UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
XX QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
---EXCHANGE ACT OF 1934
For the quarterly period ended
---------------------------------
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---EXCHANGE ACT OF 1934
to
For the transition period from ------------ -----------------
Commission file number 1-7123
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SHOWBOAT, INC.
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(Exact name of registrant as specified in its charter)
NEVADA 88-0090766
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(State or other jurisdiction
of incorporation or organization)
2800 FREMONT STREET, LAS VEGAS NEVADA 89104-4035
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(Address of principal executive offices) (Zip Code)
(702) 385-9123
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PAST FIVE YEARS
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13, or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution under a plan confirmed by a court.
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock - $1 Par Value,
and Preferred Stock Purchase Rights 16,160,830 shares outstanding
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SHOWBOAT, INC. AND SUBSIDIARIES
INDEX
PART I FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 1996 and December 31, 1995 1-2
Condensed Consolidated Statements of Income -
For the three months ended March 31,
1996 and 1995 3-4
Condensed Consolidated Statements of Cashflows -
For the three months ended March 31,
1996 and 1995 5
Notes to the Condensed Consolidated Financial
Statements 6-7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 8-16
PART II OTHER INFORMATION
ITEMS 1 - 6 17-18
SIGNATURES 19
Item 1Financial Statements
SHOWBOAT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
Assets 1996 1995
---------
(unaudited)
(In thousands)
Current assets:
Cash and cash equivalents $74,360 $106,927
Receivables, net 8,066 8,448
Income tax receivable 4,148 2,076
Inventories 2,815 2,808
Prepaid expenses 5,247 4,728
Current deferred income taxes 8,469 9,744
----------- -----------
Total current assets 103,105 134,731
----------- -----------
Property and equipment 558,980 541,786
Less accumulated depreciation
and amortization (192,153) (186,872)
--------------------------
366,827 354,914
--------------------------
Other assets:
Restricted cash and investments 157,296 -
Investments in unconsolidated affiliates 125,198 120,090
Deposits and other assets 31,386 28,911
Debt issuance costs, net of
accumulated amortization of $2,130,000
and $1,860,000 at March 31, 1996 and
December 31, 1995, respectively 10,479 10,749
--------------------------
324,359 159,750
--------------------------
$794,291 $649,395
==========================
See accompanying notes to condensed consolidated financial statements.
1
SHOWBOAT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
(continued)
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------ 1996 1995
(unaudited)
Current liabilities: (In thousands)
Current maturities of long-term debt $23 $22
Accounts payable $11,533 15,143
Dividends payable 396 392
Accrued liabilities 42,268 38,158
--------------------------
Total current liabilities 54,220 53,715
--------------------------
Long-term debt, excluding current maturities 532,457 392,369
--------------------------
Other liabilities 5,253 5,028
--------------------------
Deferred income taxes 22,073 22,319
--------------------------
Minority Interest 2,092 2,023
--------------------------
Shareholders' equity:
Preferred stock, $1 par value; 1,000,000
shares authorized; none issued
Common stock, $1 par value; 50,000,000
shares authorized; issued 15,827,735
shares at March 31, 1996 and 15,794,578
at December 31, 1995 15,828 15,795
Additional paid-in capital 81,804 80,078
Retained earnings 79,237 80,434
--------------------------
176,869 176,307
Cumulative foreign currency
translation adjustment 3,743 285
Cost of common stock in treasury,
-0- shares at March 31, 1996 and
74,333 shares at December 31, 1995 (587)
Unearned compensation for restricted stock (2,416) (2,064)
--------------------------
Total shareholders' equity 178,196 173,941
--------------------------
$794,291 $649,395
==========================
See accompanying notes to condensed consolidated financial statements.
2
SHOWBOAT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
1996 1995
--------------------------
Revenues:
Casino $89,990 $86,847
Food and beverage 12,991 12,306
Rooms 5,796 5,627
Sports and special events 1,048 1,055
Management fees 190
Other 1,013 1,223
--------------------------
110,838 107,248
Less complimentaries 8,248 8,569
--------------------------
Net revenues 102,590 98,679
--------------------------
Operating costs and expenses:
Casino 44,225 41,867
Food and beverage 8,086 7,766
Rooms 2,137 2,254
Sports and special events 821 951
General and administrative 28,375 27,893
Selling, advertising and promotion 2,489 2,346
Depreciation and amortization 8,018 8,156
--------------------------
94,151 91,233
--------------------------
Income from operations from
consolidated subsidiaries 8,439 7,446
Equity in income (loss) of
unconsolidated affiliate (22)
--------------------------
Income from operations 8,439 7,424
--------------------------
3
SHOWBOAT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(continued)
1996 1995
--------------------------
Income from operations $8,439 $7,424
--------------------------
Other (income) expense:
Interest income (1,330) (1,199)
Interest expense 10,909 10,631
Interest capitalized (3,372) (3,246)
Gain on sale of affiliate (2,558)
Write-down of investment in affiliate 3,902 -
Foreign currency transaction gain (66) -
--------------------------
10,043 3,628
--------------------------
Income (loss) before income taxes
and minority interest (1,604) 3,796
Minority interest (income) (7) -
--------------------------
Income (loss) before income
tax expense (benefit) (1,597) 3,796
--------------------------
Income tax expense (benefit) (796) 2,013
--------------------------
Net income (loss) ($801) $1,783
==========================
Weighted average shares outstanding 16,067,137 15,472,165
Net income (loss) per common and equivalent shar ($0.05) $0.12
==========================
See accompanying notes to condensed consolidated financial statements.
4
SHOWBOAT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
1996 1995
-----------------------
Cash flows from operating activities: (In thousands)
Net cash provided by operating activities $11,081 $11,941
--------------------------
Cash flows from investing activities:
Acquisition of property and equipment (21,769) (6,701)
Investments in unconsolidated
affiliates (2,911) (28,246)
(Advances to) repayments from
unconsolidated affiliates 386 10,182
Investments in consolidated affiliates (157,296) -
(Increase) decrease in deposits and
other assets (1,673) -
Deposit for Casino Reinvestment
Development Authority obligation (981) (823)
Other 165 (15)
--------------------------
Net cash used in investing activities (184,079) (25,603)
--------------------------
Cash flows from financing activities:
Principal payments of long-term debt $ $ (-5)
Proceeds from issuance of long-term debt 140,000 -
Proceeds from employee stock option exercises 758 -
Debt issuance costs - (25)
Payment of dividends (392) (384)
Issuance of common stock 5
Minority interest contributions 70 -
--------------------------
Net cash provided (used) by financing
activities 140,431 (409)
--------------------------
Net increase (decrease) in cash and
cash equivalents (32,567) (14,071)
Cash and cash equivalents at
beginning of period 106,927 90,429
Cash and cash equivalents at --------------------------
end of period $74,360 $76,358
==========================
Supplemental disclosures of cash flow information
and non-cash investing and financing activities:
Cash paid during the period for:
Interest, net of amounts capitalized 4,494 4,241
Income taxes 1,839 1,995
Foreign currency translation adjustment 3,458 (3,907)
See accompanying notes to condensed consolidated financial statements.
5
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
The condensed consolidated financial statements include all
domestic and foreign subsidiaries which are more than 50% owned and
controlled. Investments in unconsolidated affiliates which are at least
20% owned are carried at cost plus equity in undistributed earnings or
loss since acquisition. All material intercompany balances have been
eliminated in consolidation.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These condensed
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's December 31, 1995
Annual Report on Form 10-K.
The accompanying unaudited consolidated financial statements
contain all adjustments which are only of a recurring nature, in the
opinion of management, necessary for a fair statement of the results of
the interim periods. The results of operations for the interim periods
are not indicative of results of operations for an entire year. Certain
prior period balances have been reclassified to conform to the current
period's presentation.
On March 28, 1996 the Company's 55% owned affiliates, Showboat
Marina Casino Partnership(SMCP) and Showboat Marina Finance Corporation
(SMFC), issued $140.0 million, 13 1/2% First Mortgage Notes due 2003,
(the "First Mortgage Notes"). The net proceeds of the First Mortgage
Notes plus cash contributions by the Company are classified as
restricted cash and investments in the Company's Condensed Consolidated
Balance Sheet as of March 31, 1996. These funds will be used to develop
a riverboat casino complex in East Chicago, Indiana to be operated on
Lake Michigan.
6
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
2.LONG-TERM DEBT
Long-term debt increased by approximately $140.0 million from
December 31, 1995 to March 31, 1996. This increase is due to the
issuance of $140.0 million, 13 1/2% First Mortgage Notes, by SMCP and
SMFC. SMCP and SMFC are effectively owned 55% by the Company and
therefore are consolidated for financial reporting purposes. The First
Mortgage Notes are due 2003 and pay interest semiannually on March 15,
and September 15, of each year commencing September 15, 1996.
3.WRITE-DOWN OF INVESTMENT IN AFFILIATE
In March 1995, the Company, with an unrelated corporation (the
majority member), formed Showboat Mardi Gras, L.L.C. (SMG), to own and
operate, subject to licensing, a riverboat casino near Kansas City,
Missouri. The Company owns 35% of the equity of SMG. SMG was not
selected by the Missouri Gaming Commission for investigation for a
license. Due to a decline in the market value of the assets of SMG, as
determined based on an offer for the principal asset, a riverboat, made
to, and conditionally accepted by, the majority member of SMG, the
Company has recorded a pre-tax write-down of $3,902,000 which is
included in the 1996 Condensed Consolidated Statement of Income as
write-down of investment in affiliate. This write-down includes the
Company's remaining investment in SMG, and the Company has no further
obligation to SMG.
7
Item 2Management's Discussion and Analysis of Financial Condition
and Results of Operations
GENERAL
Showboat, Inc., and subsidiaries, collectively the Company or SBO, is
an international gaming company with over 40 years of gaming experience
that owns and operates the Atlantic City Showboat Casino and Hotel in
Atlantic City, New Jersey, (Atlantic City Showboat), the Las Vegas
Showboat, Hotel, Casino and Bowling Center in Las Vegas, Nevada (Las
Vegas Showboat), owns an interest in, and manages through subsidiaries,
the Sydney Harbour Casino located in Sydney, Australia and owns a 55%
interest in, and will manage the East Chicago Showboat through
subsidiaries which is under construction and scheduled to open in July
1997. Until March 31, 1995, the Company owned an equity interest in and
managed a riverboat casino on Lake Pontchartrain in New Orleans,
Louisiana (Star Casino).
Information contained in this quarterly report is supplemental to
disclosures in the Company's year end financial reports. This
management's discussion and analysis of financial condition and results
of operations should be read in conjunction with the management's
discussion and analysis of financial condition and results of operations
included in the Company's December 31, 1995 Annual Report on Form 10-K.
As used in this management's discussion and analysis of financial
condition and results of operations, amounts in Australian dollars are
denoted as "A$". As of March 29, 1996, the exchange rate was
approximately $0.7825 for each A$1.00.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Quarter Ended March 31, 1996 Compared to Quarter Ended March 31, 1995
Revenues
Net revenues for the Company increased $3.9 million or 4.0% in the
first quarter 1996 compared to the same period in 1995. This increase
was principally due to the $3.1 million or 3.6% increase in casino
revenues in the quarter ended March 31, 1996 compared to the quarter
ended March 31, 1995. Non casino revenues, which consist principally of
food, beverage and room revenues were up $.6 million or 3.2% in the
first quarter 1996 compared to the prior period. The $.2 million decline
in management fees in the first quarter 1996 is attributed to the sale
of the Star Casino in March, 1995 which paid management fees to the
Company. Due to the Company's agreement to forgive the first A$19.1
million of management fees due it from Sydney Harbour Casino, the
Company has not yet received management fees from the Sydney Harbour
Casino. For the quarter ended March 31, 1996, approximately A$2.6
million of management fees were forgiven and approximately A$12.5
million in management fees still remain to be forgiven.
8
Revenues
Quarter ended March 31,
(in thousands)
1996 1995 Variance Percent
-----------------------------------------------
Consolidated:
Casino revenues $ 89,9 $86,847 $ 3 3.6%
Non casino revenues 20, 20,211 3.2%
Management fees 190 -100.0%
Less complimentaries 8 8,569 -3.7%
-----------------------------------------------
Net revenues $ 102,59 $98,679 $ 3 4.0%
-----------------------------------------------
Atlantic City:
Table games revenue $ 18,2 $18,663 $ -2.0%
Slot revenues 59, 54,516 8.8%
Other gaming revenue 749 -31.0%
-----------------------------------------------
Total casino 78, 73,928 5.7%
-----------------------------------------------
Non casino revenues 14, 14,315 1.5%
Less complimentaries 7 7,331 -3.3%
Total net revenues -----------------------------------------------
Atlantic City $ 85,5 $80,912 $ 4 5.8%
-----------------------------------------------
Las Vegas:
Table games revenue $ 1, $1,407 $ 2.5%
Slot revenues 9 10,779 ( -11.9%
Other gaming revenue 733 23.6%
-----------------------------------------------
Total casino 11, 12,919 ( -8.3%
-----------------------------------------------
Non casino revenues 6 5,896 7.1%
Less complimentaries 1 1,238 -6.3%
Total net revenues -----------------------------------------------
Las Vegas $ 17,0 $17,577 ($574) -3.3%
-----------------------------------------------
9
Revenues
The Atlantic City Showboat was the principal reason for the increase
in the Company's revenues during the first quarter 1996. The Atlantic
City Showboat net revenues were up $4.7 million or 5.8%, principally
due to a $4.8 million or 8.8% increase in slot revenue in the quarter
ended March 31, 1996 over the same period in 1995. The increase in slot
revenue is attributable to the addition of approximately 300 slot units
and an increase in slot marketing in the first quarter 1996 compared to
1995. The Atlantic City market slot revenue increased 2.7% by comparison
and there was a 6.9% increase in slot units in the first quarter 1996
compared to 1995. The decline in other gaming revenue of $.2 million or
31.0% is principally due to the decline in keno revenue during the
quarter ended March 31, 1996 compared to the same quarter in the prior
year. This decline is attributed to a disruption and reduction of the
operation when it was moved to the main casino floor during the first
quarter of 1996.
The Las Vegas Showboat net revenues declined $.6 million or 3.3% in
the first quarter 1996 compared to the first quarter 1995. This decline
was principally due to a decline in slot revenue of $1.3 million or
11.9%. This decline is attributable to the loss of slot customers
caused by the construction at the Las Vegas Showboat that was completed
in December 1995 and the increased competition for the local market.
The Company is focusing its analytical and marketing efforts
on the establishment of viable marketing programs to reestablish the
customer base lost during the construction period and to attract new
customers. The increase in other gaming revenue of $.2 million or
23.6% in the first quarter 1996 compared to 1995 is principally due to
the increase in bingo revenue resulting from marketing programs to
attract bingo patrons during the first quarter 1996.
Income From Operations
The Company's income from operations increased $1.0 million or 13.7%
in the quarter ended March 31, 1996 compared to the same period in the
prior year. The improvement was due principally to the operating
improvement at the Atlantic City Showboat and lower operating costs for
corporate and development that were partially offset by a decline in
operating results for the Las Vegas Showboat.
10
Income From Operations
Quarter ended March 31,
(in thousands)
1996 1995 Variance Percent
Income from operations: -----------------------------------------------
Consolidated $ 8, $7,424 $ 1 13.7%
Atlantic City 13, 12,465 7.7%
Las Vegas (54) 1461.1%
Corporate and development (4 (4,742) -13.3%
Other (245) -86.1%
EBITDA:*
Consolidated $ 16,4 $15,580 $ 5.6%
Atlantic City 20, 19,497 3.0%
Las Vegas 1,019 -57.4%
Corporate and development (4 (4,692) -14.4%
Other (244) -86.1%
*EBITDA consists of income from operations plus depreciation and
amortization. Management believes EBITDA is used by many analysts,
lenders and investors in evaluating certain aspects of the financial
performance of the Company. EBITDA should not be construed as an
alternative to operating income (as determined in accordance with
generally accepted accounting principles) as an indication of the
Company's operating performance or to cash flow from operating
activities (as determined in accordance with generally accepted
accounting principles) as a measure of liquidity and other consolidated
income or cash flow statement data as determined in accordance with
generally accepted accounting principles. See "Condensed Consolidated
Statements of Income" and "Condensed Consolidated Statements of Cash
Flows" set forth elsewhere herein.
The Atlantic City Showboat's income from operations, before management
fees, increase of $1.0 million or 7.7% is attributed to the improvement
in revenue production in the first quarter 1996 compared to 1995.
Operating expenses increased $3.7 million or 5.4% to $72.2 million for
the March 31, 1996 quarter up from $68.4 million for the same period in
the prior year. The increase in operating expenses is primarily
attributed to an increased marketing cost for slot patrons of $2.5
million in response to the more aggressive competition for slot patrons
in the Atlantic City market during the first quarter of 1996. General
and administrative expense, principally payroll, property operations
and real estate taxes related to the expanded property, increased $1.3
million in the quarter ended March 31, 1996 compared to the same period
in 1995. Depreciation expense at the Atlantic City Showboat declined $.4
million or 5.4% in the first quarter 1996 compared to the same period in
1995.
11
Income From Operations
The decline in income from operations at the Las Vegas Showboat,
before management fees and inter-company rent, was due principally from
the decline in slot revenues during the first quarter 1996. Operating
expenses remained constant during the first quarter 1996 compared to
the same period in 1995.
The decline in operating expenses for corporate and development
activities in the first quarter 1996 compared to 1995 is primarily
attributed to the capitalization of $.6 million of costs related to
the Company's St. Louis project.
The increase in other income from operations for the quarter ended
March 31, 1996 compared to the same period in 1995 is attributed to the
elimination of expenses for the Star Casino when it was sold in March
of 1995. The Company realized no earnings during the quarter ended
March 31, 1996, from its investment in the Sydney Harbour Casino as a
result of the write-off of preopening costs. Approximately A$11.4
million of preopening costs are remaining to be written off as of March
31, 1996.
Net income
In the quarter ended March 31, 1996 the Company recognized a net loss
of $.8 million or $.05 per share compared to net income of $1.8 million
or $.12 per share for the quarter ended March 31, 1995. The March 31,
1996 net loss reflects an after tax loss of $1.9 million or $.12 per
share for the write down of the Company's investment in Showboat Mardi
Gras, L.L.C. (SMG). SMG was formed to develop a riverboat casino
operation in Randolph, Missouri. In comparison, the first quarter of
1995 net income results included an after tax gain of $1.4 million or
$.09 per share on the sale of the Star Casino.
12
MATERIAL CHANGES IN FINANCIAL CONDITION
As of March 31, 1996 the Company held cash and cash equivalents of
$74.4 million compared to $106.9 million at December 31, 1995. This
decline is due principally to the funding of the East Chicago project.
On March 28, 1996 the Company's 55% owned subsidiaries, Showboat
Marina Casino Partnership (SMCP) and Showboat Marina Finance
Corporation (SMFC), sold $140.0 million, 13 1/2% First Mortgage Notes
due 2003 (the "First Mortgage Notes"). The net proceeds of $135.1
million and the debt are included on the Company's balance sheet as of
March 31, 1996. The funds were raised to support the development of
the $195.0 million East Chicago Showboat riverboat casino project in
East Chicago, Indiana (the "East Chicago Showboat"). The Company has
funded $36.9 million to the project and has committed an additional
$3.1 million to this project. The proceeds from the sale of the First
Mortgage Notes and equity contributions by the Company and its partners
are reflected on the Company's balance sheet as non current assets,
since such funds can only be used for the acquisition of property and
equipment or other purposes to benefit the East Chicago Showboat.
Interest expense will be capitalized to the extent permitted under
generally accepted accounting principles and as a result the Company
anticipates that a portion of this expense will impact results in
reporting periods preceding the opening of the East Chicago Showboat
project, currently anticipated for July, 1997. As a result, for the
period ended December 31, 1996, the Company anticipates that net
interest expense of approximately $2.0 million to $3.0 million will be
recorded.
The First Mortgage Notes are senior secured obligations of SMCP and
rank senior in right of payment to all existing and future subordinated
indebtedness of SMCP and pari passu with SMCP's senior indebtedness.
Terms not otherwise defined herein have the meanings assigned to them
in the First Mortgage Note Indenture. The First Mortgage Notes are
secured by a first lien on substantially all of SMCP's assets. The
First Mortgage Note Indenture places significant restrictions on SMCP
for the incurrence of additional Indebtedness, the creation of
additional Liens on the Collateral securing the First Mortgage Notes,
transactions with Affiliates and making Restricted Payments unless
certain conditions are met. Restricted Payments include paying a
management fee to the Manager of the East Chicago Showboat, an entity
which is 55% owned by the Company, unless among other things, SMCP's
Fixed Charge Coverage Ratio for the most recently ended four full
fiscal quarters, after giving effect to such Restricted Payment must be
greater than 1.5 to 1.0. To make any other Restricted Payment SMCP
must meet, among other things, a Fixed Charge Coverage Ratio for the
most recently ended four full fiscal quarters, after giving effect to
such Restricted Payment, must be greater than 2.0 to 1.0.
13
In addition, subject to certain qualifications and exceptions, the
Company entered into a standby equity commitment with SMCP, pursuant to
which it will cause to be made up to an aggregate of $30.0 million in
additional capital contributions to SMCP if, during the first three
full four fiscal quarters following the commencement of operations at
the East Chicago Showboat, the project's combined cash flow
(defined) is less than $35.0 million for any one such full four quarter
period. However, in no event will the Company be required to cause to
be contributed to SMCP more than $15.0 million in respect of any such
full four quarter period. In addition, subject to certain
qualifications and exceptions, the Company entered into a completion
guarantee with SMCP to complete the East Chicago project so that it
becomes operational, including the payment of all costs owing prior to
such completion, up to a maximum aggregate amount of $30.0 million.
The Company's obligation to complete the East Chicago project will be
suspended during the pendency of any force majeure event or other event
outside the control of the Company.
During the three months ended March 31, 1996 the Company expended
approximately $21.8 million on capital improvements at its Las Vegas
and Atlantic City facilities and construction costs at the East
Chicago Showboat which were funded from operations and the First
Mortgage Notes. Approximately $10.7 million related to the East Chicago
Showboat.
On April 1, 1996, an affiliate of the Company, Sydney Harbour Casino
Holdings Pty Limited, through its wholly owned subsidiary, Sydney
Harbour Casino Properties Pty Limited, ("SHCP") renegotiated its
agreement with Leighton Properties Pty Limited ("Leighton Properties")
for the design and construction of the interim and permanent Sydney
Harbour Casino. The renegotiated project cost is approximately A$867.2
million, a A$176.1 million increase over the April 1994 projected
project cost of A$691.1 million, and includes the administration and
management of the project, an accelerated completion date of December
1997, the firming up of on monetary allowances and resolution of
certain claims by Leighton Properties to SHCP. The design element
changes incorporated in the renegotiated contract for the permanent
casino were made with a view toward improving its operational
efficiency and product quality and to match the changing competitive
environment. The increased project cost is being funded in part by the
sale of 35,250,000 preferred ordinary shares of stock by SHCH on
May 13, 1996, providing net proceeds of approximately A$64.0 million.
Additional financing is being negotiated with local banks and the
project expansion is subject to obtaining the additional financing and
required approvals. As with any construction contract, the final amount
of such contract will be subject to modification based upon change
orders and the occurrence of events such as costs associated with
certain types of construction delays. No assurance can be given that the
construction costs for the Sydney Harbour Casino will not exceed the
announced project cost estimate. The sale of the additional equity by
SHCH reduced the Company's equity in the project to 24.6% from 26.3%.
14
The Company is actively pursuing potential gaming opportunities in
jurisdictions where gaming is legalized, as well as jurisdictions where
gaming is not yet, but is expected to be legalized. There can be no
assurance that legislation will be enacted in any additional
jurisdictions, that any properties in which the Company may have
invested will be compatible with any gaming legislation so enacted,
that legalized gaming will continue to be authorized in any
jurisdiction or the Company will be able to obtain the required
licenses in any jurisdiction. Further, no assurance can be given that
any of the announced projects under development or any unannounced
projects under development will be completed, licensed or result in any
significant contribution to the Company's cash flow or earnings.
Casino gaming operations are highly regulated and new casino
developments are subject to a number of risks.
The Company through its subsidiary, Showboat Lemay, Inc. ("Showboat
Lemay"), has an 80% general partner interest in Southboat Limited
Partnership ("SLP") which, subject to licensing, plans to build and
operate a riverboat casino project and related facilities (the
"Southboat Casino Project") on the Mississippi River near Lemay,
Missouri. SLP has entered into, as of this date hereof, a commitment
letter to receive up to $75.0 million of financing from an unrelated
party for the construction of the project subject to certain
conditions. The financing commitment is for a period of 30 days with
three extension periods of 30 days each at the election of the Company
and three additional 30 day extension periods at the election of the
Company and agreement of the unrelated party. No assurance can be given
that SLP will be selected for investigation for a gaming license prior
to the expiration of the current commitment letter or the available
extensions. No assurance can be given that SLP will be successful in
obtaining the necessary funds to finance its gaming project or that SLP
will successfully obtain a casino license.
The Company believes that it has sufficient capital resources,
including its existing cash balances, cash provided by operations and
existing borrowing capacity, to cover the cash requirements of its
existing operations. The ability of the Company to satisfy its cash
requirements, will be dependent upon the future performance of its
casino hotels which will continue to be influenced by prevailing
economic conditions and financial, business and other factors, certain
of which are beyond the control of the Company. As the Company realizes
expansion opportunities, the Company will need to make significant
capital investments in such opportunities and additional financing will
be required. The Company anticipates that additional funds will be
obtained through loans or public offerings of equity or debt
securities. Although no assurance can be made that such funds will be
available or at interest rates acceptable to the Company.
15
All statements contained herein that are not historical facts,
including but not limited to, statements regarding the Company's
current business strategy, the Company's prospective joint ventures,
expansions of existing projects, and the Company's plans for future
development and operations, are based upon current expectations. These
statements are forward-looking in nature and involve a number of risks
and uncertainties. Actual results may differ materially. Among the
factors that could cause actual results to differ materially are the
following: the availability of sufficient capital to finance the
Company's business plan on terms satisfactory to the Company;
competitive factors, such as legalization of gaming in jurisdictions
from which the Company draws significant numbers of patrons and an
increase in the number of casinos serving the markets in which the
Company's casinos are located; changes in labor, equipment and capital
costs; the ability of the Company to consummate its contemplated joint
ventures on terms satisfactory to the Company and to obtain necessary
regulatory approvals therefore; changes in regulations affecting the
gaming industry; the ability of the Company to comply with its
Indentures for its 9 1/4% First Mortgage Bonds and 13% Senior
Subordinated Indebtedness; future acquisitions or strategic
partnerships; general business and economic conditions; and other
factors described from time to time in the Company's reports filed with
the Securities and Exchange Commission. The Company wishes to caution
the readers not to place undue reliance on any such forward-looking
statements, which statements are made pursuant to the Private
Litigation Reform Act of 1995 and, as such, speak only as of the date
made.
16
SHOWBOAT, INC. AND SUBSIDIARIES
PART II, OTHER INFORMATION
Item 1Legal Proceedings.
"William H. Ahern v. Caesers World, Inc., et al.", Case No.
94-532-Civ-Orl-22, instituted on May 10, 1994 (the "Ahern Complaint")
and "William Poulos v. Caesers World, Inc., et al.", Case No.
94-478-Civ-Orl-22, instituted on April 26, 1994 (the "Poulos
Complaint")(collectively, the Ahern Complaint and Poulos Complaint are
referred to as the Complaints"). Two individuals, each purportedly
representing a class, filed Complaints in the United States District
Court, Middle District of Florida, against various manufacturers,
distributors and casino operators of video poker and electronic slot
machines, including the Company. The Complaints allege that the
defendants have engaged in a course of conduct intended to induce
persons to play such games based on a false belief concerning how the
gaming machines operate, as well as the extent to which there is an
opportunity to win on a given play. The Complaints allege violations
of the Racketeer Influenced and Corrupt Organizations Act, as well as
claims of common law fraud, unjust enrichment and negligent
misrepresentation, and seek damages in excess of $1.0 billion without
any substantiation of that amount. The Complaints were consolidated
and transferred to the United States District Court for the District of
Nevada (the "Nevada District Court"). The Company filed a motion to
dismiss the action based on jurisdiction, abstention and related
doctrines. Various other defendants filed similar motion and motions
to dismiss based on defects in the pleadings. The Nevada District
Court entered an order granting the motions to dismiss based on defects
in the pleadings, and denying as moot all other pending motions,
including those of the Company. The Nevada District Court granted
plaintiffs until May 31, 1996 within which to file an amended complaint
that complies with the applicable pleading requirements. Failure to
file an amended complaint will result in dismissal of the Complaints.
Although the Company did not join in the motions based on defects in
the pleadings, the Company believes, based on the scope of the order,
that it is entitled to rely upon the conditional dismissal. Management
does not know whether plaintiffs intend to file amended complaints, but
believes that they will do so. Management continues to believe that
the substance of the allegations in the Complaints are without merit
and intends to defend vigorously the allegations.
Item 2Changes in Securities.
Not Applicable
Item 3Defaults Upon Senior Securities.
Not Applicable
17
SHOWBOAT, INC. AND SUBSIDIARIES
PART II, OTHER INFORMATION
(continued)
Item 4Submission of Matters to a Vote of Security Holders
None
Item 5Other Information
Not Applicable
Item 6Exhibits on Reports on Form 8-K
(a) Exhibits
Exhibit
No. Description
------ -------- -------- -----------
10.01 Completion Guarantee dated March 28, 1996
by and between Showboat, Inc. and
American Bank National Association as
trustee.
10.02 Standby Equity Commitment dated March 28,
1996, by and among Showboat Marina
Casino Partnership, Showboat Marina Finance
Corporation and Showboat, Inc.
(b) Reports on Form 8-K
None
18
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 thereunto duly authorized.
Showboat, Inc.
Registrant
DateMay 15, 1996 s/ J. Kell Houssels, III
--------------------- -----------------------------------
J. KELL HOUSSELS, III,
President and Chief Executive
Officer
DateMay 15, 1996 s/ R. Craig Bird
--------------------- -----------------------------------
R. CRAIG BIRD, Executive Vice
President - Finance and
Administration and Chief
Financial Officer
19
EXHIBIT 10.01
<PAGE>
EXECUTION COPY
COMPLETION GUARANTEE
COMPLETION GUARANTEE dated as of March 28, 1996 (this
"COMPLETION GUARANTEE") by SHOWBOAT, INC., a Nevada corporation
(the "GUARANTOR"), in favor of AMERICAN BANK NATIONAL
ASSOCIATION, a national banking association, as trustee (the
"TRUSTEE") under the Indenture (as defined below), its successors
and assigns.
RECITALS
A. WHEREAS, pursuant to that certain Indenture dated
as of March 28, 1996 (the "INDENTURE") by and among Showboat
Marina Casino Partnership, an Indiana general partnership
("SHOWBOAT PARTNERSHIP"), Showboat Marina Finance Corporation,
a Nevada corporation ("FINANCE CORPORATION" and, together with
Showboat Partnership, the "COMPANY") and the Trustee, as trustee,
the Company has issued $140,000,000 aggregate principal amount
of 13 1/2% First Mortgage Notes due 2003 (the "FIRST MORTGAGE
NOTES");
B. WHEREAS, the Company has entered into the
Indenture to finance, in part, the design, development,
construction, equipping and opening of East Chicago Showboat;
C. WHEREAS, the Guarantor indirectly owns a
substantial equity interest in the Company and will obtain
substantial economic and other benefits as a result of the
successful completion of East Chicago Showboat; and
D. WHEREAS, as a material inducement to the
purchasers of the First Mortgage Notes, the Guarantor has agreed
that it will guarantee, for the benefit of the holders of the
First Mortgage Notes from time to time (the "Holders"), the
obligations of the Company to complete the construction of East
Chicago Showboat as provided herein;
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and
other benefits accruing to the Guarantor, the receipt and
sufficiency of which are hereby acknowledged, the Guarantor
hereby makes the following representations and warranties for the
benefit of the Holders and hereby covenants and agrees for the
benefit of the Holders as follows:
1. OBLIGATIONS GUARANTEED. Subject to Paragraph 12
hereof, the Guarantor hereby irrevocably and unconditionally
guarantees (a) the Company's obligation to complete the
construction of East Chicago Showboat so that East Chicago
Showboat is Operating in accordance with the terms of the
Indenture and the Escrow and Disbursement Agreement and (b) the
payment of all Amounts Required For Completion payable by the
Company on or prior to the date on which East Chicago Showboat
becomes Operating. The Guarantor hereby irrevocably and
unconditionally guarantees the payment of any Disputed Amounts
(as defined in the Escrow and Disbursement Agreement) that it has
acknowledged under the Escrow and Disbursement Agreement and that
the Company does not pay when due and payable, whether or not
East Chicago Showboat becomes Operating. The Guarantor's
obligations hereunder are referred to as the "OBLIGATIONS." Such
Obligations shall include, without limitation, (a) the payment,
satisfaction or discharge of all Liens, other than Permitted
Liens, that are or may be imposed upon or asserted against East
Chicago Showboat, any related real property or any portion
thereof and (b) the defense and indemnification of the Trustee
and the Holders against all such Liens, other than
<PAGE>
Permitted Liens, whether arising from the furnishing of labor,
materials, supplies or equipment, from taxes, assessments, fees
or other charges, from injuries or damage to persons or property,
or otherwise. The Guarantor agrees to perform and comply with its
Obligations hereunder, whether or not the Company is liable
therefor individually or jointly or severally with others, and
whether or not recovery against the Company is or may become
barred by any applicable statute of limitations or is or may
become unenforceable or discharged for any reason other than
payment or performance thereof in full. Without limiting the
generality of the foregoing, the Guarantor agrees that the
Obligations shall include its obligation (i) to cause any and all
costs of constructing and completing East Chicago Showboat so
that East Chicago Showboat is Operating, including, without
limitation, the costs of all labor, materials, supplies and
equipment related thereto, to be paid and satisfied as the same
shall become due and payable, (ii) to cause any and all costs and
cost overruns of constructing and completing East Chicago
Showboat so that East Chicago Showboat is Operating not paid by
the Company to be funded, paid and satisfied, (iii) to cause the
completion of East Chicago Showboat (together with all support
facilities and improvements appurtenant and related thereto) in
accordance with the terms of the Indenture and the Escrow and
Disbursement Agreement and (iv) to cause all Project Costs (as
defined in the Indenture) relating to East Chicago Showboat
(together with all support facilities and improvements
appurtenant and related thereto) and any related real property,
including, without limitation, the payment of interest (but not
principal), taxes, assessments, utilities, insurance and
maintenance expenses, to be funded, paid and satisfied prior to
delinquency to the extent necessary to cause East Chicago
Showboat to become Operating. Notwithstanding anything to the
contrary in this Completion Guarantee, (i) the Guarantor shall
only be liable for the Obligations in the event that, and to the
extent that, there are not sufficient Available Funds which the
Company can then use for such purpose in accordance with the
terms of the Escrow and Disbursement Agreement and (ii) the
Guarantor's Obligations pursuant to this Completion Guarantee
shall be limited to $30.0 million in the aggregate.
The Guarantor shall use its best efforts to cause East
Chicago Showboat to become Operating and to cause the funds in
the Escrow Account to be used to make East Chicago Showboat
become Operating; PROVIDED, HOWEVER, that in no event shall the
use of best efforts require the Guarantor to expend more than
$30.0 million in the aggregate under any and all provisions of
this Completion Guarantee.
The Guarantor acknowledges that it has received copies
of and is familiar with the Indenture and each Collateral
Document, all of which are incorporated herein by reference.
Notwithstanding anything to the contrary in this Completion
Guarantee, it is understood and agreed by the parties hereto
that, except as expressly provided herein, that the Holders' and
the Trustee's sole remedies under this Completion Guarantee shall
be to require the Guarantor to fulfill its Obligations as
described above, and in no event shall the Guarantor incur,
directly or indirectly ("INCUR" meaning to create, incur, assume,
guarantee or otherwise become liable for), any obligation,
contingent or otherwise, for the payment of the principal amount
of the First Mortgage Notes, except to the extent the First
Mortgage Notes are paid as a result of a foreclosure and the
Guarantor's funds were used to improve East Chicago Showboat.
The Guarantor's Obligations hereunder with respect to East
Chicago Showboat shall immediately terminate upon the date on
which East Chicago Showboat first becomes Operating.
2. PROCEDURES FOR COMPLETION.
2.1. If for any reason whatsoever the Company shall (a)
fail or neglect to complete East Chicago Showboat, including the
furnishing and fixturing thereof, in the manner specified in the
Indenture and the Escrow and Disbursement Agreement, free and
clear of all Liens, other than Permitted Liens, and fully paid
for, (b) fail in any other manner to prosecute with diligence and
continuity the construction and completion of East Chicago
Showboat, (c) commit or permit to exist a Default or Event
2
<PAGE>
of Default under the Indenture or any of the Collateral
Documents, (d) be unable to satisfy any condition precedent to
obtaining a disbursement of Proceeds under the Escrow and
Disbursement Agreement, or (e) become subject to a termination of
its right to receive undisbursed Proceeds prior to the full
disbursement thereof from the Escrow Account, including by reason
that the Trustee has demanded that it receive the funds in the
Escrow Account pursuant to Section 3.4 of the Escrow and
Disbursement Agreement, then, in any such event or at any time
thereafter, the Trustee may give written notice to the
Guarantor of the occurrence of such event and, if the Trustee
exercises its rights hereunder, the Trustee shall give written
notice to the Guarantor prior to or contemporaneously with such
exercise; PROVIDED, that the failure to give such notice shall
not relieve the Guarantor of its obligations under this
Agreement, except to the extent the Guarantor demonstrates actual
damage as a result of such failure.
2.2 Within thirty (30) days after the date on which
the Trustee gives any such notice to the Guarantor, the
Guarantor, at its sole cost, shall perform the Obligations.
2.3 If the Guarantor fails to perform the Obligations,
then, in addition to all other rights and remedies that may be
available to the Trustee under this Completion Guarantee, the
Indenture and the Collateral Documents, at law or in equity,
including, without limitation, the right and remedy of specific
performance, the Trustee or its agent may proceed as follows:
(a) The Trustee, at its option, shall have
the right, but shall have no obligation, to undertake to
complete the construction of East Chicago Showboat (either itself
or through any agent, contractor or subcontractor of its
selection), exercisable whether or not the Trustee elects to
proceed judicially or nonjudicially to foreclose on all or any
portion of the First Mortgage Note Collateral.
(b) The Trustee, at its option, shall have
the right, subject to any restrictions imposed by the Indiana
Riverboat Gambling Act (the "Indiana Act"), to the extent
applicable, but shall have no obligation, to proceed judicially
or nonjudicially to foreclose on all or any portion of the First
Mortgage Note Collateral, exercisable whether or not the Trustee
elects to undertake to complete the construction of East Chicago
Showboat.
(c) Whether or not the Trustee elects to
undertake to complete the construction of East Chicago Showboat
and whether or not the Trustee elects to proceed judicially or
nonjudicially to foreclose on all or any portion of the First
Mortgage Note Collateral, the Trustee shall have the right to
recover damages from the Guarantor in an amount equal to the
sum of (i) the reasonable costs incurred by the Trustee to
complete the construction of East Chicago Showboat, plus (ii) all
unreimbursed costs and expenses, including reasonable attorneys'
fees, incurred by the Trustee in protecting, preserving,
enforcing or defending its interests in this Completion
Guarantee.
(d) In any action or proceeding by the
Trustee to recover damages from the Guarantor, the Trustee may
exercise any and all remedies available under federal law or the
laws of the State of Nevada or the State of Indiana applicable to
an action on matured contractual indebtedness. No delay or
failure by the Trustee to exercise any remedy against the
Guarantor will be construed as a waiver of that right or remedy.
2.4 The remedy of specific performance, the recovery
of damages and all other rights and remedies under this
Completion Guarantee, the Indenture and the Collateral Documents,
at law or in equity, are intended to be non-exclusive. The
parties recognize that the choice of remedies by the Trustee will
necessarily and properly be a matter of business judgment, which
the passage of time and events may or may not prove to have been
the best choice to maximize recovery by the Trustee at the
3
<PAGE>
lowest cost to the Company or the Guarantor. Nevertheless, the
choice of alternatives by the Trustee shall not be subject to
question or challenge by the Guarantor or any other person, nor
shall any such choice be asserted as a defense, set-off or basis
for any claim of failure to mitigate damages in any action or
proceeding arising from this Completion Guarantee.
3. ALTERATION OF OBLIGATIONS. In such manner, upon
such terms and at such times as the Trustee deems appropriate,
and without notice to the Guarantor, the Trustee or the Holders
of 25% of the aggregate principal amount of the First Mortgage
Notes then outstanding may alter, compromise, accelerate, extend
or change the time or manner for the payment or performance of
any obligations hereby guaranteed, alter or amend the Escrow and
Disbursement Agreement or the Construction Budget (as defined
therein), release the Company, by acceptance of a deed in lieu of
foreclosure or otherwise, as to all or any portion of the
obligations hereby guaranteed, release, substitute or add any one
or more guarantors or endorsers, accept additional or substitute
security therefor, or release or subordinate any security
therefor. The Guarantor acknowledges and agrees that the Escrow
and Disbursement Agreement and the Construction Budget may be
amended from time to time by the Company in accordance with the
terms and conditions set forth in the Escrow and Disbursement
Agreement and the Guarantor agrees to perform its Obligations
hereunder in accordance with the terms of the Escrow and
Disbursement Agreement and the Construction Budget, as so amended
or altered. No exercise or non-exercise of any right hereby
given to the Trustee, no dealing by the Trustee with the
Guarantor or any other guarantor, endorser of the First Mortgage
Notes or any other person, and no change, impairment or release
of all or any portion of the obligations of the Company under the
Indenture or any of the Collateral Documents or suspension of any
right or remedy of the Trustee against any person, including,
without limitation, the Company or any other such guarantor,
endorser or other person, shall in any way affect any of the
obligations of the Guarantor hereunder or any security furnished
by the Guarantor, or give the Guarantor any recourse against the
Trustee. If the Trustee has exculpated or hereafter exculpates
the Company from personal liability in whole or in part, or has
agreed or hereafter agrees to look solely to the First Mortgage
Note Collateral or any other property for the satisfaction of the
Company's obligations under the Indenture and the Collateral
Documents, said exculpation and agreement shall not affect the
Obligations of the Guarantor hereunder. The Guarantor further
acknowledges that any such exculpation or agreement that has been
given or that is hereafter given to the Company has been given or
is given in reliance upon the covenants of the Guarantor
contained herein.
4. WAIVER. The Guarantor hereby waives and
relinquishes all rights and remedies accorded by applicable law
to sureties or guarantors and agrees not to assert or take
advantage of any such rights or remedies, including, without
limitation, (a) any right to require the Trustee to proceed
against the Company or any other person or to proceed against
or exhaust any security held by the Trustee at any time or to
pursue any other remedy in the power of the Trustee before
proceeding against the Guarantor, (b) the defense of the statute
of limitations in any action hereunder or in any action for the
collection or performance of any obligations hereby guaranteed,
(c) any defense that may arise by reason of the incapacity, lack
of authority, death or disability of any other person or the
failure of the Trustee to file or enforce a claim against the
estate (in administration, bankruptcy or any other proceeding)
of any other person, (d) demand, presentment, protest and
notice of any kind, including, without limitation, notice of the
existence, creation or incurrence of any new or additional
indebtedness or obligation or of any action or non-action on the
part of the Company, the Trustee, any endorser or creditor of
the Company or the Guarantor or on the part of any other person
under this or any other instrument in connection with any
obligation or evidence of indebtedness held by the Trustee,
as collateral or in connection with any obligations hereby
guaranteed, (e) any defense based upon an election of remedies
by the Trustee, including, without limitation, an election
to proceed by nonjudicial rather than judicial foreclosure,
which destroys or otherwise impairs the subrogation rights of the
Guarantor, the right of the Guarantor to proceed against the
Company for reimbursement, or both, (f) any defense based upon
any statute or rule
4
<PAGE>
of law that provides that the obligation of a surety must be
neither larger in amount nor in other respects more burdensome
than that of the principal, (g) any duty on the part of the
Trustee to disclose to the Guarantor any facts the Trustee may
now or hereafter know about the Company, regardless of whether
the Trustee has reason to believe that any such facts materially
increase the risk beyond that which the Guarantor intends to
assume, or has reason to believe that such facts are unknown
to the Guarantor, or has a reasonable opportunity to communicate
such facts to the Guarantor, because the Guarantor acknowledges
that it is fully responsible for being and keeping informed
of the financial condition of the Company and of all
circumstances bearing on the risk of non-payment of any
obligations hereby guaranteed, (h) any defense arising because
of the election of the Trustee, in any proceeding instituted
under the Federal Bankruptcy Code, of the application of Section
1111(b)(2) of the Federal Bankruptcy Code, and (i) any defense
based upon any borrowing or grant of a security interest under
Section 364 of the Federal Bankruptcy Code.
5. SUBORDINATION. Except as expressly permitted under
the Indenture, no indebtedness of the Company to the Guarantor or
any subsidiary of the Guarantor (other than the Company) shall be
paid or withdrawn in whole or in part, nor shall the Guarantor
accept any payment of or on account of any such indebtedness or
as a withdrawal of capital while this Completion Guarantee is in
effect. Any such payment by the Company in violation of this
Completion Guarantee shall be received by the Guarantor in trust
for the Trustee, and the Guarantor shall cause the same to be
paid to the Trustee immediately upon demand by the Trustee on
account of the Company's obligations hereby guaranteed. Any
amounts paid, advanced or contributed by the Guarantor pursuant
to this Completion Guarantee shall (i) (a) be evidenced by a note
or notes, (b) be subordinated in right of payment pursuant to the
terms and conditions set forth in the Completion Guarantor
Subordination Agreement, set forth as EXHIBIT A hereto and
entered into between the Company and the Guarantor on the date
hereof, (c) have a maturity date no earlier than March 16, 2003;
PROVIDED, HOWEVER, that principal and interest may be prepaid, at
the option of the Company, without premium, under such note(s) so
long as such prepayment is permitted pursuant to Section 4.07 of
the Indenture and no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence
thereof under the Indenture, and (d) provide that no payment
under such note(s) shall be due and payable any time a Default or
Event of Default has occurred and is continuing under the
Indenture or (ii) be made in the form of a capital contribution
to the Company; PROVIDED THAT Disqualified Stock is not issued in
exchange therefor.
6. BANKRUPTCY.
6.1 So long as any Obligations are owed to the
Trustee, the Guarantor shall not, without the prior written
consent of the Trustee, commence, or join with any other person
in commencing, any bankruptcy, reorganization or insolvency
proceeding against the Company. Subject to Section 12 hereof,
the obligations of the Guarantor under this Completion Guarantee
shall not be altered, limited or affected by any proceeding,
voluntary or involuntary, involving the bankruptcy,
reorganization, insolvency, receivership, liquidation or other
winding-up of the Company, or by any defense which the Company
may have by reason of any order, decree or decision of any court
or administrative body resulting from any such proceeding.
6.2 The Guarantor shall file, in any bankruptcy or
other proceeding in which the filing of claims is required or
permitted by law, all claims which the Guarantor may have against
the Company relating to any indebtedness of the Company to the
Guarantor, and hereby assigns to the Trustee all rights of the
Guarantor thereunder. If the Guarantor does not file any such
claim, the Trustee, as attorney-in-fact for the Guarantor, is
hereby authorized to do so in the name of the Guarantor or, in
the Trustee's discretion, to assign the claim to a nominee and to
cause proofs of claim to be filed in the name of the Trustee's
nominee. The foregoing power of attorney is coupled with an
interest and cannot
5
<PAGE>
be revoked. The Trustee or its nominee shall have the sole right
to accept or reject any plan proposed in any such proceeding and
to take any other action that a party filing a claim is entitled
to take. In all such cases, whether in administration, bankruptcy
or otherwise, the person authorized to pay such a claim shall pay
the same to the Trustee, and, to the full extent necessary for
that purpose, the Guarantor hereby assigns to the Trustee all
of the Guarantor's rights to all such payments or distributions
to which the Guarantor would otherwise be entitled; PROVIDED,
HOWEVER, that the Guarantor's Obligations hereunder shall not be
satisfied except to the extent that the Trustee receives cash
by reason of any such payment or distribution. If the Trustee
receives anything hereunder other than cash, the same shall be
held as collateral for amounts due under this Completion
Guarantee.
7. INTEREST, COSTS AND ATTORNEYS' FEES.
7.1 If the Company or the Guarantor fail to pay all or
any portion of the obligations hereby guaranteed upon demand by
the Trustee, the amount of such obligations and all other sums
payable by the Guarantor to the Trustee hereunder shall bear
interest from the date of demand at the highest rate applicable
to the principal balance of the First Mortgage Notes, or, if the
First Mortgage Notes have been fully repaid, at the highest rate
that would be applicable if the First Mortgage Notes had not been
fully repaid.
7.2. If the Trustee refers this Completion Guarantee to
an attorney to enforce, construe or defend any provision thereof,
or as a consequence of any Default or Event of Default under the
Indenture or any default hereunder, with or without the filing of
any legal action or proceeding, the Guarantor shall pay to the
Trustee upon demand the amount of all reasonable attorneys' fees,
costs and other expenses incurred by the Trustee in connection
therewith, together with interest thereon from the date of demand
at the highest rate applicable to the principal balance of the
First Mortgage Notes, or, if the First Mortgage Notes have been
fully repaid, at the highest rate that would be applicable if the
First Mortgage Notes had not been fully repaid. Such attorneys'
fees, costs and expenses shall include, without limitation, those
incurred in connection with any bankruptcy, reorganization,
insolvency, receivership, liquidation, arrangement or other
similar proceeding involving the Guarantor that in any way affect
the exercise by the Trustee of its rights and remedies hereunder.
8. CUMULATIVE RIGHTS. All rights, powers and remedies of
the Trustee hereunder and under any other agreement now or at any
time hereafter in force between the Trustee and the Guarantor,
including, without limitation, any other guarantee executed by
the Guarantor relating to any indebtedness of the Company, shall
be cumulative and not alternative, and such rights, powers and
remedies shall be in addition to all rights, powers and remedies
given to the Trustee and the Holders by law. This Completion
Guarantee is in addition to and independent of the guarantee of
any other guarantor of any obligations or other indebtedness of
the Company.
9. INDEPENDENT OBLIGATIONS. The Obligations of the
Guarantor hereunder are independent of the obligations of the
Company and, in the event of any default hereunder, a separate
action or actions may be brought and prosecuted against the
Guarantor, whether or not the Company is joined therein or a
separate action or actions are brought against the Company. The
Trustee's rights hereunder shall not be exhausted by its exercise
of any of its rights or remedies or by any such action or by any
number of successive actions unless and until all obligations
hereby guaranteed have been paid and fully performed.
10. APPLICATION OF PAYMENTS OR RECOVERIES. Subject to the
applicable provisions of this Completion Guarantee, with or
without notice to the Guarantor, the Trustee, in its sole
discretion, at any time and from time to time, and in such manner
and upon such terms as the Trustee deems fit, may (a) apply any
or all payments or recoveries from the Company or from any other
guarantor or endorser
6
<PAGE>
under any other instrument or realized from any security, in such
manner and order of priority as the Trustee may determine, to any
of the obligations of the Company, whether or not such
indebtedness is guaranteed hereby or is otherwise secured or is
due and payable at the time of such application, and (b) refund
to the Company any payment received by the Trustee upon any
obligations hereby guaranteed, and payment of the amount refunded
shall be fully guaranteed hereby.
11. FINANCIAL STATEMENTS. The Guarantor hereby represents
and warrants that the information pertaining to the Guarantor set
forth in its most recent filings with the Securities and Exchange
Commission is true and correct in all material respects, and
fairly presents the financial condition and results of operations
of the Guarantor as of the respective dates indicated therein and
for the periods covered thereby, and that no material adverse
change has occurred in the business, condition (financial or
other), results of operations, properties or prospects of the
Guarantor and its subsidiaries, individually or in the aggregate,
since the date of the latest information provided therein.
12. SUSPENSION OF OR EXCUSE FROM PERFORMANCE.
Notwithstanding anything to the contrary in this Completion
Guarantee, if, at any time, there shall occur a Force Majeure
Event with respect to East Chicago Showboat, then the Guarantor's
Obligations under this Completion Guarantee shall be suspended
(the "SUSPENSION") until such time as the Force Majeure Event is
removed. During the period following any date of Suspension and
until the end of such Suspension, the Guarantor shall use its
best efforts to remove the Force Majeure Event.
13. DEFINITIONS. As used in this Completion Guarantee, the
following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of
the terms defined). All other capitalized terms used herein but
not defined shall have the meanings given them in the Indenture.
"AMOUNTS REQUIRED FOR COMPLETION" shall mean (i) all
regularly scheduled payments of principal, as well as all
interest and other amounts (other than principal payments prior
to the regularly scheduled date of repayment), due and payable
pursuant to any Indebtedness (other than the First Mortgage
Notes) prior to the occurrence of the date on which East Chicago
Showboat becomes Operating, (ii) all regularly scheduled payments
of interest due and payable under the First Mortgage Notes prior
to the occurrence of the date on which East Chicago Showboat
becomes Operating; PROVIDED, that in no event shall the Guarantor
be responsible to pay any amounts of principal due on the First
Mortgage Notes), (iii) all costs of construction of East Chicago
Showboat (including, without limitation, the costs relating to
the Casino, gaming and other equipment, pre-opening expenses,
capitalized interest, breakwater, garage, furniture, fixtures and
equipment, contingency, pavilion, design and development fees,
economic development incentives, site improvements and
infrastructure, financing fees and expenses, and bankroll and
working capital, all as identified as a Use of Funds needed in
connection with East Chicago Showboat so that East Chicago
Showboat is Operating in the Escrow and Disbursement Agreement
and the Construction Budget, in each case, as it may be amended
from time to time, prior to or concurrently with the date on
which East Chicago Showboat becomes Operating, (iv) all amounts
owing under any agreement entered into in connection with the
construction or development of East Chicago Showboat so that East
Chicago Showboat is Operating, as well as all amounts owing to
the City of East Chicago, the State of Indiana, or any other
governmental authority, agency, board, subdivision or special
purpose corporation thereof prior to or concurrently with the
date on which East Chicago Showboat becomes Operating, (v) all
operating costs of the Company prior to the time East Chicago
Showboat becomes Operating, and (vi) any other amounts or funds
required in order to cause East Chicago Showboat to become
Operating, including, without limitation, for the furnishing of
labor, materials, supplies or equipment, from taxes, assessments,
fees or other charges, from injuries or damages to persons or
property, or otherwise.
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"AVAILABLE FUNDS" shall have the meaning assigned to it
in the Escrow and Disbursement Agreement.
"FORCE MAJEURE EVENT" shall mean strikes, lockouts or
other labor trouble; fire or other casualty; governmental
preemption in connection with a national emergency; breakdown,
accident or other acts of God; acts of war, insurrection, civil
strife and commotion; failure to supply despite the reasonable
diligence of the Company and the Guarantor; any statute, rule,
order or regulation of any legislature or governmental agency or
any department or subdivision thereof; any litigation not caused
by the Company, the Guarantor or any of the Guarantor's
affiliates; or any other event outside the control of the Company
or the Guarantor; in each such case that shall make it physically
impossible or unlawful to cause East Chicago Showboat to become
Operating; PROVIDED, HOWEVER, that it shall not be deemed to be a
Force Majeure Event to the extent it is not physically impossible
or unlawful to cause East Chicago Showboat to become Operating by
amending or altering the meaning of Minimum Facilities as defined
in the Indenture and the Escrow and Disbursement Agreement or
otherwise altering or amending a physical specification of East
Chicago Showboat (in which case the Guarantor shall have the
obligation pursuant to this Completion Guarantee to complete the
construction of East Chicago Showboat to such modified or amended
extent), and; PROVIDED, FURTHER, that nothing in this definition
shall prevent or cease to cause a Default or Event of Default
under the Indenture for failure to construct East Chicago
Showboat in accordance with the Minimum Facilities or the Plans.
"PROCEEDS" shall have the meaning assigned to it in the
Escrow and Disbursement Agreement.
14. REPRESENTATIONS, WARRANTIES AND ADDITIONAL COVENANTS.
The Guarantor represents, warrants and covenants to the Trustee
that:
14.1 The execution and delivery of this Completion
Guarantee, the performance of this Completion Guarantee,
compliance by the Guarantor with the provisions hereof and the
consummation of the transactions contemplated hereby, will not
(i) conflict with or result in a breach or violation of any of
the respective charters or bylaws of the Guarantor or any of its
subsidiaries or any respective material franchise or license of
the Guarantor or any of its subsidiaries or any of the terms or
provisions thereof, (ii) constitute a default or cause an
acceleration of any obligation under, or result in the imposition
or creation of (or the obligation to create or impose) any lien
with respect to, any bond, note, debenture or other evidence of
indebtedness or any indenture, mortgage, deed of trust or other
agreement or instrument to which the Guarantor or any of its
subsidiaries is a party or by which it or any of them is bound,
or to which any properties of the Guarantor or any of its
subsidiaries is or may be subject, (iii) contravene any order of
any court or governmental agency (including, without limitation,
any gaming authority in any state of the United States or foreign
country or body having jurisdiction over the Guarantor or any of
its subsidiaries or any of their properties, or (iv) violate or
conflict with any statute, rule or regulation or administrative
or court decree applicable to the Guarantor or any of its
subsidiaries or any of their respective properties, in the case
of clauses (i), (ii), (iii) and (iv) which conflict, breach,
violation, default or contravention, singly or in the aggregate
with each other conflict, breach, violation, default or
contravention, would have a material adverse effect on the
business, condition (financial or other), results of operations,
properties or prospects of the Guarantor and its subsidiaries,
individually or in the aggregate, or would materially and
adversely affect the consummation of this Completion Guarantee or
the transactions contemplated hereby.
14.2 The Guarantor has all necessary corporate power
and authority to execute and deliver this Completion Guarantee
and to perform its obligations hereunder.
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14.3 This Completion Guarantee has been duly
authorized, executed and delivered by the Guarantor and
constitutes the legal, valid and binding agreement of the
Guarantor, enforceable against the Guarantor in accordance with
its terms, except as the enforceability hereof may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereinafter in effect relating to or
affecting the rights and remedies of creditors generally and (ii)
the effect of general principles of equity, whether enforcement
is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may
be brought.
14.4 The Guarantor agrees that it will not, and that it
will cause its subsidiaries not to, enter into any bond, note,
debenture or other evidence of indebtedness or any indenture,
mortgage, deed of trust or other agreement or instrument that
would conflict with the performance by the Guarantor of its
obligations under this Completion Guarantee or compliance by the
Guarantor with the provisions hereof or pursuant to which this
Completion Guarantee would constitute a default or cause an
acceleration of any obligation under, or result in the imposition
or creation of (or the obligation to create or impose) any lien.
15. NOTICES. Whenever the Guarantor or the Trustee shall
desire to give or serve any notice, demand, request or other
communication with respect to this Completion Guarantee, each
such notice shall be in writing and shall be effective only if
the same is delivered by personal service, by telegram, or mailed
by certified mail, postage prepaid, return receipt requested,
addressed as follows:
(a) if to the Guarantor, at:
Showboat, Inc.
2800 Fremont Street
Las Vegas, Nevada 89104
Attention: Chief Financial Officer
Telephone: (702) 385-9123
Facsimile: (702) 385-9678
with copies to
Kummer Kaempfer Bonner & Renshaw
3800 Howard Hughes Parkway
Las Vegas, NV 89109
Attention: John N. Brewer, Esq.
Telephone: (702) 792-7000
Facsimile: (702) 796-7181
and
Ice Miller Donadio & Ryan
One American Square, 31st Floor
Indianapolis, Indiana 46204
Attention: Stephen J. Hackman, Esq.
Telephone: (317) 236-2100
Facsimile: (317) 236-2219
or
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(b) if to the Trustee, as provided in the Indenture;
or at such other address as shall have been furnished in writing
by any person described above to the party required to give
notice hereunder.
Any such notice delivered personally shall be deemed to
have been received upon delivery. Any such notice sent by
telegram shall be presumed to have been received by the addressee
one business day after its acceptance for sending by an
authorized carrier thereof. Any such notice sent by mail shall
be presumed to have been received by the addressee three business
days after posting in the United States mail. The Guarantor or
the Trustee may change its address by giving the other party
written notice of the new address as provided herein.
16. SUCCESSORS AND ASSIGNS. This Completion Guarantee
shall inure to the benefit of the Trustee, its successors and
assigns, including the assignees of any obligations hereby
guaranteed, and shall bind the heirs, executors, administrators,
personal representatives, successors and assigns of the
Guarantor. This Completion Guarantee may be assigned by the
Trustee with respect to all or any portion of the obligations
hereby guaranteed, and when so assigned the Guarantor shall be
liable to the assignees under this Completion Guarantee without
in any manner affecting the liability of the Guarantor hereunder
with respect to any Obligations retained by the Trustee.
17. MISCELLANEOUS PROVISIONS.
17.1 THIS COMPLETION GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA AS
APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE
OF NEVADA, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS
OF NEVADA LAW, INCLUDING THE NEVADA GAMING CONTROL ACT AND THE
REGULATIONS PROMULGATED THEREUNDER. THE GUARANTOR HEREBY
CONSENTS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEVADA
AND CONSENTS TO SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY
NEVADA LAW IN ANY ACTION BROUGHT UNDER OR ARISING FROM THIS
COMPLETION GUARANTEE.
17.2 Except as provided in any other written agreement
now or at any time hereafter in force between the Guarantor and
the Trustee, this Completion Guarantee shall constitute the
entire agreement of the Guarantor with the Trustee with respect
to the subject matter hereof, and no representation,
understanding, promise or condition concerning the subject matter
hereof shall be binding upon the Trustee unless expressed herein.
17.3 Should any term, covenant, condition or provision
of this Completion Guarantee be determined to be illegal or
unenforceable, it is the intent of the parties that all other
terms, covenants, conditions and provisions hereof shall
nevertheless remain in full force and effect.
17.4 Time is of the essence to this Completion
Guarantee and each of its provisions.
17.5 When the context and construction so require, all
words used in the singular herein shall be deemed to include the
plural, the masculine shall include the feminine and neuter, and
vice versa.
17.6 The word "person" as used herein shall include any
individual, company, firm, association, partnership, joint
venture, corporation, trust or other legal entity of any kind
whatsoever.
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17.7 No provision of this Completion Guarantee or right
granted to the Trustee hereunder may be waived in whole or in
part, nor can the Guarantor be released from the Guarantor's
obligations hereunder, except by a writing duly executed by an
authorized officer of the Trustee. No provision of this
Completion Guarantee or any of the Obligations hereunder may be
amended without the prior written consent of the Guarantor and
the Trustee and the consent of any additional beneficiaries
hereof shall not be required.
17.8 The Trustee need not inquire into the power of the
Company or the authority of its partners, officers, shareholders
or agents acting or purporting to act on its behalf.
17.9 This Completion Guarantee is intended only for the
benefit of the Trustee, for the benefit of the Holders, and is
not intended to benefit any other third party, including any
other creditor of the Company.
17.10 The headings of this Completion Guarantee
are inserted for convenience only and shall have no effect upon
the construction or interpretation thereof.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have executed this
Completion Guarantee as of the date first above written.
GUARANTOR:
SHOWBOAT, INC., a Nevada
corporation
By:/s/ R. Craig Bird
Name: R. Craig Bird
Title: Executive Vice President
Finance and Administration
Accepted and Agreed:
American Bank National Association, a
national banking association, as Trustee
By: /s/
Name:
Title:
By: /s/ Thomas M. Korsman
Name: Thomas M. Korsman
Title: Vice President
<PAGE>
EXHIBIT A
COMPLETION GUARANTOR SUBORDINATION AGREEMENT
<PAGE>
EXECUTION COPY
COMPLETION GUARANTOR SUBORDINATION AGREEMENT
COMPLETION GUARANTOR SUBORDINATION AGREEMENT (this
"AGREEMENT") dated as of March 28, 1996 by and between SHOWBOAT,
INC., a Nevada corporation (the "GUARANTOR"), and American Bank
National Association, a national banking association, as trustee
(the "TRUSTEE") under the Indenture (as defined below).
W I T N E S S E T H :
WHEREAS, contemporaneously herewith Showboat Marina
Casino Partnership, an Indiana general partnership ("SHOWBOAT
PARTNERSHIP"), and Showboat Marina Finance Corporation, a Nevada
corporation ("FINANCE CORPORATION" and, together with Showboat
Partnership, the "COMPANY"), are issuing $140,000,000 aggregate
principal amount of 13 1/2% First Mortgage Notes due 2003 (the
"FIRST MORTGAGE NOTES") pursuant to an Indenture dated as of
March 28, 1996 by and among the Company and the Trustee (the
"INDENTURE" and, together with the First Mortgage Notes, the
Collateral Documents and all other documents and agreements
relating thereto, the "FIRST MORTGAGE NOTE DOCUMENTS");
WHEREAS, the Guarantor (i) has entered into a
Completion Guarantee, dated as of March 28, 1996, in favor of the
Trustee (the "COMPLETION GUARANTEE") and (ii) may in the future
enter into one or more completion or other guarantees in support
of the obligations of the Company with respect to the First
Mortgage Notes (with all completion and other guarantees
described in this paragraph being herein collectively called the
"GUARANTEES");
WHEREAS, any amounts advanced or paid pursuant to the
Guarantees (such amounts being referred to herein as "GUARANTEE
PAYMENTS") may be loans owing to the Guarantor (the "COMPLETION
LOANS") by the Company;
WHEREAS, all Completion Loans, together with all
principal, interest, fees, indemnities and other amounts owing
with respect thereto, shall be herein called the "SUBORDINATED
OBLIGATIONS");
WHEREAS, pursuant to the Security Agreement, the
Company has granted to the Trustee for the benefit of the holders
of the First Mortgage Notes a first priority perfected lien on,
and security interest in, the Collateral;
WHEREAS, the Trustee, for the benefit of the holders of
the First Mortgage Notes, is the holder of that certain Leasehold
Mortgage, Assignment of Rents and Security Agreement executed by
the Company on March 28, 1996 in respect of INTER ALIA, the
Company's leasehold estate in certain real property comprising a
part of East Chicago Showboat; and
WHEREAS, as a condition to the issuance of the First
Mortgage Notes, the parties hereto (including the Guarantor) are
required to execute and deliver this Agreement;
<PAGE>
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. SUBORDINATION.
1.01 DEFINITIONS. For purposes of this Agreement, the
term "HOLDERS" shall mean the Holders from time to time of the
First Mortgage Notes and the term "FIRST MORTGAGE NOTE
OBLIGATIONS" shall mean (a) the principal of, and premium, if
any, and interest and Liquidated Damages, if any, on the First
Mortgage Notes and (b) all other Obligations and Indebtedness of
the Company to the Holders under the First Mortgage Notes and the
Indenture. Except as otherwise defined herein, capitalized terms
used but not defined herein shall have the meanings given them in
the Indenture.
1.02 SUBORDINATION OF LIABILITIES. The Guarantor, for
itself and its successors and assigns, hereby covenants and
agrees that the payment of the Subordinated Obligations is hereby
expressly subordinated, to the extent and in the manner
hereinafter set forth, to the prior payment in full in cash of
all First Mortgage Note Obligations. The provisions of this
Section 1 shall constitute a continuing offer to all Persons who,
in reliance upon such provisions, become or continue to remain
Holders and such provisions are made for the benefit of the
Holders and such Holders are hereby made obligees hereunder the
same as if their names were written herein as such, and they and
each of them may proceed to enforce such provisions.
1.03 COMPANY NOT TO MAKE PAYMENTS WITH RESPECT TO
SUBORDINATED OBLIGATIONS IN CERTAIN CIRCUMSTANCES.
(a) Until all First Mortgage Note Obligations shall
have been paid in full in cash, no payment or distribution of any
kind or character (whether in cash, property, securities or
otherwise) shall be made in respect of any Subordinated
Obligations other than any payments permitted under Section 4.07
of the Indenture.
(b) In the event that notwithstanding the provisions
of the preceding subsection (a) of this Section 1.03, (i) the
Company or any of its Subsidiaries shall make any payment to the
Guarantor on account of the Subordinated Obligations, which
payment is not permitted by said subsection (a), or (ii) the
Guarantor receives any payment or distribution from any
enforcement or other action against the Collateral, such payment
shall be held by the Guarantor in trust for the benefit of the
Holders, and shall be paid forthwith over and delivered to the
Trustee, for application to the payment of all First Mortgage
Note Obligations remaining unpaid to the extent necessary to pay
the First Mortgage Note Obligations in full in cash in accordance
with the terms of the First Mortgage Note Documents after giving
effect to any concurrent payment or distribution to or for the
benefit of the Holders.
1.04 SUBORDINATION TO PRIOR PAYMENT OF ALL SENIOR
INDEBTEDNESS ON DISSOLUTION, LIQUIDATION OR REORGANIZATION OF
COMPANY. Upon any distribution of assets of the Company
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<PAGE>
upon any dissolution, winding-up, liquidation or reorganization
of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or
otherwise):
(a) the Holders shall first be entitled to receive
payment in full in cash of all First Mortgage Note
Obligations (including, without limitation, post-petition
interest at the rate provided in the First Mortgage Note
Documents whether or not such post-petition interest is an
allowed claim against the debtor in any bankruptcy or
similar proceeding) before the Guarantor is entitled to
receive any payment of any kind or character with respect to
any Subordinated Obligations, other than any payments
permitted under Section 4.07 of the Indenture;
(b) any payment or distributions of assets of the
Company of any kind or character, whether in cash, property,
securities or otherwise to which the Guarantor would be
entitled except for the provisions of this Section 1.04,
shall be paid by the liquidating trustee or agent or other
person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or
other trustee or agent, directly to the Holders or to the
Trustee to the extent necessary to make payment in full in
cash of all First Mortgage Note Obligations remaining
unpaid, after giving effect to any concurrent payment or
distribution to the Holders; and
(c) in the event that, notwithstanding the foregoing
provisions of this Section 1.04, any payment or distribution
of assets of the Company of any kind or character, whether
in cash, property, securities or otherwise, shall be
received by the Guarantor on account of Subordinated
Obligations before all First Mortgage Note Obligations are
paid in full in cash, which payment or distribution is not
permitted by the preceding subsections (a) and (b) of this
Section 1.04, such payment or distribution shall be received
and held in trust for and shall be paid over to the Holders
or to the Trustee for application to the payment of such
First Mortgage Note Obligations until all First Mortgage
Note Obligations shall have been paid in full in cash, after
giving effect to any concurrent payment or distribution to
the Holders.
1.05 EFFECT OF SUBORDINATION ON OBLIGATIONS PURSUANT TO
CONSULTING AGREEMENTS. The Guarantor hereby agrees for the
benefit of the Company and the Holders to the extent any payment
of Subordinated Obligations is not permitted to be made pursuant
to the provisions of this Section 1, then, and notwithstanding
anything to the contrary contained in any other agreement, the
respective Subordinated Obligations shall not be payable by the
Company or any of its Subsidiaries until they are permitted to be
paid in accordance with the terms of this Section 1. To the
extent that any such Subordinated Obligations are not payable by
the Company or any of its Subsidiaries pursuant to this
Section 1, the Guarantor shall forbear from exercising any right
to accelerate the Company's obligations under any instrument or
agreement evidencing any such obligation of the Company as a
result thereof so long as the Indenture or this Agreement shall
continue to prohibit the Company from making such payments.
Without limiting the foregoing, no action shall be taken by the
Guarantor to enforce the payment of any
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<PAGE>
Subordinated Obligations until all First Mortgage Note Obligations
shall have been paid in full in cash.
1.06 SUBROGATION. After all First Mortgage Note
Obligations have been paid in full in cash, the Guarantor shall
have and be entitled to all rights of subrogation otherwise
provided by law in respect of any payment it may make or be
obligated to make under this Agreement with respect to the claims
of the Holders against the Company or any other guarantor of the
First Mortgage Note Obligations.
1.07 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR
OMISSIONS OF COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS. No right
of any Holder or the Trustee to enforce subordination as herein
provided shall at any time or in any way be prejudiced or
impaired by any act or failure to act on the part of the Company
or by any act or failure to act by any such Holder, or by any
noncompliance by the Company with the terms and provisions of the
Completion Guarantee or any other agreement regardless of any
knowledge thereof which any such Holder may have or otherwise be
charged with. The Holders or the Trustee may, without in any way
affecting the obligations of the Guarantor with respect hereto,
at any time or from time to time and in their absolute
discretion, change the manner, place or terms of payment of,
change or extend the time of payment of, or renew or alter, any
First Mortgage Note Obligations or amend, modify or supplement
any of the First Mortgage Note Documents or exercise or refrain
from exercising any of their other rights under the First
Mortgage Note Documents, including, without limitation, the
waiver of default thereunder and the release of any collateral
securing the First Mortgage Note Obligations, all without notice
to or assent from the Guarantor.
2. OTHER RESTRICTED PAYMENTS; SUBORDINATED RIGHTS.
2.01 RECEIPT OF RESTRICTED PAYMENTS. In addition to
the provisions of Section 1 hereof, until all First Mortgage Note
Obligations have been repaid in full in cash, the Guarantor shall
not, and shall not permit any of its Subsidiaries to, receive any
Restricted Payment in violation of the provisions of the
Indenture (including, without limitation, Section 4.07 thereof).
2.02 RECEIPT OF PAYMENTS TO BE HELD IN TRUST. In the
event that, notwithstanding the provisions of the preceding
subsection 2.01, the Guarantor or any of its Subsidiaries shall
receive any payment not permitted to be received by them pursuant
to said subsection 2.01, such payment shall be held by the
Guarantor or such respective Subsidiary in trust for the benefit
of the Holders, and shall be paid forthwith and delivered (with
the Guarantor hereby agreeing to pay such amount over) to the
Trustee for application to the payment of all First Mortgage Note
Obligations remaining unpaid to the extent necessary to pay all
First Mortgage Note Obligations in full in cash after giving
effect to any concurrent payment or distribution to the Holders.
3. AMENDMENT. No modification, amendment, waiver or
release of any provision of this Agreement or of any right,
obligation, claim or cause of action arising
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<PAGE>
hereunder shall be valid or binding for any purpose whatsoever
unless in writing and duly executed by the Trustee and the
Guarantor.
4. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEVADA AS APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN
THE STATE OF NEVADA, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY
PROVISIONS OF NEVADA LAW, INCLUDING THE NEVADA GAMING CONTROL ACT
AND THE REGULATIONS PROMULGATED THEREUNDER. THE GUARANTOR HEREBY
CONSENTS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEVADA
AND CONSENTS TO SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY
NEVADA LAW IN ANY ACTION BROUGHT UNDER OR ARISING FROM THIS
COMPLETION GUARANTEE.
5. THIRD PARTY BENEFICIARIES. This Agreement is
entered into for the benefit of the Holders and may not be
amended, modified or supplemented in any respect, or terminated,
without the consent of the Trustee or that percentage of the
Holders required pursuant to the terms of the Indenture. The
provisions of this Agreement are continuing provisions and all
First Mortgage Note Obligations to which they apply shall
conclusively be presumed to have been created in reliance
thereon. Except to the extent provided in Section 1.05 hereof,
this Agreement is not entered into for the benefit of the
Company, and the Company shall not be a third party beneficiary
of this Agreement.
6. TERMINATION. This Agreement shall terminate on
the date on which all First Mortgage Note Obligations have been
repaid in full in cash.
7. REPRESENTATIONS, WARRANTIES AND ADDITIONAL
COVENANTS. The Guarantor represents, warrants and covenants to
the Trustee that:
7.01 The execution and delivery of this Agreement, the
performance of this Agreement, compliance by the Guarantor with
the provisions hereof and the consummation of the transactions
contemplated hereby, will not (i) conflict with or result in a
breach or violation of any of the respective charters or bylaws
of the Guarantor or any of its subsidiaries or any respective
material franchise or license of the Guarantor or any of its
subsidiaries or any of the terms or provisions thereof, (ii)
constitute a default or cause an acceleration of any obligation
under, or result in the imposition or creation of (or the
obligation to create or impose) any lien with respect to, any
bond, note, debenture or other evidence of indebtedness or any
indenture, mortgage, deed of trust or other agreement or
instrument to which the Guarantor or any of its subsidiaries is a
party or by which it or any of them is bound, or to which any
properties of the Guarantor or any of its subsidiaries is or may
be subject, (iii) contravene any order of any court or govern
mental agency (including, without limitation, any gaming
authority in any state of the United States or foreign country)
or body having jurisdiction over the Guarantor or any of its
subsidiaries or any of their properties, or (iv) violate or
conflict with any statute, rule or regulation or administrative
or court decree applicable to the Guarantor or any of its
subsidiaries
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<PAGE>
or any of their respective properties, in the case of clauses
(i), (ii), (iii) and (iv) which conflict, breach, violation,
default or contravention, singly or in the aggregate with each
other conflict, breach, violation, default or contravention,
would have a material adverse effect on the business, condition
(financial or other), results of operations, properties or
prospects of the Guarantor and its subsidiaries, individually or
in the aggregate, or would materially and adversely affect
the consummation of this Agreement or the transactions
contemplated hereby.
7.02 The Guarantor has all necessary corporate power
and authority to execute and deliver this Agreement and to
perform its obligations under this Agreement.
7.03 This Agreement has been duly authorized, validly
executed and delivered by the Guarantor and constitutes the
legally valid and binding agreement of the Guarantor, enforceable
against the Guarantor in accordance with its terms, except as the
enforceability hereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now
or hereinafter in effect relating to or affecting the rights and
remedies of creditors generally and (ii) the effect of general
principles of equity, whether enforcement is considered in a
proceeding in equity or at law, and the discretion of the court
before which any proceeding therefor may be brought.
7.04 The Guarantor agrees that it will not, and that it
will cause its subsidiaries not to, enter into any bond, note,
debenture or other evidence of indebtedness or any indenture,
mortgage, deed of trust or other agreement or instrument which
would conflict with the performance by the Guarantor of its
obligations pursuant to this Agreement or compliance by the
Guarantor with the provisions hereof or pursuant to which this
Agreement would constitute a default or cause an acceleration of
any obligation under, or result in the imposition or creation of
(or the obligation to create or impose) any lien.
7.05 The Guarantor agrees (i) to place on any note or
other instrument evidencing Subordinated Obligations a legend
stating that such obligations are subject to the terms and
conditions of this Agreement and (ii) not to sell, assign,
transfer, pledge or otherwise dispose of any such note or other
instrument to any other party.
8. NOTICES, ETC. All notices, requests, approvals,
consents and other communications required or permitted to be
made hereunder shall, except as otherwise provided, be in writing
and may be delivered personally or sent by telegram, telecopy,
facsimile, telex, first class mail or overnight courier, postage
prepaid, to the parties hereto addressed as follows:
(a) if to Showboat, at:
Showboat, Inc.
2800 Fremont Street
Las Vegas, Nevada 89104
Attention: Chief Financial Officer
Telephone: (702) 385-9123
Facsimile: (702) 385-9678
6
<PAGE>
with copies to:
Kummer, Kaempfer, Bonner & Renshaw
3800 Howard Hughes Parkway
Las Vegas, NV 89109
Attention: John N. Brewer
Telephone: (702) 792-7000
Facsimile: (702) 796-7181
and
Ice, Miller, Donadio & Ryan
One American Square
31st Floor
Indianapolis, Indiana 46204
Attention: James Burrows
Telephone: (317) 236-2100
Facsimile: (317) 235-2219
(b) if to the Trustee, as provided in the
Indenture;
(c) if to the Company, at:
Showboat Marina Casino Partnership
Showboat Marina Finance Corporation
2001 East Columbus Drive
East Chicago, Indiana 46312
Attention: Vice President - Finance and
Administration
Telephone: (219) 392-1111
Facsimile: (219) 736-2334
Such notices, requests and other communications sent as provided
above shall be effective when received by the addressee thereof,
unless sent by registered or certified mail, postage prepaid, in
which case they shall be effective exactly three (3) business
days after being deposited in the United States mail. The
parties hereto may change their addresses by giving notice
thereof to the other parties hereto in conformity with this
section.
[SIGNATURE PAGE FOLLOWS]
7
<PAGE>
IN WITNESS WHEREOF, the Trustee and the Guarantor have
caused this Agreement to be duly executed and delivered as of the
date first written above.
GUARANTOR:
SHOWBOAT, INC., a Nevada
corporation
By: /s/ R. Craig Bird
Name: R. Craig Bird
Title: Executive Vice President
- Finance and Administration
Acknowledged and agreed by:
American Bank National Association, a
national banking association, as Trustee
By: /s/
Name:
Title: Vice President
By: /s/ Thomas M. Korsman
Name: Thomas M. Korsman
Title: Vice President
<PAGE>
EXHIBIT 10.02
<PAGE>
EXECUTION COPY
STANDBY EQUITY COMMITMENT
This Standby Equity Commitment dated as of March 28, 1996
(this "STANDBY EQUITY COMMITMENT") is made and entered into by
and between Showboat Marina Casino Partnership, an Indiana
general partnership ("SHOWBOAT PARTNERSHIP"), Showboat Marina
Finance Corporation, a Nevada corporation ("FINANCE CORPORATION"
and, together with Showboat Partnership, the "COMPANY"), and
Showboat, Inc. ("SHOWBOAT"), a Nevada corporation.
R E C I T A L S
WHEREAS, pursuant to that certain Indenture, dated as of
March 28, 1996 (the "INDENTURE"), by and among the Company and
American Bank National Association, a national banking
association, as trustee (the "TRUSTEE"), the Company has issued
$140,000,000 aggregate principal amount of 13 1/2% First Mortgage
Notes due 2003 (the "FIRST MORTGAGE NOTES");
WHEREAS, the Company has entered into the Indenture to
finance, in part, the design, development, construction,
equipping and opening of a riverboat casino and supporting
ancillary facilities on Lake Michigan in East Chicago, Indiana
("EAST CHICAGO SHOWBOAT");
WHEREAS, Showboat indirectly owns a substantial equity
interest in the Company and will obtain substantial economic and
other benefits as a result of the successful completion of East
Chicago Showboat, including substantial compensation for this
Standby Equity Commitment;
WHEREAS, Showboat has concurrently entered into that
certain Completion Guarantee dated as of March 28, 1996 in favor
of the Trustee (the "COMPLETION GUARANTEE"); and
WHEREAS, as a material inducement to the purchasers of the
First Mortgage Notes, Showboat has agreed that it will commit,
for the benefit of the Company and the holders of the First
Mortgage Notes from time to time, to make or cause to be made
additional capital contributions to the Company as provided
herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as
follows. Capitalized terms used but not otherwise defined herein
shall have the meanings given to them in the Indenture.
1. SHOWBOAT'S COMMITMENT. If during any of the first
three full consecutive fiscal four-quarter periods (commencing on
January 1, April 1, July 1 or October 1, as the case may be)
after East Chicago Showboat begins Operating (each, an "EQUITY
COMMITMENT YEAR") the Company's Combined Cash Flow for such
Equity Commitment Year is less than $35.0 million, Showboat will
cause additional capital contributions to be made to the Company
in an amount equal to not less than the difference between $35.0
million and the amount of the Company's Combined Cash Flow for
such Equity
<PAGE>
Commitment Year (the "EQUITY COMMITMENT"); provided, however,
that Showboat shall in no event be required to cause to be
contributed (a) more than $15.0 million in respect of any one
such Equity Commitment Year and (b) more than $30.0 million in
the aggregate in respect of all three Equity Commitment Years.
The Equity Commitment for any one Equity Commitment Year shall be
made to the Company no later than 60 days after the end of such
Equity Commitment Year. Showboat may satisfy the Equity
Commitment in respect of any such Equity Commitment Year through
any means it deems appropriate.
2. DETERMINATION OF COMBINED CASH FLOW. On or before the
last day of the month immediately following the end of each
Equity Commitment Year covered by this Agreement, the Company
shall estimate, through its regular internal accounting
procedures, its Combined Cash Flow for such fiscal year. In the
event that such estimate equals or exceeds $35.0 million,
Showboat, pending receipt of the Combined Cash Flow Certificate
(as defined below), shall not then be required to make
arrangements to cause additional capital contributions to be made
to fund the Equity Commitment. In the event that such estimate
is less than $35.0 million, the Company shall notify Showboat of
the amount of such estimate and, upon receipt of such notice,
Showboat shall, at its sole cost and expense, promptly arrange to
cause the Equity Commitment to be satisfied on a timely basis.
On or before the 50th day following the end of each Equity
Commitment Year covered by this Agreement, the Company shall
prepare and deliver to Showboat a certificate (the "COMBINED CASH
FLOW CERTIFICATE") stating (a) the amount of the Company's
Combined Cash Flow for such Equity Commitment Year as reflected
in or determined from the Company's audited financial statements
or, if such financial statements are not yet available, the
Company's most recent unaudited quarterly financial statements,
and (b) the amount of any Equity Commitment required to be made
in respect of such Equity Commitment Year. In the event that the
Combined Cash Flow Certificate reflects Combined Cash Flow of at
least $35.0 million, there shall be no Equity Commitment in
respect of such Equity Commitment Year. In the event that the
Combined Cash Flow Certificate reflects Combined Cash Flow of
less than $35.0 million, Showboat shall, at its sole cost and
expense, cause additional capital contributions to be made to
fund the Equity Commitment in the amount indicated in the
Combined Cash Flow Certificate no later than 60 days after the
end of such Equity Commitment Year.
3. COOPERATION. In connection with this Standby Equity
Commitment, Showboat agrees, at its sole cost and expense, to
fully cooperate with the Company and to timely provide such
documents, agreements and information as may be required in
connection therewith.
4. ACKNOWLEDGEMENT. Showboat acknowledges that it has
received copies of and is familiar with the Indenture and each
Collateral Document, all of which are incorporated herein by
reference. Notwithstanding anything to the contrary in this
Standby Equity Commitment, it is understood and agreed by the
parties hereto that, except as expressly provided herein, the
Company's sole remedies under this Standby Equity Commitment
shall be to require Showboat to fulfill its obligations as
described above, and in no event shall Showboat incur, directly
or indirectly, any obligation, contingent or otherwise, for the
payment of the principal amount of the First Mortgage Notes.
5. ATTORNEYS' FEES. If any party refers this Standby
Equity Commitment to an attorney to enforce or defend any
provision hereof, with or without the filing of any legal action
or proceeding, then the prevailing party shall pay to the other
party upon demand the amount of all reasonable attorneys' fees,
costs and other expenses incurred by such other party in
connection therewith, together with interest thereon from the
date of demand at the highest rate applicable to the principal
balance of the First Mortgage Notes, or, if the First Mortgage
Notes have been fully repaid, at the highest rate that would be
applicable if the First Mortgage Notes had not been fully repaid.
2
<PAGE>
6. NOTICES. Whenever Showboat or the Company shall desire
to give or serve any notice, demand, request or other
communication with respect to this Standby Equity Commitment,
each such notice shall be in writing and shall be effective only
if the same is delivered by personal service, by telegram,
facsimile or mailed by certified mail, postage prepaid, return
receipt requested, addressed as follows:
(a) if to Showboat, at:
Showboat, Inc.
2800 Fremont Street
Las Vegas, Nevada 89104
Attention: Chief Financial Officer
Telephone: (702) 385-9123
Facsimile: (702) 385-9678
with copies to:
Kummer Kaempfer Bonner & Renshaw
3800 Howard Hughes Parkway
Las Vegas, NV 89109
Attention: John N. Brewer, Esq.
Telephone: (702) 792-7000
Facsimile: (702) 796-7181
and
Ice Miller Donadio & Ryan
One American Square, 31st Floor
Indianapolis, Indiana 46204
Attention: Stephen J. Hackman, Esq.
Telephone: (317) 236-2100
Facsimile: (317) 236-2219
or
(b) if to the Company, at:
Showboat Marina Casino Partnership
Showboat Marina Finance Corporation
2001 East Columbus Drive
East Chicago, Indiana 46312
Attention: Vice President - Finance
and Administration
Telephone: (219) 392-1111
Facsimile: (219) 736-2334
and, in either case
(c) to the Trustee, as provided in the Indenture;
3
<PAGE>
or at such other address as shall have been furnished in writing
by any person described above to the party required to give
notice hereunder.
Any such notice delivered personally shall be deemed to
have been received upon delivery. Any such notice sent by
telegram shall be presumed to have been received by the addressee
one business day after its acceptance for sending by an
authorized carrier thereof. Any such notice sent by mail shall be
presumed to have been received by the addressee three business
days after posting in the United States mail. Any such notice
delivered by facsimile shall be deemed to have been received upon
confirmation thereof. Either party may change its address by
giving the other written notice of the new address herein
provided.
7. REPRESENTATIONS, WARRANTIES AND ADDITIONAL COVENANTS
OF SHOWBOAT. Showboat represents, warrants and covenants to the
Company that:
7.1 The execution, delivery and performance of this
Standby Equity Commitment, the compliance by Showboat with the
provisions hereof and the consummation of the transactions
contemplated hereby, will not (i) conflict with or result in a
breach or violation of any of the respective charters or bylaws
of Showboat or any of its subsidiaries or any respective material
franchise or license of Showboat or any of the terms or
provisions thereof, (ii) constitute a default or cause an
acceleration of any obligation under, or result in the imposition
or creation of (or the obligation to create or impose) any lien
with respect to, any bond, note, debenture or other evidence of
indebtedness or any indenture, mortgage, deed of trust or other
agreement or instrument to which Showboat or any of its
subsidiaries is a party or by which it or any of them is bound,
or to which any properties of Showboat or any of its subsidiaries
is or may be subject, (iii) contravene any order of any court or
governmental agency (including, without limitation, any gaming
authority in any state of the United States or foreign country)
or having jurisdiction over Showboat or any of its subsidiaries
or any of their properties, or (iv) violate or conflict with any
statute, rule or regulation or administrative or court decree
applicable to Showboat or any of its subsidiaries or any of their
respective properties, in the case of clauses (i), (ii), (iii)
and (iv) which conflict, breach, violation, default or
contravention, singly or in the aggregate with each other
conflict, breach, violation, default or contravention, would have
a material adverse effect on the business, condition (financial
or other), results of operations, properties or prospects of
Showboat and its subsidiaries, individually or in the aggregate,
or would materially and adversely affect the consummation of this
Standby Equity Commitment or the transactions contemplated
hereby.
7.2 Showboat has all necessary corporate power and
authority to execute and deliver this Standby Equity Commitment,
and to perform its obligations hereunder.
7.3 This Standby Equity Commitment has been duly
authorized, validly executed and delivered by Showboat and
constitutes the valid and binding agreement of Showboat,
enforceable against Showboat in accordance with its terms, except
as the enforceability hereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now
or hereinafter in effect relating to or affecting the rights and
remedies of creditors generally and (ii) the effect of general
principles of equity, whether enforcement is considered in a
proceeding in equity or at law, and the discretion of the court
before which any proceeding therefor may be brought.
7.4 Showboat agrees that it will not, and that it
will cause its subsidiaries not to, enter into any bond, note,
debenture or other evidence of indebtedness or any indenture,
mortgage, deed of trust or other agreement or instrument that
would conflict with the performance by Showboat of its
obligations under this Standby Equity Commitment or compliance by
Showboat with the provisions hereof or pursuant to which this
Standby Equity Commitment would constitute a default or cause an
acceleration
4
<PAGE>
of any obligation under, or result in the imposition or creation
of (or the obligation to create or impose) any lien.
8. SUCCESSORS AND ASSIGNS. This Standby Equity
Commitment shall inure to the benefit of the parties hereto, the
Trustee, as a third party beneficiary on behalf of the holders of
the First Mortgage Notes, and their successors and assigns, and
shall bind the heirs, executors, administrators, personal
representatives, successors and assigns of such persons.
9. MISCELLANEOUS PROVISIONS.
9.1 THIS STANDBY EQUITY COMMITMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEVADA AS APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN
THE STATE OF NEVADA, SUBJECT TO MANDATORY PROVISIONS OF NEVADA
LAW, INCLUDING THE NEVADA GAMING CONTROL ACT AND THE REGULATIONS
PROMULGATED THEREUNDER. SHOWBOAT HEREBY CONSENTS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEVADA, AND CONSENTS
TO SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY NEVADA LAW IN
ANY ACTION BROUGHT UNDER OR ARISING FROM THIS STANDBY EQUITY
COMMITMENT.
9.2 Except as provided in any other written
agreement now or at any time hereafter in force between Showboat
and the Company, this Standby Equity Commitment shall constitute
the entire agreement of Showboat and the Company with respect to
the subject matter hereof, and no representation, understanding,
promise or condition concerning the subject matter hereof shall
be binding upon Showboat or the Company unless expressed herein.
9.3 Should any term, covenant, condition or
provision of this Standby Equity Commitment be determined to be
illegal or unenforceable, it is the intent of the parties that
all other terms, covenants, conditions and provisions hereof
shall nevertheless remain in full force and effect.
9.4 Time is of the essence for this Standby Equity
Commitment and each of its provisions.
9.5 When the context and construction so require,
all words used in the singular herein shall be deemed to include
the plural, the masculine shall include the feminine and neuter,
and vice versa.
9.6 No provision of this Standby Equity Commitment
or right granted hereunder may be waived in whole or in part, nor
may any party be released from such party's obligations
hereunder, except by a writing duly executed by an authorized
officer of the other party and the Trustee. No provision of this
Standby Equity Commitment or any of the obligations hereunder may
be amended without the prior written consent of Showboat, the
Company and the Trustee.
9.7 The headings of this Standby Equity Commitment
are inserted for convenience only and shall have no effect upon
the construction or interpretation thereof.
[SIGNATURE PAGE FOLLOWS]
5
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this
Standby Equity Commitment as of the date first above written.
SHOWBOAT, INC., a Nevada
corporation
By: /s/ R. Craig Bird
Name: R. Craig Bird
Title: Executive Vice President -
Finance and Administration
SHOWBOAT MARINA CASINO PARTNERSHIP,
an Indiana general partnership
By: SHOWBOAT MARINA PARTNERSHIP, an
Indiana general partnership, its
general partner
By: SHOWBOAT INDIANA INVESTMENT
LIMITED PARTNERSHIP, a Nevada
limited partnership, its general
partner
By: SHOWBOAT INDIANA, INC., a Nevada
corporation, its general partner
By: /s/ J. Keith Wallace
Name: J. Keith Wallace
Title: President and Chief
Executive Officer
SHOWBOAT MARINA FINANCE CORPORATION,
a Nevada corporation
By: /s/ Mark J. Miller
Name: Mark J. Miller
Title: Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 24454
<SECURITIES> 49906
<RECEIVABLES> 10845
<ALLOWANCES> 2779
<INVENTORY> 2815
<CURRENT-ASSETS> 103105
<PP&E> 558980
<DEPRECIATION> 192153
<TOTAL-ASSETS> 794291
<CURRENT-LIABILITIES> 54220
<BONDS> 532457
0
0
<COMMON> 15828
<OTHER-SE> 162368
<TOTAL-LIABILITY-AND-EQUITY> 794291
<SALES> 101577
<TOTAL-REVENUES> 102590
<CGS> 0
<TOTAL-COSTS> 55269
<OTHER-EXPENSES> 30864
<LOSS-PROVISION> 258
<INTEREST-EXPENSE> 7537
<INCOME-PRETAX> (1597)
<INCOME-TAX> (796)
<INCOME-CONTINUING> (801)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (801)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
