeds and Awards. 44
Section 13.03 Procedure for Distribution of
Insurance Proceeds and Awards. 44
ARTICLE 14. ASSIGNMENT AND SUBLETTING 46
ARTICLE 15. AFFIRMATIVE COVENANTS OF MANAGER 47
Section 15.01 Corporate Status. 47
Section 15.02 Compliance with Laws. 47
Section 15.03 Gaming Approvals. 47
Section 15.04 Confidential Information. 48
Section 15.05 Gaming Applications. 48
ARTICLE 16. AFFIRMATIVE COVENANTS OF OWNER 48
Section 16.01 Corporate Status. 48
Section 16.02 Maintenance of Insurance. 49
<PAGE>
Section 16.03 Compliance with Laws. 49
Section 16.04 Cooperation with Gaming Authorities. 50
Section 16.05 Confidential Information. 50
Section 16.06 Compliance with Loan Covenants. 51
Section 16.07 Non-Interference. 51
Section 16.08 Gaming Applications. 51
ARTICLE 17. REPRESENTATIONS AND WARRANTIES 51
Section 17.01 Owner Corporate Status. 51
Section 17.02 Manager Corporate Status. 52
Section 17.03 Authorization/No Conflict. 52
Section 17.04 Permits/Approvals. 53
Section 17.05 Accuracy of Representations. 53
Section 17.06 Development Plans. 54
Section 17.07 Maintenance of Gaming and Other Licenses. 54
Section 17.08 Financings; Governmental Approval. 54
Section 17.09 Condition of Riverboat During Term. 55
Section 17.10 Utilities. 55
Section 17.11 Impair Reputation. 55
ARTICLE 18. ARBITRATION 55
SECTION 18.01 Appointment of Arbitrators. 55
Section 18.02 Inability to Act. 57
ARTICLE 19. DEFAULT/STEP-IN RIGHTS 57
Section 19.01 Definition. 57
Section 19.02 Manager's Defaults. 57
Section 19.03 Step-In Rights. 58
Section 19.04 Owner's Default. 60
Section 19.05 Bankruptcy. 61
Section 19.06 Reorganization/Receiver. 61
Section 19.07 Delays and Omissions. 61
Section 19.08 Disputes in Arbitration. 62
ARTICLE 20. TERMINATION 62
Section 20.01 Termination Events. 62
Section 20.02 Notice of Termination. 63
Section 20.03 Remedies Upon Termination. 63
Section 20.04 Delivery of Riverboat. 64
ARTICLE 21. HAZARDOUS MATERIALS 64
Section 21.01 No Hazardous Materials. 64
Section 21.02 Compliance With Laws. 65
Section 21.03 Indemnification. 65
Section 21.04 Hazardous Material Defined. 66
ARTICLE 22. NOTICES 67
ARTICLE 23. MISCELLANEOUS 68
Section 23.01 Time of the Essence. 68
Section 23.02 Heirs, Successors, Assigns 68
<PAGE>
Section 23.03 Construction. 68
Section 23.04 Governing Law. 68
Section 23.05 Severability. 68
Section 23.06 Relation of the Parties. 69
Section 23.07 No Broker or Finder. 69
Section 23.08 Default Interest Rate. 70
Section 23.09 Attorneys' Fees. 70
Section 23.10 Entire Agreement. 70
Section 23.11 Counterparts. 70
Section 23.12 Force Majeure. 71
Section 23.13 No Warranties. 71
Section 23.14 Headings. 71
Section 23.15 Waiver. 72
<PAGE>
MANAGEMENT AGREEMENT
This Management Agreement ("Agreement") is dated as of May
2, 1995, and is made and entered into by and between Southboat
Partnership, a Missouri general partnership or its successors and
assigns ("Owner"), whose address is 3630 S. Geyer Road, St.
Louis, Missouri 63127, and Showboat Operating Company, a Nevada
corporation, or its successors and assigns ("Manager"), whose
address 2800 Fremont Street, Las Vegas, Nevada 89104.
RECITALS
A. Owner is designing and developing a riverboat casino in
order to conduct a riverboat gaming business on the Mississippi
River to be located on approximately 29 acres (the "Casino Site")
at the southernmost portion of the St. Louis County Port
Authority Site in Lemay, Missouri.
B. Owner expects to have completed construction of the
riverboat and all ancillary facilities, including, but not
limited to, docking, parking areas and administrative offices,
and to have obtained all licenses necessary to open the riverboat
to the public for gaming operations approximately by October
1996.
C. Manager has experience in designing interior gaming
premises, and in starting up and conducting a gaming business.
D. Owner desires to engage Manager as a consultant to Owner
in designing the interior gaming area of the riverboat, training
staff and installing gaming equipment for public use, and, upon
completion of the construction of the riverboat and all ancillary
facilities, including the receipt of all gaming and other
approvals, to manage and operate the gaming operations associated
with the riverboat.
E. Manager desires to be engaged as a consultant to assist in
the design of the interior gaming area of the riverboat and, upon
completion of the construction of the riverboat and all ancillary
facilities, to manage and operate the gaming operations
associated with the riverboat.
F. As of the date of this Agreement, neither Owner nor Manager
has obtained a permanent riverboat gaming license from the
Missouri Gaming Commission.
NOW, THEREFORE, in consideration of the mutual promises
contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, and with the intention of being bound by this
Agreement, the parties stipulate and agree as follows:
<PAGE>
ARTICLE 1. RECITALS AND DEFINITIONS
The foregoing Recitals are true and correct.
The following defined terms are used in this Agreement:
"Affiliate" shall mean a person who, directly or indirectly,
or through one or more intermediaries, (i) controls, is
controlled by, or is under common control with the person in
question; (ii) is an officer, director, five percent (5%)
stockholder, partner in or trustee of any person referred to in
the preceding clause; or (iii) is a spouse, father, mother, son,
daughter, brother, sister, uncle, aunt, nephew or niece of any
person described in clauses (i) and(ii).
"Audit Day" is defined in Section 4.03.
"Audited Statements" is defined in Section 4.03.
"Award" is defined in Section 12.01.
"Bad Debts" shall mean the amount equal to gaming accounts
receivables which have not been collected for more than 120 days.
"Bank Accounts" is defined in Section 4.09.
"Business Days" shall mean all weekdays except those that
are official holidays of the state of Missouri or the U.S.
government. Unless specifically stated as "Business Days," a
reference in this Agreement to "days" means calendar days.
"Casino" shall mean those areas reserved for the operation
of slot machines, table games, electronic games of chance,
electronic games of skill and any other legal forms of gaming
permitted under applicable law, and ancillary service areas,
including reservations and admissions, cage, vault, count room,
surveillance room and any other room or area or activities
therein regulated or taxed by the Riverboat Authorities by reason
of gaming operations.
"Casino Bankroll" shall mean an amount reasonably determined
by Manager as funding required to bankroll Casino Gaming
Activities, but in no case less than the amount required by
Missouri gaming law. In no event shall such Casino Bankroll
include amounts necessary to cover Operating Expenses or
Operating Capital. Casino Bankroll shall include the funds
located on the casino tables, in the gaming devices, cages,
vault, counting rooms, or in any other location in the Casino
where funds may be found and funds in a bank account identified
by Owner for any additional amount required by Missouri gaming
law or such other amount as is reasonably determined by Manager.
<PAGE>
"Casino Gaming Activities" shall mean the casino cage, table
games, slot machines, video machines, electronic games of chance,
electronic games of skill, and any other form of gaming managed
by Manager in the Casino. The area reserved in the Riverboat for
the Casino Gaming Activities shall be an area of approximately
26,000 square feet. If permitted by the Missouri Gaming
Commission, the area reserved on the barges for Casino Gaming
Activities shall be an area of approximately 22,000 square feet.
Owner expressly reserves the right to expand or decrease the area
reserved for gaming based upon changes in existing facts and
circumstances which may affect the Riverboat Casino project.
"Casino Operating Budget" shall be the budget of Casino
Operating Expenses.
"Casino Operating Expenses" shall mean expenses incurred by
Manager on behalf of Owner in the management of the Casino,
including, but not limited to, gaming supplies, maintenance of
the Casino area, gaming marketing materials, uniforms,
complimentaries, Casino employee training, Casino employee
compensation and entitlements, and Gaming Taxes.
"Control" shall mean, in relation to a person that is a
corporation, the ownership, directly or indirectly, of voting
securities of such person carrying more than 25% of the voting
rights attaching to all voting securities of such person and
which are sufficient, if exercised, to elect a majority of its
board of directors; "Controls" and "Controlled" shall have
similar meanings.
"Commencement Date" shall mean the first day on which a
revenue-paying customer is admitted to the Casino.
"Credit Policy" shall mean the policy approved by Owner,
whose approval shall not be unreasonably withheld, regarding the
extension and collection of credit to patrons of the Casino,
which Credit Policy shall be prepared by Manager based on (i) the
target markets of the Casino; (ii) prudent business judgment; and
(iii) such changes and refinements as Owner may reasonably
require and shall comply and conform in all respects with the
rules and regulations of the Riverboat Authorities.
"Default" or "Event of Default" is defined in Section 19.01.
"Development Term" shall mean the period beginning on the
date of this Agreement and ending on the Commencement Date.
"Earnings" shall mean Gross Revenue less Operating Expenses.
"Effective Date" is defined in Section 2.02.
<PAGE>
"FF&E" shall mean all furniture, furnishings, equipment, and
fixtures, including gaming equipment, computers, housekeeping and
maintenance equipment, necessary or convenient to the operations
of the Riverboat in conformity with this Agreement and in
accordance with applicable law.
"Gaming Taxes" shall mean any tax imposed by the state of
Missouri on Gross Gaming Revenue, including, without limitation,
any state admissions tax (currently 20% of Gross Gaming Revenue
and $2.00 per customer).
"Gross Food and Beverage Revenue" shall mean all of the
revenue resulting from the operation of all of the restaurants,
snack bars, lounges, bars, vending machines and any other areas
or facilities which serve food or beverages at the Riverboat.
"Gross Gaming Revenue" shall mean all of the revenue from
the operation of the Casino.
"Governmental Authorities" shall mean the United States, the
state of Missouri, county of St. Louis, city of Lemay, any other
political subdivision in which the Riverboat is located or does
business, and any court or political subdivision agency,
commission, board or instrumentality or officer thereof, whether
federal, state or local, having or exercising jurisdiction over
Owner, Manager or the Riverboat, including the Casino.
"Gross Revenue" shall mean Gross Gaming Revenue plus all
other revenue resulting from the operation of Riverboat.
"Hazardous Material" is defined in Section 21.04.
"Impositions" is defined in Section 7.01.
"Incentive Management Fee" shall mean 20% of Earnings in
excess of $30,000,000, before any interest expense, income taxes,
capital lease rent, depreciation and amortization. The Incentive
Management Fee shall be reduced to ten percent (10%) of Earnings
in excess of $35,000,000, before any interest expense, income
taxes, capital lease rent, depreciation and amortization.
"Initial Inventory" shall mean the list of operating
supplies required for the operation of the Riverboat for the
initial 30-day period following the Commencement Date.
"Initial Inventory Price" shall mean the cost of purchasing
the Initial Inventory.
"Institution" is defined in Section 13.01.
"Institutional Mortgage" is defined in Section 13.01.
<PAGE>
"Loan Documents" shall mean all of the documents evidencing,
securing and relating to any indebtedness owing by Owner to any
person, including, without limitation, all promissory notes, loan
agreements, mortgages, pledges, assignments, certificates,
indemnities and other instruments or agreements.
"Management Fee" shall mean that sum which is equal to (i) 2
1/4% of Gross Gaming Revenue net of all Gaming Taxes, and (ii)
the Incentive Management Fee.
"Management Fee Account" shall be the bank account
established by Manager into which the Management Fee shall be
deposited.
"Manager's Management Team" is defined in Section 4.06(d).
"Manager Pre-Opening Expenses" are those expenses incurred
during the Development Term including, but not limited to, travel
by Manager employees, officers and directors, rent, regulatory
fees, salaries, wages and benefits, and other costs of Manager
employees which are operational in nature. The Manager Pre-
Opening Expenses are estimated to be at least $250,000 per month.
"Nevada Gaming Authorities" shall mean the Nevada Gaming
Commission and the Nevada Gaming Control Board.
"Operating Budget" shall mean the Casino Operating Budget
and the budget for all other operations of the Riverboat.
"Operating Capital" shall mean such amount in the Bank
Accounts as will be reasonably sufficient to assure the timely
payment of all current liabilities of the Riverboat, including
the operations of the Casino, during the term of this Agreement,
and to permit Manager to perform its management responsibilities
and obligations hereunder, with reasonable reserves for
unanticipated contingencies and for short term business
fluctuations resulting from monthly variations from the Operating
Budget.
"Operating Expenses" shall mean actual expenses incurred
following the Commencement Date in operating the Riverboat,
including, but not limited to, the Management Fee, the Casino
Operating Expenses, employee compensation and entitlements,
including Manager's employees assigned to the Riverboat,
Operating Supplies, maintenance costs, fuel costs, utilities and
taxes.
"Operating Supplies" shall mean gaming supplies, paper
supplies, cleaning materials, marketing materials, maintenance
supplies, uniforms and all other materials used in the operation
of the Riverboat.
"Organizational Chart" shall be the Organizational Chart
attached hereto as Exhibit A, detailing the reporting lines of
<PAGE>
representatives of Owner and Manager in relation to the
operations of the Riverboat.
"Owner's Advances" is defined in Section 4.11.
"Pre-Opening Budget" shall mean the budget of anticipated
Pre-Opening Expenses.
"Pre-Opening Expenses" shall mean all costs and expenses
incurred by Owner and Owner's Affiliates and Manager and
Manager's Affiliates in implementing the Pre-Opening Plan,
including, but not limited to, Manager Pre-Opening Expenses, the
costs of recruitment and training for all employees of the
Riverboat, costs of licensing or other qualification of Casino
employees prior to the Commencement Date, the cost of pre-opening
sales, marketing, advertising, promotion and publicity, the cost
of obtaining all operating permits, and permits for employees,
and the fees and expenses of lawyers and other professionals and
consultants retained by Owner or Manager in connection therewith.
"Pre-Opening Plan" shall mean the plan and schedule for
implementing and performing the Pre-Opening Services.
"Pre-Opening Services" is defined in Section 3.07.
"Riverboat" shall mean the Vessel and all necessary
ancillary facilities to the Vessel, including, but not limited
to, barges, restaurants, entertainment facilities, docks, piers,
vehicular parking area, waiting areas, restaurants, restrooms,
administrative offices for, but not limited to, accounting,
purchasing, and management information services (including
offices for Manager's Management Team) and other areas utilized
in support of the operations of the Riverboat.
"Riverboat Authorities" shall mean the Missouri Gaming
Commission.
"Taking" is defined in Section 12.01.
"Taking Date" is defined in Section 12.01.
"Term" is defined in Section 2.02.
"Trustee" is defined in Section 13.01.
"Vessel" shall mean the riverboat cruise vessel constructed
by Owner for operation of the Casino on the Missouri River in
Lemay, Missouri.
<PAGE>
ARTICLE 2. APPOINTMENT/TERM/OPTION TO EXTEND TERM
Section 2.01 APPOINTMENT.
Owner hereby appoints and employs Manager to act as its
agent for the supervision and control of the management of the
Riverboat on Owner's behalf, upon the terms and conditions set
forth herein. Manager hereby accepts such appointment and
undertakes to manage the Riverboat upon the terms and conditions
hereinafter set forth.
Section 2.02 TERM.
This Agreement shall be effective upon execution ("Effective
Date"). The terms of this Agreement shall commence upon the
Effective Date and shall continue until the Manager or its
Affiliates no longer hold an equity position in the Owner or its
successor (hereinafter referred to as the "Term").
Section 2.03 OPENING THE CASINO.
The Commencement Date shall be a date established by Owner
upon giving written notice thereof to Manager and shall be a date
no earlier than ten (10) days after, and no later than fifteen
(15) days after, the satisfaction of all the following
conditions: (i) the project architect has issued to Owner a
certificate of substantial completion confirming that the
Riverboat has been substantially completed in accordance with the
plans and specifications, (ii) the project interior designer has
issued to Owner a certificate of substantial completion
confirming that the FF&E has been substantially installed in the
Riverboat in accordance with the FF&E specifications contained in
the plans and specifications, (iii) all operating permits for the
Riverboat and its operations (including, without limitation, a
certificate of occupancy or local equivalent, gaming, liquor and
restaurant licenses) have been obtained, (iv) the Operating
Capital and the Casino Bankroll for the Casino has been furnished
by Owner, (v) Manager shall have given written notice to Owner
that all operational systems have been tested on a "dry-run"
basis to the satisfaction of Manager and, to the extent required
by applicable law, the Riverboat Authorities, and (vi) all other
material state and federal governmental requirements necessary to
open, occupy and operate the Riverboat, have been satisfied.
Owner shall use its best efforts to assure that the conditions
set forth in clauses (i)-(iv) and (vi) are met on or before
October, 1996. Manager shall use its best efforts in the
performance of its duties under this Agreement to assist Owner in
achieving the satisfaction of all of the foregoing requirements.
<PAGE>
ARTICLE 3. OWNER AND MANAGER DEVELOPMENT OBLIGATIONS
DURING DEVELOPMENT TERM
Section 3.01 CONSTRUCTION OF RIVERBOAT/COMPLIANCE WITH LAW.
Owner, at its sole cost and expense, shall construct the
Riverboat and install the FF&E. The Riverboat and its systems
(including but not limited to plumbing, heating, air
conditioning, electrical, and life safety systems, if applicable)
shall comply with the Missouri Gaming Act, and all regulations
promulgated thereunder, all appropriate building, fire and zoning
codes, the Americans With Disability Act, maritime law, including
all regulations governing maritime vessels adopted by the United
States Coast Guard.
Section 3.02 ENGAGEMENT OF MANAGER AS CONSULTANT.
Owner engages Manager to be Owner's consultant in the
configuration, layout, interior design and construction of the
Casino. Additionally, Manager shall recommend to Owner and advise
Owner as to the suggested placement of all gaming equipment and
ancillary furnishings and the configuration of ancillary areas
within the Riverboat.
Section 3.03 PRELIMINARY PLANS AND SPECIFICATIONS.
Owner, at its sole and separate expense, shall prepare
preliminary design plans, working drawings, and specifications of
the Riverboat. Manager shall evaluate the preliminary design
plans, working drawings and assist Owner in designing the Casino.
Owner shall have the sole and exclusive right to manage, direct,
control, coordinate and prosecute the construction of the
Riverboat and the installation of the FF&E.
Section 3.04 PRE-OPENING COMMITTEE.
Owner and Manager shall form a Pre-Opening Committee which
shall consist of four persons, two persons appointed by Owner and
two persons appointed by Manager immediately upon execution of
this Agreement. Within three (3) weeks of the date hereof,
Manager shall prepare and submit to the Pre-Opening Committee,
the Pre-Opening Budget for the committee's approval. The Pre-
Opening Committee shall also prepare promptly the Pre-Opening
Plan detailing each party's responsibilities (including those set
forth in Section 3.07) and the time frame for the performance of
such responsibilities during the Development Term. Each party
agrees to use its best efforts to timely complete each task, in
accordance with the Pre-Opening Plan and the Pre-Opening Budget.
The Pre-Opening Committee shall submit progress reports to Owner
on a regular basis. Manager agrees not to exceed the Pre-Opening
Budget without the prior approval of Owner.
<PAGE>
Section 3.05 OBLIGATIONS DURING DEVELOPMENT TERM.
(a) Owner represents that it has commenced the construction
of the Riverboat, and agrees that it shall diligently complete
the construction of the Riverboat by approximately October, 1996.
(b) Owner and Manager shall file all applications necessary
to obtain all required permits and other approvals necessary to
operate the Riverboat, and the Casino located therein, as
contemplated by this Agreement.
Section 3.06 CONSTRUCTION.
The construction of the Riverboat shall be in accordance
with appropriate laws, regulations and ordinances of any kind and
nature.
Section 3.07 PRE-OPENING SERVICES BY MANAGER.
(a) Prior to the Commencement Date, Manager, as agent of
Owner, shall, among other things, perform or arrange for others
to perform the following services on behalf of and for the
account of Owner pursuant to the Pre-Opening Plan and Pre-Opening
Budget (the "Pre-Opening Services").
(b) Manager shall implement the marketing portion of the
approved Pre-Opening Plan, including, but not limited to, direct
sales, media and direct mail advertising, promotion, publicity
and public relations designed to attract customers to the
Riverboat from and after the Commencement Date.
(c) Manager shall recruit, hire, provide orientation to and
train all executive and general staff of the Riverboat, including
all personnel to be utilized during the period from the date
hereof until the Commencement Date in accordance with the Pre-
Opening Plan.
(d) Manager shall prepare and deliver to Owner a list of all
Operating Supplies necessary to operate the Casino and Owner
shall timely purchase the initial inventories for the Casino and
the Riverboat.
Section 3.08 PAYMENT OF PRE-OPENING EXPENSES.
The cost of the Pre-Opening Expenses shall be paid by Owner.
Pre-Opening Expenses and the time schedule for incurring such
expense shall be established in the Pre-Opening Budget and Pre-
Opening Plan. Owner shall deposit such sums to fund the Pre-
Opening Expenses in accordance with the schedules as shall be
established by the parties in the Pre-Opening Plan and Pre-
Opening Budget and
<PAGE>
Owner shall maintain sufficient funds therein to timely provide
for any and all Pre-Opening Expenses.
ARTICLE 4. OPERATIONS
Section 4.01 ACCOUNTING PROCEDURES AND SERVICES BOOKS AND
RECORDS.
Manager shall use its best efforts to cause Owner's
employees to maintain a complete accounting system in connection
with the operation of the Riverboat. The books and records shall
be kept in accordance with generally accepted accounting
principles consistently applied and in accordance with federal
tax laws. Such books and records shall be kept on a calendar year
basis. Books and accounts shall be maintained at the Riverboat.
Manager shall use its best efforts to cause Owner to comply with
all requirements with respect to internal controls in accounting
and Owner shall prepare and provide all required reports under
the rules and regulations of the Riverboat Authorities regarding
the operations of the Riverboat. The cost of preparing such
reports shall be an Operating Expense. All operating bank
accounts shall be maintained in the state of Missouri.
Section 4.02 OWNER'S ACCESS TO GAMING FINANCIAL RECORDS.
Owner, at its option and at its sole cost and expense, may
engage and appoint a representative to review, examine, and copy
the gaming books and records, including all daily reports,
prepared by Manager detailing the results of operations of
Manager's business conducted from the Riverboat during regular
business hours. Any representative's review, examination and
copying shall be conducted in such a manner so as to not be
disruptive to Manager's operations. Such representative shall at
all times be bound by Owner's confidentiality covenant contained
in Section 16.05 hereof.
Section 4.03 AUDITS.
Owner shall engage a certified public accountant to audit
the operations of the Riverboat as of and at the end of each
calendar year (or portion thereof) occurring after the date of
this Agreement (the "Audited Statements") by a nationally
recognized reputable accounting firm ("Regular Auditor"), and a
sufficient number of copies of the Audited Statements shall be
furnished to Owner and Manager as soon as available to permit
Owner and Manager to meet any public reporting requirements as
may be applicable to them, but in no event later than ninety (90)
days following the end of such fiscal period (such 90th day to be
the "Audit Day"). All costs and expenses incurred in connection
with the preparation of the Audited Statements shall be Operating
Expenses. Nothing herein contained shall prevent either party
from designating an additional
<PAGE>
reputable accounting firm ("Special Auditor") to conduct an
audit of the Riverboat as of the end of the calendar year during
regular business hours at the requesting party's expense;
provided, however, that if the additional audit shall reveal
a discrepancy within the control of Manager in the computation
of Gross Gaming Revenue of more than 5% from the audit
performed by the Regular Auditor, then the special audit shall
be paid for by Manager. In the event of any dispute between the
Regular Auditor and the Special Auditor as to any item subject
to audit, the Regular Auditor and the Special Auditor shall
select a third national, reputable accounting firm whose resolution
of such dispute shall bind the parties.
Section 4.04 MONTHLY FINANCIAL STATEMENTS.
On or before the thirtieth (30th) day of each month, Owner
shall prepare under the supervision of Manager an unaudited
operating statement for the preceding calendar month detailing
the Gross Revenue and expenses incurred in the operation of the
Riverboat (the "Monthly Financial Statements"). The Monthly
Financial Statements shall include a statement detailing drop
figure accounts on all Gross Gaming Revenue.
Section 4.05 EXPENSES.
All costs, expenses, funding or operating deficits and
Operating Capital, real property and personal property taxes,
insurance premiums and other liabilities incurred due to the
gaming and nongaming operations of the Riverboat shall be the
sole and exclusive financial responsibility of Owner, except for
those instances herein where it is expressly and specifically
stated that such costs and expenses shall be the responsibility
of Manager. It is understood that statements herein indicating
that Manager shall furnish, provide or otherwise supply, present
or contribute items or services hereunder shall not be
interpreted or construed to mean that Manager is liable or
responsible to fund or pay for such items or services, except in
those instances specifically mentioned herein.
Section 4.06 STANDARDS.
(a) Manager shall exclusively manage and maintain the
Riverboat in a manner reasonably consistent with other riverboat
gaming operators in the management of riverboat casinos of the
same or similar type, class and quality, located in Missouri
subject to such adjustments as Manager in its reasonable
discretion deems necessary to adjust to the Lemay, Missouri
riverboat gaming market. Manager shall establish such standards
and procedures in its reasonable business judgment, subject only
to standards and procedures required by law.
<PAGE>
(b) Owner hereby agrees that Manager shall have
uninterrupted control of and the exclusive responsibility for the
operation of the Riverboat during the Term of this Agreement.
Owner will not interfere or involve itself with the day-to-day
operation of the Riverboat, and Manager shall operate the
Riverboat free of eviction or disturbance by Owner or any third
party claiming by, through or under Owner. Manager agrees that it
will discharge its duties and responsibilities in the control and
operation of the Casino in good faith and for the purposes of
maximizing Gross Gaming Revenue; provided, however, that in no
event shall Owner make any claim against Manager on account of
any alleged errors of judgment made in good faith in connection
with the operation of the Riverboat. Manager agrees that,
notwithstanding the foregoing, it shall not alter the interior
and exterior design and architecture, including color schemes of
the Casino, nor make any structural engineering modifications
without the prior written consent of Owner.
(c) All persons employed in connection with the operations
of the Riverboat, including the Casino located therein, shall be
employees of Owner or a subsidiary of Owner, except for Manager's
Management Team. Manager shall determine the fitness and
qualifications of all Casino employees, whether Owner employees
or Manager's Management Team, subject only to Missouri riverboat
gaming licensing standards. Manager shall hire, supervise, direct
the work of, and discharge all personnel working in the
Riverboat. Manager shall determine the wages and conditions of
employment of all employees, all of which shall be comparable to
the existing standards therefor in Missouri for employees of
riverboat casinos. Manager and Owner shall consult, and if Owner
approves, Manager may hire at Owner's expense consultants or
independent contractors for surveillance, security and other
matters. All wages, bonuses, compensation and entitlements of
employees of the Riverboat and the Manager's Management Team
(although not employees of the Riverboat), shall be an expense of
Owner.
(d) Manager shall assign experienced gaming executives to
direct and supervise the management of the Riverboat (the
"Manager's Management Team"). Manager shall solely select
individuals who shall collectively represent Manager's Management
Team.
(e) Manager shall formulate, coordinate and implement
promotions and sales programs for casino operations on the
Riverboat and Owner shall cause the Riverboat to participate in
such sales and promotional campaigns and, as appropriate,
activities involving complimentary food and beverages to patrons
of the Riverboat in Manager's sole discretion in the exercise of
good management practice. All such promotion and sales programs
shall be an expense of Owner.
<PAGE>
Section 4.07 PLANS AND BUDGETS.
(a) Manager shall furnish Owner with the Operating Budget
within thirty (30) days of the Effective Date of this Agreement.
Manager shall use its best efforts to comply with the Operating
Budget to meet or exceed the goals set forth therein.
(b) Owner shall approve or disapprove the Operating Budget
within twenty (20) days of receipt of the budget, provided that
if Owner does not give written notice to Manager of its approval
or disapproval within such time period, the Operating Budget
shall be deemed approved. Owner's approval of the Operating
Budget cannot be unreasonably withheld or delayed. Owner may hire
a consultant to evaluate the Operating Budget. In the event that
Owner disagrees with any line item contained in the Operating
Budget, Owner shall discuss its disagreement with Manager.
Manager will, within ten (10) days of notice of Owner's
disagreement, offer constructive corrections to resolve Owner's
concerns. During any period that Owner disapproves of the
Operating Budget, Manager will continue to manage the Riverboat
in accordance with the Operating Budget for the preceding year
plus ten percent (10%), as the same may be adjusted for increases
year-to-year in the Consumer Price Index applicable to the St.
Louis area.
(c) The Operating Budget may be amended from time to time
with Owner's and Manager's approval, which approvals shall not be
unreasonably withheld or delayed, after submission by Manager or
Owner, as applicable, of the amendments to such budget and the
rationale for such amendments.
(d) Manager and Owner make no guaranty, warranty or
representation whatsoever in regard to either of the Operating
Budget, the same being intended as reasonable estimates only.
(e) Manager shall furnish Owner with the Initial Inventory
and the Initial Inventory Price on or before ____________, 1995.
Section 4.08 MANAGEMENT.
Manager shall have the discretion and authority to determine
operating policies and procedures, standards of operating,
staffing levels and organization, win payment arrangements,
standards of service and maintenance, food and beverage quality
and service, pricing, and other policies affecting the Riverboat,
or the operation thereof, to implement all such policies and
procedures, and to perform any act on behalf of Owner which
Manager deems necessary or desirable in its reasonable business
judgment for the operation and maintenance of the Riverboat on
behalf of, for the account of, and at the expense of Owner.
<PAGE>
Section 4.09 BANK ACCOUNTS.
Immediately upon giving written notice to Manager of the
Commencement Date, Owner shall have established bank accounts
that are necessary for the operation of the Riverboat, including
an account for the Casino Bankroll, and to effect the Pre-Opening
Plan at various banking institutions chosen by Owner and
reasonably acceptable to Manager (such accounts are hereinafter
collectively referred to as the "Bank Accounts"). The Bank
Accounts shall be in Owner's name. Checks drawn on the Bank
Accounts shall be signed only by representatives of Manager who
are covered by the fidelity insurance described in Section 10.01
and Manager may be the only signatures on checks drawn on the
Bank Accounts which do not exceed $50,000. Any checks exceeding
$50,000 shall be executed by a representative of Owner and a
representative of Manager. The Bank Accounts shall be interest
bearing accounts if such accounts are reasonably available and
all interest thereon shall be credited to the Bank Accounts. All
Gross Revenue shall be deposited in the Bank Accounts and Manager
shall use its best efforts to cause Owner to pay out of the Bank
Accounts, to the extent of the funds therein, from time to time,
all Operating Expenses and other amounts required by Manager to
perform its obligations under this Agreement. All funds in the
Bank Accounts shall be separate from any other funds of any of
Owner's Affiliates and Owner may not commingle any of Owner's
funds with the funds of any of Owner's Affiliates in the Bank
Accounts. Owner shall bear the risk of the insolvency of any
financial institutions holding such Bank Accounts.
Section 4.10 CREDIT.
If permitted by Missouri law, all decisions regarding the
granting and collection of credit shall be governed by the Credit
Policy to be developed by Manager and Owner. All credit
consistent with the Credit Policy shall be for the account of and
at the sole risk of Owner.
Section 4.11 OWNER'S ADVANCES.
Owner shall advance to Manager on a timely and prompt basis
immediately available funds to conduct the affairs of the
Riverboat and maintain the Riverboat (hereinafter referred to as
"Owner's Advances") as set forth in this Agreement and as
otherwise provided hereunder.
(a) Pre-Opening Budget. Owner shall timely deposit in the
Bank Accounts the amounts set forth in the Pre-Opening Plan and
Pre-Opening Budget or any revisions thereof approved by Owner. In
the event that Owner or Manager anticipates a delay in the
opening of the Riverboat beyond October, 1996, each shall be
obligated to immediately notify the other in writing and Owner
<PAGE>
shall, at the request of Manager, at any time and from time to
time, deposit any additional amounts that are reasonably
necessary to pay the additional pre-opening expenses attributable
to the delay, which shall include, without limitation, wages and
other expenses relating to the Riverboat personnel already
employed.
(b) Initial Cash Needs. Two (2) weeks prior to the
Commencement Date, Owner shall fund the Operating Capital
necessary to commence operating the Riverboat, in an amount not
to exceed the estimated operating expenses for eight (8) weeks,
as set forth in the Operating Budget, and an amount equal to the
Casino Bankroll.
(c) Operating Capital. During the Term of this Agreement,
within five (5) Business Days after receipt of written notice
from Manager, Owner shall fund Owner's Advances in such a fashion
so as to adequately insure that the Operating Capital set forth
in the Operating Budget as revised is sufficient to support the
uninterrupted and efficient ongoing operation of the Riverboat.
The written request for any additional Operating Capital shall be
submitted by Manager to Owner on a monthly basis based on the
interim statements and the Operating Budget as revised.
(d) Payment of Expenses. Owner shall pay from the Gross
Revenue the following items in the order of priority listed
below, subject to the laws of the state of Missouri, on or before
their applicable due date: (i) Operating Expenses (including
taxes and Management Fee), (ii) emergency expenditures to correct
a condition of an emergency nature, including structural repairs,
which require immediate repairs to preserve and protect the
Riverboat, (iii) required payments to the state of Missouri, and
(iv) principal, interest and other payments due the holder of any
Institutional Mortgage. In the event that funds are not available
for payment of the Operating Expenses in their entirety all state
and local taxes shall be paid first from the available funds.
Failure to pay the Management Fee in accordance with the time
periods set forth in this Agreement shall constitute a default of
this Agreement.
Section 4.12 SPECIAL EVENTS.
Owner shall have the right from time to time to use a
portion of the Riverboat to host special events (each, a "Special
Event") provided (i) Owner gives Manager at least two (2) weeks
prior written notice of the Special Event and (ii) the Special
Event does not unreasonably interfere with the efficient
operation of the Riverboat. Manager shall have the right to make
revisions to the Operating Budget to reflect the impact of such
events, subject to Owner's approval.
<PAGE>
Section 4.13 COOPERATION OF OWNER AND MANAGER.
Owner and Manager shall cooperate fully with each other
during the Term of this Agreement to facilitate the performance
by Manager of Manager's obligations and responsibilities set
forth in this Agreement and to procure and maintain all
construction and operating permits. Owner shall provide Manager
with such information pertaining to the Riverboat necessary to
the performance by Manager of its obligations hereunder as may be
reasonably and specifically requested by Manager from time to
time.
Section 4.14 FINANCING MATTERS.
(a) If Owner, or any Affiliate of Owner shall, at any time,
sell or offer to sell any securities issued by Owner or any
Affiliate of Owner through the medium of any prospectus or
otherwise and which relates to the Riverboat or its operation, it
shall do so only in compliance with all applicable laws, and
shall clearly disclose to all purchasers and offerees that,
except to the extent of Manager or its Affiliates' interest in
Owner, (i) neither Manager nor any of its Affiliates, officers,
directors, agents or employees shall in any way be deemed to be
an issuer or underwriter of such securities, and (ii) Manager and
its Affiliates, officers, directors, agents and employees have
not assumed and shall not have any liability arising out of or
related to the sale or offer of such securities, including
without limitation, any liability or responsibility for any
financial statements, projections or other information contained
in any prospectus or similar written or oral communication.
Manager shall have the right to approve any description of
Manager or its Affiliates, or any description of this Agreement
or of Owner's relationship with Manager hereunder, which may be
contained in any prospectus or other communications, and Owner
agrees to furnish copies of all such materials to Manager for
such purposes not less than twenty (20) days prior to the
delivery thereof to any prospective purchaser or offeree. Owner
agrees to indemnify, defend or hold Manager and its Affiliates,
officers, directors, agents and employees, free and harmless from
any and all liabilities, costs, damages, claims or expenses
arising out of or related to the breach of Owner's obligations
under this Section 4.14. Manager agrees to reasonably cooperate
with Owner in the preparation of such agreements and offerings.
(b) Notwithstanding the above restrictions, subject to
Manager's right of review set forth in Section 4.14, Owner may
represent that the Riverboat shall be managed by Manager and
Manager may represent that it manages the Riverboat and both may
describe the terms of this Agreement and the physical
characteristics of the Riverboat in regulatory filings and public
or private offerings. Moreover, nothing in this Section shall
preclude the disclosure of (i) already public information, or
(ii) audited or unaudited financial statements from the Riverboat
<PAGE>
required by the terms of this Agreement or (iii) any information
or documents required to be disclosed to or filed with the
Governmental Authorities, or (iv) the amount of the Management
Fees earned in any period. Both parties shall use their best
efforts to consult with the other concerning disclosures as to
the Riverboat. Owner and Manager shall cooperate with each other
in providing financial information concerning the Riverboat and
Manager that may be required by any lender or required by any
Governmental Authority.
(c) In the event that the holder of any Institutional
Mortgage requires the collateral assignment of this Agreement as
further security for its loan, Manager shall consent to such
assignment; provided, however, that such collateral assignment
shall contain non-disturbance provisions satisfactory to Manager
and provided further that in no event shall Manager be required
to accept any reduction or subordination of its Management Fee
and Incentive Management Fee or to diminish any right which it
may have under this Agreement.
Section 4.15 CONFLICT OF INTEREST/NON-COMPETITION.
Owner acknowledges that Manager and/or its Affiliates
operate other casinos in Missouri and throughout the world and
may in the future operate additional casinos in different areas
of the world, and that marketing efforts may cross over in the
same markets and with respect to the same potential customer
base. Manager, in the course of managing the Casino, may refer
customers of the Riverboat and other parties to other facilities
operated by Affiliates of Manager to utilize gaming,
entertainment and other amenities, without payment of any fees to
Owner. Owner consents to such activities and agrees that such
activities will not constitute a conflict of interest. Owner
acknowledges and agrees that Manager may distribute promotional
materials for Manager's Affiliates and facilities, including
casinos, at the Riverboat. Either Manager or Owner and/or their
Affiliates in the future may acquire an interest or operate other
casinos, including, without limitation, any similar or
competitive riverboat operation in Missouri, so long as such
casino is not within the boundaries as shown on the map attached
hereto as Exhibit "A".
ARTICLE 5. MANAGEMENT FEE
Section 5.01 PAYMENTS TO MANAGER.
The Management Fee shall be paid monthly. Manager shall
deposit the Management Fee into the Management Fee Account for
any calendar month in which the Riverboat conducts gaming
operations by the twentieth (20th) day of the following month.
The Management Fee shall be deemed paid upon deposit in the
Management Fee Account.
<PAGE>
ARTICLE 6. MANAGER'S RIGHT OF FIRST
REFUSAL TO MANAGE RIVERBOAT
In the event that Owner transfers the Riverboat to conduct a
gaming business in a new location or locations other than on the
Casino Site, Owner hereby grants to Manager a right of first
refusal to manage the gaming operations of the Riverboat at such
new location. Should Owner determine to so relocate the
Riverboat, Owner shall immediately submit to Manager in writing
the terms of the management agreement acceptable to Owner. Owner
covenants and agrees that the terms for the management agreement
for such relocated Riverboat shall be substantially similar to
the terms hereof, with such changes as are necessary to reflect
the appropriate laws and regulations governing gaming operations
at such new location. The offer or terms submitted hereby shall
be accompanied by a written notice giving Manager a first right
to manage the relocated Riverboat within the time provided in
such offer, but in no event less than thirty (30) days of the
date upon which Manager receives from Owner notification of such
terms. If Manager elects to exercise its right of first refusal,
Manager shall give Owner written notice thereof within thirty
(30) days of receipt of the notification from Owner and Manager
and Owner shall prepare and execute a management agreement for
such relocated Riverboat within sixty (60) days following Owner's
receipt of acceptance by Manager.
ARTICLE 7. TAXES AND ASSESSMENTS, AND PAYMENTS
TO THE RIVERBOAT AUTHORITIES
Section 7.01 PAYMENT OF TAXES AND ASSESSMENTS.
Owner shall be responsible for the payment when due, if any,
of all taxes and assessments, including, without limitation,
property taxes, assessments for benefits from public works or
improvements, levies, fees, Gaming Taxes, and all other
governmental charges, general or special, ordinary or
extraordinary, foreseen or unforeseen, together with interest and
penalties thereon, which may heretofore or hereafter be levied
upon or assessed against the Riverboat. All charges set forth in
this Section 7.01 are herein called "Impositions." If any
Impositions are levied or assessed against the Riverboat which
may be legally paid in installments, Owner shall have the option
to pay such Impositions in installments except that each
installment thereof, and any interest thereon, must be paid by
the final date fixed for the payment thereof. In the event of the
enactment, adoption or enforcement by any Governmental
Authorities or Riverboat Authorities of any assessment, levy, fee
or tax, whether sales, use or otherwise, on or in respect of the
Management Fee and charges set forth herein, Owner shall pay such
assessment, levy, fee or tax.
<PAGE>
Section 7.02 EXCEPTIONS.
Nothing contained in this Agreement shall be construed to
require Owner to pay any estate, inheritance or succession tax,
corporate franchise tax or any net income or excess profits tax
of Manager.
ARTICLE 8. USE AND OCCUPANCY OF THE CASINO
Section 8.01 USES.
Manager agrees to manage the Riverboat continuously during
the Term hereof only for the purpose of legally operating a
gaming casino establishment and related ancillary services.
Manager and Owner shall not use or allow the Riverboat or any
part thereof to be used or occupied for any unlawful purpose or
for any dangerous or other trade or business not customarily
deemed acceptable to relevant casinos. In no event may Manager or
Owner conduct ancillary uses which violate the Missouri Gaming
Act. In addition, Manager shall not knowingly permit any unlawful
occupation, business or trade to be conducted on the Riverboat or
any use to be made of the Casino contrary to any law, ordinance
or regulation as aforesaid with respect thereto.
Section 8.02 NAME.
Manager or its Affiliates (excluding Owner) are the owners
of the trademark "Showboat," its logos, trademarks, tradenames,
service marks, and any variation or extension of such name
(collectively "Trademark"). Manager shall operate the Riverboat
under the Trademark, and shall grant to Owner a non-exclusive
personal and non-transferable right to use the Trademark in
Lemay, Missouri in connection with the operation of the
Riverboat, pursuant to a trademark license agreement satisfactory
to Manager or its Affiliates. Notwithstanding the foregoing,
Owner acknowledges that its use of the Trademark shall not create
in Owner's favor any right, title, or interest in or to the
Trademark, but all rights of ownership and control of the
Trademark shall reside solely in Manager or its Affiliates.
ARTICLE 9. MAINTENANCE AND REPAIRS
Section 9.01 OWNER'S MAINTENANCE AND REPAIRS.
Owner, at its cost, shall maintain, in good condition and
repair, the following:
(a) The structural parts of the Riverboat;
(b) The electrical, plumbing, and sewage systems of the
Riverboat;
<PAGE>
(c) Heating, ventilating, and air conditioning systems
servicing the Riverboat.
Owner shall have ten (10) days after notice pursuant to
Article 22 from Manager to commence to perform its obligations
under Section 9.01, except that (i) Owner shall perform its
obligations immediately upon receipt of oral notice from Manager
if the nature of the problem presents a hazard or emergency; or
(ii) Owner shall perform and complete its obligations within
twelve (12) hours after receipt of written or oral notice from
Manager if the nature of the problem interferes with gaming
operations in the Casino. If Owner does not perform its
obligations within the time limitations in this Section, Manager
may perform the obligations of Owner and have the right to be
reimbursed for the sum it actually expends in the performance of
Owner's obligations. Any amounts paid by Manager shall be due
from Owner on the first (lst) day of the month occurring after
any such payment, with interest at the rate of twelve percent
(12%) per annum from the date of payment thereof by Manager until
repayment thereof by Owner.
ARTICLE 10. INSURANCE AND INDEMNITY
Section 10.01 OWNER INSURANCE OBLIGATIONS.
Owner covenants and agrees that it will at all times stated
herein, at its sole cost and expense, of this Agreement, keep the
Riverboat insured, with:
(a) appropriate marine hull insurance coverage forms to
provide coverage for all risks as is traditionally covered by
such insurance. The marine hull insurance shall contain full
repair and replacement coverage and against all risks as now are
or hereafter may be available by extended coverage form or
endorsements in an amount not less than one hundred percent
(100%) of the full insurable replacement value of the Vessel.
Owner shall obtain such marine hull insurance coverage at the
time that it obtains possession of the Vessel, and Owner shall
maintain such insurance thereafter until the termination of this
Agreement.
(b) full repair and replacement coverage endorsements,
against all risks including, but not limited to, ice, floods and
earthquakes, and against loss or damage by such other, further
and additional risks as now are or hereafter may be available by
standard extended coverage forms or endorsements in an amount
sufficient to prevent Manager or Owner from becoming a co-insurer
of any loss, but in no event in an amount less than one hundred
percent (100%) of the full insurable replacement value of the
Riverboat. So long as Owner is not in default under this
Agreement, all proceeds of insurance not otherwise applied for
the purpose of repairing, replacing or restoring the damage
insured against or applied to an Institutional Mortgage shall be
paid over to Owner.
<PAGE>
Owner shall obtain such insurance coverage at the time that it
obtains possession of the Riverboat (exclusive of the Vessel),
and Owner shall maintain such insurance thereafter until the
termination of this Agreement.
(c) general comprehensive public liability insurance
including Broad Form Liability coverage (including coverage for
false arrest, wrongful detention and invasion of privacy, and
coverage for elevators, if any, on the Riverboat) against claims
for bodily injury, death or property damage occurring on, in or
about the Riverboat, the ancillary facilities and the adjoining
streets, sidewalks and passageways, such insurance to afford
protection, with respect to any one occurrence, of not less than
$1,000,000 and no less than $5,000,000 in the aggregate or such
higher amount as Owner and Manager may from time to time
reasonably agree to be maintained, which insurance shall also
cover Owner's liability under any indemnity contained herein, it
being understood that the standard of reasonableness shall be
that amount of insurance which a prudent owner of a comparable
property would maintain. Owner shall also obtain and maintain a
$40,000,000 umbrella liability policy in excess of the general
comprehensive public liability policy. Owner shall obtain such
general comprehensive public liability insurance at the time that
Owner employs its first employee, and Owner shall maintain such
insurance until the termination of this Agreement.
(d) adequate boiler and pressure vessel insurance on all
equipment, parts thereof and appurtenances attached or connected
to the Riverboat which by reason of their use or existence are
capable of bursting, erupting, collapsing or exploding. Owner
shall obtain such insurance at the time that it obtains
possession of the Vessel, and Owner shall maintain such insurance
thereafter until the termination of this Agreement.
(e) war-risk insurance as and when such insurance is
obtainable from the United States Government or any agency or
instrumentality thereof, and a state of war or national or public
emergency exists or threatens, in an amount not less than the 90%
of the replacement value of the Riverboat.
(f) such other insurance as Owner and Manager may from time
to time reasonably agree to be maintained or as may be required
by lenders of Owner in such amounts and against such insurable
hazards which at the time is customary in the case of businesses
similarly situated.
(g) for the mutual benefit of Owner and Manager, maintain
liquor liability insurance in an amount to be determined by
Owner, covering Manager and Owner under any liquor liability laws
which may currently be in existence or which may hereafter be
enacted as they would be applicable to Manager's operations of
the Riverboat.
<PAGE>
Owner shall obtain such insurance on or before the Commencement Date,
and Owner shall maintain such insurance until the termination of the
Agreement.
(h) all required workmen's compensation insurance or
equivalent Missouri industrial accident coverage, or coverages
required by the federal maritime act (a\k\a Jones Act). Owner
shall obtain such insurance at the time that Owner employs its
first employee, and Owner shall maintain such insurance until the
termination of this Agreement.
(i) business interruption resulting from losses covered
under policies covering land-based buildings and marine water
borne hull will be required in an amount sufficient to protect
losses for a period of six (6) months. Owner shall obtain such
insurance on or before the Commencement Date, and Owner shall
maintain such insurance until the termination of this Agreement.
(j) crime insurance which includes fidelity and such other
crime coverages as may be desired in the amount of $5,000,000.
Owner shall obtain such insurance at the time that Owner employs
its first employee, and Owner shall maintain such insurance until
the termination of this Agreement.
Section 10.02 PARTIES INSURED.
The policies with respect to such insurance as described in
Section 10.01 shall name Owner and Manager as parties insured
thereby and such policies shall require all insurance proceeds
except for liability and third party insurance to be paid to a
Trustee as designated pursuant to Article 13. Such policies shall
also contain, when requested by Owner or Manager, a mortgagee
clause or clauses naming the mortgagee or mortgagees involved
and/or the holder or such mortgage or mortgages as parties
insured thereby (in the form required by such mortgagee or
mortgagees) all as their respective interests may appear and with
loss payable provisions accordingly.
Section 10.03 APPROVED INSURANCE COMPANIES.
Insurance procured under this Article 10 shall be placed
with reputable, financially sound insurance companies, with a
Best guide rating of A-10 admitted in the state of Missouri,
acceptable to Owner and Manager, as the parties may mutually
agree.
Section 10.04 APPROVAL OF INSURANCE COVERAGE.
Each year, Owner shall submit to Manager a summary of the
insurance coverage maintained by Owner (including deductibles)
with respect to the Riverboat and Manager shall have thirty (30)
days thereafter to give its comments thereon to Owner. If Owner
receives
<PAGE>
no written comments from Manager within said period, the insurance
program shall be deemed approved for that year.
Section 10.05 FAILURE TO OBTAIN REQUIRED INSURANCE.
In the event Owner shall at any time fail, neglect, or
refuse to maintain any of the insurance required under the
provisions of this Article 10, then Manager may procure or renew
such insurance, and any amounts paid therefor by Manager shall be
due from Owner on the first day of the month occurring after any
such payment, with interest at the rate of twelve percent (12%)
per annum from the date of payment thereof by Manager until
repayment thereof to Manager by Owner.
Section 10.06 WAIVER OF SUBROGATION.
As long as the insurer of a party is willing to include a
waiver of subrogation in the policies insuring against the loss
or damages referred to in this Article 10 without an extra
charge, the parties shall cause the waiver of subrogation to be
included in the policies. If an insurer of a party is willing to
include a waiver of subrogation in an insurance policy only if an
extra charge is paid, the party carrying the insurance shall be
required to cause the waiver of subrogation to be included in the
policy only if the other party pays the extra charge.
Section 10.07 MUTUAL COOPERATION.
Owner shall cooperate with Manager to the extent Manager may
reasonably require, and Manager shall cooperate with Owner to the
extent Owner may reasonably require in connection with the
prosecution or defense of any action or proceeding arising out
of, or for the collection of any insurance proceeds and will
execute and deliver to Owner or Manager, as the case may be, such
instruments as may be properly required to facilitate the
recovery of any insurance proceeds (including the endorsement by
Owner or Manager over to the Trustee of all checks evidencing
said insurance proceeds).
Section 10.08 DELIVERY OF INSURANCE POLICIES.
Owner shall deliver, as applicable, promptly after the
execution and delivery of this Agreement the original or
duplicate policies or certificates of insurers satisfactory to
Manager evidencing all the insurance which is then required to be
maintained by Owner hereunder. Owner shall, within thirty (30)
days prior to the expiration of any such insurance, deliver to
Manager original or duplicate policies or other certificates of
the insurers evidencing the renewal of such insurance.
<PAGE>
Section 10.09 INDEMNIFICATION BY MANAGER.
Manager covenants and agrees that it will protect, keep and
defend Owner forever harmless and indemnified against and from
any penalty or damage or charges imposed for any violation of any
laws or ordinances including, but not limited to, gaming statutes
and regulations, whether occasioned by the neglect of Manager or
those holding under Manager, and that Manager will at all times
protect, indemnify and save and keep Owner harmless against and
from any and all claims and against and from any and all loss,
cost, damage or expense, including reasonable attorneys' fees,
arising out of any failure of Manager in any respect to comply
with and perform all the requirements and provisions hereof
except where any penalty, damage, charges, loss, cost or expense
is caused by the sole or negligent or the wanton or willful acts
of Owner's directors, officers, employees, agents or
stockholders. Without limiting the generality of the foregoing
and with the inclusion of the same exceptions as set forth above,
Manager covenants and agrees that it will protect, keep and
defend Owner forever harmless and indemnified against any and all
debt, claim, demand, suit or obligation of every kind, character
and description which may be asserted, claimed, filed or brought
against Owner where such claim arises out of or is asserted in
connection with Manager's management of the Casino, including any
claim by any subtenant, guest, licensee or invitee of Manager.
This indemnity does not apply to loss or damage occasioned by
defects in the Riverboat.
Section 10.10 INDEMNIFICATION BY OWNER.
Owner covenants and agrees that it will protect, keep and
defend Manager forever harmless and indemnified against and from
any penalty or damage or charges imposed for any violation of any
laws or ordinances including, but not limited to, gaming statutes
and regulations, whether occasioned by the neglect of Owner or
those holding under Owner, and that Owner will at all times
protect, indemnify, defend and save and keep harmless Manager
against and from any and all claims and against and from any and
all loss, cost, damage or expense, including reasonable
attorneys' fees, arising out of any failure of Owner in any
respect to comply with and perform all the requirements and
provisions hereof except where any penalty, damage, charges,
loss, cost or expense is caused by the negligent or the wanton or
willful acts of Manager's officers, agents, employees or
stockholders. Without limiting the generality of the foregoing,
and with the inclusion of the same exceptions as set forth above,
Owner covenants and agrees it will protect, keep and defend
Manager forever harmless and indemnified against any and all
debt, claim, demand, suit or obligation of every kind, character
and description which may be asserted, claimed, filed or brought
against Manager where such claim arises out of or is asserted in
connection with Owner's ownership of the
<PAGE>
Riverboat. This indemnity does not apply to loss or damage occasioned
by defects in the Riverboat.
Section 10.11 SELECTION OF COUNSEL/CONDUCT OF LITIGATION.
Defense counsel engaged by Manager or Owner, as indemnitor,
shall be reasonably acceptable to Manager and Owner, as
indemnitee. Without limiting the generality of the foregoing,
indemnitee shall be promptly provided with copies of all claims
and pleadings (as well as correspondence, memos, documents and
discovery with respect thereto, unless within the scope of any
applicable privilege) relating to any such matters. Indemnitee
shall be given prior written notice of all meetings, conferences
and judicial proceedings and shall be afforded an opportunity to
attend and participate in same. Indemnitee shall have the right
to engage independent counsel, at its sole expense, to represent
indemnitee as additional and/or co-counsel in all such
proceedings, trials, appeals and meetings with respect thereto.
ARTICLE 11. CASUALTY
In case of any damage or loss to the Riverboat by reason of
fire or otherwise, Manager shall give immediate notice thereof to
Owner. If the Riverboat shall at any time be damaged or destroyed
by fire or otherwise, Owner shall at its sole option either (i)
promptly repair or rebuild same at Owner's expense, so as to make
the Riverboat at least equal in value to the Riverboat existing
immediately prior to such occurrence and as nearly similar to it
in quality and character as shall be practicable and reasonable
or (ii) if dockside gaming is permitted under the laws of the
state of Missouri, promptly construct a barge in compliance with
all regulations of the Riverboat Authorities. Owner shall submit
for Manager's approval, which approval Manager shall not
unreasonably withhold or delay, complete detailed plans and
specifications for such rebuilding or construction. Promptly
after receiving Manager's approval of said plans and
specifications, Owner shall begin such repairs and rebuilding and
shall prosecute the same to completion with diligence, subject,
however, to strikes, lockouts, acts of God, embargoes,
governmental restrictions, and other foreseeable causes beyond
the reasonable control of Owner. Insofar as a certificate of
occupancy may be necessary with respect to such repairs or
construction, Owner shall obtain a temporary or final certificate
of occupancy or similar certificate before the Riverboat shall be
occupied by Manager. Such repairs, rebuilding or construction
shall be completed free and clear of mechanics' or other liens,
in accordance with the building code and all applicable laws,
ordinances, regulations or orders of any state, municipal or
other public authority affecting the same.
<PAGE>
ARTICLE 12. TAKING OF THE RIVERBOAT
Section 12.01 DEFINITIONS.
(a) "Permanent Taking" means the permanent taking (more than
one year) of, or permanent damage to, property as a result of the
exercise of a power of eminent domain or purchase under the
threat of the exercise.
(b) "Temporary Taking" means the temporary taking (one year
or less) of, or temporary damage to, property as a result of the
exercise of a power of eminent domain or purchase under the
threat of the exercise.
(c) "Taking Date" means the date on which a condemning
authority shall have the right of possession of property pursuant
to a Permanent Taking or a Temporary Taking.
(d) "Award" means the award for, or proceeds of, a taking
less all fees and expenses incurred in connection with collecting
the award or proceeds including the reasonable fees and
disbursements of attorneys, appraisers, and expert witnesses.
Section 12.02 ENTIRE TAKING OF THE SUPPORT AREAS.
The following shall apply if all or a part of the Riverboat
are taken pursuant to a Permanent Taking or a Temporary Taking:
(a) Owner shall be entitled to any Award.
(b) If all of the Riverboat is taken pursuant to a Permanent
Taking, this Agreement shall be terminated as of the Taking Date.
(c) If all or such portion of the Riverboat is taken
pursuant to a Permanent Taking which renders it uneconomic to
continue operation of the Riverboat in Manager's reasonable
judgment, Manager shall have the option to terminate this
Agreement by giving Owner notice of termination within ten (10)
days after Owner gives Manager notice of the Permanent Taking.
This Agreement will terminate five (5) days after Manager
delivers its written termination notice to Owner.
(d) If all or a part of the Riverboat is taken pursuant to a
Temporary Taking, Manager shall have the option to terminate this
Agreement by giving Owner notice of termination within ten (10)
days after Owner gives Manager notice of the Temporary Taking.
This Agreement will terminate five (5) days after Manager
delivers its written termination notice to Owner.
<PAGE>
Section 12.03 DUTY TO RESTORE.
If part of the Riverboat is taken pursuant to a Permanent
Taking and this Agreement is not terminated, then Owner shall
restore the Riverboat to an architectural unit as near as
possible to its function and condition immediately prior to the
Permanent Taking. The restoration shall begin promptly after the
Taking Date and shall be prosecuted diligently. If a party shall
have an option to terminate with respect to the Permanent Taking,
then Owner may delay the beginning of the restoration until the
option is waived or until the time within which the option may be
exercised expires.
ARTICLE 13. DISPOSITION OF INSURANCE PROCEEDS AND AWARDS
Section 13.01 TRUSTEE.
If the Riverboat is encumbered by an Institutional Mortgage,
the "Trustee" shall be the Institutional Mortgagee or a national
bank designated by such mortgagee. If the Riverboat is not
encumbered by an Mortgage, the "Trustee" shall be a commercial
bank which maintains an office in the greater St. Louis
metropolitan area and the total assets of which exceed $1
billion, and the Trustee shall be selected by Owner subject to
the reasonable approval of Manager. An "Institutional Mortgage"
is a Mortgage granted to an Institution. An "Institution" is a
bank, insurance company, trust company, savings and loan
association, real estate investment trust, pension trust,
governmental entity or similar institution. An "Institutional
Mortgagee" is the holder of Mortgage of Owner's interest in the
Riverboat.
Section 13.02 DEPOSITS OF INSURANCE PROCEEDS AND AWARDS.
In the event this Agreement is not terminated all insurance
proceeds and Awards shall be paid to the Trustee. If this
Agreement is terminated, all Insurance Proceeds and Awards shall
be paid to Owner and Manager as their interests may apply. All
funds paid to the Trustee shall be held by the Trustee, and the
Trustee shall disburse them solely in accordance with this
Article.
Section 13.03 PROCEDURE FOR DISTRIBUTION OF INSURANCE PROCEEDS
AND AWARDS.
The following shall apply unless this Agreement is
terminated and the termination is not nullified.
(a) The Trustee shall make payments to Owner or Manager, as
appropriate, out of the insurance proceeds or Awards to be
applied to the cost of repair or restoration. The payments shall
be made as the repair or restoration progresses.
<PAGE>
(b) The Trustee shall comply with the following requirements
which shall be contained in escrow instructions, if required by
the Trustee, with respect to the payments:
(i) The Trustee shall not make payments more frequently
than once each month.
(ii) Until the repair or restoration is complete, the
Trustee shall make no payment unless the sum of the payment
requested and all previous payments shall be less than ninety
percent (90%) of the cost of the repair or restoration to date.
(iii) The Trustee shall make no payment unless the
balance of the insurance proceeds or Awards shall be at least
sufficient to complete the repair or restoration.
(iv) The Trustee shall make no payment unless it
receives a certificate of Owner or Manager, as appropriate, and a
certificate of Owner's or Manager's architect or engineer, as
appropriate, in accordance with part (c) of this subsection.
(v) The Trustee shall receive, prior to any payment, a
certificate from the Title Insurance Company stating that there
are no liens filed of record.
(c) The certificate of Owner or Manager shall be certified
as true and correct by an officer of Owner or Manager and shall
set forth the following information:
(i) The estimated cost of the repair or restoration.
(ii) The nature of the work to be done and the
materials furnished which form the basis for the requested
payments.
(iii) That the requested payment does not exceed the
reasonable cost of the work and materials.
(iv) That none of the work or materials has been made
the basis for any previous payment.
(v) That, insofar as the work has been completed, the
work complies with the requirements of this Agreement, applicable
legal requirements, and insurance requirements.
(vi) That all contractors, laborers, suppliers and
subcontractors that have performed work shall have been paid any
amount then payable to them.
(d) The architect's or engineer's certificates shall be
certified by an architect or engineer familiar with the work. The
certificate shall be certified as true and correct to the best of
<PAGE>
the knowledge, information and belief of the architect or
engineer and shall be based upon periodic on-site inspections of,
and testing by, the architect or engineer. The architect or
engineer selected by one party shall be reasonably satisfactory
to the other party. The architect or engineer shall certify that,
in the opinion of the architect or engineer, the Trustee shall
have complied with the requirements of clauses (ii) and (iii) of
part (b) of this subsection; shall verify that the statements set
forth in clauses (iii), (iv) and (v) of part (c) of this
subsection are true; and shall set forth the information required
by clauses (i) and (ii) of part (c) of this subsection.
(e) Any balance of insurance proceeds or Awards after the
cost of any repair or restoration shall have been paid in full
shall be paid to Owner or Manager, as their interests appear, and
shall be the sole property of such party.
ARTICLE 14. ASSIGNMENT AND SUBLETTING
Except as provided in Section 4.14(c), neither Owner or
Manager shall assign this Agreement or any interest therein
without the prior written consent of the other party, which
consent shall not be unreasonably withheld. However, Manager may
assign or transfer this Agreement to any Affiliate, provided,
that a counterpart original of such assignment is delivered to
Owner on or before the effective date of such assignment, and
provided further that such Affiliate expressly assumes and agrees
to be bound by all of the terms and conditions of this Agreement.
ARTICLE 15. AFFIRMATIVE COVENANTS OF MANAGER
Manager hereby covenants and agrees that so long as this
Agreement remains in effect:
Section 15.01 CORPORATE STATUS.
Manager shall preserve and maintain its corporate rights,
franchises and privileges in Nevada and Missouri.
Section 15.02 COMPLIANCE WITH LAWS.
Manager shall comply in all material respects with all
applicable laws, rules, regulations and orders of all states,
counties, and municipalities in which such party conducts
business related to the Riverboat, including, without limitation,
any laws, rules, regulations, orders and requests for information
of the Riverboat Authorities, the Nevada Gaming Authorities, the
New Jersey Casino Control Commission, the Louisiana Gaming
Division of State Police, and the New South Wales Casino Control
Authority. Manager shall also follow applicable federal laws,
rules, and regulations.
<PAGE>
Section 15.03 GAMING APPROVALS.
Manager shall use its best efforts to obtain the approval of
the Nevada Gaming Authorities, the New Jersey Casino Control
Commission, the Louisiana Gaming Division of the State Police,
and the New South Wales Casino Control Authority to permit it to
conduct gaming operations in the state of Missouri and shall use
its best efforts to secure and maintain such approvals necessary
for the conduct of gaming operations at the Casino.
Section 15.04 CONFIDENTIAL INFORMATION.
Manager agrees for itself and its Affiliates, agents,
representatives and consultants to hold in the strictest
confidence and not to disclose to any person, entity, party, firm
or corporation (other than agents or representatives of Manager
who are also bound by this section) without the prior express
written consent of Owner (except as such disclosures are required
in applications or by applicable securities or gaming laws) any
of Owner's confidential data, whether related to the Riverboat or
to general business matters, which shall come into their
possession or knowledge. In addition, Manager agrees that it
shall cause all documents, drawings, plans or other materials
developed by Owner in connection with the Riverboat to be
returned to the Owner in the event of termination of this
Agreement and that Manager shall not make use of such information
in connection with the Riverboat or any other undertaking by
Manager without the prior express written consent of Owner.
Section 15.05 GAMING APPLICATIONS.
Manager agrees to use its best efforts to expeditiously
prepare and file all gaming license applications necessary for it
to perform its obligations under this Agreement.
ARTICLE 16. AFFIRMATIVE COVENANTS OF OWNER
Owner hereby covenants and agrees that so long as this
Agreement remains in effect:
Section 16.01 CORPORATE STATUS.
Owner shall preserve and maintain its corporate rights,
franchises and privileges in Missouri, including without
limitation its right to own a gaming establishment.
Section 16.02 MAINTENANCE OF INSURANCE.
Owner shall, in accordance with the provisions of Article 10
of this Agreement, maintain insurance with responsible and
reputable insurance companies or associations in such amounts and
<PAGE>
covering such risks as are usually carried by companies engaged
in similar business and owning similar properties in the same
general area in which Owner operates, and which may be necessary
to satisfy the requirements of Owner's lenders, as well as the
mutual approvals and agreements of the parties hereto as is
specified in Article 10 hereof.
Section 16.03 COMPLIANCE WITH LAWS.
Owner shall comply in all material respects with all
applicable laws, rules, regulations and orders of all states,
counties, and municipalities in which such party conducts
business related to the Riverboat, including, without limitation,
any laws, rules, regulations, orders and requests for information
of the Riverboat Authorities, the Nevada Gaming Authorities, the
New Jersey Casino Control Commission, the Louisiana Gaming
Division of the State Police and the New South Wales Casino
Control Authority. Owner shall also follow applicable federal
laws, rules, and regulations. In connection with this Agreement,
Owner acknowledges that certain casino gaming licenses are
currently issued to and held by Manager's Affiliates by the
States of Nevada, Louisiana and New Jersey, and the State of New
South Wales, Australia, and Manager or its Affiliates may in the
future apply for gaming licenses in additional states or foreign
countries. The laws of such jurisdictions may require Manager or
its Affiliates to disclose private or otherwise confidential
information about Owner and its respective principals, lenders
and Affiliates. Owner agrees to refrain from all conduct that may
negatively affect such licenses or license applications. Owner
further agrees that this Agreement shall terminate immediately at
Manager's option if any representative, agent or Affiliate of
Owner is required to be licensed, qualified or found suitable by
Nevada, New Jersey, Louisiana, New South Wales or other gaming
authority and is denied such status by such gaming authority;
provided, however, that upon the termination of any such
agreement, Owner shall be obligated to reimburse Manager
immediately for any Management Fees and all other amounts due to
Manager under this Agreement.
Section 16.04 COOPERATION WITH GAMING AUTHORITIES.
Owner shall use its best efforts to cause its officers,
directors, employees and stockholders to provide any gaming
authority which governs or may govern gaming facilities of
Affiliates of Manager with necessary documents and information.
Section 16.05 CONFIDENTIAL INFORMATION.
Owner agrees for itself and its Affiliates, agents,
representatives and consultants to hold in the strictest
confidence and not to disclose to any person, entity, party, firm
or corporation (other than agents or representatives of Owner who
are
<PAGE>
also bound by this section) without the prior express written
consent of Manager (except as such disclosures are required in
applications or by applicable securities or gaming laws) any of
Manager's confidential data, whether related to Riverboat or to
general business matters, which shall come into their possession
or knowledge. In addition, Owner agrees that it shall cause all
documents, drawings, plans or other materials developed by
Manager in connection with the Riverboat to be returned to the
Manager in the event of termination of this Agreement and that
Owner shall not make use of such information in connection with
the Riverboat or any other undertaking by Owner without the prior
express written consent of Manager.
Section 16.06 COMPLIANCE WITH LOAN COVENANTS.
Owner shall comply with and be bound by and shall not breach
or default under any of the terms, covenants or provisions of any
mortgage, loan, financing or debt covenant applicable to it.
Section 16.07 NON-INTERFERENCE.
Owner agrees and shall use its best efforts to cause its
shareholders, directors, officers, and employees to not interfere
with or attempt to influence Casino day-to-day operations (except
in accordance with this Agreement).
Section 16.08 GAMING APPLICATIONS.
Owner agrees to use its best efforts to expeditiously
prepare and file all gaming license applications necessary for it
to perform its obligations under this Agreement.
ARTICLE 17. REPRESENTATIONS AND WARRANTIES
Section 17.01 OWNER CORPORATE STATUS.
Owner represents and warrants that it is a general
partnership duly organized, validly existing and in good standing
under the laws of the state of Missouri and qualified to do
business in Missouri, that Owner has full power and authority to
enter into this Agreement and perform its obligations hereunder,
and that the officers of Owner who executed this Agreement on
behalf of Owner are in fact officers of Owner and have been duly
authorized by Owner to execute this Agreement on its behalf.
Futuresouth, Inc., as a general partner of Owner, represents and
warrants that it is corporation duly organized, validly existing,
and in good standing under the laws of the state of Missouri and
is qualified to do business in Missouri, that it has full
corporate power and authority to enter into this Agreement and to
perform the obligations hereunder, and that the officer who
executed this
<PAGE>
Agreement is in fact an officer of Futuresouth and has been duly
authorized by Futuresouth to execute this Agreement on its behalf.
Section 17.02 MANAGER CORPORATE STATUS.
Manager represents and warrants that it is a corporation
duly organized, validly existing and in good standing under the
laws of the state of Nevada, and qualified to do business in the
State of Missouri, that Manager has full corporate power and
authority to enter into this Agreement and perform its
obligations hereunder, and that the officers of Manager who
executed this Agreement on behalf of Manager are in fact officers
of Manager and have been duly authorized by Manager to execute
this Agreement on its behalf.
Section 17.03 AUTHORIZATION/NO CONFLICT.
The execution, delivery and performance by Owner and
Manager, as applicable, of this Agreement has been duly
authorized by all necessary corporate action (including any
necessary stockholder action) on the part of Owner and Manager,
as applicable, and no further action or approval is required in
order to constitute this Agreement as the valid and binding
obligations of Owner and Manager, enforceable in accordance with
its terms. The execution, delivery and performance of this
Agreement by Owner and Manager, as applicable, does not and will
not (a) violate or conflict with any provisions of their
respective Articles of incorporation or bylaws, or of any law,
rule, regulation of the Riverboat Authorities, or any order,
writ, judgment, decree, determination or award presently in
effect having applicability to Owner or Manager; (b) result in a
breach of any condition or provision of, or constitute a default
under, any indenture, loan or credit agreement or any other
agreement or instrument to which Owner or Manager is a party or
by which Owner or Manager may be bound or affected; or (c) result
in, or require, the creation or imposition of any lien, claim,
charge or encumbrance of any nature upon or with respect to any
of the properties now owned or hereafter acquired by Owner or
Manager.
Section 17.04 PERMITS/APPROVALS.
Owner and Manager possess adequate franchises, licenses,
permits, orders and approvals of all federal, state and local
governmental or regulatory bodies required for them to carry on
their businesses as presently conducted; all of such franchises,
licenses, permits, orders and approvals are in full force and
effect, and no suspension or cancellation of any of them is
threatened; and none of such franchises, licenses, permits,
orders or approvals will be adversely affected by the
consummation of the transactions contemplated by this Agreement.
<PAGE>
Section 17.05 ACCURACY OF REPRESENTATIONS.
No representation or warranty of Owner or Manager in this
Agreement nor any information, exhibit, memorandum, schedule or
report furnished by Owner or Manager in connection with this
Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements
of fact contained therein not misleading.
Section 17.06 DEVELOPMENT PLANS.
Unless Owner is prevented or delayed from disclosing any
such report or study by law or by any applicable rules or
regulations of governmental agencies or bodies, Owner covenants
to make available immediately or at the expiration of the
restriction to Manager, or to Manager's authorized agents, any
and all reports and feasibility studies related to the
development of the Riverboat. Owner shall make such reports and
studies available for copying by Manager, at Manager's expense.
Unless Manager is prevented or delayed from disclosing any such
report or study by law or by any applicable rules or regulations
of governmental agencies or bodies, Manager covenants that it
shall make available for copying by Owner any report or
feasibility studies related to the Casino upon completion of the
same upon the request of Owner.
Section 17.07 MAINTENANCE OF GAMING AND OTHER LICENSES.
Owner and Manager agree to provide the other party with
copies of all applications, reports, letters, and other documents
filed or provided to the Riverboat Authorities. Both parties
agree to use their best efforts to secure and maintain any
license needed for the operation of the Casino.
Section 17.08 FINANCINGS; GOVERNMENTAL APPROVAL.
Owner will use its best efforts to obtain financing and all
necessary licenses, permits and approvals from various
governmental authorities with respect to the construction of the
Riverboat, if applicable.
Section 17.09 CONDITION OF RIVERBOAT DURING TERM.
During the Term of this Agreement, Owner shall maintain the
Riverboat in first-class condition and repair. All areas of the
Riverboat shall be adequately illuminated and adequately
patrolled by security guards.
<PAGE>
Section 17.10 UTILITIES.
At the time Manager takes possession of the Riverboat, all
necessary utilities, including electricity, water, sewerage and
gas, will be available.
Section 17.11 IMPAIR REPUTATION.
Owner will do nothing to embarrass or impair Manager's good
name and reputation. Manager will do nothing to embarrass or
impair Owner's good name and reputation.
ARTICLE 18. ARBITRATION
SECTION 18.01 APPOINTMENT OF ARBITRATORS.
IF ANY DISPUTE SHALL ARISE OR IF ANY ISSUE LEFT OPEN
HEREUNDER CANNOT BE RESOLVED BETWEEN THE PARTIES HERETO, SUCH
DISPUTE IS TO BE REFERRED FIRST TO A COMMITTEE OF FOUR PERSONS
WHO SHALL MEET IN AN ATTEMPT TO RESOLVE SAID DISPUTE OR OPEN
ISSUE. THE COMMITTEE SHALL CONSIST OF TWO PERSONS APPOINTED BY
OWNER AND TWO PERSONS APPOINTED BY MANAGER. IF AN AGREEMENT
CANNOT BE REACHED TO RESOLVE THE DISPUTE BY THE COMMITTEE, THE
DISPUTE OR OPEN ISSUE WILL BE RESOLVED BY BINDING ARBITRATION
BEFORE ARBITRATORS HAVING NOT LESS THAN 10 YEARS EXPERIENCE IN
THE GAMING INDUSTRY. ANY AWARD OF THE ARBITRATORS MAY BE FILED IN
A COURT OF LAW AS A FINAL JUDGMENT. ANY SUCH ARBITRATION SHALL BE
IN ACCORDANCE WITH THE RULES AND REGULATIONS ADOPTED BY THE
AMERICAN ARBITRATION ASSOCIATION OR AS THE PARTIES OTHERWISE
AGREE. EITHER PARTY MAY SERVE UPON THE OTHER PARTY A WRITTEN
NOTICE OF THE DEMAND DISPUTE OR APPRAISAL TO BE RESOLVED PURSUANT
TO THIS ARTICLE. WITHIN THIRTY (30) DAYS AFTER THE GIVING OF SUCH
NOTICE, EACH OF THE PARTIES HERETO SHALL NOMINATE AND APPOINT AN
ARBITRATOR (OR APPRAISER, AS THE CASE MAY BE) AND SHALL NOTIFY
THE OTHER PARTY IN WRITING OF THE NAME AND ADDRESS OF THE
ARBITRATOR SO CHOSEN. UPON THE APPOINTMENT OF THE TWO ARBITRATORS
AS HEREINABOVE PROVIDED, SAID TWO ARBITRATORS SHALL FORTHWITH,
WITHIN FIFTEEN (15) DAYS AFTER THE APPOINTMENT OF THE SECOND
ARBITRATOR, AND BEFORE EXCHANGING VIEWS AS TO THE QUESTION AT
ISSUE, APPOINT IN WRITING A THIRD ARBITRATOR ("SELECTED
ARBITRATOR") AND GIVE WRITTEN NOTICE OF SUCH APPOINTMENT TO EACH
OF THE PARTIES HERETO. IN THE EVENT THAT THE TWO ARBITRATORS
SHALL FAIL TO APPOINT OR AGREE UPON THE SELECTED ARBITRATOR
WITHIN SAID FIFTEEN (15) DAY PERIOD, THE SELECTED ARBITRATOR
SHALL BE SELECTED BY THE PARTIES THEMSELVES IF THEY SO AGREE UPON
SUCH SELECTED ARBITRATOR WITHIN A FURTHER PERIOD OF TEN (10)
DAYS. IF A SELECTED ARBITRATOR SHALL NOT BE APPOINTED OR AGREED
UPON WITHIN THE TIME HEREIN PROVIDED, THEN EITHER PARTY ON BEHALF
OF BOTH MAY REQUEST SUCH APPOINTMENT BY THE AMERICAN ARBITRATION
ASSOCIATION (OR ITS SUCCESSOR OR SIMILAR ORGANIZATION IF THE
AMERICAN ARBITRATION ASSOCIATION IS NO LONGER IN EXISTENCE).
OWNER AND MANAGER SHALL SHARE EQUALLY THE COST OF THE SELECTED
ARBITRATOR. SAID ARBITRATORS
<PAGE>
SHALL BE SWORN FAITHFULLY AND FAIRLY TO DETERMINE THE QUESTION AT
ISSUE. THE ARBITRATORS SHALL AFFORD TO OWNER AND MANAGER A HEARING
AND THE RIGHT TO SUBMIT EVIDENCE, WITH THE PRIVILEGE OF
CROSS-EXAMINATION, ON THE QUESTION AT ISSUE, AND SHALL WITH ALL
POSSIBLE SPEED MAKE THEIR DETERMINATION IN WRITING AND SHALL GIVE
NOTICE TO THE PARTIES HERETO OF SUCH DETERMINATION. THE CONCURRING
DETERMINATION OF ANY TWO OF SAID THREE ARBITRATORS SHALL BE BINDING
UPON THE PARTIES, OR, IN CASE OF NO TWO OF THE ARBITRATORS
SHALL RENDER A CONCURRING DETERMINATION, THEN THE DETERMINATION
OF THE SELECTED ARBITRATOR SHALL BE BINDING UPON THE PARTIES
HERETO. EACH PARTY SHALL PAY THE FEES OF THE ARBITRATOR APPOINTED
BY IT, AND THE FEES OF THE SELECTED ARBITRATOR SHALL BE DIVIDED
EQUALLY BETWEEN OWNER AND MANAGER.
Section 18.02 INABILITY TO ACT.
In the event that an arbitrator appointed as aforesaid shall
thereafter die or become unable or unwilling to act, his
successor shall be appointed in the same manner provided in this
Article for the appointment of the arbitrator so dying or
becoming unable or unwilling to act.
ARTICLE 19. DEFAULT/STEP-IN RIGHTS
Section 19.01 DEFINITION.
The occurrence of any one or more of the following events
which is not cured within the time permitted shall constitute a
default under this Agreement (hereinafter referred to as a
"Default" or an "Event of Default") as to the party failing in
the performance or effecting the breaching act.
Section 19.02 MANAGER'S DEFAULTS.
If Manager shall (a) fail to perform or materially comply
with any of the covenants, agreements, terms or conditions
contained in this Agreement applicable to Manager (other than
monetary payments) and such failure shall continue for a period
of thirty (30) days after written notice thereof from Owner to
Manager specifying in detail the nature of such failure, or, in
the case such failure is of a nature that it cannot, with due
diligence and good faith, be cured within thirty (30) days, if
Manager fails to proceed promptly and with all due diligence and
in good faith to cure the same and thereafter to prosecute the
curing of such failure to completion with all due diligence
within ninety (90) days thereafter, or (b) take or fail to take
any action to the extent required of Manager under this Agreement
that creates a default under or breach of any Loan Document, any
related contract or any requirement of the Riverboat Authorities,
unless Manager cures such default or breach prior to the
expiration of applicable notice, grace and cure periods, if any;
provided, however, that Manager shall only be
<PAGE>
required to cure any defaults with respect to which Manager has
a duty hereunder. If the only result of the failure by Manager to
act is a monetary loss to Owner which is not otherwise capable of
being cured by Manager, then Manager shall not be in Default
if Manager reimburses Owner for such losses within ten (10)
Business Days of incurring such loss or otherwise protects Owner
against such loss in a manner reasonably acceptable to Owner.
Section 19.03 STEP-IN RIGHTS.
(a) If Owner funds are available, and Manager fails to pay
when due any amount which it is Manager's responsibility to pay
pursuant to this Agreement, then Owner, after five (5) Business
Days written notice to Manager with respect to any Operating
Expense, and with respect to non-Operating Expense with such
notice, if any, as may be reasonable under the circumstances
(except in the event that Manager has exposure to potential
liability in connection with making such payments in which case
Owner shall give Manager two (2) days written notice), and
without waiving or releasing Manager from any responsibility of
Manager hereunder, Owner may (but shall not be required to) pay
such amounts (including fines, penalty, interest and late payment
fees) and take all such action as may be necessary in respect
thereof. Manager shall, following such payments by Owner,
promptly reimburse Owner from the Bank Accounts to the extent
funds are available the amount which Manager failed to pay when
due. In addition, unless Manager has not acted with reasonable
diligence in failing to make such payments then, to the extent
that Manager's lack of reasonable diligence in this connection
has resulted in fines, penalty, interest or late payment fees in
excess of Twenty-Five Thousand Dollars ($25,000) in any twelve
(12) month period, then Manager shall immediately disburse to
Owner from Gross Revenue, following such payments by Owner, such
amounts as may be necessary to reimburse Owner for such payments
and Manager shall promptly deposit into the appropriate Bank
Accounts, from Manager's own funds, the full amount of any fines,
penalty, interest or late payment fees paid in connection
therewith.
(b) If Manager fails to take any action which it is
Manager's responsibility under this Agreement to take and the
result is to expose the Riverboat to a material loss or Riverboat
patrons to a material risk of physical safety, then Owner, upon
five (5) days written notice to Manager (except in any emergency
in which case Owner shall give Manager such notice, if any, as is
reasonable under the circumstances), without saving or releasing
Manager from any obligation of Manager hereunder, may (but shall
not be required to) take such actions as may be necessary to
preserve Owner's assets from such a material loss and/or to
protect the Riverboat patrons. Manager shall, following any
payments by Owner made with respect to such actions, promptly
reimburse Owner from the Bank Accounts, to the extent funds are
available, the amount which Owner
<PAGE>
has expended. In addition, unless Manager has acted with
reasonable diligence in failing to take such action then, to
the extent that Manager's lack of reasonable diligence in this
connection has resulted in fines or late payment fees in excess
of Twenty-Five Thousand Dollars ($25,000) in any twelve month
period, then Manager shall immediately disburse to Owner from
Gross Revenue, following payment of such amounts by Owner, such
amounts as are necessary to reimburse Owner for any fines or late
payment fees by Owner in connection with taking such action on
Manager's behalf and Manager shall also deposit into the
appropriate Bank Account, from Manager's own funds, the full
amount of such payment made to Owner.
Section 19.04 OWNERS DEFAULT.
If Owner shall (a) fail to make any monetary payment
required under this Agreement (or other agreements between Owner
and Manager or Manager's Affiliates), including, but not limited
to, debt service, Management Fee or Owner's Advances, on or
before the due date recited herein and said failure continues for
five (5) Business Days after written notice from Manager
specifying such failure, or (b) fail to perform or materially
comply with any of the other covenants, agreements, terms or
conditions contained in this Agreement (or other agreements
between Owner and Manager or Manager's Affiliates) applicable to
Owner (other than monetary payments) and such failure shall
continue for a period of thirty (30) days after written notice
thereof from Manager to Owner specifying in detail the nature of
such failure, or, in the case such failure is of a nature that it
cannot, with due diligence and good faith, cure within thirty
(30) days, if Owner fails to proceed promptly and with all due
diligence and in good faith to cure the same and thereafter to
prosecute the curing of such failure to completion with all due
diligence within ninety (90) days thereafter.
Section 19.05 BANKRUPTCY.
If either party (i) applies for or consents to the
appointment of a receiver, trustee or liquidator of itself or any
of its property, (ii) makes a general assignment for the benefit
of creditors, (iii) is adjudicated a bankrupt or insolvent, or
(iv) files a voluntary petition in bankruptcy or a petition or an
answer seeking reorganization or an arrangement with creditors,
takes advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation Law, or admits
the material allegations of a petition filed against it in any
proceedings under any such law.
Section 19.06 REORGANIZATION/RECEIVER.
If an order, judgment or decree is entered by any court of
competent jurisdiction approving a petition seeking
reorganization
<PAGE>
of Manager or Owner, as the case may be, or appointing a
receiver, trustee or liquidator of Manager or Owner, as the case
may be, or of all or a substantial part of any of the assets of
Manager or Owner, as the case may be, and such order, judgment or
decree continues unstayed and in effect for a period of sixty (60)
days from the date of entry thereof.
Section 19.07 DELAYS AND OMISSIONS.
No delay or omission as to the exercise of any right or
power accruing upon any Event of Default shall impair the non-
defaulting party's exercise of any right or power or shall be
construed to be a waiver of any Event of Default or acquiescence
therein.
Section 19.08 DISPUTES IN ARBITRATION.
Notwithstanding the provisions of this Article 19, any
occurrence which would otherwise constitute an Event of Default
hereunder shall not constitute an Event of Default for so long as
such dispute is subject to arbitration pursuant to the
arbitration provisions of Article 18.
ARTICLE 20. TERMINATION
Section 20.01 TERMINATION EVENTS.
This Agreement shall terminate upon the occurrence of the
following:
(a) on _________, 199_, in the event that Owner has not
completed construction of the Riverboat in accordance with the
regulations and specifications required by the Riverboat
Authorities;
(b) Owner fails to secure all appropriate licenses for
itself and any of its employees for whom licenses are required
prior to ____________, 1995;
(c) Manager fails to secure all appropriate licenses for
itself and any of its employees for whom licenses are required
prior to ___________, 1995;
(d) upon the effective date of passage of legislation making
it unlawful to operate a riverboat casino in the state of
Missouri or the entry of an order or judgment from a court of
appropriate jurisdiction declaring such legislation
unconstitutional or invalid under the laws of the state of
Missouri (the termination shall be delayed if any court order is
duly appealed and its effectiveness is suspended);
<PAGE>
(e) upon the occurrence of an Event of Default under this
Agreement and the time to cure has lapsed;
(f) upon Manager's failure to maintain all approvals from
any gaming authority permitting Manager or its affiliates to
conduct gaming in the state of Missouri;
Section 20.02 NOTICE OF TERMINATION.
In the event of an occurrence specified in Section 20.01(a)-
(f), either Manager or Owner, as appropriate, shall terminate
this Agreement by giving five (5) days written notice, and the
Term of this Agreement shall expire by limitation at the
expiration of said last day specified in the notice as if said
date was the date herein originally fixed for the expiration of
the Term.
Section 20.03 REMEDIES UPON TERMINATION.
(a) Prior to Commencing Gaming Operations. In the event that
this Agreement is terminated prior to commencing gaming
operations and if the termination is not the result of an Event
of Default caused by Manager, Owner shall reimburse Manager all
Manager Pre-Opening Expenses.
(b) After Commencement of Gaming Operations. Owner shall pay
to Manager all earned Management Fees plus any unpaid Manager Pre-
Opening Expenses.
Section 20.04 DELIVERY OF RIVERBOAT.
Upon termination of this Agreement for any reason, Manager
shall assign and transfer to Owner all of Manager's rights,
title, and interest in and to all transferable licenses and
permits with respect to the operation of the Riverboat, save and
except the name "Showboat" which will and shall remain the
property of Manager. Manager shall peacefully vacate the
Riverboat. No signs or personalized property bearing the name
"Showboat" shall be purchased or used by Owner without prior
written arrangements between Owner and Manager, which may need a
license from its parent company, Showboat, Inc. Upon surrender,
any exterior signs inscribed with the name "Showboat" shall be
removed as soon as is practicable, and in any event within
fifteen (15) days of the date of termination. Additionally, any
personalized property bearing the name "Showboat" (including
without limitation, ashtrays, office supplies, linen, glassware,
paper goods, promotional items, guest checks, uniforms, carpets,
and upholstery) shall also be removed as soon as practicable, and
in any event within thirty (30) days of the date of termination.
<PAGE>
ARTICLE 21. HAZARDOUS MATERIALS
Section 21.01 NO HAZARDOUS MATERIALS.
Owner represents and warrants to the best of Owner's
knowledge that: (i) any handling, removing, transportation,
storage, treatment or usage of Hazardous Materials or toxic
substances that has occurred at the Casino Site to date has been
in compliance with all applicable federal, state and local laws,
regulations and ordinances; (ii) no leak, spill, release,
discharge, emission or disposal of Hazardous Materials or toxic
substances has occurred at the Casino Site to date; and (iii) the
Casino Site is free of asbestos, toxic or Hazardous Materials as
of the date that the term of this Agreement commences.
Section 21.02 COMPLIANCE WITH LAWS.
Owner agrees to comply with all federal, state and local
environmental and real estate laws, including the Americans With
Disabilities Act relating to Owner's construction, ownership,
management and operation of the Riverboat. Manager agrees to
comply with all federal, state and local environmental and real
estate laws, including the Americans With Disabilities Act
relating to Manager's management and operation of the Riverboat.
All expenses incurred in such compliance shall be Operating
Expenses.
Section 21.03 INDEMNIFICATION.
Owner agrees to indemnify, defend and hold Manager and its
officers, employees and agents harmless from any claims,
judgments, damages, penalties, fines, costs, liabilities
(including sums paid in settlements of claims) or loss including
reasonable attorneys' fees, consultant fees, and expert fees
(consultants and experts to be selected by Manager) which arise
during or after the Term as a result of any breach of Owner's
representation and warranty contained in Section 21.01 or as a
result of Owner's failure to perform its covenant contained in
Section 21.02. Without limiting the generality of the foregoing,
the indemnification provided by this Section shall specifically
cover costs incurred in connection with any investigation of site
conditions or any clean-up, remedial, removal or restoration work
required by any federal, state or local governmental agency or
political subdivision because of the presence or suspected
presence of asbestos, other toxic or Hazardous Material at the
Casino Site, or the soil, groundwater or soil vapor on or under
the Casino Site, unless the Hazardous Materials are present
solely as a result of the actions of Manager, its officers,
shareholders, employees or agents. The foregoing indemnity shall
survive the expiration or earlier termination of this Agreement.
<PAGE>
Section 21.04 HAZARDOUS MATERIAL DEFINED.
"Hazardous Material," as used in this Agreement, shall be
construed in its broadest sense and shall include asbestos, other
asbestotic material (which is currently or may be designated in
the future as a Hazardous Material), any petroleum base products,
pesticides, paints and solvents, polychlorinated biphenyl, lead,
cyanide, DDT, acids, ammonium compounds and other chemical
products (excluding commercially used cleaning materials in
ordinary quantities) and any substance or material if defined or
designated as a hazardous or toxic substance, or other similar
term, by any federal, state or local law, statute, regulation, or
ordinance affecting the Riverboat, the Casino Site or any support
areas.
ARTICLE 22. NOTICES
All notices provided for in this Agreement or related to
this Agreement, which either party desires to serve on the other,
shall be in writing, and any and all notices or other papers or
instruments related to this Agreement shall be deemed
sufficiently served or delivered on the date of mailing if sent
(i) by United States registered or certified mail (return receipt
requested), postage prepaid, in an envelope properly sealed, (ii)
by a facsimile transmission where written acknowledgment of
receipt of such transmission is received, or (iii) by a
nationally recognized overnight delivery service provided for
receipted delivery, addressed as follows:
Owner: Southboat Partnership
3630 S. Geyer Road
St. Louis, Missouri 63127
Attention: Dennis P. Long
with a copy to: Rick Barry, Esq.
6000 Maryland Avenue
St. Louis, Missouri 63105
Manager: Showboat Operating Company
2800 Fremont Street
Las Vegas, Nevada 89104
Attention: J. Kell Houssels, III
with a copy to: Martha J. Ashcraft, Esq.
Kummer Kaempfer Bonner & Renshaw
3800 Howard Hughes Parkway
Seventh Floor
Las Vegas, Nevada 89109
Either Owner or Manager may change the address or name of
addressee applicable to subsequent notices (including copies of
said notices as hereinafter provided) or instruments or other
papers to be served upon or delivered to the other party, by
giving
<PAGE>
notice to the other party as aforesaid, provided that notice of
such change shall not be effective until the fifth (5th) day after
mailing or facsimile transmission.
ARTICLE 23. MISCELLANEOUS
Section 23.01 TIME OF THE ESSENCE.
Time is of the essence with respect to all time periods set
forth in this Agreement.
Section 23.02 HEIRS, SUCCESSORS, ASSIGNS.
Except as otherwise provided herein, each provision hereof
shall extend to and shall, as the case may require, bind and
inure to the benefit of the parties' heirs, executors,
administrators, permitted successors, permitted assigns and legal
representatives. Owner and Manager understand and agree that,
pursuant to that certain letter agreement dated May 1, 1995 by
and between Futuresouth, Inc. and Showboat Lemay, Inc., Owner
anticipates that it will be restructured as a limited
partnership. Owner and Manager agree that such limited
partnership is a permitted assignee under this Agreement, and
that as of the date upon which such limited partnership agreement
is executed, such limited partnership will assume all rights,
duties and obligations of Owner under this Management Agreement.
Section 23.03 CONSTRUCTION.
All of the provisions of this Agreement shall be deemed and
construed to be conditions as well as covenants as though in
words specifically expressing or importing covenants and
conditions for use in each separate provision hereof. The
language in all parts of this Agreement shall be in all cases
construed simply according to its fair meaning, and not strictly
for or against Owner or Manager. This Agreement shall be
construed without regard to any presumption or other rule
requiring construction against the party causing the same to be
drafted.
Section 23.04 GOVERNING LAW.
This Agreement shall be governed by, construed and enforced
in accordance with the laws of the State of Nevada without
reference to its choice of law provisions.
Section 23.05 SEVERABILITY.
Should any portion of this Agreement be declared invalid or
unenforceable, then such portion shall be deemed to be severed
from this Agreement and shall not affect the remainder thereof.
<PAGE>
Section 23.06 RELATION OF THE PARTIES.
Nothing in this Agreement shall be construed as creating a
tenancy, ownership, limited partnership, joint venture, or any
other relationship between the parties hereto other than as
principal and agent. All debts and liabilities incurred by
Manager within the scope of the authority granted and permitted
hereunder in the course of its management and operation of the
Riverboat shall be the debts and liabilities of Owner only, and
Manager shall not be liable for such debts and liabilities except
as specifically stated to the contrary herein.
Section 23.07 NO BROKER OR FINDER.
Each party represents to the other that it has not engaged
any finder, broker or agent for whose commission or fee the other
party could be liable. Each party covenants and agrees to
indemnify and hold the other party free and harmless at all times
in respect of any and all liabilities, actions, suits,
proceedings, demands, assessments, judgments, costs and expenses,
including attorneys fees, arising from, by reason of, or in
connection with any fees, commissions or other compensation which
shall be alleged to be due to any finder, broker, agent or other
similar representative in connection with this transaction, if
the person is found to have been engaged by either party or if
such services are found to have been provided at the request of
either party.
Section 23.08 DEFAULT INTEREST RATE.
Any sum accruing to Owner or Manager under this Agreement
which shall not be paid when due shall bear interest at the rate
of twelve percent (12%) per annum from the date such payment
becomes due and payable until it is paid in full with said
interest.
Section 23.09 ATTORNEYS' FEES.
Should either party institute an arbitration, action or
proceeding to enforce any provisions hereof or for other relief
due to an alleged breach of any provision of this Agreement, the
prevailing party shall be entitled to receive from the other
party all costs of the action or proceeding and reasonable
attorneys fees.
Section 23.10 ENTIRE AGREEMENT.
This Agreement covers in full each and every agreement of
every kind or nature whatsoever between the parties hereto
concerning this Agreement, and all preliminary negotiations and
agreements, whether verbal or written, of whatsoever kind or
nature are merged herein. No oral agreement or implied covenant
shall be
<PAGE>
held to vary the provisions hereof, any statute, law or custom to
the contrary notwithstanding.
Section 23.11 COUNTERPARTS.
This Agreement may be executed in two or more counterparts
and shall be deemed to have become effective when and only when
all parties hereto have executed this Agreement, although it
shall not be necessary that any single counterpart be signed by
or on behalf of each of the parties hereto, and all such
counterparts shall be deemed to constitute but one and the same
instrument.
Section 23.12 FORCE MAJEURE.
Whenever this Agreement requires an act to be performed
within a specified time period or to be completed diligently,
such periods are subject to "unavoidable delays." Unavoidable
delays include delays caused by acts of God, acts of war, civil
commotions, riots, strikes, lockouts, acts of government in
either its sovereign or contractual capacity, perturbation in
telecommunications transmissions, inability to obtain suitable
labor or materials, accident, fire, water damages, flood,
earthquake, or other natural catastrophes.
Section 23.13 NO WARRANTIES.
Manager shall use its best efforts to render the services
contemplated by this Agreement in good faith to Owner, but hereby
explicitly disclaims any and all warranties, express or implied,
including but not limited to the success or profitability of the
Riverboat.
Section 23.14 HEADINGS.
Headings or captions have been inserted for convenience of
reference only and are not to be construed or considered to be a
part hereof and shall not in an way modify, restrict or amend any
of the terms or provisions hereof.
Section 23.15 WAIVER.
The waiver by one party of any default or breach of any of
the provisions, covenants or conditions hereof of the part of the
other party to be kept and performed shall not be a waiver of any
preceding or subsequent breach or any other provisions, covenants
or conditions contained herein.
<PAGE>
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES.
DATED as of the day first above written.
"Manager" "Owner"
SHOWBOAT OPERATING COMPANY, SOUTHBOAT PARTNERSHIP,
a Nevada corporation a Missouri general partnership
By: FUTURESOUTH, INC.,
a Missouri corporation
General Partner
By: /s/ By: /s/
H. Gregory Nasky Dennis P. Long
Its: Secretary Its: President
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement ("Agreement ), dated
as of the 2nd day of May, 1995, between Showboat Operating
Company, a Nevada corporation whose principal office is located
at 2800 Fremont Street, Las Vegas, Nevada 89104 ("Showboat"), and
Southboat Partnership, a Missouri general partnership whose
principal office is located at 3630 S. Geyer Road, St. Louis,
Missouri 63127 ("Owner").
W I T N E S S E T H:
WHEREAS, Showboat and its management are experienced in
providing corporate administrative services to riverboat casinos
and restaurant operations; and
WHEREAS, Owner anticipates applying for a gaming license
from the Missouri Gaming Commission ("MGC") to manage and operate
a riverboat casino and ancillary facilities (collectively, the
"Riverboat') on the Mississippi River in or near Lemay, Missouri;
and
WHEREAS, Owner has appointed Showboat as the manager and
operator of the Riverboat; and
WHEREAS, Owner desires to engage Showboat to render certain
corporate administrative services to Owner in order for Owner to
manage and operate the Riverboat all as more fully described
herein; and
WHEREAS, Showboat desires to render such services to Owner;
and
<PAGE>
WHEREAS, the parties hereto are desirous of setting forth
the terms of compensation for the services to be rendered by
Showboat hereunder; and
WHEREAS, pursuant to the Riverboat Gambling Act (Missouri
1993), Owner is permitted to enter into an Agreement with
Showboat, providing for the payment of a percentage of revenues
to be derived from the operation of the Riverboat; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements of the parties herein contained, the parties agree as
follows:
ARTICLE 1.0 - SERVICES TO BE PROVIDED
1.1. THE SERVICES. Upon the terms and conditions described
herein, Showboat shall provide to Owner the corporate
administrative services (the "Services") set forth in Exhibit A,
which is attached hereto and made a part hereof.
1.2. CONTINUED OWNER PERFORMANCE. Any Services to be
performed by Showboat hereunder shall not be performed as a
substitute for Owner performance, but shall assist, support or
supplement the routine functions and responsibilities of the
employees, officers and managers of Owner.
1.3. SHOWBOAT PERSONNEL. All Showboat personnel engaged to
render the Services shall remain the employees of Showboat, and
Showboat shall be responsible for their compensation and for
withholding federal or state income taxes. The costs and expenses
incurred by Showboat for consultants, agents and independent
contractors selected and engaged to perform Services for Owner
shall be engaged directly by Owner and paid directly by Owner or
<PAGE>
reimbursed to Showboat upon demand. Any such consultants, agents
and independent subcontractors shall separately invoice and
account for Services to Owner. To the extent that Showboat itself
or any Showboat personnel, other than consultants, agents and
independent contractors, must be licensed or approved by the MGC,
however, Owner shall bear the expense of obtaining such
regulatory approvals and Showboat shall cooperate fully in order
to obtain all necessary regulatory approvals.
1.4. SHOWBOAT PERFORMANCE/RESPONSIBILITY. Showboat
undertakes to provide the Services hereunder with the same degree
of care and diligence it uses in providing such Services for its
own operations. In providing the Services hereunder, Showboat
shall not be liable to Owner for errors or omissions hereunder
except to the extent that such errors and omissions constitute
gross negligence or willful misconduct. Under no circumstances
shall any of Showboat's employees, officers, agents, directors,
or stockholders be liable to Owner for any errors or omissions by
Showboat hereunder.
ARTICLE 2.0 - PAYMENT OF COMPENSATION
2.1. FEES. Owner shall pay to Showboat fees for the
Services rendered hereunder equal to one percent (1%) of Owner's
gross gaming revenue net of all gaming taxes. Owner shall pay
such fees monthly on or before the twentieth (20th) day of the
following month. "Gross gaming revenue" shall mean all revenue
from the operation of the Casino. "Gaming taxes" shall mean any
tax imposed by the State of Missouri on gross gaming revenue,
including, without limitation, any state admissions tax
<PAGE>
(currently 20% of gross gaming revenue and $2.00 per customer).
"Casino" shall mean those areas reserved for the operation of
slot machines, table games, electronic games of chance,
electronic games of skill and any other legal forms of gaming
permitted under applicable law, and ancillary service areas,
including reservations and admissions, cage, vault, count room,
surveillance room and any other room or areas or activities
therein regulated or taxed by the Missouri Gaming Commission by
reason of gaming operations. Showboat and owner agree that the
fees provided for by this Section 2.1 constitute their good faith
determination of the fair market value of such services.
2.2. PARTIAL YEARS. Fees for partial fiscal years and
months hereunder shall be prorated
2.3. TAXES. Showboat and Owner agree that in the event any
tax or assessment (other than any such tax or assessment on
income) is required to be paid as a result of the performance of
the Services by Showboat hereunder, Owner shall be solely
responsible for the payment of such tax or assessment.
2.4. FISCAL YEAR: BOOKS AND RECORDS. Owner shall keep at
its usual place of business books and records relating to gross
revenues and the payment to be made hereunder containing such
true entries as may be necessary or proper to ascertain the
amount of payments to be made to Showboat hereunder. Owner shall
produce, during normal business hours, said books and records and
make them available for inspection or audit by duly authorized
agents of Showboat, shall permit such agents to make copies
thereof, and shall give such information as may be necessary or
<PAGE>
proper to enable the amount of payment due hereunder to be
ascertained and verified.
ARTICLE 3.0 - TERM AND TERMINATION
3.1. TERM. The term of this Agreement shall begin as of the
date hereof and shall continue until Showboat or its affiliates
no longer hold an equity position in Owner or its successor.
3.2. FORCE MAJEURE. Neither party shall be liable in any
manner for failure or delay of performance of all or any part of
this Agreement, directly or indirectly, owing to an act of God,
governmental orders or restrictions, strikes or other labor
disturbances, riots, embargoes, revolutions, wars (declared or
undeclared), sabotage, fires, floods, or any other causes or
circumstances beyond the control of the parties. The party
suffering such delay or failure shall give prompt notice to the
other party and shall exert its best efforts to remove the causes
or circumstances of nonperformance with all possible dispatch. If
any of the causes or circumstances above continue for more than
six (6) months, either party hereto may elect to terminate this
Agreement by written notice to the other party.
3.3. ACCRUED PAYMENTS. Termination of the Agreement
pursuant to Section 3.2 hereof shall not affect the right of
Showboat to any fees accrued hereunder prior to the date of such
termination.
3.4. REMEDIES. In the event that either party commits a
material default of its obligations hereunder, the nondefaulting
party may notify the defaulting party of such default. In the
<PAGE>
event that such default is not cured within thirty (30) days
thereafter, the nondefaulting party shall be entitled to pursue
any remedies available to it, including but not limited to, the
termination of the Agreement upon notice to the defaulting party.
ARTICLE 4.0 - GENERAL PROVISIONS
4.1. OTHER SERVICES. Nothing in this Agreement shall be
construed to prohibit Showboat from undertaking to provide
additional services to Owner not described in this Agreement or
in the exhibits hereto on terms and conditions (including the
fees therefore) satisfactory to each of Showboat and Owner.
4.2. INDEPENDENT PARTIES. Nothing in this Agreement shall
be construed as creating a partnership or a joint venture between
Showboat and Owner, or making either party an agent or employee
of the other party, but in all of its operations hereunder
Showboat shall be an independent contractor for Owner. No
employee of Showboat who renders any service hereunder shall be
considered, construed, or deemed to be an employee of Owner as a
result thereof.
4.3. INTEGRATION, MODIFICATION AND WAIVER. This Agreement
constitutes the entire agreement between Showboat and Owner
pertaining to the subject matter hereof and supersedes all prior
understandings of the parties. No supplement, modifications or
amendment of this Agreement shall be binding upon either Showboat
or Owner unless executed in writing by each of them. No waiver of
any of the provisions of this Agreement shall be deemed to be or
shall constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
<PAGE>
4.4. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the state of
Nevada without giving effect to the conflict of laws principles
thereof.
4.5 NOTICES. Any notice or other communication required or
permitted under this Agreement shall be deemed given when: (a) it
is personally delivered; (b) it is transmitted by telecopy,
telex, or telegram with confirmation of receipt; (c) the day
after it is sent by a nationally recognized overnight courier
service; or (d) five (5) days after it is sent by United States
mail with postage prepaid, addressed to the respective party at
its address set forth in the first paragraph of this Agreement,
attention: President if for Showboat or Partner if for Owner.
Either party may change the address or telecopy number to which
notices or other communications are to be given under this
Agreement by furnishing the other party with written notice of
such change in accordance with this Section 4.5.
4.6. BINDING EFFECT: ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns. Neither party may
assign this Agreement or any of its rights or obligations under
this Agreement without the prior written consent of the other
party. Showboat and Owner understand and agree that, pursuant to
that certain letter agreement by and between Futuresouth, Inc.
and Showboat Lemay, Inc. dated May 1, 1995, it is anticipated
that Owner will be restructured as a limited partnership under
the laws of the state of Missouri. Showboat and Owner consent and
<PAGE>
agree that, under the terms and conditions of this provision,
such new limited partnership is and shall be a permitted
assignee, and that upon the execution of such limited partnership
agreement, such limited partnership shall assume automatically
all of the rights, duties and obligations of this Agreement.
4.7 HEADINGS. The headings used in this Agreement are for
convenience of reference only and are not intended to affect the
interpretation of this Agreement.
4.8. SEVERABILITY. If any provision of this Agreement or
the application of any provision to any party or circumstance
shall, to any extent, be adjudged invalid or unenforceable, the
application of the remainder of such provision to such party or
circumstance, the application of such provision to other parties
or circumstances, and the application of the remainder of this
Agreement shall not be affected thereby. Each provision of this
Agreement shall be valid and enforceable to the fullest extent
permitted by law.
4.9. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the
same instrument.
4.10. NO THIRD PARTY BENEFICIARIES. Nothing expressed or
implied in this Agreement is intended, or shall be construed, to
confer upon or give any person or entity, other than the parties
hereto, any rights or remedies under or by the reason of the
Agreement.
<PAGE>
4.11. NO WARRANTIES. Showboat shall use its best efforts to
provide the services in good faith to Owner, but disclaims any
and all warranties, express or implied, including, but not
limited to, the success or profitability of the business
conducted by Owner. Nothing contained herein shall be deemed to
confer on Showboat the right or ability to manage Owner's
business. Management of Owner's business shall solely be the
function and responsibility of Owner.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their representatives thereunto duly
authorized.
SHOWBOAT OPERATING COMPANY,
a Nevada corporation
By: /s/H. Gregory Nasky
H. Gregory Nasky
Title: Secretary
SOUTHBOAT PARTNERSHIP,
a Missouri general partnership
By: /s/Dennis P. Long
Dennis P. Long
Title: President
<PAGE>
EXHIBIT A
SERVICES TO BE PROVIDED
Pursuant to the Administrative Services Agreement entered
into by the Parties, Owner engages Showboat to render, or cause
to be rendered, the following corporate administrative services
in connection with Owner's operations.
1. Human Resource services, including: provision of policy
development and operating guidelines for standardization of
operation philosophy and principles for employee management; and
establishment of uniform controls for selection and licensing of
key management personnel, compensation and benefits.
2. Accounting and financial services, including: development of
standards and procedures for internal audits and supervision;
review and evaluation of internal audits; assistance with the
development of policies, standards and procedures for accounting
and supervision; and, provision of technical accounting advisory
services and review of financial statements and other accounting
records maintained by Owner.
3. Data processing services, including: development of
policies, standards and procedures governing data processing
operations: assistance in the acquisition of software programs;
coordination of hardware acquisitions; and, review and evaluation
of data processing systems and operations.
4. Tax planning and compliance, including: review of federal
and state income tax returns; review of estimated tax
<PAGE>
payments; and assistance in the coordination of Internal Revenue
Service and state agency examinations.
5. General administrative services, including: consultation on
selection of consultants for strategic planning efforts;
assistance in the evaluation and acquisition of insurance
policies and establishment of standards and policies related to
all insurance-related matters; assistance in the development of
standards and policies related to safety programs and supervision
of such programs; and such other administrative services as may
be appropriate.
<PAGE>
TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT (this "Agreement")
made as of May 2, 1995, by and between Showboat, Inc., a Nevada
corporation ("Licensor"), and Southboat Partnership, a Missouri
general partnership ("Licensee").
RECITALS
A. Licensor is the owner of the trademark "Showboat," its
logos, trademarks, tradenames, service marks, and any variation
or extension of such name ("Trademark").
B. Licensor and Licensee desire that the Licensee be
permitted to use the Trademark in connection with the operation of a
gaming riverboat (the "Riverboat") to be located on the Mississippi
River in or near Lemay, Missouri (the "Territory"). Licensee is
the owner of the Riverboat.
OPERATIVE PROVISIONS
In consideration of the recitals, covenants and
conditions contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the Licensor and Licensee agree as follows:
1. LICENSE. The Licensor grants to the Licensee the non-
exclusive, personal and nontransferable right to use the
Trademark in the Territory in connection with the operation of
the Riverboat.
2. OPERATION OF THE RIVERBOAT. The Licensee shall operate
the Riverboat in a first-rate manner, consistent with the quality of
other riverboat gaming operations in Missouri, and shall use the
Trademark only in connection with the operations of the
Riverboat, and the quality of the operations of the Riverboat
shall be satisfactory to the Licensor, as determined in its sole
discretion.
3. INSPECTION. The Licensee will permit duly authorized
representatives of the Licensor to inspect, at all reasonable
times, the operations of the Riverboat.
4. USE OF TRADEMARK. Whenever the Licensee uses the
Trademark in advertising or in any other manner in connection with
the Riverboat, the Licensee shall clearly indicate the Licensor's
ownership of the Trademark. The Licensee shall provide the
Licensor with samples of all signs, advertising, promotional
material, literature, packages and labels prepared by or for the
Licensee and intended to be used by Licensee. When using the
Trademark under this Agreement, the Licensee undertakes to comply
<PAGE>
with all laws pertaining to trademarks in force at any time in
the Territory.
5. REGISTRATION OF LICENSEE. If the law requires, or
if requested by the Licensor or its duly authorized representative,
the Licensee shall execute any such documents and to take such
action as may be necessary to implement an application to
register the Licensee as a Permitted User or to retain, enforce
or defend the Trademark.
6. ASSIGNMENT OF LICENSE. The right granted in
Paragraph 1 hereof shall not be transferable without the Licensor's
prior written consent, which consent may be granted or withheld in
Licensor's sole discretion.
7. INDEMNITY. The Licensor assumes no liability to the
Licensee or to third parties with respect to the operations of the
Riverboat, and the Licensee hereby defends, indemnifies and holds
harmless the Licensor against all losses, damages and expenses,
including attorneys' fees, incurred as a result of or related to
claims of third persons arising out of the operations of the
Riverboat.
8. TERM.
(a) The term of this Agreement shall begin as of
the date hereof and shall continue until Licensor or its
affiliates no longer holds an equity position in Licensee or its
successor.
(b) If the Licensee or any sublicensee makes any
assignment of assets or business for the benefit of creditors, or
if a trustee or receiver is appointed to administer or conduct its
business or affairs, or if it is adjudged in any legal proceeding
to be either voluntary or involuntary bankrupt, then all the
rights granted herein shall forthwith cease and terminate without
prior notice or legal action by the Licensor and without any
further obligation or liability to Licensor.
(c) Should the Licensee fail to comply with any
provision of this Agreement or Licensee's actions or failure to
act in any way threaten, jeopardize or harm the Trademark, the
Licensor may terminate this Agreement without prior notice or
legal action and without any further obligation or liability to
Licensor. The Licensor shall have the right to determine
unilaterally whether or not the conditions envisioned by this
subparagraph exist, and the Licensor's determination shall be
final.
(d) Notwithstanding anything to the contrary
contained herein, Licensor may terminate this Agreement, at any
time and for any reason whatsoever, in its sole and absolute
discretion, provided that it shall first give the Licensee thirty
(30) days prior written notice of the intended termination, with
<PAGE>
said termination to be effective thirty (30) days from the date of
the notice, without any further obligation or liability to Licensor.
9. FEES. Licensee shall pay to Licensor fees for the
use of the Trademark equal to two percent (2%) of Licensee's
gross gaming revenue net of all gaming taxes. Licensee shall pay
such fee monthly on or before the twentieth (20th) day of the
following month. "Gross gaming revenue" shall mean all revenue
from the operation of the Casino. "Gaming taxes" shall mean
any tax imposed by the State of Missouri on gross gaming
revenue, including, without limitation, any state admissions tax
(currently 20% of gross gaming revenue and $2.00 per customer).
"Casino" shall mean those areas of the Riverboat reserved for the
operation of slot machines, table games, electronic games of
chance, electronic games of skill and any other legal forms of
gaming permitted under applicable law, and ancillary service
areas, including reservations and admissions, cage, vault, count
room, surveillance room and any other room or areas or activities
therein regulated or taxed by the Missouri Gaming Commission by
reason of gaming operations. Showboat and Randolph agree that the
fees provided for by this Section 9 constitute their good faith
determination of the fair market value of the use of the
Trademark.
10. OWNERSHIP OF TRADEMARK. The Licensee acknowledges
the Licensor's exclusive right, title, and interest in and to the
Trademark including its trademarks, logos, service marks, and any
variation or extensions thereof (collectively, "Showboat
Intellectual Property" and will not at any time do or cause to be
done any act or thing contesting or in any way impairing or
tending to impair any part of such right, title, and interest. In
connection with the use of the Trademark, the Licensee shall not
in any manner represent that it has any ownership in the
Trademark or registration hereof, and the Licensee acknowledges
that use of the Trademark shall not create in the Licensee's
favor any right, title, or interest in or to the Trademark, but
all uses of the Trademark by the Licensee shall inure to the
benefit of the Licensor. Upon termination of this Agreement in
any manner provided herein, the Licensee will cease and desist
from all use of the Trademark in any way (and will deliver up to
the Licensor, or its duly authorized representatives, all
material and papers upon which the Trademark appears), and the
Licensee shall at no time adopt or use, without the Licensor's
prior written consent, any word or mark which is likely to be
similar to or confusing with the Trademark.
11. NOTICES. Any notices required or permitted to be
given under this Agreement shall be deemed sufficiently given if
mailed by certified mail, postage prepaid, addressed to the party
to be notified at its address shown at the beginning of this
Agreement, or at such other address as may be furnished in writing
to the notifying party.
<PAGE>
IN WITNESS WHEREOF this Agreement has been executed as
of the day and year first above written.
"Licensor" "Licensee"
SHOWBOAT, INC., SOUTHBOAT PARTNERSHIP,
a Nevada corporation a Missouri general partnership
By: FUTURESOUTH, INC.
a Missouri corporation
Its: General Partner
By: /s/H. Gregory Nasky By: /s/Dennis P. Long
H. Gregory Nasky Dennis P. Long
Its: Secretary Its: President
<PAGE>
EHIBIT 10.03
<PAGE>
LEASE AND DEVELOPMENT AGREEMENT
THIS LEASE AND DEVELOPMENT AGREEMENT (the "Lease") is
made and entered into as of this 13 day of October, 1995 (the
"Effective Date"), by and between the ST. LOUIS COUNTY PORT
AUTHORITY, a public body corporate and politic of the State of
Missouri ("Landlord"), and SOUTHBOAT LIMITED PARTNERSHIP, a
Missouri limited partnership ("Tenant");
R E C I T A L S
A. Landlord is the owner, subject to the Exceptions
(defined below), of a certain approximately 80 acre parcel of
real estate, together with the structures thereon, located in the
Lemay area of St. Louis County, Missouri (the "County"), as
described on ATTACHMENT A (the "Property"), consisting of a
certain approximately 29 acre site depicted diagrammatically on
ATTACHMENT B (the "Premises") and an approximately 51 acre site
depicted diagrammatically on ATTACHMENT C (the "Adjacent
Parcel").
B. Landlord has been created as a public body corporate
and politic duly organized and existing pursuant to Chapter 68 of
the Revised Statutes of Missouri and is charged with the
responsibility of developing the riverfront area of the
unincorporated portion of St. Louis County. In connection with
such duties and responsibilities, to promote the general welfare,
to encourage capital investment, and to increase the volume of
commerce within the Lemay area and of the County generally,
Landlord solicited the submission of proposals for development of
a riverboat and/or barge-based gaming project on the Premises
(the "Project").
C. Tenant submitted to Landlord and the St. Louis County
Council (the "Council"), a certain Project proposal, which
Project proposal was modified and supplemented by subsequent
correspondence to Landlord and the Council (together, the
"Project Proposal").
D. In order to induce acceptance of the Project Proposal
by Landlord and the Council, Tenant agreed to apply to the
Missouri Gaming Commission (the "Commission") for one or more
licenses, as necessary, to operate the Project (including the
Casino, as hereinafter defined) at and from the Premises ("Gaming
Licensure"), to pay certain rentals to Landlord in consideration
of the opportunity to develop and operate the Project, and to
designate the County as the "home dock" for the Project, all as
hereinafter set forth.
<PAGE>
E. In order to further induce Landlord and the Council
to approve the Project Proposal, Showboat, Inc., a Nevada
corporation ("Guarantor") and parent company of Showboat Lemay,
Inc., a Missouri corporation and Tenant's general partner (the
"General Partner"), agreed to issue its unconditional guarantees
(together, the "Guarantees") of (i) payment of the hereinafter
specified minimum rent for 15 years (the "Rent Guarantee") and
(ii) timely completion of construction of and payment for all
Project improvements and installations (the "Completion
Guarantee").
F. In order to promote the economic development of the
Lemay area and the County, and in consideration of the Project
Proposal, the financial incentives to Landlord, the Guarantees,
the special and unique qualifications of the Guarantor in the
development and operation elsewhere of gaming projects, and the
covenants and promises of the Tenant and the Guarantor under this
Lease and the Guarantees, respectively, Landlord approved the
Project Proposal, and the Council enacted Ordinance Number
17,593, as amended by Ordinance Number 17,739, in support of the
Project Proposal and the execution, delivery and performance of
this Lease.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements of the parties contained herein,
Landlord and Tenant agree as follows:
1. EFFECTIVENESS OF LEASE.
(a) DEMISE OF PREMISES. This Lease shall be deemed
effective as of the Effective Date. Subject to the terms and
conditions of this Lease, Landlord hereby demises and leases to
Tenant, and Tenant hereby leases and takes from Landlord, the
Premises, for the Term (as hereinafter defined).
(b) LANDLORD'S OWNERSHIP. Landlord represents and
warrants to Tenant that Landlord is the owner of the Premises,
subject to the following matters (collectively, the
"Exceptions"): (i) covenants, restrictions, easements, liens,
encumbrances and any other matters of record affecting the
Premises; (ii) present and future federal, state and local zoning
and land use laws, ordinances and restrictions affecting the
Premises or the use thereof; (iii) any state of facts which an
accurate survey or an inspection of the Premises and the
Mississippi River would show; (iv) special assessments now or
hereafter becoming a lien against the Premises; and (v) general
property taxes and assessments for the current and subsequent tax
fiscal years affecting the Premises.
<PAGE>
(c) ESCROW AGREEMENT. On the date hereof, Landlord,
Tenant and Guarantor have established an escrow account (the
"Escrow") with Boatmen's Trust Company (the "Escrow Agent")
pursuant to an agreement dated as of the date hereof by and among
Landlord, Tenant, Guarantor and the Escrow Agent (the "Escrow
Agreement"). Guarantor has deposited the Guarantees into the
Escrow, and, not later than 5 business days after the Effective
Date, Tenant shall deposit the $500,000 Acceptance Fee and the
$750,000 Security Deposit (described in Section 7) into the
Escrow. Such deliveries shall be held in trust by the Escrow
Agent in accordance with the Escrow Agreement and the provisions
of Sections 2 and 7 hereof. Landlord also acknowledges receipt
of a copy of the commitment for Project financing obtained by
Tenant in an amount not less than $75 million.
2. TENANT'S DUE DILIGENCE AND PRE-DEVELOPMENT WORK.
(a) AS-IS DELIVERY OF PREMISES. Except as expressly
provided in this Lease, Landlord makes no representation and
provides no warranty to Tenant of any kind whatsoever regarding
(i) the existence or nature of any Exceptions, (ii) the condition
of the Premises or the Mississippi River (including, without
limitation, any environmental matters), (iii) the suitability of
the Premises for any aspect of the Project, or (iv) the
feasibility of Tenant's development and operation of the Project
on, at or from the Premises. Tenant acknowledges receipt from
Landlord of the following: (i) an owner's policy of title
insurance dated October 9, 1987 relating to the Property and
issued by Ticor Title Insurance Company; (ii) a survey dated July
7, 1987 relating to the Property and prepared by Pitzman's & Co.
Surveyors and Engineers, and (iii) certain environmental reports
and studies conducted in respect of the Property dated January
30, 1981, March 12, 1981, January 1986 and June 1986,
respectively, and prepared by Envirodyne Engineers, Inc. Tenant
acknowledges that such materials have been provided solely for
informational purposes to assist Tenant in Tenant's due
diligence, that the same do not constitute representations or
warranties by Landlord or the County, and that Tenant shall rely
on Tenant's own evaluations, inspections and testing of the
Property in determining the suitability of the Premises and the
feasibility of the Project.
(b) SATISFACTION OF CONDITIONS. Tenant shall have a
period of one hundred twenty (120) days following the Effective
Date (the "Due Diligence Period") within which to satisfy or
waive certain conditions subsequent to the continuing
effectiveness of this Lease. Such Conditions relate to the
quality of Landlord's title to the Premises (the "Title and
Survey Condition"), the rezoning of the Premises required by
<PAGE>
Tenant (the "Zoning Condition"), Tenant's approval of the
environmental suitability of the Premises (the "Environmental
Condition"), and Tenant's approval of the scope of certain
offsite improvement work which Tenant is required to complete
(the "Offsite Work Condition"), all as described in subsections
(d) through (g) hereof (collectively, "the "Conditions"). During
the Due Diligence Period, Landlord shall make reasonable efforts
to locate all documents in its immediate possession relating to
the Premises and the Adjacent Parcel and to make same available
to Tenant for Tenant's examination (and copying, at Tenant's sole
expense), at Landlord's offices during Landlord's regular office
hours, subject to the same understandings and disclaimers as
govern the delivery of the title policy, survey and environmental
reports described in Section 2(a), and subject to the further
understanding that Landlord makes no representation or warranty
that any documents which are provided Tenant constitute the only
documents in Landlord's possession or control relating to the
Premises and/or the Adjacent Parcel. Except as provided in
subsection (c) below, upon the expiration of the Due Diligence
Period, as a condition to the continuing effectiveness of this
Lease, and notwithstanding any extension of the Due Diligence
Period agreed to by the parties, Tenant shall cause the
Acceptance Fee to be released from the Escrow and delivered to
Landlord. In the event Tenant fails to direct the Escrow Agent
to deliver the Acceptance Fee to Landlord on or before the
expiration of the Due Diligence Period, whether or not Tenant has
satisfied or waived all or any of the Conditions, this Lease
shall be void and of no further force or effect, the Acceptance
Fee, Security Deposit and the Guarantees shall be released to
Tenant, and neither party shall have any further obligation or
liability to the other hereunder; provided, however, that if
Tenant shall have withdrawn or abandoned Tenant's application for
Gaming Licensure or for any Site Permits (as defined in Section
3(b)), or otherwise abandoned the Project, Landlord shall be
entitled to recover the Security Deposit as liquidated damages
for such withdrawal or abandonment.
(c) TENANT'S ACCESS TO PREMISES. Tenant shall have
access to the Premises (and with respect to satisfaction of the
Title and Survey Condition under Section 2(d), to the Adjacent
Parcel) at any and all times after the Effective Date for the
purposes of enabling Tenant to accomplish work desired by Tenant,
at Tenant's sole risk, cost and expense, with regard to the
satisfaction of the Conditions, including, but not limited to,
title work, surveying, environmental testing, evaluation and
inspections of the Premises for determining the feasibility of
the construction and operation of the Project, which inspections
shall include, but shall not be limited to soil tests and
subsurface borings (the "Predevelopment Work"). By undertaking
<PAGE>
whatever inspection, investigation or review concerning the
Adjacent Parcel which Tenant deems necessary or appropriate,
Tenant assumes no obligation or liability with respect to the
Adjacent Parcel other than the direct costs and expenses
associated with such inspection, investigation or review of the
Title and Survey Condition of the Adjacent Parcel. It is
understood and agreed that the environmental inspections to be
conducted by Tenant shall include tests for hazardous substances
including, but not limited to, oil drums or barrels, or other
refuse, underground storage tanks, oil substances, printer's ink,
or chemicals in the ground, or on or within the Premises, or
within the water, asbestos, and other waste piles on or below the
surface of the Premises. In the event Landlord or the County
denies Tenant access to the Premises, Tenant shall have the
right, by delivery of written notice to Landlord, to advise
Landlord that Tenant is extending the Due Diligence Period one
day for each day Landlord or the County has denied Tenant access
to the Premises.
(d) TITLE AND SURVEY CONDITION. On or before 30 days
after the Effective Date, Tenant shall obtain, at Tenant's sole
risk, cost and expense, copies of all Exceptions appearing in the
commitment for a leasehold policy of title insurance issued to
Tenant on the Effective Date and a survey of the Premises. In
the event Tenant in its discretion objects to any matter
contained in the commitment or to any of the Exceptions
(including any survey matter or issue raised by such survey and
any matter or issue pertaining to the Adjacent Parcel to the
extent included or referenced in the commitment or survey),
Tenant shall so advise Landlord within 15 days after the
expiration of such 30 day period, whereupon Landlord shall have
10 days within which to advise Tenant whether Landlord will cure
or remove the matter or Exception objected to by Tenant. If
Landlord fails to timely notify Tenant that it will cure or
remove the matter or Exception objected to by Tenant, or elects
not to do so, Tenant shall have the option, if exercised by
delivery of written notice to Landlord not later than 10 days
after expiration of Landlord's 10 day response period, to cancel
this Lease without further obligation or liability on the part of
either party to the other (except that the Escrow Agent shall
release the Guarantees, the Security Deposit and the Acceptance
Fee to Tenant). All matters and Exceptions which are not
objected to, or which are waived, by Tenant shall be deemed
"Permitted Exceptions" for all purposes under this Lease. If
Tenant fails to cancel this Lease within such 10 day period,
Tenant's objection to such Exception or matter shall be deemed
waived.
<PAGE>
(e) ZONING CONDITION. Within 30 days after the
Effective Date, Landlord shall apply to the County Planning
Commission for rezoning of the Premises to the "C-8"
classification, so as to enable Tenant to construct and operate
the Project as contemplated by Tenant in the Project Proposal at
and from the Premises; provided, however that Landlord shall not
be obligated to incur any out-of-pocket or third-party costs and
expenses in connection with such application. Tenant shall
provide to Landlord such information and documentation as may be
necessary and appropriate to enable Landlord to apply for the
rezoning. In the event the Premises is not so rezoned (or, if so
rezoned, in the event the conditions of such rezoning are not
acceptable to Tenant in its discretion) pursuant to County
ordinance within 120 days after the Effective Date, Tenant shall
have the option, if exercised by delivery of written notice to
the other party not later than the expiration of such 120 period,
to cancel this Lease without further obligation or liability on
the part of either party to the other (except that the Escrow
Agent shall release the Guarantees, the Security Deposit and the
Acceptance Fee to Tenant). Tenant shall be responsible for
providing the County Planning Commission with all information
required of Tenant by the Commission.
(f) ENVIRONMENTAL CONDITION. On or before 85 days
after the Effective Date, Tenant shall conduct, at Tenant's sole
risk, cost and expense, such inspections, investigations and
evaluations of the Premises as Tenant may require in order to
determine whether any hazardous waste, pollutant, toxic
pollutant, extremely hazardous substance, toxic substance,
infectious waste, solid waste or similar material or substance
(collectively, "Hazardous Substances") shall have been released
on or from the Premises. In the event Tenant in its discretion
determines that Hazardous Substances may impair Tenant's
development, construction, use or operation of the Project,
create unacceptable risks of liability, or cause Project costs to
exceed Tenant's Project budget, Tenant shall so advise Landlord
in writing prior to the expiration of such 85 day period,
whereupon Landlord shall have 20 days within which to advise
Tenant whether Landlord will remediate the condition objected to
by Tenant. If Landlord fails to timely notify Tenant that it
will remediate the environmental condition objected to by Tenant,
or elects not to do so, Tenant shall have the option, if
exercised by delivery of written notice to Landlord not later
than 15 days after expiration of Landlord's 20 day response
period, to cancel this Lease without further obligation or
liability on the part of either party to the other (except that
the Escrow Agent shall release the Guarantees, the Security
Deposit and the Acceptance Fee to Tenant). If Tenant fails to
cancel this Lease within such 15 day period, Tenant shall be
<PAGE>
deemed to have accepted the environmental condition of the
Premises, subject only to the provisions of Section 4(g).
(g) OFFSITE WORK CONDITION. On or before 85 days
after the Effective Date, Tenant shall, at Tenant's sole risk,
cost and expense, but with the assistance and full cooperation of
Landlord, conduct such inspections, investigations and
evaluations of highway, traffic, general access and off-site
improvement issues relating to the Premises and access to the
Adjacent Parcel (collectively, the "Access Issues"), including
without limitation the following issues: (i) whether the bridge
to be constructed by Tenant will provide access solely to the
Premises or whether it will service the Adjacent Parcel as well;
(ii) whether additional road work will be required to provide
alternative access to the Adjacent Parcel directly from
Hoffmeister Road; and (iii) whether and subject to what
requirements access to the Adjacent Parcel at the existing grade
location will be continued during and/or after construction of
the bridge. In the event Tenant in its discretion determines
that such Access Issues may impair Tenant's development,
construction, use or operation of the Project, or cause the cost
of constructing the Project to exceed Tenant's maximum allowable
budget to economically carry out the Project, or create
unacceptable risk or liability, Tenant shall so advise Landlord
in writing prior to the expiration of such 85 day period,
whereupon Landlord shall have 20 days within which to advise
Tenant whether Landlord will cure the condition objected to by
Tenant. If Landlord fails to timely notify Tenant that it will
remediate the Access Issue(s) objected to by Tenant, or elects
not to do so, Tenant shall have the option, if exercised by
delivery of written notice to Landlord not later than 15 days
after expiration of Landlord's 20 day response period, to cancel
this Lease without further obligation or liability on the part of
either party to the other (except that the Escrow Agent shall
release the Guarantees, the Security Deposit and the Acceptance
Fee to Tenant). If Tenant fails to cancel this Lease within such
15 day period, Tenant shall be deemed to have accepted all Access
Issues.
(h) LANDLORD'S OBLIGATIONS. In connection with
Tenant's review of matters relating to the Conditions, Landlord
agrees to cooperate with Tenant and to use its best efforts to
cure any objection raised by Tenant which Landlord, as owner of
the Premises, has the ability to cure; provided, however, such
"best efforts" shall not be deemed to require Landlord to
undertake litigation or to pay monies to third parties or to
Tenant. In electing to cure any objection raised by Tenant,
Landlord shall advise Tenant concerning the manner and timing of
such cure, and Tenant shall have the right to approve or
<PAGE>
disapprove such matters. Failure of the parties to agree as to
the manner or timing of the cure offered by Landlord shall have
the same effect as though Landlord had not offered to cure such
objection.
(i) ACCEPTANCE OF PREMISES. Tenant's satisfaction or
waiver of each of the Conditions shall constitute Tenant's "AS
IS" acceptance of the Premises, subject only, if applicable, to
(i) the occurrence of the Commencement Date, as defined in
Section 3(a), (ii) Landlord's full compliance with any commitment
made by Landlord to satisfy any objection raised by Tenant, and
(iii) any termination of this Lease occurring pursuant to Section
4(g). The date Tenant has accepted or is deemed to have accepted
the Premises pursuant to this Section 2(i) shall be referred to
herein as the "Acceptance Date." On the Acceptance Date, the
$500,000 Acceptance Fee shall be unconditionally and irrevocably
released to Landlord by the Escrow Agent, and the Guarantees and
Security Deposit shall remain subject to Escrow until released to
Landlord or Tenant in accordance with the provisions of Section
3. From and after the Effective Date, Landlord shall not subject
the Premises to any liens or encumbrances not expressly permitted
by this Lease without the prior written consent of Tenant.
3. TERM OF LEASE.
(a) COMMENCEMENT DATE. The term of this Lease (the
"Term") shall commence (the "Commencement Date") if at all, at
such time as the following have occurred: (i) the Commission
commences the investigation of Tenant (the "Investigation")
incident to Tenant's application for Gaming Licensure (the
"Investigation Date"); and (ii) Tenant has obtained all Site
Permits (as defined in Section 3(b)) (the "Site Permit Date").
The Term shall expire on the 99th anniversary of the day prior to
the Commencement Date. Each successive 12 month annual period
occurring subsequent to the Commencement Date shall be deemed a
"Lease Year" for all purposes under the Lease. Landlord and
Tenant shall each execute a memorandum prepared by Landlord and
reasonably acceptable to Tenant confirming the Commencement Date
of this Lease, such memorandum to become an attachment to this
Lease.
(b) SITE PERMITS AND GAMING LICENSURE. As used in
this Lease, the term "Site Permits" shall mean all permits or
licenses issued by the U.S. Army Corps of Engineers (the "Corps")
or by other governmental bodies to enable Tenant to commence
dredging of the Mississippi River, and for site development,
grading and excavation work on the Premises, including, without
limitation, the Corps' Section 10 and 404 Permits, a flood plain
development permit, a metro sewers and highway permit and a site
<PAGE>
plan approval permit, but excluding any building or construction
permits required to enable Tenant to commence or complete the
construction of Tenant's Project improvements or to occupy and
operate the Project. Tenant shall make application for all Site
Permits at the earliest practical opportunity, without regard to
the status of the Investigation. Tenant shall use its best
efforts to obtain the Site Permits and Gaming Licensure, and
Landlord shall fully and actively support, endorse and diligently
assist Tenant in such efforts, provided Landlord shall not be
obligated to incur any out-of-pocket or third party expenses for
Tenant's benefit or pay any monies to Tenant. Tenant agrees to
file the application for Gaming Licensure with the Commission as
promptly as possible after the Effective Date and in no event
later than 30 days after the Effective Date, and to deliver to
Landlord a copy of the transmittal correspondence for Tenant's
application to the Commission and a copy of each and every
material notice delivered to or received from the Commission by
Tenant. As used in this subsection (b), a "material notice"
shall be any notice substantively bearing upon the availability
of Gaming Licensure or the Site Permits or affecting the
occurrence of the Commencement Date or Project Opening. Tenant
shall not withdraw Tenant's application for any of the Site
Permits or for Gaming Licensure prior to any termination of this
Lease.
(c) EARLY DEFEASANCE OF LEASE. Landlord or Tenant
shall have the right to terminate this Lease pursuant to
subsection (d) if, for any reason other than an Unavoidable Delay
(as defined in Section 30) or a delay caused by Landlord or the
County, any of the following conditions occur:
(i) notwithstanding Tenant's diligent pursuit of
Gaming Licensure, if the Investigation Date has not occurred on
or before the expiration of the 14 month period commencing on the
Effective Date (the "Investigation Deadline") or Tenant
reasonably determines, based on communications with or
information received from the Commission staff, that the
Commission will not commence the Investigation before the
Investigation Deadline; or
(ii) the Site Permit Date has not occurred on or before
the expiration of the 9 month period commencing on the
Investigation Date (the "Site Permit Deadline") or the Corps
officially notifies Tenant that it will not permit the
construction or operation of the Project as contemplated in this
Lease; provided, however, in the event (i) the Investigation Date
has timely occurred, (ii) Tenant has obtained all Site Permits
other than the Site Permits to be issued by the Corps (or
issuance of the remaining Site Permits is contingent solely on
<PAGE>
issuance of the Corps' Site Permits), and (iii) the Corps has
not officially notified Tenant that it will not permit the
operation of the Project at the Premises, Tenant shall have the
option to extend the Site Permit Deadline for 3 successive
periods of 60 days each by delivery of written notice of such
election to Landlord not sooner than 30 days prior to, and not
later than, the Site Permit Deadline; provided, however, Tenant
has made diligent efforts to secure the Site Permits to be issued
by the Corps and has cooperated with the Corps by responding in a
reasonably timely fashion to requests for information or proposed
plan changes from the Corps.
(d) TERMINATION NOTICE. Termination of this Lease
pursuant to subsection (c) shall be accomplished by delivery of
written notice to the non-terminating party of such election on
or before the Investigation Deadline or the Site Permit Deadline,
as the case may be (a "Termination Notice"); provided, however,
that no such Termination Notice shall be effective unless the
terminating party shall have sent an initial notice advising the
non-terminating party of its intent to terminate this Lease at
least 30 days prior to the date of the Termination Notice. Upon
the effective date of such termination, the Escrow Agent shall
release the Guarantees and the Security Deposit to Tenant unless
Tenant shall have withdrawn or abandoned Tenant's application for
Gaming Licensure or for any of the Site Permits or otherwise
abandoned the Project, in which event, the Security Deposit shall
be subject to disposition in accordance with the terms of this
Lease, notwithstanding any termination of this Lease.
(e) POST-COMMENCEMENT DATE DEFEASANCE. From and after
the Commencement Date, this Lease may be terminated solely upon
the discovery of Hazardous Substances beneath the surface of the
Premises not detected by Tenant during the Due Diligence Period
and costing more than $3 million to remediate, or upon the repeal
or invalidation of the law permitting gaming in the State of
Missouri and consequent cessation of Tenant's business at the
Premises, or upon the occurrence of a casualty or condemnation,
or an Event of Default, all in accordance with the applicable
provisions of Sections 4(g), 11(c), 15, 16 or 25, respectively.
<PAGE>
4. PROJECT CONSTRUCTION AND DEVELOPMENT.
(a) SUBMISSION AND APPROVAL OF PLANS. Prior to
commencement of the Work, Tenant shall submit to Landlord for
Landlord's approval, a final site plan, footprints, utility
plans, exterior renderings, elevations and offsite improvement
plans (together, the "Plans") and a proposed schedule of the Work
(the "Work Schedule") for the construction and development of the
Project on the Premises (the "Work"), including the riverboat or
barge-based gaming facility and related installations (or, if
permitted by the Commission, improvements and installations for
dockside gaming) at the Premises (together, the "Casino").
Landlord's approval of the Plans shall not be unreasonably
withheld or delayed. In all events, Landlord shall approve or
disapprove any proposed Plans within 10 business days after
Landlord's receipt of same, and any disapproval shall be specific
as to the reasons. Tenant shall be given adequate time and
opportunity to correct such matters which Landlord has identified
as the basis for such disapproval. If Landlord does not approve
or disapprove such Plans within 10 business days after Tenant's
submission, then such Plans shall be deemed approved for all
purposes under this Agreement. Landlord agrees that the Premises
shall be subject to any utility easements referenced in the
approved Plans and to execute such easement agreements for the
benefit of the Project. Landlord's approval of the Plans shall
not be deemed to constitute acceptance by Landlord of any
liability in connection with the Plans or the Work, such
liability and risk being expressly and exclusively borne by
Tenant. Landlord shall not be deemed to be acting unreasonably
in withholding its consent to the Plans proposed by Tenant if the
Plans constitute a material change from the preliminary site plan
set forth in ATTACHMENT D; provided, however, that roadway access
to the Premises, as depicted on ATTACHMENT D, may be reconfigured
by the parties in connection with Tenant's resolution of the
Access Issues. The procedures set forth in this Section 4(a)
shall apply with respect to any changes to the approved Plans
proposed by Tenant.
(b) CONSTRUCTION AND OCCUPANCY PERMIT APPLICATIONS.
Tenant, at Tenant's sole cost and expense, shall apply for all
permits required to enable Tenant to commence and complete the
construction of Project improvements (the "Construction Permits")
and to occupy and operate the Project (the "Occupancy Permits"),
and Tenant shall prepare all engineering and construction
documents required to apply for or comply with the terms of any
Construction Permit. Landlord shall endorse and support Tenant's
Permit applications to the extent the same are materially
consistent with the approved Plans; provided Landlord shall not
<PAGE>
be required to incur any out-of-pocket or third-party costs or
expenses in connection therewith.
(c) DELIVERY OF PREMISES. The Premises shall be made
available to Tenant for commencement of the Work from and after
the Commencement Date, provided Tenant has first obtained such
Permits (Site Permits or Construction Permits, as the case may
be) as are necessary for commencement of the applicable Work,
executed and delivered the necessary construction contracts,
established the construction disbursing escrow and delivered to
Landlord the insurance certificates, contract assignments,
consents and bonds provided for in Section 4(e). Prior to
commencing any Work on or at the Premises, Tenant, at Tenant's
sole risk, cost and expense, shall cause a resubdivision plat and
revised legal description of the Premises to be prepared by a
licensed Missouri surveyor in accordance with ATTACHMENT B and
submitted to Landlord for Landlord's review and approval, which
approval shall not be unreasonably withheld. The legal
description of the Premises shall become ATTACHMENT E to this
Lease. The resubdivision plat shall be sufficient to enable
Landlord to cause the Premises to be lawfully subdivided from the
Adjacent Parcel and shall be consistent with Tenant's
contemplated ingress and egress by the public to the Project and
Tenant's access to service roads and work areas as shown on the
Project design plans and renderings. Landlord agrees to
cooperate fully with Tenant in connection with Tenant's
preparation of the legal descriptions and resubdivision plat, but
at no out-of-pocket or third-party cost or expense to Landlord,
except that Landlord shall bear the cost of any surveying of the
Adjacent Parcel required to effect the resubdivision and any
other resubdivision costs allocable to the Adjacent Parcel, with
any such allocation between Tenant and Landlord to be based on
the relative size of the parcels unless the cost in question
relates solely to one parcel.
(d) COORDINATION AND INSPECTION OF WORK. Landlord
shall have the right to inspect and monitor the progress of the
Work during regular business hours, on reasonable prior notice to
Tenant and without material interference with the Work. Tenant
shall advise Landlord as to any material claim pending or
threatened by or against Tenant or otherwise involving the
Project and of any anticipated delays in Project Opening. Within
30 days after the Effective Date, Tenant and Landlord shall each
designate one or more "Project Representatives" who shall provide
liaison services between the Tenant and Guarantor and contractors
and consultants working on the Project on one hand and Landlord
and officials and departments of the County on the other. The
Project Representatives shall confer by telephone and fax
communication, and shall meet with each other regularly or
<PAGE>
otherwise on reasonable prior request for the purpose of
conveying and obtaining information and approvals required in
connection with the Work. Notices provided by Project
Representatives shall be sent and received in accordance with the
provisions of Section 29 regarding delivery of Notices.
(e) THE WORK. After the Commencement Date, Tenant
shall proceed with reasonable diligence to obtain all
Construction Permits not theretofore obtained by Tenant, to
commence and complete the Work in accordance with the Plans and,
subject only to Unavoidable Delays and delays caused by Landlord
or the County, the Work Schedule, and to obtain all Occupancy
Permits and to open the Project (including the Casino) to the
public ("Project Opening"). All Work shall be performed by
Tenant at the sole risk, cost and expense of Tenant (i) in a
first class, workmanlike manner, (ii) free of liens for labor and
materials (subject to Tenant's right to contest liens as provided
in this Lease), (iii) subject to commercial liability, builder's
risk and worker's compensation insurance coverage required under
this Lease, (iv) free of all other claims against Landlord or the
Project (subject to Tenant's right to contest liens as provided
in this Lease), (v) in compliance with the Permits and all
applicable laws, regulations, ordinances and codes ("Governmental
Requirements"), and (vi) as to the Work performed on the Premises
only, (a) subject to fully-funded construction disbursing escrows
with properly qualified, licensed and bonded contractors, and (b)
pursuant to contracts permitting assignment of Tenant's interest
thereunder to the Guarantor and the consent of the contractors to
such assignment (collectively, the "Work Requirements"). Tenant
shall be responsible for timely delivery to Landlord of all
insurance certificates, construction contracts, bonds,
construction disbursing escrows, collateral assignments of
construction contracts and the contractors' consents thereto.
Tenant shall deliver to Landlord a certificate of Substantial
Completion of the Work issued by Tenant's architect, and Tenant
shall provide evidence of payment of all construction costs. As
used herein, "Substantial Completion" shall mean that only
insubstantial details of finish construction and installation
remain to be performed, and that the Project may nonetheless be
opened to the public. Tenant agrees that all punch-list items
shall be completed as soon as reasonably practical and in no
event later than 180 days after Substantial Completion. Tenant
shall deliver to Landlord a certificate of Final Completion
issued by Tenant's architect and evidencing the completion of all
punch-list items.
(f) CONTROL OF WORK. Landlord and Tenant agree,
subject to the provisions of the Project Proposal applicable to
the employment or engagement of local persons or companies,
<PAGE>
minorities and women or companies owned by minorities and women,
which provisions are hereby incorporated into this Lease by this
reference, and subject further to applicable Governmental
Requirements, that performance of the Work shall be subject to
the following terms and conditions: (i) Tenant shall have the
sole and exclusive right to select any architect, construction
manager, general contractor and engineer in connection with the
design and construction of the Project; (ii) Tenant shall have
the sole and exclusive right to select any additional
subcontractors, materialmen, suppliers or any other persons or
companies in connection with the construction of the Project; and
(iii) Tenant shall have the sole and exclusive right to manage,
direct, control, coordinate and prosecute the completion of the
Project, and Landlord shall cooperate fully in such regard, but
at no cost or expense to Landlord.
(g) UNDETECTED CONTAMINATION. In the event Tenant,
after commencement of the Work and not later than the date of
Project Opening, discovers Hazardous Substances beneath the
surface of the Premises which were not detected during the Due
Diligence Period or, if detected, the extent of which was not
fully ascertained by Tenant's "Phase II" work during the Due
Diligence Period, and which must be remediated in order to meet
applicable Governmental Requirements, and in the event the cost
to remediate such Hazardous Substances shall equal or exceed $3
million, Tenant shall have the option, by delivery of written
notice to Landlord within 90 days after Tenant's discovery of
such Hazardous Substances, accompanied by a written bid of
Tenant's contractor confirming such $3 million or greater
remediation cost, to terminate this Lease without further
obligation or liability to Landlord, such termination to take
effect no earlier than the date Tenant shall have (i) paid all
costs incurred by Tenant in connection with the Work, (ii)
installed warning signs and perimeter fencing to secure access to
any area made dangerous by Tenant's excavations, and (iii)
surrendered the Premises to Landlord, free and clear of Tenant's
construction equipment and materials. Landlord shall not be
obligated to refund to Tenant the Acceptance Fee, the
Commencement Date Fee (defined in Section 5(a)(i)), or any
prepaid Annual Rent, and Landlord's agreement with respect to the
cure of any objection raised by Tenant shall be void and of no
further force or effect. Tenant shall provide Landlord with
copies of all reports, test results and evaluations of Hazardous
Substances discovered beneath the Premises.
(h) PROJECT OPENING. Upon, and as a condition to,
Project Opening, Tenant shall pay the Project Opening Fee
described in Section 5(a)(ii). On or before the date of Project
Opening, the parties shall execute a memorandum prepared by
<PAGE>
Landlord and reasonably acceptable to Tenant establishing the
Project Opening date (and the date payments of Minimum Rent or
Percentage Rent, as the case may be, shall be due under Section
5), which memorandum shall become an attachment to this Lease.
5. RENT.
(a) KEY DATE PAYMENTS AND ANNUAL RENT. Tenant shall
pay to Landlord, without setoff or deduction, by corporate or
cashiers check or by wire transfer as directed by Landlord in
immediately available U.S. funds, the following rentals
(collectively, "Rent"):
(i) $2.5 million on the
Commencement Date (the "Commencement Date
Fee");
(ii) $2.5 million on the date of
Project Opening (the "Project Opening Fee");
and
(iii) as annual rent ("Annual
Rent"),
(A) commencing on the
Commencement Date and continuing until
the date of Project Opening, $2 million
per annum, payable in equal monthly
installments, and
(B) commencing on the
date of Project Opening and continuing
until the expiration of the Term, the
greater of (a) 4% of Adjusted Gross
Receipts ("AGR") ("Percentage Rent") or
(b) applicable Minimum Rent.
(b) MINIMUM RENT. As used in this Lease, the term
"Minimum Rent" shall mean $3 million during the 1st 12 month
period occurring after Project Opening, $2.8 million during the
2nd 12 month period occurring after Project Opening, $2.6 million
during the 3rd 12 month period occurring after Project Opening,
$2.4 million during the 4th 12 month period occurring after
Project Opening, $2.2 during the 5th 12 month period occurring
after Project Opening, and $2 million commencing on the 5th
anniversary of the date of Project Opening and continuing through
Lease Year 15. Minimum Rent shall be increased by 10% on the
first day of each successive 10th Lease Year occurring during the
Term, commencing with Lease Year 16.
(c) PAYMENT OF ANNUAL RENT. From the Commencement
Date until the date of Project Opening, Annual Rent shall be paid
in equal monthly installments, with each installment equal to
<PAGE>
1/12th of the applicable Minimum Rent. On the date of Project
Opening, Annual Rent shall be paid on a monthly basis as provided
in Section 5(a)(iii)(B). In the event the Commencement Date, the
date of Project Opening, or the date the Term expires occurs on a
date which is not the first day of a month, the relevant monthly
installment of Annual Rent shall be prorated per diem, based on
the number of days of such month included within the applicable
Rent period. Payments of Annual Rent shall be subject to
quarterly adjustment as provided in this subsection (c) in the
event and to the extent Minimum Rent accruing for such quarterly
period is exceeded by Percentage Rent (4% x AGR) accruing for
such quarterly period. As used in this Lease, the term "Adjusted
Gross Receipts" or "AGR" shall mean the gross receipts from
licensed gambling games and devices less winnings paid to
wagerers and the 20% tax paid to the State of Missouri pursuant
to Section 318.822 of the Revised Missouri Statutes. In the
event Percentage Rent exceeds Minimum Rent during any quarter,
Tenant shall pay such difference to Landlord, as an adjustment to
Minimum Rent, not later than 45 days after the end of each
quarter. At the end of each Lease Year, Tenant shall be entitled
to a credit against Rent next due to the extent of any
overpayments of Percentage Rent made by Tenant during such Lease
Year. Tenant shall report AGR to Landlord on a quarterly basis
in accordance with the provisions of Section 13.
6. TRIPLE NET OBLIGATION. The Lease shall be what is
commonly known as a "Triple Net" Lease, and Tenant shall be
responsible for the full and timely performance of all
obligations and payment of all costs, charges, fees, expenses and
other sums incurred by or for Tenant's benefit in connection with
Tenant's ownership, leasing, construction, development,
equipping, management, maintenance, repair, replacement,
operation or use of the Project or any component thereof,
including without limitation all salaries, fees, commissions,
rentals, license or permit fees, loan or mortgage payments,
utility charges, trash, sewage and waste water disposal charges,
fuel charges, insurance premiums and deductibles, and all general
real estate, ad valorem, sales, use and other taxes and
assessments, special or general, allocable to the Premises, the
Project or the leasehold estate of Tenant. All sums other than
Rent payable by Tenant hereunder, including without limitation
the Acceptance Fee and the amounts due Landlord pursuant to this
Section 6 (whether directly or by reimbursement of any sum paid
by Landlord to a third party in the cure of a default by Tenant
as permitted under this Lease) shall be deemed "Additional Rent"
as to which Landlord shall have the same rights and remedies for
enforcement of payment and collection as Landlord has in respect
of Rent.
<PAGE>
7. SECURITY DEPOSIT. Until the occurrence of the
Commencement Date and payment of the Acceptance Fee, the
Commencement Date Fee, and the first installment of Annual Rent,
Landlord and Tenant shall maintain the Escrow established with
the Escrow Agent. The Escrow shall secure Landlord against the
possibility that Tenant shall withdraw or abandon Tenant's
application for Gaming Licensure or for any Site Permits, or
otherwise abandon the Project, in which event Landlord shall be
entitled to terminate this Lease and, as Landlord's sole remedy,
to retain the sum deposited into Escrow as liquidated damages and
not as a penalty, the parties not being able to determine
Landlord's actual damages prior to the Commencement Date. Not
later than 5 business days after the Effective Date, Tenant shall
deposit into the Escrow $750,000 or a 6-month (or longer)
irrevocable letter of credit in the stated amount of $750,000
issued by a bank or financial institution acceptable to Landlord
(the "Security Deposit"), and permitting draws (and deposit into
the Escrow of the resulting cash) upon unilateral presentation to
the issuer of Landlord's certificate that Tenant has withdrawn or
abandoned Tenant's application for Gaming Licensure or for any
Site Permits, or otherwise abandoned the Project, or that Tenant
has failed to renew or replace the letter of credit within 30
days prior to its stated expiration. Upon delivery to the Escrow
Agent of Landlord's certification that Tenant has withdrawn or
abandoned Tenant's application for Gaming Licensure or for any
Site Permits, or otherwise abandoned the Project, the Escrow
Agent shall be authorized and directed to interplead into the St.
Louis County Circuit Court for disposition by the Court the cash
sum deposited into the Escrow (including cash drawn from the
letter of credit), under the terms of the Escrow Agreement and
this Lease. Within 5 business days after cancellation of this
Lease in accordance with the provisions of Section 2(b) or
Section 3(d), or within 5 business days after the occurrence of
the Commencement Date, Landlord shall deliver its certificate to
the Escrow Agent, and the Escrow Agent shall be authorized and
directed, under the terms of the Escrow Agreement, to immediately
release to Tenant the cash or letter of credit deposited in the
Escrow by Tenant. Upon the Commencement Date and payment of the
Acceptance Fee, the Commencement Date Fee and the first
installment of Annual Rent, the Security Deposit shall be
promptly refunded to Tenant.
8. REPRESENTATIONS AND WARRANTIES.
(a) In order to induce Landlord to enter into this
Lease, Tenant makes the following representations and warranties
to Landlord, all of which representations and warranties shall be
deemed restated as of the Commencement Date:
<PAGE>
(i) Tenant is duly formed and validly
existing as a Missouri limited
partnership;
(ii) the General Partner is duly formed and
validly existing as a Nevada corporation;
(iii) the execution and delivery of this
Lease and the performance by Tenant of
Tenant's obligations hereunder have been
duly authorized by all requisite corporate
and partnership action;
(iv) this Lease constitutes the legal, valid
and binding obligation of Tenant and is
enforceable against Tenant in accordance
with its terms;
(v) no litigation is pending or, to the best
of Tenant's knowledge, threatened against
Tenant which, if adversely determined,
would likely have a material adverse
impact on Tenant or the Project;
(vi) Tenant is not a party to, and neither
Tenant nor Tenant's properties, real or
personal, are subject to, any agreement,
order, proceeding, ruling or other matter
in conflict with any provision of this
Lease or which materially and adversely
affects its ability to perform its
obligations hereunder;
(vii) Tenant is solvent and is not a party to
any assignment for the benefit of
creditors or bankruptcy proceeding; and
(viii) Tenant is not in material default of
any contract or agreement to which it is a
party which materially and adversely
affects Tenant's ability to perform its
obligations under this Lease.
(b) In order to induce Tenant to enter into this
Lease, Landlord makes the following representations and
warranties to Tenant, all of which representations and warranties
shall be deemed restated as of the Commencement Date:
(i) Landlord is a corporate and political body
lawfully existing and in good standing under
the laws of the State of Missouri and has
the power and authority to enter into this
Lease,
<PAGE>
and the execution and delivery of this Lease
and the performance by Landlord of Landlord's
obligations hereunder have been duly
authorized by all requisite governmental
action;
(ii) this Lease constitutes the legal, valid and
binding obligation of Landlord and is
enforceable against Landlord in accordance
with its terms;
(iii) no litigation is pending or, to the best
of Landlord's knowledge, threatened against
Landlord which, if adversely determined,
would likely have a material adverse impact
on the Project;
(iv) Landlord is solvent and is not a party to
any assignment for the benefit of creditors
or bankruptcy proceeding;
(v) Landlord is not a party to any agreement,
order, proceeding, ruling or other matter in
conflict with any provision of this Lease;
and
(vi) Landlord is not in default of any contract
or agreement to which it is a party which
materially and adversely affects its ability
to perform its obligations under this Lease.
9. USE OF PREMISES AND QUIET ENJOYMENT.
(a) DESIGNATED USE. Tenant shall use the Premises for
the operation of a Casino containing a minimum of 26,000 square
feet of Las Vegas style gaming area and for related, supporting
infrastructure, including without limitation a parking lot,
lighting, signage and such additional installations as are
required by Tenant in connection therewith. In addition to the
Casino, Tenant may operate on the Premises such restaurants, bars
and/or stores, as Tenant may in its discretion determine.
(b) ALTERATIONS AND IMPROVEMENTS. Subject to the
provisions of Section 9(a), Tenant may from time to time, at
Tenant's sole risk, cost and expense, make alterations and
improvements, (i) without Landlord's prior written consent, to
the interior, non-structural components of the Premises which do
not reduce the minimum square footage devoted to Casino gaming,
<PAGE>
and (ii) with Landlord's prior written consent, which consent
shall not be unreasonably withheld or delayed, to the exterior or
structural components of the Project; provided, however, that
Landlord shall not be required to consent to any reduction in the
square footage of the Project devoted to Casino gaming. In the
event of a dispute between the parties as to whether Landlord's
consent is required or has been unreasonably withheld, the issue
shall be submitted to binding arbitration in accordance with the
procedures of Section 31. In order to rule in favor of Landlord,
the arbitrators must determine that such proposed new
construction would be detrimental to the Project and Landlord's
realization of the benefits of this Lease.
(c) COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. During
the Term, Tenant shall, at its sole cost and expense, promptly
observe and comply with all Governmental Requirements and the
requirements of all insurance companies writing policies covering
the Casino or the parking areas, streets, sidewalks, vaults,
curbs and gutters included within the Project, or the use and
occupation or franchises and privileges connected therewith,
whether or not such Governmental Requirements or insurance
requirements shall necessitate structural changes, improvements,
interference with the use and enjoyment of the Project,
replacements or repairs, extraordinary as well as ordinary,
foreseen or unforeseen. The Casino shall be located within the
Project in such a manner so as not to violate any applicable
Gaming Licensure requirements of the Commission or any Permits
obtained by Tenant. Tenant shall pay all costs, expenses,
claims, fines, penalties and damages that may in any manner arise
out of or be imposed because of the failure of Tenant to comply
with any of the foregoing requirements.
(d) PERMITTED CONTESTS. Tenant, after notice to
Landlord, may, by appropriate legal proceedings conducted at
Tenant's sole expense, contest in good faith the validity or
enforcement of any Governmental Requirement and may defer
compliance therewith, provided that (i) such noncompliance shall
not constitute a crime, (ii) Tenant shall diligently prosecute
such contest to final determination by a court, governmental
authority, agency, department or other body having final
jurisdiction, (iii) the contest conducted by Tenant will not
operate to extend the Investigation Deadline or the Permit
Deadline, and (iv) the contest conducted by Tenant will not
result in the closing of the Project, any foreclosure or
forfeiture of Tenant's leasehold estate or the imposition of any
charge, fine, lien, penalty or claim against Landlord. Tenant,
after notice to Landlord, may, by appropriate legal proceedings
conducted at Tenant's sole expense, contest in good faith the
validity of any lien for labor or materials imposed against
<PAGE>
Tenant or the Project, provided that Tenant first discharges
such lien from the records of the County by posting of bond or
other security reasonably adequate to secure Tenant's
performance, and provided further that such contest will not
result in the closing of the Project or any foreclosure or
forfeiture of Tenant's leasehold estate.
(e) QUIET ENJOYMENT. Landlord covenants and agrees
that Tenant shall be entitled to lawfully and quietly hold,
occupy and enjoy the Premises during the Term without hindrance
or interference by Landlord or by any party claiming by, through
or under Landlord, in accordance with and subject to the terms
and conditions of this Lease.
10. EXCLUSIVITY AND RESTRICTIVE COVENANT.
(a) GRANT OF EXCLUSIVITY. To the fullest extent
permitted by law, and subject only to the provisions of Section
10(b), Landlord hereby grants to Tenant and its permitted
successors and assigns, for a period commencing on the Effective
Date and continuing through the 15th Lease Year (the "Exclusive
Rights Period"), the exclusive right to operate any type of
excursion gaming boat, land based or other type of gaming or
gambling facility or facilities on any property which is at any
time during the Exclusive Rights Period owned or controlled by
Landlord and located south of the River des Peres or, with
respect to the development thereof or to uses which may be made
thereof by the owner, tenant or occupant, under the
administrative jurisdiction of Landlord. Such exclusive rights
shall include an obligation on the part of Landlord to not
authorize, endorse, support or otherwise assist, directly or
indirectly, in connection with issuance by any governmental
entity of any license or permit to or for the development or
operation of any potentially competing gaming project south of
the River des Peres for the duration of the Exclusive Rights
Period.
(b) CONDITIONS OF GRANT. Landlord's grant to Tenant
of exclusivity is subject to the following express conditions:
(i) the Casino shall remain in operation after Project Opening;
(ii) no Event of Default shall have occurred and be continuing
under this Lease on the part of Tenant or on the part of the
Guarantor under the Guarantees; (iii) Tenant and Guarantor shall
honor the restrictive covenant contained or referenced in Section
10(c); and (iv) Tenant shall not earn more than $200 million in
AGR during any Lease Year.
(c) RESTRICTIVE COVENANT. Tenant covenants and agrees
that during the Exclusive Rights Period, Tenant shall not
<PAGE>
participate in any manner in the ownership, sponsorship,
control, management, operation or use of any riverboat gaming
facility along either the Illinois or Missouri banks of the
Mississippi River from the southern boundary of the City of St.
Louis to the northern boundary of Jefferson County. Tenant
acknowledges that the restrictive covenant contained in this
Section 10(c) (and issued by the Guarantor under the Rent
Guarantee) is reasonable under all of the circumstances.
(d) RIGHT OF FIRST REFUSAL. In the event Landlord
shall elect to support issuance of a second gaming license south
of the River des Peres because Tenant has earned more than $200
Million in AGR during any Lease Year, and provided Tenant and
Guarantor are in compliance with the conditions described in
clauses (i), (ii) and (iii) of Section 10(b), Landlord shall
grant Tenant a 90-day right of first refusal to commit in writing
to construct and operate a second gaming project in
unincorporated St. Louis County at a mutually acceptable location
(and on terms and conditions mutually acceptable to the parties)
which, if constructed and opened for operation by Tenant within
24 months after Tenant's election (which 24 month period shall be
subject to extension on account of Unavoidable Delays), shall
operate, so long as the Tenant and Guarantor are in compliance
with respect to clauses (i), (ii) and (iii) above, as the same
pertain to both projects, to divest Landlord of the right to
implement or to authorize the implementation of any proposal from
another prospective tenant, developer or operator of a second
gaming facility, whether the proposal in question involves the
sale, lease or licensing of property owned or leased by Landlord
or Landlord's support before the Commission and the Council with
respect to an operation proposed to be located on privately-owned
land. Tenant's failure to elect to construct and operate a
second gaming project by timely written notice to Landlord shall
constitute a waiver of Tenant's right of first refusal, unless
Landlord's proposal does not result in a sale or lease of the
site in question, in which event Tenant's right of first refusal
shall be deemed reinstated. Landlord agrees to lend all
reasonable cooperation to Tenant in connection with any timely
exercise by Tenant of Tenant's right of first refusal to
construct and operate a second gaming project. In the event of a
dispute between Landlord and Tenant regarding any aspect of
Tenant's specific plans for the construction and operation of a
second gaming project or the terms of a lease or other agreement
with Landlord with respect to such second gaming project (other
than rent, which shall be equal to the then-current Rent payable
under this Lease), either party shall have the right to submit
such dispute to binding arbitration in accordance with the
procedures of Section 31.
<PAGE>
(e) MEMORANDUM OF RESTRICTIVE COVENANT. The
provisions of this Section 10 shall be incorporated into a
memorandum prepared and recorded by Landlord against the Adjacent
Parcel and any property now or hereafter owned by Landlord and
located south of the River des Peres.
11. COVENANT OF CONTINUOUS OPERATION.
(a) MAXIMIZATION OF REVENUES. The Project (including
the Casino and any barges utilized in connection with the
Project, and all structures, parking lots, driveways,
landscaping, fencing, lighting and signage), shall be maintained,
managed, operated, staffed, serviced, equipped and repaired in a
first class manner, in accordance with all Governmental
Requirements, insurance requirements and the highest standards of
similar projects operating along and from the Mississippi and
Missouri Rivers. The Casino shall remain in operation 24 hours a
day, 7 days a week, 365 days a year, so as to maximize the
opportunity of Landlord to earn Percentage Rent under Section
5(a)(iii), except to the extent limited by applicable
Governmental Requirements, Unavoidable Delays, casualty or
condemnation or by repairs, replacements or alterations made by
Tenant in accordance with the provisions of Section 9. Tenant
shall provide a reasonably adequate complement of properly
trained and equipped security personnel for the Project at all
times.
(b) PARTICULAR OPERATIONS. The Project and all
Project signage shall be fully illuminated at all times during
which the Project is open. Subject to applicable laws, Tenant
shall have the right to erect or affix such signs and banners as
Tenant may require in its discretion for directional,
informational, promotional or advertising purposes upon windows,
doors and walls (interior and exterior) of Project structures and
otherwise on or about the Project. All signs and banners shall
be in good taste and generally consistent with the themes and
aesthetics of the Project.
(c) ILLEGALITY OF GAMING OPERATIONS. Notwithstanding
the foregoing provisions of this Section 11, in the event casino
gaming shall become illegal in the State of Missouri by virtue of
legislative action taken by the Missouri General Assembly,
popular referendum or otherwise, and in the further event that
the Casino is closed for a period of 30 consecutive days due to
such legal impediment, then either party shall have the right to
cancel this Lease by delivery of written notice of such election
to the other party at any time prior to the date casino gaming
again becomes legal in the State of Missouri. For so long as the
Project remains closed due to such legal impediment, Tenant's
<PAGE>
obligation to operate the Project and to pay Rent shall be
suspended. Landlord or Tenant shall have the right but not the
obligation to contest the validity of any legal impediment to the
operation of the Project arising under this subsection (c), and
in the event either party elects to contest such impediment, the
other party shall lend all non-financial assistance reasonably
required by the contesting party; provided, however, Tenant shall
not be obligated to participate in or assist Landlord in
connection with such contest if the Project is closed for 30 days
due to such legal impediment and either party elects to cancel
this Lease as provided in this subsection (c).
12. ASSIGNMENT AND SUBLETTING.
(a) LANDLORD'S CONSENT GENERALLY. No assignment or
subletting (including licensing) shall be allowed without the
prior written consent of Landlord, which consent shall not be
unreasonably withheld. In no event shall any assignment or
subletting operate to release Tenant from any liability under the
Lease or to release Guarantor from any liability under the
Guarantee or constitute permission for any further subletting or
assignment. Consent to any one proposed assignment or sublease
shall not be deemed consent to further proposed assignments or
subleases. A corporate or partnership transaction involving
Tenant or the General Partner, including without limitation a
merger or sale or other transfer of the stock or partnership
interests in Tenant or the General Partner, which results in a
change of control of the Tenant or the General Partner, shall
constitute an assignment requiring Landlord's prior written
consent, unless the transaction involves the assignment of this
Lease to the Guarantor or to any corporation, partnership or
limited liability company controlling or controlled by the
Guarantor and meeting the Stated Criteria (as defined in Section
12(b)). The assignment or pledge of the assets of the Project as
collateral for financing purposes shall not be considered an
assignment pursuant to this Section 12 but shall be governed by
the provisions of Section 19. Landlord's consent shall not be
required in connection with the subletting or licensing of
portions of the Project for bar, restaurant, retail or
entertainment purposes which are incidental to the operation of
the Casino and which do not reduce the floor space dedicated to
Casino gaming under Section 9; provided that no such subletting
or licensing shall operate to relieve Tenant of any liability
under this Lease.
(b) PROCEDURES FOR ASSIGNMENT AND SUBLETTING. In the
event Tenant desires to assign its interest in this Lease or to
sublet the use of all or any portion of the Project, Tenant shall
deliver notice of the proposed transaction to Landlord, together
<PAGE>
with detailed information regarding the financial condition and
operating history of the proposed assignee or subtenant
(including any operator) and the terms of the proposed assignment
or subletting. Within 30 days after receipt of the foregoing
information, and subject to the provisions of subsection (a) of
this Section 12, Landlord shall accept or reject Tenant's
proposal. Landlord's rejection shall be based upon (i) the
failure of the proposed assignee or subtenant to meet any of the
"Stated Criteria" as hereinafter defined, or (ii) the occurrence
of an Event of Default, and Landlord shall specifically state the
grounds for Landlord's rejection. If Landlord shall fail to
respond to Tenant within 30 days after receipt of Tenant's
proposal, Landlord shall be deemed to have accepted such
proposal. In the event Tenant shall object to Landlord's
rejection of Tenant's proposal, Tenant's sole remedy shall be to
commence arbitration proceedings in accordance with the
provisions of Section 31. The arbitrators shall either approve
or disapprove the proposed assignment or sublease based on
compliance with the Stated Criteria and shall make no other award
or determination. Tenant hereby indemnifies and holds Landlord
harmless from and against any loss, cost, damage, claim, demand
or expense (including attorneys' fees and expenses) incurred by
Landlord in connection with any action brought by or for the
benefit of the proposed assignee or subtenant or seeking relief
other than arbitration as provided herein. In the event an
assignment is approved by Landlord or through arbitration, the
assignee shall be subject to all of the provisions of this Lease.
(c) STATED CRITERIA. With respect to any assignee or
subtenant (or the general partner, if the assignee or subtenant
is a partnership), the following shall constitute the Stated
Criteria for approving any proposed assignee of Tenant's interest
in this Lease or any proposed subtenant or operator of the
Project:
(i) a net worth at least equal to that of
the Guarantor (whether or not the
Guarantees remain in effect);
(ii) a sufficient casino gaming operating
history or reputation in the industry
or community in the reasonable
judgment of Landlord; and
(iii) a gaming license to operate the
Project.
Tenant agrees that Landlord shall not be deemed unreasonable in
rejecting a proposed assignee or subtenant on any of the above-
stated grounds.
<PAGE>
(d) CONSIDERATION AND EXPENSES. In connection with
any assignment of this Lease or any sublease or licensing
involving Casino operations (as opposed to ancillary uses of the
Project), and whether or not Landlord's consent is required,
Tenant shall pay to Landlord in cash 25% of the "Gain" realized
by Tenant (whether or not the Gain is deferred) from such
assignment, sublease or license, determined in accordance with
the requirements of the U.S. Internal Revenue Code. In the event
no Gain is realized, Tenant shall nonetheless pay to Landlord, as
and when received by Tenant, 25% of the total value of all
consideration realized by Tenant for or incident to any
assignment, sublease or license involving Casino operations in
excess of the Annual Rent payable under this Lease, after
deducting Tenant's reasonable attorneys' fees and real estate
commissions incurred to effect such assignment, sublease or
license. Prior to the effective date of any assignment, sublease
or licensing involving Casino operations, Tenant shall provide
Landlord with a statement of a nationally recognized accounting
firm certifying the Gain, if any, to be reported by Tenant in
connection with such assignment, sublease or licensing. Tenant
shall pay all reasonable attorneys' fees and expenses of Landlord
in connection with the review and approval of any such request
and of the documentation implementing same upon approval by
Landlord.
13. REPORTING COVENANTS. Tenant shall report each
month in writing to Landlord the progress of the Gaming Licensure
and Permit application process, the progress of construction, and,
after Project Opening, on a quarterly basis, AGR realized by
Tenant. Tenant also shall provide Landlord with such other
information regarding the development and operation of the
Project as Landlord may reasonably request, including the status
of Tenant's obligations under the Lease. All reports of AGR
shall be certified as to accuracy and completeness by an officer
of Tenant. In addition, copies of annual audit statements shall
be provided to Landlord by Tenant, and Landlord shall have the
right, at Landlord's sole cost and expense, except as hereinafter
provided, to conduct an audit of the books and records of Tenant,
not more frequently than once during any Lease Year, in order to
verify the accuracy of AGR reported by Tenant and Tenant's
compliance with the various operating and reporting covenants
contained in this Lease. Tenant shall maintain Tenant's books
and records in support of Tenant's computations and reporting of
AGR in accordance with generally accepted principles of
accounting consistently applied. Tenant's books and records
shall be retained in the St. Louis metropolitan area, available
for inspection and audit by Landlord during regular business
hours on reasonable prior notice to Tenant and without material
interruption of Tenant's business. In the event Landlord's audit
<PAGE>
or any audit conducted by the Commission discloses that AGR has
been under-reported such that Landlord is entitled to receive an
additional payment of Annual Rent, Tenant shall promptly make
payment to Landlord of the entire sum due Landlord. In the event
the amount due exceeds 5% of the amount paid by Tenant, Tenant
also shall pay Landlord's expenses in conducting such audit.
Upon Landlord's request, Tenant also shall provide Landlord with
a copy of each financial statement, report and filing issued by
or on its behalf and provided to any regulatory body, including,
without limitation, the Missouri Gaming Commission, the
Securities and Exchange Commission and other authorities,
agencies and commissions having jurisdiction over Tenant's
operations. Tenant shall promptly report to Landlord any notice
received by it from any governmental authority or in respect of
any proceedings at law or in equity to which Tenant is a party
alleging violation of any Governmental Requirements by Tenant,
and Tenant shall provide to Landlord such information as Landlord
may request in connection therewith. Upon Landlord's request,
Tenant shall present to Landlord on an annual basis the Coast
Guard certificate of inspection obtained for the Casino. Tenant
hereby irrevocably designates St. Louis County as the "home dock"
for the Project during the Term for all purposes under Section
313.822 of the Revised Missouri Statutes, and Tenant agrees to
confirm the status of the County as the "home dock" for the
Project as and when requested to do so by Landlord or the
Commission.
14. INSURANCE.
(a) TYPES OF INSURANCE. Throughout the Term, Tenant
shall maintain in full force and effect the following insurance
coverage:
(i) commercial liability insurance on an
"occurrence basis" against claims for "personal injury"
including, without limitation, bodily injury, death or
property damage occurring on, in or about the Project
or in connection with any other operations of Tenant
related to the Project (such as, by way of example, off-
site bus or shuttle service), such insurance to afford
immediate minimum protection of $5 million combined
single limit/per occurrence and $10 million aggregate,
and, (a) with respect to the Project exclusive of any
boat hull, a deductible not greater than $75,000, and,
(b) with respect to any boat hull, a deductible not
greater than 1% of the value of the boat;
<PAGE>
(ii) property insurance against loss or
damage to the Project (including the Casino) by fire
and other risks covered by insurance of the type now
known as "fire and extended coverage" in an amount
equal to the replacement value of the Casino and
remainder of the Project and with a deductible not
greater than $75,000 from the loss payable for any
casualty;
(iii) protection and indemnity insurance
including collision liability covering collisions with
all fixed or floating objects with a minimum limit of
$5 million per occurrence and a deductible not greater
than $75,000;
(iv) worker's compensation insurance in
full compliance with all applicable state and federal
laws and regulations, including a specific endorsement
covering liability for Federal Longshoremen's and
Harbor Workers' Compensation Act;
(v) employers liability insurance in the
minimum amounts of $1 million per individual claim, not
to exceed $100 million in the aggregate, covering
injury or death to any employee which may be outside of
or in addition to liability under any worker's
compensation statutory coverage;
(vi) excess or umbrella insurance
providing a minimum of $10 million in excess of
underlying limits and coverage provided by commercial
general liability, protection and indemnity and
employer's liability policies; and
(vii) personal property insurance
covering Tenant's trade fixtures, equipment, goods and
inventory in an amount not less than 95% replacement
value.
(b) QUALITY OF COVERAGE. All such policies shall be
issued by insurance companies licensed to do business in the
State of Missouri and approved by Landlord as to form and as to
surety and reserving the right of recovery by the Landlord in the
event of damage to its property and issued in the name of Tenant
and naming Landlord as additional insured, as its interest may
appear. Included in the property and maritime policies shall be
coverage providing for the removal of any Casino when damaged or
sunk from any cause whatsoever and this clause shall be expressed
as a specific warranty by the insurance company regardless of
cause. In addition, one or more of the policies shall include
<PAGE>
special dram shop, vehicular and maritime operations
endorsements and a contractual liability endorsement covering the
indemnification agreements of Tenant contained in this Lease.
Policy certificates shall be delivered to Landlord on the
Effective Date and shall state that the coverage afforded thereby
shall not be modified or canceled without 60 days' prior written
notice to Landlord, delivered by registered mail. Provided no
Event of Default has occurred and is continuing, all loss
proceeds shall be made available to Tenant to restore and repair
the Project (including the Casino) as provided in Section 15.
Permitted deductibles may be increased by an amount equal to any
increased inflation in the value of U. S. currency.
(c) RENEWAL OF COVERAGE. Certificates of insurance
with reasonably satisfactory evidence of payment of the premium
thereof, shall be delivered to Landlord on or before the
Commencement Date or date of Project Opening, as appropriate, and
upon renewals of such policies, not less than 30 days after
renewal. Not less than 60 days prior to the expiration of any
such coverage, Tenant will provide evidence to Landlord of
continuing insurability by means of letters from qualified
carriers confirming intent to renew or provide the required
coverage. If Tenant at any time fails or refuses to procure or
maintain the required amount of insurance, then the Landlord may,
and without notice to Tenant, obtain same for and on behalf of
Tenant and charge the cost thereof to Tenant, such charge to be
due and payable upon demand and to constitute Additional Rent
hereunder.
(d) WAIVER OF SUBROGATION AND RIGHT OF RECOVERY.
Tenant, and all parties claiming under or through Tenant, hereby
expressly release and discharge Landlord and the County from any
claim or liability, whether based on negligence or any reason
whatsoever, for any personal injury or property damage. All
insurance policies of Tenant shall contain an endorsement
containing an express waiver of any right of subrogation by the
insurance company against Landlord and the County.
(e) ADDITIONAL INSURANCE. Tenant shall obtain such
other insurance in such amounts as may from time to time be
reasonably required by the Landlord against other insurable
hazards, and the Landlord may require the amount of any policy of
insurance Tenant is required to maintain pursuant to the
provisions of this Lease to be increased. Tenant shall not carry
separate or additional insurance concurrent in form or
contributing in the event of any loss or damage with any
insurance required to be obtained by Tenant under this Lease, if
the effect of such insurance would be to reduce the protection or
payment to be made under insurance required hereunder. In the
<PAGE>
event Tenant objects to any increased or additional coverage
required by Landlord, the issue shall be submitted to binding
arbitration in accordance with the provisions of Section 31
hereof.
15. DAMAGE AND DESTRUCTION.
(a) CASUALTY TERMINATION. If, at any time during
the last 10 years of the Term, the Project is damaged by any
cause or casualty in an amount exceeding 15% of the then
replacement cost of the Project, Tenant shall have the right to
terminate this Lease by written notice to Landlord within 60 days
of the happening of the casualty causing such damage or
destruction. In such event, Landlord shall receive from the
insurance proceeds the lesser of (a) the then present value of
the Minimum Rent payable to Landlord for the remainder of the
Term plus the amount equal to the cost of rebuilding all damaged
or destroyed land-based facilities, or (b) 100% of the insurance
proceeds. Any funds remaining following the distribution of the
insurance proceeds paid to Landlord pursuant to the previous
sentence shall be paid to Tenant. Upon any termination of the
Lease under this provision, Tenant shall surrender possession of
the Premises within 90 days after notice of termination,
whereupon each of the parties shall be released thereby from any
further obligations to the other except for items which have
theretofore accrued and are then unpaid, and such termination
shall be deemed to relate back to the date of damage or
destruction; provided, however, that if the Project or any part
thereof shall be kept open for business after the date of damage
and prior to the surrender of possession of the Premises, the
termination date shall be the date upon which Tenant shall
discontinue the conduct of its business on the Premises. In the
event of any termination pursuant to this Section 15(a), and upon
surrender of the Premises to Landlord, Landlord shall refund to
Tenant any unearned portion of Annual Rent prepaid by Tenant. In
addition, in the event Landlord relets the Premises to another
lessee, Landlord shall reimburse Tenant for the prepaid Minimum
Rent paid by Tenant due to the termination of this Lease pursuant
to this Section 15(a) from the rent paid by such lessee.
(b) CASUALTY RECONSTRUCTION. In the event of damage
or destruction occurring to the Project (including the Casino)
other than as described in subsection (a) above, Tenant shall
repair and rebuild the Project (including the Casino), and
restore the Project to full operation with reasonable diligence;
Tenant shall direct, control, coordinate and approve all such
repairs, reconstruction and restoration contemplated by this
provision and shall have the right to select any architects,
engineers and contractors for such repairs, reconstruction or
<PAGE>
restoration. All loss proceeds shall be made available to
Tenant and shall be applied to effect such repair, reconstruction
or restoration of the Project. No component of Annual Rent or
Additional Rent shall abate as a result of any such damage or
destruction, it being understood and agreed that Tenant shall
maintain such business interruption insurance as Tenant may
require in order to assure Tenant of the ability to continue to
meet Tenant's financial obligations under this Lease.
16. CONDEMNATION.
(a) DEFINITIONS. Whenever used in this section, the
following words shall have the following respective definitions
and meanings: (i) "condemnation" or "condemnation proceedings" -
any action or proceeding brought by competent authority for the
purpose of the taking of the fee of the Premises, the Project or
any part thereof, as a result of the exercise of the power of
eminent domain, including a voluntary sale to such authority
either under threat of or in lieu of condemnation or while such
action or proceedings is pending; (ii) "taking" - the event of
vesting of title to the fee of the Premises, or the Project or
any part thereof, in the competent authority pursuant to
condemnation; (iii) "vesting date" - the date of the taking.
(b) DEFENSE OF TAKING. Landlord, immediately upon
obtaining knowledge of the institution of any proceedings for the
condemnation of the Premises or any part thereof, shall notify
Tenant of the pendency of such proceedings. Landlord shall then,
if requested by Tenant, file or defend its rights thereunder and
prosecute the same with due diligence to its final disposition.
Tenant may, but shall not be required to, participate in any such
proceedings and Landlord from time to time will deliver to Tenant
all instruments requested by it to permit such participation. In
the event Tenant chooses to participate in any such proceedings,
Landlord may be the nominal party in such proceedings, but Tenant
shall be entitled to control and direct the same and to be
represented therein by counsel of its choice, at Tenant's cost.
Landlord covenants and agrees that it will use its best efforts
and take all actions necessary and appropriate to cause the
County not to exercise its powers of eminent domain with regard
to the Premises, the Project or any part thereof, and otherwise
to assure to the greatest extent possible that neither the
Premises, the Project nor any part thereof, shall be condemned
during the Term.
(c) TOTAL TAKING. In the case of a taking of all of
the Premises and the Project, this Lease shall terminate as of
the vesting date and the Rent under this Lease shall be
apportioned to the date of termination, and upon surrender of the
<PAGE>
Premises to Landlord, Landlord shall refund to Tenant any
unearned portion of Annual Rent prepaid by Tenant.
(d) PARTIAL TAKING - TERMINATION OR ARBITRATION.
In the case of a taking of less than all of the Premises and Project
(other than for a temporary use) Landlord and Tenant mutually
shall determine within a reasonable time after the vesting date
whether the remainder thereof can economically and feasibly be
used by Tenant. If Landlord and Tenant cannot mutually agree
upon such matter with 90 days after the vesting date, it shall be
determined by binding arbitration pursuant to the provisions of
Section 31. If it is determined by mutual agreement or by
arbitration that the remaining Premises and Project cannot
economically and feasibly be used by Tenant, Tenant may terminate
this Lease on not less than 10 days nor more than 30 days notice
to Landlord to such effect, provided that such notice is given
within 30 days after such determination, and the Rent shall be
apportioned to the date of termination. If Tenant does not elect
to terminate this Lease within the period aforementioned, it
shall continue in full force and effect with respect to the
remaining portion of the Premises. If this Lease shall terminate
pursuant to this provision, the award for the Project shall be
apportioned and paid, to the extent available, in the following
order of priority: (i) Landlord and Tenant first shall be
entitled to their reasonable expenses and charges including,
without limitation, reasonable attorneys' fees incurred in
connection with the taking; (ii) Landlord shall be entitled to
the value of the fee exclusive of the value of this Lease; and
(iii) Tenant shall be entitled to the balance of the award. If
the court in which the condemnation proceedings are brought fails
or refuses to apportion its award between Landlord and Tenant,
and if Landlord and Tenant cannot agree upon the allocation
defined in the above order of priority, such values, allocation
and apportionment shall be determined by binding arbitration
under the provisions of this Lease. The provisions of this
section also shall apply in the case of a partial taking where
the this Lease is terminated pursuant to the provisions hereof.
(e) PARTIAL TAKING - RECONSTRUCTION. In the case of a
partial taking where the Tenant does not elect to terminate this
Lease pursuant to the provisions set forth above, Tenant shall
commence and proceed with reasonable diligence to repair and
reconstruct the remaining improvements to a complete,
economically usable, architectural unit or units, including,
without limitation, temporary repairs, changes and installations
required to accommodate space subtenants and all other work and
replacements and additions of furniture and furnishings
incidental to and appropriate in connection with all of the
foregoing (all such repair, reconstruction, replacements and
<PAGE>
additions and work being referred to in this section as
"restoration"); and the total award of the condemnation
proceedings, including the award for the Project shall be
apportioned and paid to the extent available in the following
order of priority: (i) Landlord and Tenant first shall be
entitled to their reasonable expenses and charges including,
without limitation, reasonable attorneys' fees incurred in
connection with the taking; (ii) Tenant shall be entitled to an
amount equal to the cost of restoration to the extent
contemplated by this section, such sums shall be turned over to
Tenant to be held in trust for the purpose of paying for the cost
of restoration; (iii) Landlord shall be entitled to the value of
the fee exclusive of the value of this Lease; (iv) Tenant next
shall be entitled to the value of its leasehold estate under this
Lease, the value of the Project, the value of the furniture,
fixtures and equipment of the Project and the balance of the
award.
(f) TEMPORARY TAKING. In the event of a taking of all
or any portion of the Premises and the Project for temporary use,
the foregoing provisions of this Section 16 shall be inapplicable
thereto. This Lease shall remain in full force and effect and
Tenant alone shall be entitled to make claim for, recover and
retain any award recoverable in respect of such temporary use, so
long as Rent is first paid from such award. If any portion of
the award for such temporary use is intended to cover the cost of
restoring the Premises and the Project to the condition they were
in prior to such temporary use, such portion of the award shall
be paid to Tenant to cover the cost of such restoration and
repair.
<PAGE>
17. ADJACENT PARCEL.
(a) DEVELOPMENT PARAMETERS. Tenant and its affiliates
shall be permitted to submit proposals to Landlord for the
development of all or portions of the Adjacent Parcel. The
Adjacent Parcel may be developed by Landlord and/or other parties
for light industrial, commercial, retail, entertainment and/or
recreational uses. Structures of any size or height, such as
warehouses, distribution centers, manufacturing facilities,
hotels, shopping centers, entertainment, sporting or recreational
facilities, parking lots or garages, communications towers, and
docking facilities, may be constructed and operated on the
Adjacent Parcel. Landlord covenants that no use may be made of
the Adjacent Parcel which shall constitute a nuisance or
hindrance to the Project, detract materially from the aesthetic
appeal of the Project, generate excessive industrial noise or
noxious industrial or chemical odors, or materially impair access
to the Project. Neither the volume nor type of traffic,
including heavy truck traffic, on the Adjacent Parcel, including
any resulting noise or omissions, nor any signage or illumination
located on the Adjacent Parcel, shall be deemed to constitute a
nuisance, impairment or detraction. That portion of the Adjacent
Parcel which is within the 50' by 550' zone along the northern
perimeter boundary of the Premises identified on ATTACHMENT D
shall constitute a "Buffer Zone" between any development located
on the Adjacent Parcel and the Premises. Only green space or
landscaping shall be located within the Buffer Zone. Tenant
shall have a non-exclusive license, at Tenant's sole risk, cost
and expense, at Tenant's option, but without obligation, to enter
upon the Buffer Zone for the sole purpose of performing,
maintaining, repairing and replacing landscaping on the Buffer
Zone should Tenant so desire. Notwithstanding the foregoing
provisions of this Section 17(a), the parties acknowledge and
agree that a reconfiguration of the roadway providing access to
the Premises and/or the Adjacent Parcel, if and as agreed to by
the parties in connection with a resolution of pertinent Access
Issues, may entail access to the Adjacent Parcel via the bridge
to be constructed by Tenant or via the circular roadway depicted
on ATTACHMENT D.
(b) ENFORCEMENT. A restrictive covenant consistent
with the requirements of Section 17(a) shall be recorded by
Landlord against the Adjacent Parcel, and such restrictive
covenant shall be prior and paramount to any mortgage, deed of
trust or other encumbrance against the Adjacent Parcel. Landlord
shall have the right but not the obligation to enforce compliance
with such covenant to the extent the real estate in question has
been sold or transferred to a third party, but Tenant, its
successors and assigns, shall be designated in the covenant as
<PAGE>
intended beneficiaries thereof with full right to institute
action, legal and equitable, for any violation thereof. To the
extent Landlord retains ownership of the real estate in question
and the violation complained of is committed by a tenant or
occupant of the real estate, Landlord shall use its best efforts
to enforce Landlord's rights under the covenant by appropriate
legal action, including seeking appellate relief, if necessary.
(c) EXISTING LEASE. In the event of a conflict
between any provision of this Section 17 and any existing
provision of that certain Lease between Landlord, as successor to
NL Industries, Inc., and The Kiesel Company, as Tenant, dated as
of June 2, 1987, the provisions of the latter such lease shall
control. In the event the operations of the Kiesel Company, its
successors, assigns or subtenants, on or from the Kiesel Company
premises, are interfering with, or will likely interfere with,
Tenant's development or operation of the Project, in the
reasonable judgment of Tenant, after written notice to Landlord,
and provided other measures taken by Landlord and the Kiesel
Company to obviate the interference or potential interference are
either unavailable or prove insufficient, Landlord agrees to
cancel the Kiesel Company lease at the earliest permissible date.
18. NON-DISTURBANCE AND ATTORNMENT.
Landlord shall have the right to obtain a mortgage secured by Landlord's
interest in the Premises and/or this Lease; provided, however, that this
Lease, including all of the rights of Tenant under or pursuant to
this Lease, shall be paramount to, and shall not be subject or
subordinate to, any mortgage, deed of trust or other security
interest instrument ("Mortgage") that may now or hereafter affect
Tenant's interest in the Premises. Any Mortgage shall contain,
as required terms, the express acknowledgment that Tenant shall
not be liable for the payment of the sum secured by such
Mortgage, nor for any expenses in connection with the same.
Neither such Mortgage nor any instrument collateral thereto shall
contain any covenant or other obligation on Tenant's part to pay
such debt, or any part thereof, or to take any affirmative action
of any kind whatsoever; provided, however, that Tenant shall
remain liable under this Lease notwithstanding any foreclosure of
Landlord's interest in the Premises or any transfer of title to
the Premises, and provided further that Tenant shall agree to
attorn to such transferee. Such Mortgage shall expressly provide
that the Mortgagee shall not seek any money judgment against
Tenant related to any Mortgage obligation of Landlord. Each
Mortgagee shall agree to a non-disturbance and attornment
agreement which will require the Mortgagee to recognize that this
Lease is superior to Mortgagee's Mortgage, (ii) that Tenant shall
be entitled to use and occupy the Premises and the Project in
accordance with the terms of this Lease, (iii)
<PAGE>
that Tenant shall be entitled to all of its rights under this Lease,
(iv) that insurance and condemnation awards and proceeds shall be
disbursed as provided in this Lease, and (v) Tenant's possession of
the Premises and the Project shall not be disturbed by Mortgagee
or by any person whose rights are acquired through foreclosure
proceedings or through a deed in lieu of foreclosure except as
may be expressly provided in this Lease, and any subsequent
transferee of such rights shall be so bound provided no Event of
Default occurs and is continuing under this Lease. The non-
disturbance and attornment agreement may require (x) that as a
condition to the making of any amendment or modification to this
Lease Landlord receive the prior written consent of such
Mortgagee, (y) that such Mortgagee shall receive notice of any
default claimed by or through Tenant against Landlord, and (z)
that such Mortgagee shall have the same right to cure such
default as is provided the holder of any Leasehold Mortgage
obtained by Tenant. Tenant shall within 10 days after receipt
from Landlord execute and deliver to Landlord and Landlord's
Mortgagee such estoppels and attornment agreements as may be
required in connection with any proposed financing or refinancing
involving the Premises and/or the Adjacent Parcel, provided the
terms and conditions of such estoppels or attornment agreements
are consistent with the provisions of this Section 18 and the
same do not constitute a modification of this Lease.
19. LEASEHOLD MORTGAGES.
(a) RIGHT TO LEASEHOLD MORTGAGE. Tenant shall have
the right to mortgage and to refinance this Lease and Tenant's
leasehold estate and any improvements thereon, including but not
limited to the Project, ("Leasehold Mortgage") at any time, and
from time to time, on any terms Tenant may deem desirable and to
assign this Lease and any existing and future subleases, license
agreements and concession agreements, and the rentals and fees
payable to Tenant thereunder to the holder of such mortgage
("Leasehold Mortgagee"), as additional collateral security for
the indebtedness secured by the Leasehold Mortgage. In
connection therewith, Landlord agrees to timely execute and
deliver an estoppel certificate, a non-disturbance agreement, and
such other documents in reasonably satisfactory form as shall be
requested by any Leasehold Mortgagee, so long as such
certificates, agreements or other documents are not inconsistent
with this Lease. Any Leasehold Mortgage shall be subject and
subordinate to Landlord's rights under this Lease and its fee
interest in the Premises, except as otherwise provided herein.
(b) TERMS OF LEASEHOLD MORTGAGE. If Tenant shall have
executed and delivered a Leasehold Mortgage or Mortgages and the
<PAGE>
Leasehold Mortgagee shall have notified Landlord in writing to
such effect giving its name and address:
(i) Landlord concurrently shall serve upon such
Leasehold Mortgagee a copy of each notice, consent, approval,
request or demand given to Tenant under this Lease including,
without limitation, any notice, consent, approval, request or
demand under this Lease. No such notice to Tenant shall be
deemed to have been given nor shall be effective unless copies
thereof are thus served upon the Leasehold Mortgagee at such
address and in the manner provided pursuant to the Notice
provisions hereof.
(ii) Subject to the provisions set forth below,
such Leasehold Mortgagee shall have the right, for a period of 30
days more than is given to Tenant, to remedy or cause to be
remedied any default which is the basis of a notice; and Landlord
shall accept performance by such Leasehold Mortgagee as
performance by Tenant. In the event that Tenant has contested an
event of default, such Leasehold Mortgagee shall be given a 20
day period after the date of a final decision affirming the
contested default within which to cure such default on behalf of
Tenant.
(iii) In the case of default by Tenant under this
Lease which is susceptible of being cured only when such
Leasehold Mortgagee has obtained possession of the Premises and
the Project, other than a default in the payment of Rent or
Additional Rent, Landlord shall take no action to effect a
termination of this Lease by service of a notice or otherwise
without first giving to such Leasehold Mortgagee a reasonable
period of time (not to exceed 6 months) within which diligently
to obtain possession of the Premises and the Project (including
possession by a receiver) and to cure such default and/or
diligently to institute and complete foreclosure proceedings or
otherwise acquire Tenant's leasehold estate under this Lease and
to cure such defaults.
(iv) Upon acquisition of Tenant's interest in
this Lease by the Leasehold Mortgagee, or by any purchaser of
this Lease pursuant to any foreclosure proceeding instituted by
the Leasehold Mortgagee, Landlord's right to serve a notice of
election to end the Term based upon the occurrence of any default
(other than non-payment of Rent or Additional Rent, or non-
compliance with the provisions of Sections 9, 10, 12, 14, 15 or
20) which cannot with the exercise of due diligence be remedied
by such Leasehold Mortgagee or purchaser shall be deemed waived.
<PAGE>
(v) If, prior to any foreclosure sale brought by
a Leasehold Mortgagee, or if prior to the date upon which
Tenant's interest in this Lease shall have been otherwise
acquired by Leasehold Mortgagee or other purchaser, the default
in respect of which Landlord shall have given the notice shall
have been remedied and possession of the Premises and the Project
restored to Tenant, the obligation of the Leasehold Mortgagee to
assume this Lease shall be null and void and of no further
effect.
(vi) Notwithstanding anything contained in this
Section 19 to the contrary, if for any reason this Lease shall
terminate prior to the expiration of the Term, Landlord shall
give written notice thereof to the Leasehold Mortgagee. Subject
to the curing of any Event of Default and the payment of all Rent
and Additional Rent owed Landlord by the Tenant, and provided
such cure occurs not later than 60 days after Landlord's
termination of this Lease, Landlord shall enter into a new lease
for the Premises and the Project with the Leasehold Mortgagee or
with any person, firm, corporation or entity designated by the
Leasehold Mortgagee for the remainder of the Term, subject to
approval by Landlord, which approval shall not be unreasonably
withheld or delayed as provided in clause (vii) below, commencing
as of the date of such termination, at the Rent and upon the same
terms, covenants and conditions contained in this Lease (except
those which by their terms are no longer applicable). Such new
lease shall have priority equal to this Lease. Concurrently with
the execution and delivery of such new lease, Landlord shall turn
over and/or assign to the new tenant all of its right, title and
interest in and to moneys (including insurance proceeds) if any,
then held by or subsequently paid to Landlord, which Tenant would
have been entitled to receive but for such termination.
(vii) Landlord shall have no obligation (i) to
waive Landlord's lien rights (it being understood and agreed that
Landlord shall be required only to subordinate such lien rights
to the security interests of the Leasehold Mortgagee) or (ii) to
agree to any modification of any express term, covenant or
provision of this Lease, including, without limitation, the
disposition of the proceeds of a condemnation or casualty
contrary to the provisions of this Lease. Landlord's refusal to
accept any proffered successor tenant or operator of the Project
shall be deemed reasonable to the extent such party fails to meet
any of the Stated Criteria. Tenant shall require any Mortgagee
to provide Landlord with notice of any default under the terms of
any loan agreements, mortgages or promissory notes entered or
provided to the Mortgagee. In no event shall Landlord be
required to forbear in the exercise of any remedies available to
Landlord against the Guarantor upon the occurrence of an Event of
<PAGE>
Default by Tenant. In the event Landlord shall refuse to
approve a successor to Tenant proffered by the Leasehold
Mortgagee, the sole remedy available to the Leasehold Mortgagee
shall be to commence arbitration proceedings in accordance with
the provisions of Section 31. The arbitrators shall either
approve or disapprove the proposed successor based on compliance
with the Stated Criteria and shall make no other award or
determination.
20. INDEMNIFICATION.
(a) INDEMNITY GENERALLY. Tenant shall defend, pay,
indemnify and hold harmless Landlord and its agents, employees,
servants and representatives (together, the "Indemnified
Parties") from and against any and all claims, demands, injuries,
damages, fines, penalties, lawsuits, actions, proceedings,
orders, decrees, judgments or liability of any kind or nature by
or in favor of anyone whomsoever and from and against any and all
costs and expenses incurred by any of the Indemnified Parties,
including reasonable attorneys' fees and expenses, resulting or
arising from or in connection with (i) any accident, bodily
injury, death, personal injury of any kind, or property damage
arising directly or indirectly, out of or from or on account of
any occurrence in, upon, at, or about the Project; (ii) any
accident, bodily injury, death, personal injury or property
damage arising, directly or indirectly, out of or in connection
with Tenant's operation of gaming activities or the Casino; (iii)
any use, occupancy, non-use, or condition of the Project; and
(iv) any failure on the part of the Tenant to perform or comply
with any of the terms, covenants and conditions of this Lease.
(b) DEFENSE. In case any action, suit or proceeding
is brought against any of the Indemnified Parties by reason of
any occurrence described in clauses (i) through (iv), Tenant or
Tenant's insurer, upon the request of Landlord, will, at no
expense to Landlord or the Indemnified Party, resist and defend
such action, suit or proceeding or cause same to be resisted and
defended by counsel reasonably acceptable to Landlord. The
Indemnified Party shall have the right, at its discretion, to
retain its own counsel and be reimbursed by Tenant for all
reasonable attorneys' fees and costs incurred in the defense of
any action. The obligations of Tenant under this Section shall
survive the termination of this Lease.
(c) ENVIRONMENTAL INDEMNITY AND RELEASE.
In addition to the foregoing, Tenant agrees to indemnify and hold
harmless the Indemnified Parties and to defend them against any
lawsuitsor claims for any liability, injuries, damages, penalties or
fines (including reasonable attorneys' fees and expenses) arising
from or relating to the disposal, discharge, release or spilling
<PAGE>
into or onto the air, water, soil, sewer system or similar media
of any Hazardous Substance which disposal, discharge, release or
spill, whether accidental or intentional, occurs on, within or
from the Project (including the Casino, wherever located) during
the Term. Tenant agrees that Landlord shall have no liability or
obligation of any kind to Tenant on account of any Hazardous
Substances released on or from the Premises and covenants not to
bring any action, claim or demand against Landlord on account
thereof; provided, however, that such covenant to not sue
Landlord shall not apply to any release or migration of any
Hazardous Substance onto the Premises from the Adjacent Parcel
which is caused by Landlord or any tenant or occupant of the
Adjacent Parcel, their respective employees, contractors or
agents, and which first occurs during any period of Landlord's
ownership after the Effective Date.
(d) SURVIVAL OF INDEMNITY. The provisions of this
Section 20 shall survive any termination of this Lease.
21. RIGHT OF ENTRY. Landlord and its authorized agents and
employees shall, upon reasonable notice and during all reasonable
business hours, have the right to enter upon the Project to
examine same; provided, however, that any such entry shall not
interfere with Tenant's use or the operation of the Project, and
provided further that Tenant shall have the right to have a
representative or employee of Tenant accompany any such
inspection by Landlord. Landlord shall have the right from time
to time to inspect the Premises and to conduct tests and
evaluations to confirm whether Hazardous Substances have been
released on or from the Project in violation of applicable
Governmental Requirements. Such tests shall be conducted at
Landlord's sole risk, cost and expense, except that if it is
determined that Tenant shall have violated the provisions of
Section 20 relating to the release of Hazardous Substances, then
Tenant shall, in addition to performing such remediation as may
be required, pay to Landlord all costs incurred by Landlord in
connection with such tests and evaluations, and such additional
tests and evaluations as Landlord may conduct to confirm
satisfactory completion of Tenant's remediation work.
22. LIMITATION OF CLAIMS. Landlord shall not be
responsible for any damage or loss to the Casino or the Project,
its furnishings, fixtures, equipment or other goods thereon due
to any cause whatsoever, including, but not limited to, theft,
vandalism, public disorder, fire, weather, collisions, floating
or underwater hazards, electrolysis, tie-up or boat defects.
Additionally, Landlord shall not be responsible for any damage or
injury to Tenant's patrons, wherever located, arising from any
source, and Tenant shall perform all acts necessary to provide
<PAGE>
for the safety of its patrons while on the Premises or in the
Casino. Upon any sale of the Premises by Landlord, Landlord
shall be released from all obligations and liabilities accruing
under this Lease prior to the effective date of such sale,
provided the transferee shall expressly assume and agree to
perform for the benefit of Tenant all obligations of Landlord
under this Lease accruing after the effective date of such
transfer.
23. ATTORNEYS' FEES AND EXPENSES. Except as otherwise
expressly provided in this Lease, each party shall pay its own
attorneys' fees and expenses in connection with any matter
arising under this Lease.
24. LATE PAYMENTS. Late payments shall be subject to a
3% penalty and interest on late payments shall accrue from the date
of delinquency until paid at the rate of 2% in excess of the from
time to time publicly announced prime rate of interest of The
Boatmen's National Bank of St. Louis.
25. DEFAULT AND REMEDIES.
(a) TENANT'S DEFAULT. It shall be an Event of Default
if any one or more of the events described in the following
clauses (i) through (ix) shall occur and be continuing after
expiration of the applicable notice and cure period provided for
in such clause or otherwise provided for in subsection (b):
(i) if default be made in the punctual payment of
any Rent payable to Landlord hereunder, when
and as the same shall become due and payable,
and such default shall continue for a period
of ten (10) days after written notice to
Tenant (except that Landlord shall not be
required to deliver notice of non-payment of
Rent on more than two occasions during any
Lease Year), or if default be made in the
punctual payment of any Additional Rent
payable hereunder, when and as the same shall
become due and payable, and such default
shall continue for a period of thirty (30)
days after written notice to Tenant;
(ii) if this Lease be mortgaged byTenant except
as provided in Section 19, or if this Lease
be assigned or the Project (including the
Casino) or any part thereof be sublet, except
as provided in Section 12;
<PAGE>
(iii) if Tenant shall abandon the Work or the
Project, or if Tenant shall fail to
continuously or fully operate the Project
after Project Opening as required under
Section 11;
(iv) if Tenant shall fail to timelyfile its
application for Gaming Licensure, or if
Tenant shall withdraw or effectively abandon
such application prior to termination of this
Lease in accordance with its terms or, after
first obtaining Gaming Licensure, if Tenant
for any reason ceases to be licensed to
conduct a gaming operation at the Project
pursuant to the laws of the state of
Missouri;
(v) if Tenant shall fail to observe, perform or
comply with any of the terms, covenants and
conditions in this Lease other than those
specified in subsections (i) through (iv)
above, within 30 days after notice from
Landlord specifying the nature of such
default;
(vi) if Tenant or the Guarantor shall file a
voluntary petition in bankruptcy or shall be
adjudicated bankrupt or insolvent or shall
file any petition or answer seeking any
reorganization, readjustment, liquidation,
dissolution or similar relief under any
bankruptcy or insolvency statute or law of
the United States or any State, or shall seek
or consent to or acquiesce in the appointment
of any bankruptcy or insolvency trustee,
receiver or liquidator of tenant, the
Guarantor or of all or any substantial part
of its properties or the Project;
(vii) if within 60 days after the commencement of
any involuntary proceeding against Tenant or
the Guarantor seeking reorganization,
readjustment, liquidation, dissolution or
similar relief under any bankruptcy or
insolvency statute or law, Tenant or the
Guarantor fails to secure a dismissal and
discharge thereof;
<PAGE>
(viii) if Guarantor shall be in default under either
of the Guarantees, and such default shall
remain uncured beyond the period provided for
the cure thereof, if any;
(ix) if Tenant or the Guarantor shall make a
material misrepresentation in any
representation or warranty provided to
Landlord under this Lease or in any report
provided to Landlord pursuant to Section 13
(b) CURE OR REMEDIES. No Event of Default shall be
deemed to have occurred under clauses (ii) through (ix) unless
Tenant or the Guarantor, as the case may be, shall fail to cure
such default within 30 days after delivery by Landlord of written
notice of such default to Tenant, unless the same cannot be cured
within 30 days, in which event an Event of Default shall not be
deemed to have occurred if Tenant commences the cure of such
default within 30 days and thereafter diligently pursues such
cure to completion. Upon an Event of Default, Landlord, at its
option, may at any time thereafter declare this Lease and all
rights of Tenant under this Lease as expired and terminated and
Tenant shall remain liable as hereinafter provided.
(c) SURRENDER OF PREMISES. Upon any such expiration
or termination of this Lease, Tenant shall quit and peacefully
surrender the Project to Landlord, and Landlord, upon any such
expiration or termination, may without further notice enter upon
and re-enter the Project and possess and repossess itself
thereof, by force, summary proceedings, ejectment or otherwise,
and may dispossess Tenant and remove Tenant and all persons and
property from the Project.
(d) RELETTING OF PREMISES. If this Lease shall expire
or be terminated, or if the Project or any part thereof shall be
abandoned by Tenant, or shall become vacant during the Term,
Landlord may in its own name, or as agent for Tenant if this
Lease not be terminated, enter into possession of and relet the
Project or any part thereof for such term or terms (which may be
greater or less than the period which would otherwise have
constituted the balance of the Term) and on such conditions as
Landlord, in its discretion, may determine and may collect and
receive the rents therefor.
(e) DIRECT DAMAGES. No event of expiration or
termination of this Lease, abandonment or vacancy, shall relieve
Tenant of its liability and obligations under this Lease, whether
or not the Project shall be relet. In any such event Tenant
shall pay Landlord the Rent and all Additional Rent required to
<PAGE>
be paid hereunder by Tenant up to the time of such event.
Thereafter:
(i) In the event of termination of the Lease,
Tenant, until the date which is the first to
occur of (a) the expiration of the Term or
(b) the expiration of the 15th Lease Year
subsequent to the date of termination, shall
be liable to Landlord as damages for Tenant's
default, the equivalent of the amount of the
Rent and Additional Rent which would be
payable under this Lease by Tenant if this
Lease were still in effect, less the net
proceeds of any reletting effected pursuant
to the provisions hereof, after deducting all
of Landlord's expenses in connection with
such reletting, including without limitation,
all repossession costs, brokerage and
management commissions, operating expenses,
legal expenses, reasonable attorneys' fees,
alterations costs, and expenses of
preparation of such reletting. The amount of
Additional Rent due in the event of
expiration or termination of this Lease shall
be equal to the Additional Rent paid to
Landlord in the year prior to the year of
termination divided into twelve equal monthly
installments. Tenant shall pay such damages
(herein called "deficiency") to the Landlord
on the days on which the net Rent would have
been payable under this Lease if this Lease
were still in effect, and the Landlord shall
be entitled to recover from Tenant each
deficiency as the same shall arise.
(ii) At any time after the expiration or
termination of this Lease, in lieu of
collecting any further deficiencies as
aforesaid, Landlord shall be entitled to
recover from Tenant, and Tenant shall pay to
Landlord, on demand, an amount equal to the
difference between the Rent which would have
accrued to Landlord under this Lease from the
date of termination to the date which is the
first to occur of (a) the expiration of the
Term or (b) the expiration of the 15th Lease
Year subsequent to the date of termination,
and the then fair and reasonable rental value
of the Premises for the same period as
<PAGE>
provided in Section 25(f). Tenant shall
remain liable for any deficiencies not
previously recovered by Landlord.
(f) VALUE OF PREMISES. If the Premises or any part
thereof be relet by Landlord for the unexpired Term, or any part
thereof, the amount of rent reserved upon such reletting shall be
deemed the fair and reasonable rental value for the part or the
whole of the Premises so relet during the term of the reletting.
Landlord agrees to make reasonable efforts to mitigate its
damages by listing the Premises with a licensed real estate
broker for reletting on terms and conditions acceptable to
Landlord, but Landlord shall have no obligation to relet the
Premises to any particular tenant or for any particular use,
including, without limitation, casino gaming.
(g) ADDITIONAL DAMAGES. If this Lease be terminated,
or if the Project is abandoned or becomes vacant, and whether or
not the Project be relet, Landlord shall be entitled to recover
from Tenant, and Tenant shall pay to Landlord, in addition to any
damages becoming due under this Section 25, the following: an
amount equal to all expenses, if any, including reasonable
attorneys' fees, incurred by Landlord in recovering possession of
the Project (whether or not litigation be commenced in aid
thereof), repairing any damage to the Project, and all reasonable
costs and charges for the care of said Project while vacant,
which damages shall be due and payable by Tenant to Landlord at
such time or times as such expenses are incurred by Landlord.
Tenant hereby expressly waives, as far as permitted by law, the
service of any notice of intention to re-enter provided for in
any statute, and except as is herein otherwise provided Tenant,
for and on behalf of itself and all persons claiming through or
under Tenant (including any leasehold mortgagee or other
creditor), also waives any and all right of redemption or re-
entry or repossession in case Tenant shall be dispossessed by a
judgment or by warrant of any court or judge or in case of re-
entry or repossession by Landlord or in case of any expiration or
termination of this Lease except as expressly provided in this
Lease. The terms "enter," "re-enter," "entry" or "re-entry" as
used in this Lease are not restricted to their technical legal
meanings.
(h) WAIVER OF AUTOMATIC STAY. In view of the public
interest in the integrity of the gaming process and the
involvement of the County and Landlord in the Project, in the
event of any voluntary or involuntary petition in bankruptcy
involving Tenant or Guarantor, Tenant and Guarantor hereby waive,
to the fullest extent permitted by law, any right they may have
to object to the waiver of vacation of the automatic stay in all
<PAGE>
respects as to the rights of Landlord under the Lease and the
Guarantees.
(i) WAIVER OF JURY TRIAL. Tenant hereby waives all
right to trial by jury in any action or proceeding hereafter
instituted by Landlord against Tenant with respect to this Lease
or the Project. Tenant agrees not to interpose any counterclaim
of any nature or description in any such action or proceeding
unless it is a compulsory counterclaim.
(j) ADDITIONAL REMEDIES. In the event of any breach
by Tenant of any of the agreements, terms, covenants or
conditions contained in this Lease, Landlord shall have the right
to invoke any right and remedy allowed at law or in equity
including the right to seek specific performance of Tenant's
obligations under this Lease and to enjoin violations of this
Lease by Tenant.
(k) LANDLORD'S DEFAULT. It shall be an event of
default on the part of Landlord (a "Landlord Default") if any one
or more of the events described in the following clauses (i)
through (iii) shall occur and be continuing after expiration of
the applicable notice and cure period provided for in such
clause:
(i) Landlord shall fail to make any payment which
Landlord agrees to make to or for the benefit
of Tenant pursuant to Section 2 or to
otherwise cure on a timely basis any
objection raised by Tenant under Section 2
which Landlord has theretofore agreed in
writing to cure, after 30 days prior written
notice to Landlord;
(ii) Landlord shall make a material
misrepresentation in any representation or
warranty provided to Tenant under Section
8(b) of this Lease, and such
misrepresentation shall materially and
adversely affect any right or benefit
available to Tenant under this Lease; or
(iii) Landlord shall breach any express covenant of
Landlord under this Lease and shall fail to
cure such breach within 30 days after notice
from Tenant specifying the nature of such
breach, unless the same cannot be cured
within 30 days, in which event Landlord shall
not be deemed in default provided Tenant
<PAGE>
commences the cure of such default within 30
days and thereafter diligently pursues such
cure to completion.
If a Landlord Default shall occur, Tenant shall have the right to
pursue any remedy available to Tenant at law or in equity on
account of such Landlord Default; provided, however, in no event
shall Tenant be entitled to (i) withhold, deduct or offset Rent
or Additional Rent, (ii) vacate or abandon the Project or close
the Casino (except pursuant to any express right of vacation or
closure granted Tenant under this Lease), (iii) seek or recover
consequential damages (such as for lost profits) from Landlord,
(iv) seek or recover damages or equitable relief in violation of
the provisions of Sections 20(c) or Section 22, or (v) terminate
this Lease (except pursuant to any express right of termination
granted Tenant under this Lease). Tenant hereby waives and
releases each of the claims specified in clauses (i) through (v)
hereof. In all events, any recovery of monetary damages by
Tenant shall be limited solely to the interest of Landlord in the
Premises, which shall include the Rentals and avails thereof.
26. REMEDIES CUMULATIVE. Each right and remedy provided
for in this Lease shall be cumulative and shall be in addition to
every other right or remedy provided for in this Lease or now or
hereafter existing at law or in equity or by statute or
otherwise, and the exercise or beginning of the exercise by
Landlord or Tenant or any one or more of the rights or remedies
provided for in this Lease or now or hereafter existing at law or
in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by Landlord or Tenant of any or
all other rights or remedies provided for in this Lease or now or
hereafter existing at law or in equity or by statute or
otherwise.
27. SURRENDER OF PREMISES. Upon the expiration or
termination of this Lease, Tenant agrees to quit and surrender
the Premises, clean and free of any and all hazardous or toxic
substances, hazardous wastes, infectious wastes, solid waste,
pollutants and contaminants which were released, spilled or
discharged into or on the Project during the Tenant's tenancy and
in the same condition and repair as on the date of execution
hereof, and Tenant shall remove the Casino and, at the discretion
of Landlord, any other improvements, fixtures or structures
installed or located within the Premises or any public right of
way at Tenant's sole cost and expense and without expense to
Landlord. If Tenant shall fail to remove any of Tenant's
property within 30 days after the receipt of notice of
termination or expiration of this Lease, Tenant's property shall,
at the option of Landlord, either be deemed abandoned and become
<PAGE>
the exclusive property of Landlord, or Landlord shall have the
right to remove Tenant's property at the expense of Tenant,
without further notice to or demand upon Tenant and hold Tenant
responsible for any and all charges and expenses incurred by
Landlord therefor. If the Premises is not surrendered as and
when aforesaid, Tenant shall indemnify Tenant against all loss or
liability resulting from the delay of Tenant in so surrendering
the same including without limitation, any claims made by any
succeeding occupant founded on such delay. Tenant's obligations
under this Section shall survive the expiration or sooner
termination of the Term.
28. CURE OF TENANT'S DEFAULT. If Tenant shall fail to
make any payment or perform any act required hereunder to be made
or performed by Tenant then Landlord may, but shall be not be
obligated to, make such payment or perform such act with the same
effect as if made or performed by Tenant. Entry by Landlord upon
the Project for such purpose shall not waive or release Tenant
from any default or obligation hereunder. Tenant shall reimburse
Landlord for all sums paid and all costs incurred by Landlord in
performing the obligations of Tenant hereunder, including
attorneys' fees, upon Landlord's demand therefor which shall be
Additional Rent hereunder.
29. NOTICES. All notices, demands, request or other
communications ("notices") required or permitted by this Lease
shall be in writing and shall be deemed to be received when
actually received by any person at the intended address if
personally served or if sent by courier or telex, whether
actually received or not, twenty-four (24) hours after the date
and time of delivery to a nationally recognized courier,
addressed as follows:
To Landlord: St. Louis County Port Authority
Economic Council of St. Louis
County
121 South Meramec, Suite 900
Clayton, Missouri 63105
Attention: Director of Real Estate
Copies to: Economic Council of St. Louis
County
121 South Meramec, Suite 900
Clayton, Missouri 63105
Attention: General Counsel
<PAGE>
St. Louis County
41 South Central
Clayton, Missouri 63105
Attention: County Counselor
If to Tenant: Showboat Development Company
3720 Howard Hughes Parkway
Las Vegas, Nevada 89109
Copies to: Kummer Kaempfer Bonner & Renshaw
3800 Howard Hughes Parkway
Seventh Floor
Las Vegas, Nevada 89109
Attention: John N. Brewer
Either party may, in substitution of the foregoing, designate a
different address and addresses within the continental United
States for purposes of this section by written notice delivered
to the other party in the manner prescribed, at least ten (10)
days in advance of the date upon which such change of address is
to be effective. Any notices relating to maintenance shall be
given to those parties locally responsible as hereinafter
designated by the parties upon completion of the anticipated
improvements.
30. UNAVOIDABLE DELAY. As used in this Lease, the
term "Unavoidable Delay" shall mean any delay if and to the extent
caused by a fire, flood, tornado, earthquake, severe inclement
weather or other Act of God, strike, lockout or other labor
dispute, unavailability of essential materials, war, insurrection
or civil disorder. In no event shall lack of funds, Tenant's
failure to comply with Tenant's contractual obligations or
changes in the economy or marketplace constitute a basis for
asserting an Unavoidable Delay.
31. ARBITRATION OF CERTAIN DISPUTES.
(a) ARBITRATION OF SPECIFIC DISPUTES. In the event of
a dispute between the parties pursuant to Sections 9, 10, 12, 14,
16 or 19, the issue requiring resolution may be submitted by
either party to expedited arbitration in accordance with the
following procedures:
(b) ARBITRATION PROCEDURES. Arbitration shall be
commenced by written notice thereof from the party seeking
arbitration to the other party. Not later than 10 days after
delivery of such notice, each party shall select an independent
arbitrator who shall be an attorney licensed to practice law in
any state and practicing law for not less than 20 years. Not
<PAGE>
later than 20 days after their selection, the two arbitrators
shall jointly select a third arbitrator having the same
qualifications as themselves. The arbitration panel shall meet
and determine the rules for submission and hearing of evidence
and so advise Landlord and Tenant not later than 10 days after
their selection. The panel shall convene and conduct a hearing
according to the rules established by them and shall render a
written decision which shall be binding on the parties not later
than 60 days after the date the third arbitrator has been
selected. The decision of the arbitration panel shall be final
and binding on the parties. Each party shall bear the fees and
expenses of its own arbitrator and shall share equally in the
payment of the fees and expenses of the third arbitrator.
32. ESTOPPELS. Each party acknowledges that from time to
time the other party may request, for the benefit of third
parties, information relating to the effectiveness of this Lease
and the Guarantees, whether this Lease or the Guarantees have
been modified or amended, the status of payments of Rent and
Additional Rent due hereunder, whether an Event of Default or a
Landlord Default has occurred and is continuing, and other
information reasonably and customarily required by lenders,
accountants and other parties having an interest in the Project,
or in Landlord, Tenant or Guarantor and their respective
operations. Each party agrees to respond in writing to any
request it may receive from the other party within 10 days after
its receipt of such request, and to provide all such requested
information.
33. RELATIONSHIP OF PARTIES. Nothing contained in this
Lease shall be deemed to constitute or be construed or implied to
create the relationship of principal and agent, partnership,
joint venture or any other relationship between the parties
hereto, other than the relationship of the landlord and tenant.
The term "Landlord" as used in this Lease means only the owner of
the current interest of Landlord in the Premises or, as the case
may be, the successor thereto from time to time.
34. NO BROKER. Tenant covenants, warrants and represents
to Landlord that there was no broker instrumental in consummating
this Lease and that no conversations or prior negotiations were
had by Tenant with any broker concerning the renting of the
Premises. Tenant agrees to indemnify and hold the Landlord
harmless against and from all liabilities, including reasonable
attorneys' fees, arising from any claims for brokerage
commissions or finders' fees resulting from or arising out of any
conversations or negotiations had by Tenant directly with any
broker.
<PAGE>
35. CONFLICT OF INTEREST. The parties agree to abide by
all Governmental Requirements relating to conflict of interest.
Additionally, but not in limitation of the foregoing, no member,
officer, commissioner or employee of Landlord or any branch of
County government who has any power of review or approval of any
of the undertakings herein, shall participate in any decisions
relating thereto which affect his/her personal interests or the
interests of any corporation or partnership in which he or she is
directly or indirectly interested. No member, official or
employee of Landlord shall have any personal interest direct or
indirect, in this Lease, nor participate in any decisions
relating thereto which affect his or her personal interests or
the interests of any corporation or partnership in which he or
she is directly or indirectly interested. In the construction
and/or operation of the Project, Tenant shall not knowingly,
after due inquiry, employ or contract with any person if a member
of his or her immediate family is a member, officer, commissioner
or employee of Landlord or any branch of County government in an
administrative capacity, by which is meant those who have
selection, hiring, supervisory or operational responsibility for
the work to be performed pursuant to this Lease. For the
purposes of this section, "immediate family" includes: wife,
husband, son, daughter, mother, father, brother, sister, brother-
in-law, sister-in-law, father-in-law, mother-in-law, aunt, uncle,
niece, nephew, step-parent and stepchild.
36. ENTIRE LEASE. This Lease sets forth the entire
agreement between the parties. There are no understandings,
agreements, statements, promises, or representations or
warranties, express or implied, in respect of the Property, the
Project or this Lease which are not specified herein. This Lease
shall not be modified, amended or supplemented except by a
writing subscribed to by the party to be charged, nor may this
Lease be canceled by Tenant or the Project surrendered except in
accordance with the express provisions of this Lease.
37. SURVIVAL OF COVENANTS. All representations,
warranties and indemnities set forth in this Lease shall survive
the execution hereof.
38. BINDING EFFECT. This Lease binds the parties
hereto and inures to the benefit of their respective heirs,
personal representatives, successors or assigns.
39. TIME OF THE ESSENCE. Time is of the essence with
respect to the performance of this Lease and each and every
provision contained herein.
<PAGE>
40. VENUE. If and in the event of a dispute arising
hereunder, venue shall be vested in the Circuit Court of St.
Louis County, State of Missouri. Tenant acknowledges that it has
negotiated this Lease in the County, and has made numerous
business contacts and entered into agreements relating to real
estate and other matters sufficient to confer jurisdiction of the
courts of St. Louis County, State of Missouri.
41. AUTHORIZATION AND CAPACITY. The parties hereto
represent to each other that each has the full right, power and
authority to enter into this Lease and to fully perform its
obligations. The persons executing this Lease warrant and
represent that each has the authority to execute in the capacity
stated and to bind the parties hereto.
42. THIRD-PARTY BENEFICIARIES. Landlord and
Tenant are the only parties to this Lease and the only parties
capable of or entitled to the enforcement of its provisions. Each
party confirms that no other parties are intended to be third party
beneficiaries of any covenant or provision of this Lease.
Notwithstanding the foregoing provisions of this Section 42,
Tenant acknowledges and agrees that the County shall be an
intended third party beneficiary of Tenant's designation of the
County as the "home dock" for the Project under Section 13.
43. SEVERABILITY. In the event any provision of
this Lease is rendered void or unenforceable by a court of
competent jurisdiction, the remaining provisions of this Lease
shall be construed so as to constitute a complete agreement, and
this Lease, as so reformed, shall remain in full force and effect.
44. NON-WAIVER PROVISION. Failure by either party
hereto,at any time, to require the performance by the other of
any term of this Lease, shall not in any way effect the right of
either party to enforce such terms, nor shall any waiver by either
party of any term hereof be taken or held to be a waiver of any
other provision of this Lease. No waiver of any term or provision
of this Lease shall be effective unless the same is in writing,
signed by the parties hereto.
45. GOVERNING LAW. This Lease is entered into in the
State of Missouri and shall be construed, enforced and governed, as to
both validity and performance, in accordance with the laws of the
State of Missouri and all of the rights and obligations of the
parties hereunder shall be determined in pursuant to the laws of
the State of Missouri.
46. RECORDING OF LEASE. From and after the
Commencement Date, either party may, at its own expense, cause a
<PAGE>
memorandum of this Lease, approved by the other party, to be
recorded in the Office of the Recorder of Deeds for the County
of St. Louis.
47. ATTACHMENTS. All exhibits attached to this Lease
are incorporated herein and made part hereof by reference.
48. HEADINGS. The captions, headings and arrangements
in this Lease are for convenience only and do not in any way define,
limit or modify the terms or provisions hereof.
49. NUMBER AND GENDER OF WORDS. Whenever the
singular number is used in this Lease, the same shall include the plural
where appropriate and words of any gender shall include the other
gender where appropriate.
50. BUSINESS DAYS. Except as provided in Section 11,
whenever it is provided in this Lease that an event shall occur
on a day which is a Saturday, Sunday or legal holiday in the
State of Missouri, such event shall occur instead on the next
business day.
51. MULTIPLE COUNTERPARTS. This Lease may be
executed in a number of identical counterparts and if so executed,
each such counterpart is deemed an original for all purposes, and all
such counterparts shall collectively constitute one Lease.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly
executed this Lease as the date first above written.
THIS LEASE CONTAINS A BINDING ARBITRATION PROVISION
WHICH MAY BE ENFORCED BY THE PARTIES
LANDLORD:
ST. LOUIS COUNTY PORT AUTHORITY
By:__/s/__________________
Name: Sheila Sweeney
Title: Chairman
APPROVED AS TO FORM
_/s/____________________
General Counsel, Economic Council
of St. Louis County
TENANT:
SOUTHBOAT LIMITED PARTNERSHIP
By: SHOWBOAT LEMAY, INC.
By:_/s/_________________________
Name:
Title:
<PAGE>
ATTACHMENT A
Legal Description of the Property
<PAGE>
ATTACHMENT B
Legal Description of the Premises
<PAGE>
ATTACHMENT B-2
Diagram of the Premises
<PAGE>
ATTACHMENT C-1
Diagram of the Premises and Adjacent Parcel
<PAGE>
ATTACHMENT C-2
Diagram of the Parcel
<PAGE>
ATTACHMENT D
Preliminary Site Plan
<PAGE>
EXHIBIT 10.04
<PAGE>
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is made,
entered into, and effective as of this 13 day of October, 1995
(the "Effective Date"), by and between the ST. LOUIS COUNTY PORT
AUTHORITY, a public body corporate and politic of the State of
Missouri ("Landlord"), SOUTHBOAT LIMITED PARTNERSHIP, a Missouri
limited partnership ("Tenant"), SHOWBOAT, INC., a Nevada
corporation ("Guarantor") and parent company of Showboat Lemay,
Inc, a Missouri corporation and Tenant's general partner, and
BOATMEN'S TRUST COMPANY, a Missouri corporation (the "Escrow
Agent");
WITNESSETH, THAT:
WHEREAS, Landlord and Tenant have entered into a
certain Lease and Development Agreement dated as of the date
hereof (the "Lease"), a copy of which is attached hereto as
EXHIBIT A; and
WHEREAS, terms defined in the Lease and used herein
shall have the same meaning herein as so defined; and
WHEREAS, the Lease provides as follows:
(a) the parties shall establish an Escrow
with Boatmen's Trust Company as Escrow Agent;
(b) Tenant shall deposit into the Escrow the
$500,000 Acceptance Fee and the $750,000 Security
Deposit, and Guarantor shall deposit into the
Escrow the Rent Guarantee and the Completion
Guaranty;
(c) not later than 120 days after the
Effective Date, Tenant shall direct Escrow Agent
to release the Acceptance Fee to Landlord or
Tenant shall cancel the Lease;
(d) upon termination of the Lease due to the
failure of any of the Conditions during the Due
Diligence Period, the Acceptance Fee and the
Security Deposit shall be released to Tenant and
the Guarantees shall be released to Guarantor;
(e) upon the occurrence of the Commencement
Date, the Guarantees shall be released to Landlord
and the Security Deposit shall be returned to
Tenant;
(f) in the event that prior to the Commencement Date
Tenant shall withdraw or abandon Tenant's
<PAGE>
application for Gaming Licensure or for
any Site Permits, or otherwise abandon the
Project, Landlord, as Landlord's sole remedy,
shall retain the Security Deposit as liquidated
damages and not as a penalty, the parties not
being able to determine Landlord's actual damages
prior to the Commencement Date; and
WHEREAS, Escrow Agent has agreed to serve as Escrow
Agent under the Lease in accordance with the terms of this
Agreement;
NOW THEREFORE, for and in consideration of the premises
and mutual covenants and agreements of the parties contained
herein, Landlord, Tenant, Guarantor and Escrow Agent hereby agree
as follows:
1. APPOINTMENT OF ESCROW AGENT. Landlord, Tenant and
Guarantor hereby appoint Escrow Agent to serve as Escrow Agent in
accordance with the provisions of the Lease and this Escrow
Agreement, and Escrow Agent hereby accepts such appointment and
agrees to hold in trust, administer, and dispose of the Tenant's
and Guarantor's deliveries in accordance with this Escrow
Agreement. Escrow Agent acknowledges receipt from Tenant of its
$1,000 fee for service as Escrow Agent during the first twelve
(12) months of this Agreement; Escrow Agent's fee for services
rendered during each subsequent twelve (12) month period or
portion thereof this Agreement remains in effect, if any, shall
be borne by Tenant but shall not exceed $1,000 for each such
subsequent twelve (12) month period or portion thereof.
2. ESTABLISHMENT OF ESCROW. Landlord and Tenant shall
maintain the Escrow established with Escrow Agent until the
Commencement Date or such earlier date as Tenant cancels the
Lease pursuant to Section 2(b) or 3(d). In the event Tenant
cancels the Lease pursuant to Section 2(b) or 3(d) thereof,
Tenant shall deliver written notice of such election to Landlord
and Escrow Agent.
3. ESCROW DEPOSITS. Tenant agrees to deposit into Escrow,
not later than 5 business days after the Effective Date, the
$500,000 cash Acceptance Fee and the $750,000 Security Deposit in
cash or in the form of a 6-month (or longer) irrevocable letter
of credit in the stated amount of $750,000 issued by a bank or
financial institution acceptable to Landlord permitting draws by
the Escrow Agent (and deposit into the Escrow of the resulting
cash) upon unilateral presentation to the issuer by the Escrow
Agent of Landlord's certificate of abandonment pursuant to
Section 6 hereof. Tenant may substitute in place of
<PAGE>
any cash deposit it may have made a letter of credit meeting the
requirements of the initial letter of credit. Funds shall be
deposited into the Escrow Account by wire transfer to Boatmen's
National Bank of St. Louis, ABA No. 081000032, for credit to
Boatmen's Trust Company, Account Number 100700004888, for credit
to Southboat Escrow. Escrow Agent agrees to acknowledge receipt
and custody of the Rent Guarantee and Completion Guarantee of
Guarantor when delivered to Escrow Agent by Guarantor or
Landlord.
4. RELEASE OF ESCROW TO TENANT. Within 5 business
days after cancellation of the Lease in accordance with the provisions
of Section 2(b) or Section 3(d) thereof, or within 5 business
days after the occurrence of the Commencement Date, Landlord
shall deliver its certificate to Escrow Agent, and Escrow Agent
shall be authorized and directed, under the terms of this Escrow
Agreement, to immediately release (i) to Tenant the cash or
letter of credit deposited in the Escrow by Tenant, and (ii) to
Guarantor, the Guarantees.
5. RELEASE OF ACCEPTANCE FEE TO LANDLORD. In
the event the Lease is not timely cancelled by Tenant pursuant to
Section 2(b) thereof, Tenant shall direct the Escrow Agent in
writing to release the Acceptance Fee from the Escrow and deliver
it to Landlord. In the event Tenant fails to direct Escrow Agent
to deliver the Acceptance Fee to Landlord on or before the
expiration of the Due Diligence Period, whether or not Tenant has
satisfied or waived all or any of the Conditions, the Lease shall
be void and of no further force or effect, and Landlord shall
deliver written notice to the Escrow Agent to release the
Acceptance Fee and the Security Deposit to Tenant, and to release
the Guarantees to Guarantor, and no party shall have any further
obligation or liability to the other under the Lease; provided,
however, that if Tenant shall have withdrawn or abandoned
Tenant's application for Gaming Licensure or for any Site Permits
or otherwise abandoned the Project, Landlord shall be entitled to
recover the Security Deposit as liquidated damages for such
withdrawal or abandonment, as provided in Section 6.
6. RELEASE OF SECURITY DEPOSIT TO LANDLORD. If
Land lorddelivers a certificate to Escrow Agent and to Tenant
stating thatTenant has with drawn or abandoned Tenant's
application for Gaming Licensure or for any Site Permits, or
otherwise abandoned the Project, or that Tenant has failed to
renew or replace any letterof credit deposited in the Escrow
within 30 days prior to its stated expiration date, Escrow Agent
shall draw down any letterof credit deposited with Escrow Agent
and place the funds received pursuant to such draw into the
Escrow for disposition by the parties in accordance with the
<PAGE>
provisions hereof. UnlessTenant shall contest the validity or
propriety of Landlord'snotice by delivery of written notice to
Escrow Agent within 10days after Escrow Agent's receipt of
instructions to release theSecurity Deposit to Landlord, Escrow
Agent shall be deemedauthorized and directed to deliver the
Security Deposit toLandlord, to deliver all other funds to
Tenant, and theGuarantees to Guarantor. If Tenant shall timely
contestLandlord's notice, as provided in this Section 6, Escrow
Agentshall deposit the funds and documents held by it into the
clerkof the St. Louis County Circuit Court for disposition by
theCourt in accordance with the provisions of Section 16 hereof.
7. INVESTMENT OF FUNDS. All funds held on deposit by
the Escrow Agent shall be invested as directed in writing by
Tenant in any securities of or guaranteed by the U.S. Government
or any instrumentality thereof, including without limitation
money market funds investing in U. S. Government obligations (the
"Permitted Investments"), and all interest earned thereon shall
belong and be paid to Tenant, quarterly or monthly,
notwithstanding any contrary disposition of the funds held in
Escrow.
8. NO IMPLIED DUTIES. The duties of Escrow Agent
shall be as expressed under this Agreement and Escrow Agent shall
have no implied duties. The permissive right or power to take
any action shall not be construed as a duty to take action under
any circumstances and Escrow Agent shall not be liable except in
the event of its gross negligence or willful misconduct.
9. NO RISK OF ESCROW AGENT'S FUNDS. Escrow Agent
shall not be obligated to risk its own funds in the
administration of the account and shall have a lien against any
funds, securities or other property in its possession or control
(the "Escrow Account") for its fees, expenses and advancements.
Escrow Agent need not take any action under the Agreement which
may involve it in any expense or liability until indemnified to
its satisfaction for any expense or liability it reasonably
believes it may incur.
10. NO RECITALS BY ESCROW AGENT. Any recitals
contained in the Agreement shall be deemed to be those of the
principals and not those of Escrow Agent.
11. NO SURETY. Unless specifically required by the
Agreement, Escrow Agent shall not be required to give any bond or
surety or report to any Court despite any statute, custom or rule
to the contrary.
<PAGE>
12. NOTICES. Any notice to or demand shall be given
by being deposited, certified mail, postage prepaid, in the
United States mail, addressed (until another address is filed in
writing) to each of the parties as follows:
To Escrow Agent: Boatmen's Trust Company
510 Locust Street
St. Louis, Missouri 63101
Attention: Corporate Trust Department
To Guarantor: Showboat, Inc.
2800 Fremont Street
Las Vegas, Nevada 89104
Attention: H. Gregory Nasky
To Tenant: Showboat Development Company
3720 Howard Hughes Parkway
Las Vegas, Nevada 89109
With a copy to: Kummer Kaempfer Bonner Renshaw
Seventh Floor
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
Attention: John N. Brewer
To Landlord: St. Louis County Port Authority
Economic Council of St. Louis
County
121 South Meramec, Suite 900
Clayton, Missouri 63105
Attention: Director of Real Estate
With a copy to: Economic Council of St. Louis
County
121 South Meramec, Suite 900
Clayton, Missouri 63105
Attention: General Counsel
St. Louis County
41 South Central
Clayton, Missouri 63105
Attention: County Counselor
13. ACTION ON INSTRUCTIONS. Escrow Agent shall be
protected in acting upon any notice, request, consent,
certificate, order, affidavit, letter, telegram, or other paper
or document believed by it to be genuine and correct and to have
been signed or sent by the proper person or persons.
<PAGE>
14. USE OF AGENTS OR RECEIVERS. Escrow Agent may
execute any of the duties under the Agreement by or through
agents or receivers.
15. RESIGNATION OF ESCROW AGENT. Escrow Agent may at
any time resign from the position created in the Agreement by
giving thirty (30) days written notice by registered or certified
mail to the parties to the Agreement and such resignation shall
take effect at the end of such thirty days or upon earlier
appointment of a successor.
16. INTERPLEADER. In the event Escrow Agent becomes
involved in litigation by reason hereof, it is hereby authorized
to deposit with the clerk of the court in which the litigation is
pending any and all funds, securities, or other property held by
it pursuant hereto, less its fees, expenses and advances, and
thereupon shall stand fully relieved and discharged of any
further duties hereunder. Also, in the event Escrow Agent is
threatened with litigation by reason hereof, it is hereby
authorized to implead all interested parties in any court of
competent jurisdiction and to deposit with the clerk of such
court any such funds, securities, or other property held by it
pursuant hereto, less its fees, expenses and advances, and
thereupon shall stand fully relieved and discharged of any
further duties hereunder.
17. ENGAGEMENT OF COUNSEL. Escrow Agent may engage
legal counsel, who may not be counsel for any party to the
Agreement, and shall not be liable for any act or omission taken
or suffered pursuant to the opinion of such counsel. The fees
and expenses of such counsel shall be deemed to be a proper
expense for which Escrow Agent will have a lien against the
Escrow Account.
18. DUTIES LIMITED TO AGREEMENT. Unless specifically
required by the terms of the Agreement, Escrow Agent need not
take notice of or enforce any other document or relationship,
including, without limiting the generality of the foregoing, any
contract, settlement, arrangement, plan, assignment, pledge,
release, decree or the like, but its duties shall be solely as
set out in the Agreement.
19. INDEMNIFICATION OF ESCROW AGENT. The parties to
the Agreement (other than Escrow Agent) hereby agree, jointly and
severally, to indemnify and save harmless the Trust company from
and against any loss, liability or expense reasonably incurred,
without negligence or bad faith on its part, arising out of or in
connection with the Agreement, including the expense of defending
itself against any claim or liability in the premises. This
<PAGE>
indemnity agreement shall survive the termination of the
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Lease as the date first above written.
LANDLORD:
ST. LOUIS COUNTY PORT AUTHORITY
By:_/s/_______________________
Name:
Title:
APPROVED AS TO FORM
_/s/_________________________
General Counsel, Economic Council
of St. Louis County
TENANT:
SOUTHBOAT LIMITED PARTNERSHIP
By: SHOWBOAT LEMAY, INC.
By:_/s/___________________________
Name: H. Gregory Nasky
Title: Secretary
GUARANTOR:
SHOWBOAT, INC.
By:_/s/__________________________
Name: H. Gregory Nasky
Title: Secretary
ESCROW AGENT:
BOATMEN'S TRUST COMPANY
By:_/s/_______________________
Name:
Title:
<PAGE>
EXHIBIT 10.05
<PAGE>
GUARANTEE OF MINIMUM RENT
FOR VALUABLE CONSIDERATION, the receipt of which is
hereby acknowledged, and to induce the ST. LOUIS COUNTY PORT
AUTHORITY, a public body corporate and politic of the State of
Missouri ("Landlord") to enter into that certain Lease and
Development Agreement dated as of the date hereof (the "Lease")
with Southboat Limited Partnership, a Missouri limited
partnership ("Tenant"), SHOWBOAT, INC., a Nevada corporation
("Guarantor"), having its principal place of business at 2800
Freemont Street, Las Vegas, Nevada 89104, does hereby
unconditionally covenant and agree with Landlord, its successors
and assigns, as follows:
1. Terms defined in the Lease and used in this
Guarantee of Minimum Rent (the "Rent Guarantee") shall have
the same meaning herein as so defined.
2. If an Event of Default shall occur under Section
25(a)(i) of the Lease at any time during the Guarantee Period (as
hereinafter defined) due to the failure of Tenant to pay, within
ten (10) days after notice of nonpayment (unless notice shall no
longer be required pursuant to such subsection), any component or
installment of Minimum Rent, or if the Lease shall be terminated
at any time during the Guarantee Period due to an Event of
Default, then Guarantor will well and truly immediately pay
Landlord on demand, in cash, the full sum of unpaid Minimum Rent
due Landlord under the Lease for the remainder of the Guarantee
Period, not to exceed the total amount of all Minimum Rent
allocable to the Guarantee Period (the "Guaranteed Amount"). As
used in this Rent Guarantee, the term "Guarantee Period" shall
mean that period commencing on the Commencement Date and ending
on the last day of the 15th Lease Year occurring after the
Commencement Date. Notwithstanding the first sentence of this
Section 2, in lieu of paying to Landlord in one lump sum the
entire Guaranteed Amount, Guarantor may elect to pay to Landlord
the Minimum Rent as and when the same would have otherwise been
due under the Lease through the remainder of the Guarantee Period
had the Lease not been terminated or had an Event of Default
under Section 25(a)(i) not occurred; provided, however, that in
order to avail itself of such payment option, Guarantor shall
deliver to Landlord, in addition to all accrued but unpaid sums
of Minimum Rent, if any, an irrevocable letter of credit in the
stated amount of $2 million issued by a national bank or
financial institution acceptable to Landlord in Landlord's
discretion and unconditionally permitting Landlord to draw the
entire stated amount of the letter of credit upon presentation to
the issuer of Landlord's certificate stating that Guarantor has
failed (a) to make timely payment, as and when due, of any
<PAGE>
installment of Minimum Rent, or (b) to renew or replace the
letter of credit not later than 30 days prior to the expiration
of the term thereof. In addition, in the event Landlord becomes
entitled to draw down the letter of credit provided by Guarantor,
or in the event an Event of Default under this Guarantee shall
occur, Guarantor's option to make installment payments of Minimum
Rent shall be null and void, and Guarantor shall immediately pay
to Landlord, on demand, in cash, the full sum of the Guaranteed
Amount due but unpaid.
3. This Rent Guarantee constitutes an absolute and
unconditional guarantee of payment of Minimum Rent during the
Guarantee Period. It shall be enforceable against Guarantor, its
successors and assigns, without the necessity for any suit or
proceedings by Landlord against Tenant, its successors and
assigns, and without the necessity of any notice of acceptance of
this Rent Guarantee. In addition, Guarantor further waives any
right Guarantor may have to seek a reduction in, or a credit
against payment of, the Guaranteed Amount, or any portion
thereof, for any reason other than payment of the Guaranteed
Amount or refusal to lease to a successor tenant meeting all of
the Stated Criteria (as defined in the Lease), including without
limitation any claim based on the failure of Landlord (a) to
mitigate its damages except as required in the Lease or in
accepting a tenant meeting all of the Stated Criteria, (b) to
obtain a new tenant, licensee or operator to replace or succeed
Tenant other than a tenant meeting all of the Stated Criteria, or
(c) to realize fair market value rentals or any other income from
the leasing, licensing or operation of the Premises; provided,
however, that the Guaranteed Amount shall be reduced by an amount
equal to any rent or license or operating fees actually received
by Landlord during the Guarantee Period from any new tenant,
licensee or operator of the Premises procured by Landlord, after
deduction of (i) any Rent and Additional Rent accrued under the
Lease but unpaid to Landlord, and (ii) Landlord's reasonable
expenses incurred in the enforcement of Tenant's obligations
under the Lease and Guarantor's obligations under this Rent
Guarantee, and in reletting or licensing the use of the Premises,
including, without limitation reasonable brokerage fees and
commissions and reasonable attorneys' fees and expenses.
4. Guarantor agrees that the validity of this Rent
Guarantee and the obligations of Guarantor shall in no way be
terminated, affected or impaired by reason of the assertion or
the failure or delay to assert by Landlord against Tenant, or
Tenant's successors and assigns, any of the rights or remedies
reserved to Landlord pursuant to the provisions of the Lease.
<PAGE>
The single or partial exercise of any right, power or privilege
under this Rent Guarantee shall not preclude any other or the
further exercise thereof or the exercise of any other right,
power or privilege by Landlord.
5. Failure of Guarantor to honor any demand for payment
under this Rent Guarantee within ten (10) days after notice
thereof by Landlord (which notice shall not be required more than
twice during any twelve month period) and to make immediate
payment of any sums due hereunder, or the breach by Guarantor of
any representation or warranty of Guarantor hereunder, shall
constitute an Event of Default hereunder.
6. This Rent Guarantee shall not be affected and the
liability of the Guarantor shall not be extinguished or
diminished by Landlord's receipt, application or release of
security given for the performance and observation of the
covenants and conditions in the Lease to be performed or observed
by Tenant, its successors and assigns, including any sums paid by
Guarantor under the Guarantee of Completion issued by Guarantor
to Landlord on the date hereof (the "Completion Guarantee"), by
the cessation from any cause whatsoever of the liability of
Tenant, its successors and assigns, by reason of sums paid or
payable to Landlord from the proceeds of any insurance policy or
condemnation award (unless the Lease is terminated incident to
condemnation), or by any extensions, renewals, amendments,
indulgences, modifications, transfers or assignments in whole or
in part of the Lease, whether or not notice thereof is given to
Guarantor.
7. Guarantor agrees that the liability of Guarantor
is co-extensive with that of Tenant and also joint and several.
8. Landlord's acceptance of a note or collateral of
Tenant shall not constitute the full cash payment required herein.
This Rent Guarantee is given in addition to all other guarantees
which may pertain to Tenant's indebtedness, and is not subordinate
to any other guarantees. Landlord's rights under all guarantees,
including this Rent Guarantee, shall be cumulative and
independently enforceable. It shall not be a condition to the
enforcement of this Guarantee that any other guarantees or
collateral be resorted to by Landlord. Any such collateral or
guarantee, including the Completion Guarantee, may be applied by
Landlord in satisfaction of any obligation or liability of Tenant
under the Lease without thereby impairing, reducing, diminishing
or otherwise modifying the obligations of Guarantor under this
Rent Guarantee.
<PAGE>
9. In order to induce Landlord to enter into the
Lease, Guarantor makes the following representations and
warranties to Landlord, all of which representations and
warranties shall be deemed restated as of the Commencement Date:
(a) Guarantor is duly formed and validly existing as a
Nevada corporation;
(b) the execution and delivery of this Rent Guarantee
and the performance by Guarantor of Guarantor's obligations
hereunder have been duly authorized by all requisite corporate
action;
(c) this Rent Guarantee constitutes the legal, valid
and binding obligation of Guarantor and is enforceable against
Guarantor in accordance with its terms;
(d) no litigation or regulatory proceedings are
pending or, to the best of Guarantor's knowledge, threatened
against Guarantor which, if adversely determined, would likely
have a material adverse impact on Guarantor or on this Rent
Guarantee;
(e) Guarantor is not a party to, and neither Guarantor
nor Guarantor's properties, real or personal, are subject to, any
agreement, order, proceeding, ruling or other matter in conflict
with any provision of this Rent Guarantee or which materially and
adversely affects its ability to perform its obligations
hereunder;
(f) Guarantor is solvent and is not a party to any
assignment for the benefit of creditors or bankruptcy proceeding;
and
(g) Guarantor is not in material default of any
contract or agreement to which it is a party which materially and
adversely affects Guarantor's ability to perform its obligations
under this Rent Guarantee.
10. Guarantor agrees that it will, at any time and
from time to time, within ten (10) business days following written
request by Landlord, execute, acknowledge and deliver to Landlord
a statement certifying that this Rent Guarantee is unmodified and
in full force and effect (or if there have been modifications,
that the same is in full force and effect as modified and stating
such modifications). Guarantor agrees that such certificate may
be relied on by third parties. Should
<PAGE>
Landlord be obligated byany bankruptcy or other law in
connection with any bankruptcyproceeding of Tenant or Guarantor
to repay to Tenant or toGuarantor or to any trustee, receiver or
other representative orany of them, any amounts previously paid
to Landlord, itssuccessors and assigns, this Rent Guarantee
shall be reinstatedin the amount of such repayments.
11. As a further inducement to Landlord to make and
enter into the Lease and in consideration thereof, Landlord and
Guarantor covenant and agree that in any action or proceeding
brought on, under or by virtue of this Rent Guarantee, Landlord
and Guarantor shall and do hereby waive trial by jury. Without
regard to principles of conflicts of laws, the validity,
interpretation, performance and enforcement of this Rent
Guarantee shall be governed by and construed in accordance with
the laws of the State of Missouri, and Guarantor hereby consents
to jurisdiction and venue in the United States District Court for
the Eastern District of Missouri, St. Louis, Missouri, wherein
Landlord at its election may bring an action for the enforcement
of this Rent Guarantee. If Landlord commences an action in
either of such courts, Guarantor hereby agrees that it will
submit to the personal jurisdiction of such court and will not
attempt to have such action dismissed, abated or transferred on
the ground of FORUM NON CONVENIENS.
12. Guarantor covenants and agrees that for so long as
the restrictive covenant described in Section 12 of the Lease shall
remain in effect as against Tenant, Guarantor shall not
participate in any manner in the ownership, sponsorship, control,
management, operation or use of any riverboat gaming facility
along either the Illinois or Missouri banks of the Mississippi
River from the southern boundary of the City of St. Louis to the
northern boundary of Jefferson County, Missouri. Guarantor
acknowledges that the restrictive covenant contained in this
Section 12 (and made by the Tenant under the Lease) is reasonable
under all of the circumstances. The provisions of this Section
12 shall survive any termination of this Rent Guarantee.
13. Guarantor covenants and agrees to pay interest to
Landlord on any and all sums due Landlord hereunder which remain
unpaid for more than five (5) days after delivery of Landlord's
demand for payment, commencing on the date such payment is due,
at the rate of two percent (2%) in excess of the from time to
time publicly announced corporate base rate of interest of The
Boatmen's National Bank of St. Louis.
<PAGE>
14. If any provision or application of this Rent
Guarantee is invalid, unenforceable or illegal for any reason,
the parties agree that such invalid, unenforceable or illegal
provision or application shall be deemed modified to the extent,
but only to the extent, required to make such portion or
application enforceable, and that no such modification shall be
deemed to affect the remainder of this Rent Guarantee.
15. Unless otherwise indicated differently, all
notices, payments, requests, reports, information or demands which
any party hereto may desire or may be required to give to any other
party hereunder, shall be in writing and shall be personally
delivered or sent by telegram, telex, telecopier or first-class
certified or registered United States mail, postage prepaid,
return receipt requested, and sent to the party at its address
appearing below or such other address as party shall hereafter
inform the other party hereto by written notice given as
aforesaid:
If to Guarantor: Showboat, Inc.
2800 Fremont Street
Las Vegas, Nevada 89104
Attention: H. Gregory Nasky
With a copy to: Kummer Kaempfer Bonner Renshaw
Seventh Floor
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
Attention: John N. Brewer
If to Landlord: St. Louis County Port Authority
Economic Council of St. Louis
County
121 South Meramec, Suite 900
Clayton, Missouri 63105
Attention: Director of Real Estate
With copies to: Economic Council of St. Louis
County
121 South Meramec, Suite 900
Clayton, Missouri 63105
Attention: General Counsel
St. Louis County
41 South Central
Clayton, Missouri 63105
Attention: County Counselor
<PAGE>
All notices, payments, requests, reports, information
or demands so given shall be deemed effective upon receipt, or if
mailed, upon receipt or the expiration of the third day following
the date of mailing, whichever occurs first, except that any
notice of change in address shall be effective only upon receipt
by the party to whom said notice is addressed.
IN WITNESS WHEREOF, Guarantor has executed this Rent
Guarantee this 13 day of October 1995.
SHOWBOAT, INC.
By:__/s/_______________________
Name: H. Gregory Nasky
Title: Secretary
<PAGE>
EXHIBIT 10.06
<PAGE>
GUARANTEE OF COMPLETION
This GUARANTEE OF COMPLETION ("Completion Guarantee")
is made this 13 day of October, in favor of the St. Louis County
Port Authority, a public body corporate and politic of the State
of Missouri ("Landlord").
WHEREAS, Southboat Limited Partnership, a Missouri
limited partnership ("Tenant") has entered into a Lease and
Development Agreement with Landlord dated the date hereof (the
"Lease");
WHEREAS, terms defined in the Lease and used herein
shall have the same meaning herein as so defined;
WHEREAS, Guarantor is the parent company of Showboat
Lemay, Inc., a Nevada corporation, the general partner of Tenant;
WHEREAS, under certain circumstances, which are
specifically set forth herein and in the Lease, Guarantor has
agreed to assure the completion of the Project;
NOW, THEREFORE, in consideration of the foregoing, and
for such good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Guarantor and
Landlord covenant and agree as follows:
1. The terms used in the Lease shall have the same
meaning herein, unless otherwise defined.
2. If Tenant shall abandon the Project after the
commencement of the Work for a period of more than thirty (30)
days after receipt of notice from Landlord concerning same, then
Guarantor unconditionally agrees to complete, or to cause the
completion of, the Project.
3. Guarantor agrees to indemnify and hold Landlord
harmless from and against any and all losses, costs, claims,
damages, liabilities and expenses, including but not limited to
reasonable attorneys' fees, which Landlord sustains by reason of
Guarantor's failure to cause completion of the Project. Landlord
will notify Guarantor in writing of any legal proceeding brought
against Landlord for which Landlord will seek indemnification and
Guarantor shall have the right to intervene in any such
proceeding.
4. Guarantor hereby agrees that in the event of the
failure of Guarantor to complete the Project, Landlord shall be
entitled to enforce the obligations of Guarantor hereunder upon
thirty (30) days prior written notice to Guarantor. Upon the
<PAGE>
failure of Guarantor to comply with its covenants contained
herein, Landlord may, without waiving or releasing Guarantor from
its obligations hereunder, and without prejudice to any other
right or remedy of Landlord, perform such covenant or agreement
in respect of which there shall be a default hereunder and in
that regard pay such money as may be required. Any such monies
paid by Landlord, as aforesaid, together with interest thereon at
at the rate of two percent (2%) in excess of the from time to
time publicly announced corporate base rate of interest of The
Boatmen's National Bank of St. Louis, shall be due and payable by
Guarantor to Landlord upon demand.
5. No delay on the part of Landlord in exercising
Landlord's rights, powers and privileges or partial or single
exercise thereof under this Completion Guarantee shall operate as
a waiver of any such rights, powers or privileges. No waiver of
any of its rights, powers of privileges hereunder, and no
modifications of amendment of this Completion Guarantee, shall be
deemed to be made by Landlord unless the same shall be in
writing, duly signed on behalf of Landlord, by a duly authorized
officer, and each such waiver, if any, shall apply only with
respect to the specific instance involved, and shall in no way
impair the rights of Landlord or the obligations of Guarantor to
Landlord in any other respect at any other time.
6. All rights, powers, privileges and remedies
afforded to Landlord by reason of this Completion Guarantee are
separate and cumulative rights, powers, privileges and remedies
and no one such right, power, privilege and remedy whether or not
exercised by Landlord shall be deemed to exclude any of the other
rights, powers, privileges and remedies available to Landlord nor
prejudice the availability of any other legal or equitable remedy
which Landlord may have under the Lease or in the Project.
7. This Completion Guarantee shall be construed and
interpreted in accordance with, and all disputes hereunder and
thereunder shall be governed by, the laws of the State of
Missouri. Landlord may bring any action or proceeding to enforce
or arising out of this Completion Guarantee in any court of
competent jurisdiction. Any action or proceeding brought by the
Guarantor arising out of this Completion Guarantee shall be
brought solely in in the United States District Court for the
Eastern District of Missouri. If Landlord commences an action in
either of such courts, Guarantor hereby agrees that it will
submit to the personal jurisdiction of such court and will not
attempt to have such action dismissed, abated or transferred on
the ground of FORUM NON CONVENIENS.
<PAGE>
8. This Completion Guarantee shall not be affected
and the liability of the Guarantor shall not be extinguished or
diminished by Landlord's receipt, application or release of
security given for the performance and observation of the
covenants and conditions in the Lease to be performed or observed
by Tenant, its successors and assigns, including any sums paid by
Guarantor under the Guarantee of Minimum Rent issued by Guarantor
to Landlord on the date hereof (the "Rent Guarantee"), by the
cessation from any cause whatsoever of the liability of Tenant,
its successors and assigns, by reason of sums paid or payable to
Landlord from the proceeds of any insurance policy or
condemnation award (except in the event of termination of the
Lease incident to condemnation), or by any extensions, renewals,
amendments, indulgences, modifications, transfers or assignments
in whole or in part of the Lease, whether or not notice thereof
is given to Guarantor.
9. All of the terms, covenants, warranties and
conditions contained in this Completion Guarantee shall be
binding upon and inure to the sole and exclusive benefit of the
parties hereto and their respective heirs, executors and
administrators, successors and assigns.
10. This Completion Guarantee shall terminate only at
such time as the Project is finally and fully completed pursuant
to the Plans and all obligations of Tenant in respect of the
completion of the Work and of Guarantor hereunder have been fully
paid or met to the reasonable satisfaction of Landlord.
11. This Completion Guarantee contains the entire
understanding between the Guarantor and Landlord and supersedes
any prior understandings or agreements between them whether
written or oral. There are no representations, agreements,
arrangements or understandings (whether oral or written), between
or among the parties hereto relating to the subject matter hereof
which are not fully expressed herein. This Completion Guarantee
may not be amended without the written consent of each party
hereto.
12. Unless otherwise indicated differently, all notices,
payments, requests, reports, information or demands which any
party hereto may desire or may be required to give to any other
party hereunder, shall be in writing and shall be personally
delivered or sent by telegram, telex, telecopier or first-class
certified or registered United States mail, postage prepaid,
return receipt requested, and sent to the party at its address
appearing below or such other address as party shall hereafter
inform the other party hereto by written notice given as
aforesaid:
<PAGE>
If to Guarantor: Showboat, Inc.
2800 Fremont Street
Las Vegas, Nevada 89104
Attention: H. Gregory Nasky
With a copy to: Kummer Kaempfer Bonner Renshaw
Seventh Floor
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
Attention: John N. Brewer
If to Landlord: St. Louis County Port Authority
Economic Council of St. Louis
County
121 South Meramec, Suite 900
Clayton, Missouri 63105
Attention: Director of Real Estate
With copies to: Economic Council of St. Louis
County
121 South Meramec, Suite 900
Clayton, Missouri 63105
Attention: General Counsel
St. Louis County
41 South Central
Clayton, Missouri 63105
Attention: County Counselor
<PAGE>
All notices, payments, requests, reports, information
or demands so given shall be deemed effective upon receipt, or if
mailed, upon receipt or the expiration of the third day following
the date of mailing, whichever occurs first, except that any
notice of change in address shall be effective only upon receipt
by the party to whom said notice is addressed.
IN WITNESS WHEREOF, the Guarantor and Landlord have
caused this Completion Guarantee to be executed by its duly
authorized signatories as of the day and year first above
written.
GUARANTOR: LANDLORD:
SHOWBOAT, INC., a ST. LOUIS COUNTY PORT AUTHORITY
Nevada corporation
By:_/s/______________ By:_/s/_____________________
H. Gregory Nasky
Secretary
