SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
[ ] Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 1-7123
Showboat, Inc.
(Exact name of registrant as specified in its charter)
Nevada 88-0090766
(State or other jurisdiction (I.R.S. employer
of incorporation or organization identification no.)
2800 Fremont Street, Las Vegas, Nevada 89104
(Address of principal executive offices) (Zip code)
(702) 385-9141
(Registrant's telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, $1.00 par value, and New York Stock Exchange
Preferred Stock Purchase Rights
9 1/4% First Mortgage Bonds due 2008 New York Stock Exchange
Securities registered pursuant to section 12(g) of the Act: None
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Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of voting stock held by non-
affiliates of the registrant, based on the closing price of
registrant's common stock on the New York Stock Exchange on
March 15, 1996, was approximately $342,272,000.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of March 15, 1996:
15,762,285
DOCUMENTS INCORPORATED BY REFERENCE
The information required by Part III of this Report is
incorporated by reference from the Showboat, Inc. Proxy Statement
to be filed with the Commission not later than 120 days after the
end of the fiscal year covered by this Report.
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PART I
ITEM 1.BUSINESS
GENERAL
Showboat, Inc. (the "Company"), through subsidiaries,
(i) owns and operates the Showboat Casino Hotel fronting the
Boardwalk in Atlantic City, New Jersey (the "Atlantic City
Showboat"), (ii) owns and operates the Showboat Hotel, Casino and
Bowling Center in Las Vegas, Nevada (the "Las Vegas Showboat"),
and (iii) beneficially owns a 26.3% interest in, and manages, the
Sydney Harbour Casino in Sydney, New South Wales, Australia,
which commenced gaming operations in an interim casino on
September 13, 1995. The Company, through subsidiaries, also owns
(i) a 55% partnership interest in Showboat Marina Partnership,
which received a certificate of suitability on January 8, 1996
for a riverboat owner's license in East Chicago, Indiana, and
(ii) an 80% interest in Southboat Limited Partnership which has
submitted an application with the Missouri Gaming Commission for
a riverboat gaming license near Lemay, Missouri. From July 1993
to March 31, 1995, the Company owned an interest in, and managed
the Showboat Star Casino, a riverboat casino then located on Lake
Pontchartrain in New Orleans, Louisiana.
The Company commenced operations in September 1954, as a
partnership, and was incorporated in Nevada in 1960. The Company
operated only in Nevada until the Atlantic City Showboat
commenced operations in 1987. The Company became a publicly
traded company on December 9, 1968. It was listed on the
American Stock Exchange from 1973 to 1984 and on the New York
Stock Exchange from 1984 to the present. Unless the context
otherwise requires, the "Company" or "Showboat," as applicable,
refers to Showboat, Inc. and its subsidiaries. The Company's
executive offices are located at 2800 Fremont Street, Las Vegas,
Nevada 89104, and its telephone number is (702) 385-9141.
FISCAL YEAR 1995 DEVELOPMENTS
SYDNEY, AUSTRALIA
The Sydney Harbour Casino commenced gaming operations in an
interim casino in Sydney, New South Wales, Australia on
September 13, 1995. Showboat Australia Pty Limited ("SA"), a
corporation formed under the laws of the State of New South Wales
and wholly-owned by subsidiaries of Showboat, is the largest
single shareholder at 26.3% of Sydney Harbour Casino Holdings
Limited ("SHCH"). SHCH, through wholly-owned subsidiaries, owns
the Sydney Harbour Casino and holds the casino license required
to operate the Sydney Harbour Casino. SA also has an 85%
interest in the management company which manages the Sydney
Harbour Casino pursuant to the terms of a 99-year management
agreement.
The interim casino, which has approximately 60,000 square
feet of casino space, is located approximately one mile from the
Sydney central business district at Pyrmont Bay adjacent to
Darling Harbour on Wharves 12 and 13. An existing building was
renovated to permit the operation of the interim casino
containing 500 slot machines and 150 table games. The interim
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casino is open 24 hours per day, every day of the year. The
interim casino features restaurants, bars, a sports lounge and a
gift shop.
The opening of the Sydney Harbour Casino marks the beginning
of Sydney Harbour Casino's 12-year monopoly as the only full-
service casino in the State of New South Wales. This exclusive
12-year period is included in the 99-year casino license awarded
to Sydney Harbour Casino Pty Limited ("SHCL"), a wholly-owned
subsidiary of SHCH.
Pursuant to the terms of a construction contract and subject
to certain exceptions, the permanent Sydney Harbour Casino must
be completed within 38 months of the December 1994 award of the
casino license to SHCL. The Company anticipates that the
permanent Sydney Harbour Casino will commence operations by early
1998. The permanent Sydney Harbour Casino will be located at
Pyrmont Bay next to the interim casino site. Pursuant to the
terms of the casino license, upon opening the permanent casino,
the interim casino will cease operations. The permanent Sydney
Harbour Casino will feature approximately 153,000 square feet of
casino space, including an approximately 22,000 square foot
private gaming area to be located on a separate level which will
target a premium clientele. The Sydney Harbour Casino will have
1,500 slot machines and 200 table games. The permanent Sydney
Harbour Casino will also contain several themed restaurants,
cocktail lounges, a 2,000 seat lyric theatre, a 900 seat cabaret
style theatre and extensive public areas. The Sydney Harbour
Casino complex will include a 352-room hotel tower and an
adjacent condominium tower containing 139 privately-owned units
with full hotel services. The complex will also include
extensive retail facilities, a station for Sydney's proposed
light rail system, a bus terminal, docking facilities for
commuter ferries and parking for approximately 2,500 cars.
EAST CHICAGO, INDIANA
On January 8, 1996, the Showboat Marina Partnership ("SMP")
was issued a certificate of suitability by the Indiana Gaming
Commission (the "Indiana Commission") for a gaming license to own
and operate a riverboat casino and related facilities
(collectively, the "East Chicago Showboat") in East Chicago,
Indiana. SMP is owned 55% by Showboat Indiana Investment Limited
Partnership, a wholly-owned limited partnership of the Company,
and 45% by Waterfront Entertainment and Development, Inc.
("Waterfront"), an unrelated corporation. SMP has applied to the
Indiana Commission to transfer the certificate of suitability to
a subsidiary partnership. The subsidiary partnership would then,
if the transfer is approved, own and operate the East Chicago
Showboat. No assurance can be given that the Indiana Commission
will approve the transfer of the certificate of suitability to
the subsidiary partnership. The certificate of suitability is
valid for a period of 180 days from January 8, 1996, during which
time SMP or the subsidiary partnership, as applicable, must
comply with certain statutory requirements and special conditions
in order to receive a permanent riverboat owner's license. The
time period of the certificate of suitability may be extended at
the discretion of the Indiana Commission. During the 180 day (or
subsequently extended) interim compliance period, SMP or the
subsidiary partnership, as applicable, must (i) invest at least
$154.5 million in project development costs for the East Chicago
Showboat, including, but not limited to site improvements,
preopening expenses and contingency; (ii) obtain all permits,
licenses and certificates required for lawful operation of the
East Chicago Showboat, including those related to zoning,
building, fire safety and health; (iii)
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obtain any required financing; (iv) post a bond in an amount the
local community will spend for infrastructure and any other
facilities associated with the East Chicago Showboat; (v) obtain
insurance; and (vi) obtain licensure for gaming equipment.
Failure to substantially comply with the foregoing requirements
may result in the Indiana Commission not extending the
certificate of suitability beyond the initial 180 day period.
The certificate of suitability also provides that failure to
commence excursions within twelve months of January 8, 1996, may
result in the revocation of the certificate of suitability;
however, to date, the Indiana Commission has not revoked any
gaming operator's certificate of suitability for failure to
commence excursions within twelve months of issuance. No
assurance can be given, however, that the Indiana Commission will
not revoke the certificate of suitability if SMP or the
subsidiary partnership, as applicable, fails to commence
excursions within 12 months of the date of issuance thereof. If
the Indiana Commission determines SMP or the subsidiary
partnership, as applicable, has complied with the requirements of
the certificate of suitability and all other applicable statutory
and regulatory requirements required during the interim
compliance period, it may issue an owner's license.
The East Chicago Showboat will be located approximately 12
miles from downtown Chicago, Illinois. The current plans for the
East Chicago Showboat contemplate a 100,000 square foot state-of-
the-art riverboat casino containing approximately 51,000 square
feet of gaming space on four levels and will feature
approximately 1,700 slot machines and approximately 86 table
games. The riverboat casino is designated to accommodate up to
3,750 customers. Adjacent to the riverboat will be an
approximately 100,000 square foot pavilion which will feature
restaurants, cocktail lounges and retail space. The East Chicago
Showboat will provide secure, well-lit customer parking for
approximately 2,500 vehicles, which includes a parking garage for
approximately 1,000 vehicles and surface level parking for
approximately 1,500 vehicles.
The East Chicago Showboat is expected to cost approximately
$195.0 million and is expected to commence gaming operations by
July 1, 1997. Showboat will invest approximately $40.0 million
in SMP of which $39.0 million will be contributed to the
subsidiary partnership. SMP, or the subsidiary partnership, as
applicable, intends to obtain a combination of debt and equipment
financings for an aggregate of approximately $156.0 million to
develop the East Chicago Showboat. No assurance can be given
that SMP, or the subsidiary partnership, as applicable, will be
successful in obtaining such financings. Under the current
partnership agreement, the Company will receive a 12% preferred
return on its investment in SMP. In addition, subject to certain
qualifications and exceptions, the Company has agreed to provide
a completion guarantee 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 should a lender require a completion guarantee
in connection with any development financing. In addition,
subject to certain qualifications and exceptions, the Company has
agreed to provide a standby equity commitment should a lender
require a standby equity commitment in connection with any
development financing, pursuant to which it will cause to be made
up to an aggregate of $30.0 million in additional capital
contributions to SMP or the subsidiary partnership if, during the
first three full four fiscal quarters following the commencement
of operations, the East Chicago Project's combined cash flow (as
defined) is less than $35.0 million for any one such full four
quarter period. However, in no event will the
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Company be required to cause to be contributed to the subsidiary
partnership more than $15.0 million in respect of any one such
full four quarter period. If the Company is required to provide
a standby equity commitment, Waterfront has agreed to pay the
Company $5.2 million, which amount shall accrue interest at 12%
per annum until paid, from Waterfront's share of distributable
cash from SMP.
Among other things, SMP agreed to contribute the following
economic incentives to the City of East Chicago: (i) 3% of its
adjusted gross receipts for the benefit of economic development,
education and community development in the City of East Chicago,
(ii) .75% of its adjusted gross receipts for the benefit of
commercial and housing development in the City of East Chicago,
(iii) to reimburse certain expenses of the City of East Chicago,
(iv) to fund certain projects and programs designated by the City
of East Chicago, and (v) to provide job training for residents of
the City of East Chicago who are hired as employees of East
Chicago Showboat. SMP committed to fund the following projects
in the approximate amounts specified, regardless of the issuance
of a gaming license: (1) Healthy East Chicago Wellness Program,
with estimated expenditures of $200,000 in 1996; (2)
comprehensive market development assessment for various
transportation corridors in the City, with estimated expenditures
of $70,000 in 1996; (3) various capital improvements to the City,
with expenditures of $500,000 in 1996; and (4) engineering fees
related to the water marketing project for extension of the
City's water main, with estimated expenditures of $500,000 in
1996. Fifty percent of the funds expended by SMP or the
subsidiary partnership, as applicable, in connection with these
four projects shall be credited against the 1% share payable to
the City of East Chicago during the first and, if necessary
second years of operations, only, unless otherwise approved by
the City of East Chicago.
On October 19, 1995, SMP entered into a lease with the City
of East Chicago for certain real property and improvements in
Lake County, Indiana. The term of the lease which commenced upon
the issuance of the certificate of suitability is 30 years with
two options to extend for 30 years each. Annual rent for the SMP
Casino Site is $400,000, subject to adjustment. On December 6,
1995, the U.S. Army Corps of Engineers issued a final development
permit to the City of East Chicago for the East Chicago Showboat.
LAS VEGAS, NEVADA
In December 1995, the Company completed an approximately
$21.0 million renovation of the Las Vegas Showboat that primarily
improved the quality of the public areas of the Las Vegas
Showboat. Approximately 30,000 square feet or 40% of the casino
space was closed from July 1995 to December 1995 as a result of
the renovation, which closure caused a significant disruption in
operations and earnings at the Las Vegas Showboat. The
renovation project included the replacement of the roof over a
portion of the casino which resulted in higher ceilings and the
removal of a number of support pillars, giving the casino a more
expansive appearance. An internal balcony was added which
provides an overview of the casino. The renovation also included
a number of alterations and expansions to the dining and bar
areas to improve their variety and overall ambiance. The coffee
shop was expanded to include patio seating which looks into the
casino. The Mardi Gras Lounge, formerly the Carnival Lounge, was
doubled in size to meet the demand of patrons when popular
entertainers perform, and the casino bar adjacent to the lounge
was expanded to include an additional raised seating area and a
large screen television.
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Additionally, the facilities power plant and HVAC systems were
replaced, a new pool building was constructed, new carpeting was
installed throughout the property, the buffet and coffee shop
kitchens and the employee dining room were remodeled and enlarged
and an employee learning center was added.
ATLANTIC CITY, NEW JERSEY
During 1995, the Atlantic City Showboat restructured the
layout of its casino. Jake's Betting Parlor, which contained
approximately 15,000 square feet of casino space, approximately
40 table games, a horse race simulcast facility, a keno facility
and a poker room, was converted into the Carousel Room, a premium
slot area. The simulcast and keno facilities were relocated to
the main casino floor. Approximately 400 slot machines were
added in connection with this restructuring. In connection with
the settlement of certain litigation in December 1995 for cash
and non-cash consideration, Atlantic City Showboat, Inc.
("ACSI"), a wholly-owned subsidiary of the Company, received
title to certain real property adjacent to the Atlantic City
Showboat upon which it constructed a surface level parking area
for approximately 500 vehicles.
LEMAY, MISSOURI
On May 1, 1995, Southboat Limited Partnership ("SLP") was
formed by Showboat Lemay, Inc. ("Showboat Lemay"), a corporation
wholly-owned by the Company, and Futuresouth, Inc.
("Futuresouth"), an unrelated corporation, for the purpose of
designing, developing, constructing, owning and operating a
riverboat casino and related facilities (collectively, the
"Southboat Casino Project"). SLP is owned 80% by Showboat Lemay,
the sole general partner, and 20% by Futuresouth, the sole
limited partner. The Southboat Casino Project is expected to be
located on approximately 29 acres at the southernmost portion of
the St. Louis County Port Authority Site on the Mississippi River
near Lemay, Missouri (the "Southboat Casino Site"). The
Southboat Casino Project is intended to be a multi-level gaming
and entertainment facility within a New Orleans-themed riverboat
and permanently-moored barge complex. The total cost of the
Southboat Casino Project is anticipated to be approximately
$117.0 million. The limited partnership agreement provides that
the Company's initial capital contribution is $19.5 million and
that Showboat Lemay, on behalf of SLP, will arrange for a $75.0
million loan to develop the Southboat Casino Project and to
arrange for equipment financing for the remaining costs of the
project. SLP has entered into a commitment letter to receive up
to $75.0 million of financing for the construction of the
Southboat Casino Project, subject to certain conditions. The
commitment letter expires on May 10, 1996. No assurance can be
given that SLP will be selected for investigation prior to the
expiration of the commitment letter. No assurance can be given
that SLP will be successful in obtaining the necessary funds to
finance the Southboat Casino Project or that SLP will be
successful in obtaining a casino license. The Company has also
agreed to provide a loan to SLP in the amount of approximately
$4.5 million to assist in the development of the Southboat Casino
Project.
Pursuant to the terms of a management agreement, an
administrative services agreement and a trademark license
agreement, each dated May 2, 1995, the Company has agreed to
manage and to provide other services to the proposed operations
at the Southboat Casino Project. The Company will receive an
aggregate fee equal to 5 1/4 % of gross gaming revenues net of
all
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gaming taxes, plus an incentive management fee equal to (i) 20%
of earnings between $30.0 to $35.0 million before any interest
expense, income taxes, capital lease rent, depreciation and
amortization, and (ii) 10% of earnings in excess of $35.0 million
before any interest expense, income taxes, capital lease rent,
depreciation and amortization.
On October 13, 1995, SLP entered into a lease and
development agreement with the St. Louis County Port Authority
("Port Authority") for the lease of the Southboat Casino Site for
a term of 99 years, commencing upon the investigation of SLP for
a Missouri gaming license and the receipt of all permits from the
U.S. Army Corps of Engineers. Fees and rent for the Southboat
Casino Site are payable as follows: (i) a $500,000 acceptance
fee upon completion of a due diligence period; (ii) a $750,000
security deposit on the commencement date of the lease; (iii) a
$2.5 million fee on the commencement date of the lease; (iv) a
$2.5 million fee on the opening date of the Southboat Casino
Project; (v) rent in the amount of $2.0 million per annum payable
in equal monthly installments, beginning on the commencement date
and continuing until the opening of the Southboat Casino Project;
and (iv) rent in the amount of the greater of 4% of adjusted
gross receipts or Minimum Rent (as defined below), beginning on
the opening date of the Southboat Casino Project and continuing
until the expiration of the term of the lease. "Minimum Rent"
means $3.0 million during the first 12-month period occurring
after the opening of the Southboat Casino Project; $2.8 million
during the second 12-month period; $2.6 million during the third
12-month period; $2.4 million during the fourth 12-month period;
$2.2 million during the fifth 12-month period; and $2.0 million
beginning on the fifth anniversary of the opening of the
Southboat Casino Project and continuing through the 15th lease
year ("Guarantee Period"). The Company has guaranteed SLP's
payment of Minimum Rent for the Guarantee Period and SLP's timely
completion of, construction of, and payment for all improvements
and installations in connection with SLP's development of the
Southboat Casino Project. If SLP fails to pay any monthly
installment of Minimum Rent, or if the lease is terminated at any
time within the Guarantee Period due to an event of default by
SLP, the Company must pay either (i) the full sum of unpaid
Minimum Rent due for the remainder of the Guarantee Period, or
(ii) if it posts a $2.0 million letter of credit, make monthly
payments of Minimum Rent. In addition, the Company agreed to
provide a Guarantee of Completion to the Port Authority which
provides, in material part, that the Company will complete the
construction of the Southboat Casino Project should SLP, after
the commencement of work, abandon the project for a period of 30
days after receipt of notice from the Port Authority.
On October 17, 1995, SLP submitted an application to the
Missouri Gaming Commission (the "Missouri Commission") for the
necessary gaming licenses to own and operate the Southboat Casino
Project. In the event SLP is selected for investigation by the
Missouri Commission for a casino license, SLP will submit an
application to the U.S. Army Corps of Engineers for the necessary
permits. In the event that SLP is issued such permits by the
U.S. Army Corps of Engineers, SLP will commence construction of
the Southboat Casino Project, which construction the Company
believes will take approximately 12 to 18 months to complete. As
of March 15, 1996, SLP had not been selected for investigation by
the Missouri Commission for a casino license and there can be no
assurance that such a selection will occur or, if such selection
occurs, that a gaming license will be granted to SLP.
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PREFERRED STOCK PURCHASE RIGHTS
On October 5, 1995, the Board of Directors of the Company
declared a dividend to shareholders of record on October 16, 1995
of one Preferred Stock Purchase Right (the "Right(s)") for each
outstanding share of Common Stock, par value $1.00 per share (the
"Common Stock"), of the Company. Each Right entitles the
registered holder to purchase from the Company one one-hundredth
(1/100) of a share of a new series of preferred shares of the
Company, designated as Series A Junior Preferred Stock
("Preferred Stock"), at a price of $120.00 per one one-hundredth
(1/100) of a share (the "Exercise Price"), subject to certain
adjustments. Initially, the Rights are not exercisable and
automatically trade with the Common Stock. The Rights are not
represented by a separate certificate, but are evidenced, with
respect to any of the Common Stock certificates outstanding as of
October 16, 1995, by such Common Stock certificate with a copy of
a summary of the Rights attached thereto.
The Rights, unless earlier redeemed by the Board of
Directors, become exercisable upon the close of business on the
day (the "Distribution Date") which is the earlier of (i) the
tenth day following a public announcement that a person or group
of affiliated or associated persons, with certain exceptions set
forth below, has acquired beneficial ownership of 15% or more of
the outstanding voting stock of the Company (an "Acquiring
Person") and (ii) the tenth business day (or such later date as
may be determined by the Board of Directors prior to such time as
any person or group of affiliated or associated persons becomes
an Acquiring Person) after the date of the commencement or
announcement of a person's or group's intention to commence a
tender or exchange offer the consummation of which would result
in the ownership of 30% or more of the Company's outstanding
voting stock (even if no shares are actually purchased pursuant
to such offer). An Acquiring Person does not include (A) the
Company, (B) any subsidiary of the Company, (C) any employee
benefit plan or employee stock plan of the Company or of any
subsidiary of the Company, or any trust or other entity
organized, appointed, established or holding Common Stock for or
pursuant to the terms of any such plan or (D) any person or group
whose ownership of 15% or more of the shares of voting stock of
the Company then outstanding results solely from (i) any action
or transaction or transactions approved by the Board of Directors
before such person or group became an Acquiring Person or (ii) a
reduction in the number of issued and outstanding shares of
voting stock of the Company pursuant to a transaction or
transactions approved by the Board of Directors (provided that
any person or group that does not become an Acquiring Person by
reason of clause (i) or (ii) above shall become an Acquiring
Person upon acquisition of an additional 1% of the Company's
voting stock unless such acquisition of additional voting stock
will not result in such person or group becoming an Acquiring
Person by reason of such clause (i) or (ii)).
The Rights are not exercisable until the Distribution Date.
The Rights will expire at the close of business on October 5,
2005, unless earlier redeemed by the Company as described below.
The Preferred Stock is non-redeemable and, unless otherwise
provided in connection with the creation of a subsequent series
of preferred stock, subordinate to any other series of the
Company's preferred stock. The Preferred Stock may not be issued
except upon exercise of Rights. Each share of Preferred Stock
will be entitled to receive when, as and if declared, a
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quarterly dividend in an amount equal to the greater of $120.00
per share and 100 times the cash dividends declared on the
Company's Common Stock. In addition, the Preferred Stock is
entitled to 100 times any non-cash dividends (other than
dividends payable in equity securities) declared on the Common
Stock, in like kind. In the event of liquidation, the holders of
Preferred Stock will be entitled to receive for each share of
Series A Preferred Stock, a liquidation payment in an amount
equal to the greater of $12,000.00 or 100 times the payment made
per share of Common Stock. Each share of Preferred Stock will
have 100 votes, voting together with the Common Stock. In the
event of any merger, consolidation or other transaction in which
Common Stock is exchanged, each share of Preferred Stock will be
entitled to receive 100 times the amount received per share of
Common Stock. The rights of Preferred Stock as to dividends,
liquidation and voting are protected by anti-dilution provisions.
The number of shares of Preferred Stock issuable upon exercise of
the Rights is subject to certain adjustments from time to time in
the event of a stock dividend on, or a subdivision or combination
of, the Common Stock. The Exercise Price for the Rights is
subject to adjustment in the event of extraordinary distributions
of cash or other property to holders of Common Stock.
Unless the Rights are earlier redeemed or the transaction is
approved by the Board of Directors and the Continuing Directors,
in the event that, after the time that the Rights become
exercisable, the Company were to be acquired in a merger or other
business combination (in which any shares of the Company's Common
Stock are changed into or exchanged for other securities or
assets) or more than 50% of the assets or earning power of the
Company and its subsidiaries (taken as a whole) were to be sold
or transferred in one or a series of related transactions, the
Rights Agreement provides that proper provision will be made so
that each holder of record of a Right will from and after such
date have the right to receive, upon payment of the Exercise
Price, that number of shares of common stock of the acquiring
company having a market value at the time of such transaction
equal to two times the Exercise Price. In addition, unless the
Rights are earlier redeemed, if a person or group (with certain
exceptions) becomes the beneficial owner of 15% or more of the
Company's voting stock (other than pursuant to a tender or
exchange offer (a "Qualifying Tender Offer") for all outstanding
shares of Common Stock that is approved by the Board of
Directors, after taking into account the long-term value of the
Company and all other factors they consider relevant in the
circumstances), the Rights Agreement provides that proper
provision will be made so that each holder of record of a Right,
other than the Acquiring Person (whose Rights will thereupon
become null and void), will thereafter have the right to receive,
upon payment of the Exercise Price, that number of shares of the
Company's Preferred Stock having a market value at the time of
the transaction equal to two times the Exercise Price (such
market value to be determined with reference to the market value
of the Company's Common Stock as provided in the Rights
Agreement).
At any time on or prior to the close of business on the
tenth day after the time that a person has become an Acquiring
Person (or such later date as a majority of the Board of
Directors and a majority of the Continuing Directors (as defined
in the Rights Agreement) may determine), the Company may redeem
the Rights in whole, but not in part, at a price of $.01 per
Right ("Redemption Price"). The Rights may be redeemed after the
time that any person has become an Acquiring Person only if
approved by a majority of the Continuing Directors. Immediately
upon the effective time of the action of the Board of Directors
of the Company authorizing redemption of the Rights, the right to
exercise the Rights will terminate and the only
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right of the holders of the Rights will be to receive the
Redemption Price. For as long as the Rights are then redeemable,
the Company may, except with respect to the redemption price or
date of expiration of the Rights, amend the Rights in any manner,
including an amendment to extend the time period in which the
Rights may be redeemed. At any time when the Rights are not then
redeemable, the Company may amend the Rights in any manner that
does not materially adversely affect the interests of holders of
the Rights as such. Amendments to the Rights Agreement from and
after the time that any person becomes an Acquiring Person
requires the approval of a majority of the Continuing Directors
(as provided in the Rights Agreement). 200,000 shares of
Preferred Stock have been reserved for issuance upon exercise of
the Rights.
The Rights have certain anti-takeover effects. The Rights
will cause substantial dilution to a person or group who attempts
to acquire the Company on terms not approved by the Company's
Board of Directors. The Rights should not interfere with any
merger or other business combination approved by the Board since
they may be redeemed by the Company at $.01 per Right at any time
until the close of business on the tenth day (or such later date
as described above) after a person or group has obtained
beneficial ownership of 15% or more of the voting stock.
NEW ORLEANS, LOUISIANA
In a series of unrelated transactions in 1995, Showboat Star
Partnership ("SSP") sold certain of its assets, and the Company
sold all of its equity interest in SSP, resulting in a pretax
gain to the Company of $2.6 million. SSP owned the Showboat Star
Casino that was located on the south shore of Lake Pontchartrain
in New Orleans, Louisiana, approximately seven miles from the New
Orleans' "French Quarter." The Showboat Star Casino commenced
gaming operations on November 8, 1993. The riverboat contained
approximately 21,900 square feet of gaming space on three levels,
with approximately 770 slot machines and 40 table games. On-
shore facilities included a 34,000 square foot terminal building,
which contained a restaurant, a cocktail lounge and
administrative offices. SSP elected to cease all gaming
operations on March 9, 1995 due to conflicting interpretations by
the Orleans Parish District Attorney and an administrative law
judge regarding the Louisiana Riverboat Gaming Act relating to
circumstances under which a riverboat casino could conduct
dockside gaming operations.
RANDOLPH, MISSOURI
In March 1995, the Company, through a subsidiary, purchased
a 35% interest in Showboat Mardi Gras, L.L.C. ("SMG") (f/k/a
Randolph Riverboat Company, L.L.C.), which applied for a gaming
license with the Missouri Commission to own and operate a
riverboat casino in Randolph, Missouri. In May 1995, the
Missouri Commission selected the applicants for the then
available gaming licenses in the Kansas City, Missouri
metropolitan area. SMG was not selected and is currently seeking
a buyer for its riverboat. The Company contributed approximately
$5.1 million to SMG which was used for the construction of the
riverboat, costs incurred in the license application process and
other general and administrative expenses. Although additional
contributions may be required from the Company in order for SMG
to sell the riverboat, the Company will receive a portion of the
proceeds upon the sale of the riverboat
11
<PAGE>
and other assets of SMG. The Company has recognized a pre-tax
write-down of $1.4 million on its investment in SMG.
ROCKINGHAM PARK, NEW HAMPSHIRE
In July 1995, the Company, through its wholly-owned
subsidiary, Showboat New Hampshire, Inc. ("SNHI"), entered into
definitive agreements with Rockingham Venture, Inc. ("RVI")
regarding the proposed development and management of a non-racing
gaming project ("Showboat Rockingham Park") at Rockingham Park in
Salem, New Hampshire. RVI is the owner and operator of
Rockingham Park which is a thoroughbred racetrack. In December
1994, the Company loaned approximately $8.9 million to RVI, which
loan is secured by a second mortgage on Rockingham Park. The
development of Showboat Rockingham Park, among other things, is
subject to the passage of enabling gaming legislation by the
State of New Hampshire and the Town of Salem. SNHI owns a 50%
interest in Showboat Rockingham Company, L.L.C. ("SRC") that was
formed for the purpose of developing and owning Showboat
Rockingham Park. Depending upon the number and types of games,
if any, legalized by the necessary authorities, SNHI and RVI will
make certain capital contributions to SRC. At a minimum, the
Company will contribute the promissory note representing the
loan. If enabling gaming legislation permits more than 500 slot
machines or any combination of slot machines and table games, the
Company, subject to available financing, will contribute funds
not to exceed 30% of the cash funds required for the project. At
this time, the cost of the project has not been determined.
Pursuant to the terms of a management agreement, an
administrative services agreement and a trademark license
agreement, each dated June 1995, the Company has agreed to manage
and to provide other services to the proposed operations at
Showboat Rockingham Park. The Company will receive an aggregate
fee equal to (i) 1.5% of gross gaming revenue up to a maximum fee
of $1.0 million per year, and (ii) 7% of earnings before any
interest expense, income taxes, capital lease rentals,
depreciation and amortization. The horse racing activities will
continue to be operated by RVI.
FUTURE EXPANSION
The Company regularly evaluates and pursues potential
expansion and acquisition opportunities in both domestic and
international markets. Such opportunities may include the
ownership, management and operation of gaming and entertainment
facilities, either alone or with joint venture partners.
Development and operation of any gaming facility is subject to
numerous contingencies, several of which are outside of the
Company's control and may include the enactment of appropriate
gaming legislation, the issuance of requisite permits, licenses
and approvals, the availability of appropriate financing and the
satisfaction of other conditions. There can be no assurance that
the Company will elect or be able to consummate any such
acquisition or expansion opportunity.
12
<PAGE>
NARRATIVE DESCRIPTION OF BUSINESS
ATLANTIC CITY OPERATIONS
The Company's subsidiary, ACSI, owns and operates the
Atlantic City Showboat, which commenced operations in 1987. ACSI
is a wholly-owned subsidiary of Ocean Showboat, Inc. ("OSI"),
which is a wholly-owned subsidiary of the Company. The Atlantic
City Showboat is located at the eastern end of the Boardwalk on
approximately 12 acres, 10 1/2 acres of which are leased to ACSI.
In addition, ACSI owns two nearby surface parking lots which
consist of approximately nine acres in the aggregate.
The Atlantic City Showboat is a New Orleans-themed hotel-
casino featuring, as of March 1, 1996, approximately 97,000
square feet of casino space located in an expansive four-story
podium facility. The four-story podium houses the casino and a
20-story hotel tower and is adjacent to a 17-story hotel tower
constructed in 1994. The Atlantic City Showboat has been
designed to promote ease of customer access to the casino and all
other public areas of the hotel-casino. Access to the Atlantic
City Showboat's four-story podium is provided by two main
entrances, one on the Boardwalk and one on Pacific Avenue, which
runs parallel to the Boardwalk.
The Atlantic City Showboat contains two public levels. Two
pairs of large escalators, which are directly accessible from the
two ground level entrances, and ten elevators provide easy access
to the second public level. Public areas located on the ground
level, in addition to the casino space, include a show lounge,
five restaurants, two cocktail lounges, a pizza snack bar, an ice
cream parlor, and retail shopping. Public areas located on the
second level include a buffet, a coffee shop, a private players
club, a beauty salon, a health spa, a video game arcade,
approximately 27,000 square feet of meeting rooms, convention,
board room and exhibition space and a 60-lane bowling center,
including a snack bar and cocktail lounge. As of March 1, 1996,
the casino offered approximately 3,300 slot machines, 95 table
games, a horse race simulcast facility and a keno facility. The
second and fourth levels of the four-story podium are occupied by
kitchens, storage for food, beverage and other perishables,
surveillance and security areas, an employee cafeteria, computer
equipment and executive and administrative offices.
The two hotel towers feature a total of 800 hotel rooms.
Many of the hotel rooms have a view of the ocean. Included in
the number of hotel rooms are 59 suites, 40 of which have ocean-
front decks. A nine-story parking garage is located on-site at
the Pacific Avenue entrance. The facility provides self-parking
for approximately 2,000 cars and a 14-bus depot integrated with
the casino podium. In addition, on-site underground parking
accommodates valet parking for approximately 500 cars. This
design permits Atlantic City Showboat's customers to enter the
casino hotel protected from the weather. The Atlantic City
Showboat also has surface level self-parking for approximately
950 cars.
Adjacent to the Atlantic City Showboat is the Taj Mahal
Casino Hotel (the "Taj Mahal"). The Taj Mahal is the largest
casino in Atlantic City and is connected to both the Atlantic
City Showboat and Merv Griffin's Resorts International Casino
Hotel by pedestrian passageways.
13
<PAGE>
These three properties form an "uptown casino complex" in which
patrons can pass from property to property, either on the ocean-
front Boardwalk or through the pedestrian connectors.
ATLANTIC CITY EMPLOYEES AND LABOR RELATIONS
As of March 1, 1996, the Atlantic City Showboat employed
approximately 3,300 persons on a full-time basis and
approximately 350 persons on a part-time basis. Approximately
1,330 or 40.3% of the Atlantic City Showboat's full-time
employees are covered by collective bargaining agreements. The
number of employees at the Atlantic City Showboat is expected to
fluctuate, with the highest number during the summer months and
the lowest number during the winter months. All employees of the
Atlantic City Showboat whose responsibilities involve or relate
to the casino or the simulcast area must be licensed by or
registered with the applicable New Jersey regulatory authorities
before commencing work at the Atlantic City Showboat. The
Company considers its current labor relations to be satisfactory.
LAS VEGAS OPERATIONS
The Company owns the Las Vegas Showboat which commenced
operations in September 1954. The Las Vegas Showboat is managed
by Showboat Operating Company ("SBOC"), a wholly-owned subsidiary
of the Company. The Las Vegas Showboat, which covers
approximately 26 acres, is located near the Boulder Highway
approximately two and one-half miles from the hotel-casinos in
downtown Las Vegas or on the Las Vegas Strip.
The Las Vegas Showboat is a New Orleans-themed hotel casino
in an 18-story hotel tower and low-rise complex. The Las Vegas
Showboat features an approximately 75,000 square foot casino, 453
hotel rooms, a 106-lane bowling center, two specialty
restaurants, a buffet, a coffee shop, a 1,300-seat bingo parlor
garden and a showroom. In addition, 8,300 square feet of meeting
room area is available with a seating capacity of 1,000 persons.
As of March 1, 1996, the Las Vegas Showboat's casino offered
approximately 1,450 slot machines, 28 table games, a race and
sports book and a keno facility. The Las Vegas Showboat also
plans to develop a recreational vehicle park with approximately
80 spaces on leased property near the Las Vegas Showboat.
Assuming there are no delays in the design and construction
phases, the recreational vehicle park is expected to be
operational in September 1996.
The Las Vegas Showboat sponsors a variety of special events
designed to produce a high volume of traffic through the casino.
The Las Vegas Showboat sponsors such events as the Professional
Bowlers Association Tour and Superstar Bingo, a high-stakes bingo
game, and is the site of the annual High Rollers Million Dollar
Bowling Tournament. The Las Vegas Showboat also regularly hosts
small conventions and groups. In addition, the Las Vegas
Showboat provides a slot club which is designed to attract and
reward frequent slot players at the Las Vegas Showboat.
14
<PAGE>
LAS VEGAS EMPLOYEES AND LABOR RELATIONS
As of March 1, 1996, the Las Vegas Showboat employed
approximately 1,275 persons, of which approximately 724 or 56.8%
of the employees were represented by collective bargaining
agreements. The Company considers its current labor relations to
be satisfactory.
SYDNEY OPERATIONS
The Company's wholly-owned subsidiary, SA, invested
approximately $100.0 million for a 26.3% interest in SHCH, which,
through wholly-owned subsidiaries, owns the Sydney Harbour Casino
and holds the casino license required to operate the Sydney
Harbour Casino. SA also has an 85% interest in the management
company which manages the Sydney Harbour Casino. In December
1994, the New South Wales Casino Control Authority ("NSWCCA")
granted the only full-service casino license in the State of New
South Wales to SHCL. The Sydney Harbour Casino commenced gaming
operations in an interim casino in Sydney, Australia on
September 13, 1995.
The interim casino, which has approximately 60,000 square
feet of casino space, is located approximately one mile from the
Sydney central business district at Pyrmont Bay adjacent to
Darling Harbour on Wharves 12 and 13. An existing building was
renovated to permit the operation of the interim casino
containing 500 slot machines and 150 table games. The interim
casino is open 24 hours per day, every day of the year. The
interim casino also features restaurants, bars, a sports lounge
and a gift shop.
The opening of the Sydney Harbour Casino marks the beginning
of Sydney Harbour Casino's 12-year monopoly as the only full-
service casino in the State of New South Wales. This exclusive
12-year period is included in the 99-year casino license awarded
to SHCL.
Pursuant to the terms of a construction contract and subject
to certain exceptions, the permanent Sydney Harbour Casino must
be completed within 38 months of the award of the casino license
to SHCL. The Company anticipates that the permanent Sydney
Harbour Casino will commence operations by early 1998. The
permanent Sydney Harbour Casino will be located at Pyrmont Bay
next to the interim casino site. Pursuant to the terms of the
casino license, upon opening the permanent casino, the interim
casino will cease operations. The permanent Sydney Harbour
Casino will feature approximately 153,000 square feet of casino
space, including an approximately 22,000 square foot private
gaming area to be located on a separate level which will target a
premium clientele. The Sydney Harbour Casino will have 1,500
slot machines and 200 table games. The permanent Sydney Harbour
Casino will also contain several themed restaurants, cocktail
lounges, a 2,000 seat lyric theatre, a 900 seat cabaret style
theatre and extensive public areas. The Sydney Harbour Casino
complex will include a 352 room hotel tower and an adjacent
condominium tower containing 139 privately-owned units with full
hotel services. When available, some of the 139 privately-owned
units may also be used by the hotel for its guests. The complex
will also include extensive retail facilities, a station for
Sydney's proposed light rail system, a bus terminal, docking
facilities for commuter ferries and parking for approximately
2,500 cars on site.
15
<PAGE>
In April 1994, Sydney Harbour Casino Properties Pty Limited
("SHCP"), a wholly-owned subsidiary of SHCH, entered into an
agreement with Leighton Properties Pty Limited ("Leighton
Properties") to design and construct the interim and permanent
Sydney Harbour Casino for a total of A$691.0 million. (As used
in this Form 10-K, amounts in Australian dollars are denoted as
"A$." As of March 15, 1996, the exchange rate was approximately
$0.7744 for each A$1.00.) SHCP is currently reviewing the
design of the permanent Sydney Harbour Casino with the view to
improving its operational efficiency and product quality and to
match the changing competitive environment. Additionally, SHCP
and Leighton Properties are discussing matters in relation to the
administration and management of the project under the
construction contract, including an accelerated completion date
for the project, firming up on monetary allowances and resolution
of certain claims notified by Leighton Properties to SHCP.
Subject to the completion of the final plans, financing and
required approvals and agreements, the current cost estimate
of the Sydney Harbour Casino project is A$771.0
million. The total development cost is, however, subject to
change based upon the final modifications resulting from SHCP's
review of the design for the permanent Sydney Harbour Casino and
the result of SHCP's discussions with Leighton Properties relating
to the administration and management of the project. As with any
construction contract, the final amount of such contract will be
subject to modification based upon change orders and the
occurrence of certain 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 budgeted amounts. SHCP has incurred approximately
A$276.1 million of the project costs as of December 31, 1995.
Under the terms of the construction contract and subject to
certain exceptions, the permanent casino must be completed within
38 months of December 1994, the date of issuance of the casino
license. In the event that the permanent Sydney Harbour Casino
is not completed within such time period, the construction
contract provides for the payment of liquidated damages of not
more than A$150,000 per day to an aggregate maximum amount of
A$30.0 million. Additionally, SHCH is indemnified against any
loss arising from the contractor's failure to perform its
obligations under the construction contract. The cost of the
Sydney Harbour Casino, excluding the cost components for
construction of the interim and permanent casinos, is anticipated
to be approximately A$518.0 million.
In addition to its 26.3% equity interest in SHCH, SA has an
option to purchase an additional 37,446,553 ordinary shares of
SHCH at an exercise price of A$1.15 per share. SA's option may
be exercised no earlier than July 1, 1998 and expires June 30,
2000. If all of the options to purchase equity in SHCH were
exercised, including the exercise by SA of its options, SA's
ownership in SHCH would increase to 28.3%. However, depending on
various factors, including the number of options exercised by the
holders of options, the issuance of additional shares or options
by SHCH and the purchase or sale of shares of SHCH by SA, SA's
ownership interest in SHCH could vary. SA is restricted to
remain the beneficial owner of not less than 10% of the issued
capital of SHCH for a period of not less than five years after
completion of the permanent Sydney Harbour Casino and remain the
beneficial owner of not less than 5% of the issued capital of
SHCH for an additional two years thereafter. SHCH became a
publicly listed company on the Australian Stock Exchange in June
1995.
Sydney Casino Management Pty Limited (the "Manager"), a
company which is 85% owned by SA and 15% owned by National Mutual
Trustees Limited in trust for Leighton Properties, manages the
interim casino and will manage the permanent Sydney Harbour
Casino pursuant to a 99-year management agreement (the
"Management Agreement"). The terms of the
16
<PAGE>
Management Agreement require the Manager to advise SHCL or SHCP
as to the casino design and configuration and the placement of
all gaming equipment. The Manager also has agreed to train all
employees of the Sydney Harbour Casino and to manage a high
quality international class casino in accordance with the
operating standards required by the NSWCCA. The NSWCCA requires
a service audit to be conducted yearly by a third party so that
areas of non-compliance can be identified and remedied by the
Manager. The Manager will be paid a management fee equal to the
sum of (i) 1 1/2% of casino revenue, (ii) 6% of casino gross
operating profit, (iii) 3 1/2% of total non-casino revenue, and
(iv) 10% of total gross non-casino operating profit, for each
fiscal year for services rendered by the Manager pursuant to the
Management Agreement. SA has agreed to forego the first A$19.1
million of its 85% portion of the fees due under the Management
Agreement, of which amount approximately A$15.1 million remains
as of December 31, 1995. Gaming revenue from the Sydney Harbour
Casino will be taxed at a rate of (i) 22.5% of slot machine
revenue and (ii) 20% of the first A$200.0 million of gross table
game revenue with the rate increasing by 1.0% for each additional
A$5.0 million of gross table game revenue up to a maximum rate of
45.0% payable on gross table game revenue in excess of A$320.0
million per annum. The A$200.0 million of base gross table game
revenue will be adjusted annually in accordance with changes in
the Consumer Price Index (Sydney All Groups) from the first week
in July each year. The base year of the index is 1992. SHCL
will also pay a community benefit levy of 2.0% of gross gaming
revenue.
As with any major construction effort, the permanent Sydney
Harbour Casino involves many risks, including, without
limitation, shortages of materials and labor, work stoppages,
labor disputes, weather interference, unforeseen engineering,
environmental or geological problems and unanticipated cost
increases, any of which could give rise to delays or cost
overruns. Construction, equipment or staffing problems or
difficulties in obtaining any of the requisite permits,
allocations and authorizations from regulatory authorities could
increase the cost or delay the construction or opening of the
permanent facilities or otherwise affect their design and
features. The final budgets and construction plans for the
permanent Sydney Harbour Casino may vary significantly from that
which is currently anticipated. Accordingly, there can be no
assurance that the permanent Sydney Harbour Casino will be
completed within the time periods or budgets which are currently
contemplated.
In addition, the Company's participation in foreign
operations in New South Wales, Australia involves a number of
risks. These risks include, without limitation, currency and
exchange control problems, operating in highly inflationary
environments, fluctuations in monetary exchange rates, the
possible inability to execute and enforce agreements, the future
regulations governing the repatriation of funds, political,
regulatory and economic instability or changes in policies of the
foreign government, and the dependence on other future events
which can influence the success or failure of such foreign
operations. There can be no assurance that these factors will
not have an adverse impact on the Company's operating results.
SYDNEY EMPLOYEES AND LABOR RELATIONS
As of March 1, 1996, the Sydney Harbour Casino employed
approximately 2,750 persons, of which approximately 2,290 or 83%
of the employees were represented by collective bargaining
agreements. The Sydney Harbour Casino considers its current
labor relations to be satisfactory.
17
<PAGE>
FINANCIAL INFORMATION ABOUT THE COMPANY
The primary source of revenue and income to the Company is
its casinos, although the hotels, restaurants, bars, buffets,
shops, bowling, sports and other special events and services are
important adjuncts to the casinos. At December 31, 1995, casinos
either owned or managed by the Company featured the following
approximate number of slot machines and table games:
<TABLE>
<CAPTION>
Interim
Sydney
Atlantic City Las Vegas Harbour
SHOWBOAT SHOWBOAT CASINO TOTAL
<S> <C> <C> <C> <C>
Slot Machines 3,450 1,450 500 5,400
"21" Tables 47 15 83 147
Poker Tables 6 0 0 6
"Craps" Tables 12 2 2 16
Roulette Tables 13 2 31 46
Caribbean Stud Poker 7 1 4 12
Pai Gow Poker Tables 1 1 4 6
Baccarat Tables 3 0 3 6
Mini-Baccarat Tables 2 0 14 16
Big Six Wheel 2 0 3 5
Sic Bo 1 0 3 5
Let It Ride 0 2 0 2
Two Up 0 0 1 1
</TABLE>
The Atlantic City Showboat also contains a horse racing simulcast
room and a keno facility. The Las Vegas Showboat also contains a
race and sports book, a 1,300-seat bingo parlor and a keno
facility. On March 1, 1996, the Las Vegas Showboat reintroduced
five poker tables.
Slot machines have been the principal source of casino
revenues at the Atlantic City Showboat and the Las Vegas
Showboat. At the Atlantic City Showboat, slot machines accounted
for 73.9%, 73.6% and 73.2% of casino revenues for the years ended
December 31, 1995, 1994 and 1993, respectively. At the Las Vegas
Showboat, slot machines accounted for 85.5%, 83.0% and 84.2% of
casino revenues for the years ended December 31, 1995, 1994 and
1993, respectively. In contrast, table games have been the
principal source of casino revenues at the interim Sydney Harbour
Casino. For the period from commencement of operations to
December 31, 1995, table games accounted for 86.1% of casino
revenues at the Sydney Harbour Casino. Gaming operations at the
Atlantic City Showboat, the Las Vegas Showboat and the interim
Sydney Harbour Casino are each conducted 24 hours a day, every
day of the year.
18
<PAGE>
The following table sets forth the contribution to total net
revenues on a dollar and percentage basis of the Company's major
activities at the Atlantic City Showboat and the Las Vegas
Showboat for the years ended December 31, 1995, 1994 and 1993.
Net revenues for the interim Sydney Harbour Casino and the
Showboat Star Casino are not included in the table since the
Company accounts for its investment in SHCH and the SSP,
respectively, under the equity method of accounting. The
Company's equity in the income or loss of SHCH, net of
intercompany elimination, was reduced to zero due to the write-
off of preopening costs for the period from commencement of
operations to December 31, 1995. Approximately, A$44.0 million
in preopening costs were incurred as of December 31, 1995, and
approximately A$23.4 million in preopening costs were expensed as
of December 31, 1995. The remaining preopening costs will be
expensed in 1996. The Company's equity in the income or loss of
SSP, net of intercompany elimination, was a loss of $22,000
through March 31, 1995, income of $12,828,000 for the year ended
December 31, 1994 and a loss of $850,000 for the period from
commencement of operations to December 31, 1993. For other
financial information, see the Company's financial statements
contained in Item 8. Financial Statements and Supplementary Data.
<TABLE>
<CAPTION>
Year Ended Year Ended
DECEMBER 31, 1995 DECEMBER 31, 1994
(dollar amounts in thousands)
AMOUNT PERCENT AMOUNT PERCENT
<S> <C> <C> <C> <C>
Revenues:
Casino <F1> $379,494 88.5 $351,436 87.6
Food and
beverage 53,894 12.6 50,624 12.6
Rooms 25,694 6.0 20,587 5.1
Sports and
special 3,924 1.0 4,168 1.0
events
Other<F2> 5,379 1.2 7,799 2.0
Total gross
revenues<F3> 468,385 109.3 434,614 108.3
Less compli-
mentaries<F1> 39,793 9.3 33,281 8.3
Total net
revenues<F3> $428,592 100.0 $401,333 100.0
</TABLE>
<TABLE>
<CAPTION>
Year Ended
DECEMBER 31, 1993
(dollar amounts in
thousands)
AMOUNT PERCENT
<S> <C> <C>
Revenues:
Casino<F1> $329,522 87.7
Food and
beverage 48,669 12.9
Rooms 19,355 5.2
Sports and
special 4,251 1.1
events
Other<F2> 5,982 1.6
Total gross
revenues<F3> 407,779 108.5
Less compli-
mentaries<F1> 32,052 8.5
Total net
revenues<F3> $375,727 100.0
<FN>
<F1> Casino revenues are the net difference between the sums
paid as winnings and the sums received as losses.
Complimentaries consist primarily of rooms, food and beverages
furnished gratuitously to customers. The sales value of such
services is included in the respective revenue classifications
and is then deducted as complimentaries. Complimentary rates
are periodically reviewed and adjusted by management. See
Note 1 of Notes to Consolidated Financial Statements in
Item 8. Financial Statements and Supplementary Data.
19
<PAGE>
<F2> Includes management fee revenues, net of intercompany
elimination, in the amount of $.2 million, $1.9 million and
$.3 million paid to Lake Pontchartrain Showboat, Inc., a
wholly-owned subsidiary of the Company, from SSP in 1995, 1994
and 1993, respectively.
<F3> Does not include interest income.
</TABLE>
The Atlantic City Showboat offers complimentary meals,
drinks and room accommodations to a larger percentage of
customers than does the Las Vegas Showboat or the Sydney Harbour
Casino. Such promotional allowances (complimentary services) at
the Atlantic City Showboat were 9.7%, 8.8% and 9.3% of total net
revenues for the years ended December 31, 1995, 1994 and 1993,
respectively. Such promotional allowances (complimentary
services) at the Las Vegas Showboat were 6.4%, 6.5% and 5.9% of
total net revenues for the years ended December 31, 1995, 1994
and 1993, respectively. At the interim Sydney Harbour Casino,
such complimentary services were 2.7% of the total net revenues
for the period from commencement of operations to December 31,
1995.
GAMING CREDIT POLICY
A relatively minimal dollar amount of credit is extended to
a limited number of gaming customers at the Las Vegas Showboat.
The Sydney Harbour Casino is prohibited by regulation from
extending any credit to its gaming customers. The Atlantic City
Showboat, however, offers substantially more credit to a greater
number of customers than the Las Vegas Showboat. At the Atlantic
City Showboat, gaming receivables were approximately $7.1 million
at December 31, 1995, before deducting allowance for doubtful
accounts of approximately $2.5 million. In comparison, gaming
receivables at the Atlantic City Showboat were approximately $6.9
million at December 31, 1994, before deducting allowance for
doubtful accounts of approximately $2.2 million. The Atlantic
City Showboat's gaming credit, as a percentage of total gaming
revenues, is at a level which is consistent with that of the
average credit levels for all other hotel-casinos in Atlantic
City. Overall, the Company's gaming receivables were
approximately $7.2 million at December 31, 1995, before deducting
allowance for doubtful accounts of approximately $2.6 million.
In comparison, the Company's gaming receivables were
approximately $7.0 million at December 31, 1994, before deducting
allowance for doubtful accounts of approximately $2.2 million.
The non-collectibility of gaming receivables can have a
material adverse effect on results of operations, depending upon
the amount of credit extended and the size of uncollected
amounts. The Company maintains strict controls over the issuance
of credit and aggressively pursues collection of its customer
receivables. These collection efforts parallel those procedures
commonly followed by most large corporations, including the
mailing of statements and delinquency notices, personal contacts,
the use of outside collection agencies and civil litigation.
Gaming debts evidenced by credit instruments are enforceable
under the laws of New Jersey and Nevada, respectively. All other
states are required to enforce a judgment on a gaming debt
entered in New Jersey or Nevada pursuant to the Full Faith and
Credit Clause of the United States Constitution. Although gaming
debts are not legally enforceable in some foreign countries, the
United States assets of foreign debtors may be reached to satisfy
a judgment entered in the United States. Annual gaming bad debt
expense at the Atlantic City Showboat was approximately .4% of
casino revenues for the year ended December 31, 1995, as compared
to approximately .2% for
20
<PAGE>
the year ended December 31, 1994. Annual gaming bad debt expense
at the Las Vegas Showboat was approximately .2% of casino
revenues for the year ended December 31, 1995, as compared to
approximately .2% of casino revenues for the year ended
December 31, 1994.
CONTROL PROCEDURES
In connection with its gaming activities, the Company
follows a policy of stringent internal controls, cross-checks and
recording of all receipts and disbursements in accordance with
industry practice. The audit and cash controls developed and
utilized by the Company include locked cash boxes, independent
counters, checkers and observers to perform the daily cash and
coin counts, floor observation of the gaming areas, closed-
circuit television observation of certain areas, daily computer
tabulation of receipts and disbursements for each slot machine,
table and other games, and the rapid identification, analysis and
resolution of discrepancies or deviations from normal
performance. All dealers and other personnel are internally
trained by the Company, however, dealers in New Jersey must also
obtain certification from an independent dealer's school in order
to meet licensing requirements. The Company presently intends to
promote qualified employees to supervisory and management levels.
However, staffing requirements for the Company's hotel-casinos
and for the Company's Gaming Development Division have required
that certain supervisory and management personnel be hired from
other hotel-casinos. Gaming operations are subject to risk of
loss as a result of employee or customer dishonesty due to the
large amount of cash and gaming chips handled. However, the
Company has not experienced significant losses related to
employee dishonesty.
SEASONAL FACTORS
The Company does not believe that gaming and hotel revenues
are significantly seasonal in Las Vegas, Nevada. In contrast,
the Company believes that gaming and hotel revenues are seasonal
in Atlantic City, New Jersey due to the harsher weather in the
mid-eastern seaboard during winter months. Due to the limited
operating history of the Sydney Harbour Casino, the Company is
currently evaluating whether gaming and hotel revenues are
seasonal in Sydney, Australia.
COMPETITION
The gaming industry includes land-based casinos, dockside
casinos, riverboat casinos, casinos located on Native American
land, card parlors, state-sponsored lotteries, on-track and off-
track wagering and other forms of legalized gaming in the United
States and internationally. Competition is intense among
companies in the gaming industry, and the Company expects it to
remain so in the future. Many states have legalized, and other
states are currently considering legalizing, casino gaming. The
Company believes that the growth in the legalization of gaming is
fueled by a combination of increasing popularity and
acceptability of gaming activities and the desire and need for
states and local communities to generate revenues without
increasing general taxation.
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ATLANTIC CITY, NEW JERSEY
The Atlantic City Showboat competes with 11 other hotel-
casinos in Atlantic City containing a total of approximately
961,000 square feet of gaming space and approximately 9,200
casino hotel rooms as of December 31, 1995 (including the
Atlantic City Showboat). According to the New Jersey Convention
and Visitors Authority, seven expansions of existing hotel-
casinos have been announced and are expected to be complete
within the next two years, which will add approximately 3,600
more hotel rooms. There are several sites on the Boardwalk and in
the Marina Area of Atlantic City on which hotel-casino facilities
could be built in the future. Several established gaming
companies, are at various stages in the licensing process with
the New Jersey Casino Control Commission to obtain gaming
licenses to develop major casino resorts in Atlantic City. Hotel-
casinos in Atlantic City generally compete on the basis of
promotional allowances, bus programs and packages, entertainment,
advertising, service provided to patrons, caliber of personnel,
attractiveness of the hotel-casino areas and related amenities.
The Atlantic City Showboat targets slot machine customers by
utilizing a variety of marketing techniques.
The Atlantic City Showboat also competes with Foxwood's High
Stakes Bingo and Casino on the Mashantucket Pequot Indian
Reservation in Ledyard, Connecticut. To a lesser extent, the
Atlantic City Showboat competes with casinos in Nevada and other
states of the United States and internationally. Delaware
recently passed legislation authorizing all three racetracks in
its state to operate slot machines. On December 29, 1995, two of
those racetracks opened casinos containing a total of
approximately 1,200 slot machines. The Company believes that the
commencement or expansion of casino and other gaming ventures in
states close to New Jersey, particularly, Delaware, Maryland, New
York or Pennsylvania, could have an adverse effect on the
Company's Atlantic City operations.
LAS VEGAS, NEVADA
The Las Vegas Showboat competes with casinos located in the
Las Vegas area, including competitors located on the Boulder
Strip, on the Las Vegas Strip, in downtown Las Vegas and at the
Nevada-California stateline. Such competition includes a number
of hotel-casinos, as well as numerous non-hotel gaming
facilities, targeted toward slot machine players and local
residents. As of December 31, 1995, there were approximately
four hotel-casinos located on the Boulder Strip (including the
Las Vegas Showboat), 37 located on or near the Las Vegas Strip,
14 located in the downtown area and 11 located in other areas in
or near Las Vegas. In recent months, several of the Company's
direct competitors have opened new hotel-casinos or have
commenced or completed major expansion projects, and other
expansions are in progress or are planned. A new hotel-casino
targeting a similar market as the Las Vegas Showboat is scheduled
to open in April 1997 in Henderson, Nevada, approximately eight
miles from the Las Vegas Showboat. According to the Las Vegas
Convention and Visitors Authority, the Las Vegas hotel-motel room
inventory was approximately 90,046 rooms as of December 31, 1995,
an increase of approximately 1.7% from the prior year. Seven new
hotel-casinos and seven hotel-casino expansions are under
construction or have been announced, which will add approximately
19,000 rooms to the Las Vegas areas over the next approximately
two years.
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As a result of increased competition primarily for slot
machine players and Las Vegas area residents, the Las Vegas
Showboat has experienced declines in revenues and earnings from
operations. The Company has expanded marketing and customer
service programs in response to excess casino capacity in the Las
Vegas market. In December 1995, the Company completed an
approximately $21.0 million renovation of the Las Vegas Showboat
that primarily improved the quality of the public areas of the
Las Vegas Showboat. Approximately 30,000 square feet or 40% of
the casino space was closed from July 1995 to December 1995 as a
result of the renovation. The increased competition and the
construction activities caused a significant disruption in
operations and earnings at the Las Vegas Showboat.
To a lesser extent, the Las Vegas Showboat competes with
casinos located in Mesquite, Laughlin and Reno-Lake Tahoe areas
of Nevada and in New Jersey and other states of the United States
and internationally. According to the Attorney General of
California, as of January 1996, there were approximately 9,000
slot machines illegally located in approximately 30 casinos on
Native American land throughout California, including four
casinos in the Palm Springs area. In November 1995, a proposed
initiative for the approval of gaming on Native American land in
California was submitted to the California Attorney General's
office but is facing opposition from certain government, law
enforcement and religious leaders. The Company believes that the
commencement or expansion of casino and other gaming ventures in
states close to Nevada, particularly California, could have a
material adverse effect on the Company's Las Vegas operations.
SYDNEY, NEW SOUTH WALES
The Sydney Harbour Casino competes with casinos in Australia
and other casinos located within the Pacific Rim. Currently, 16
full-service casinos operate in Australia and New Zealand.
Sydney Harbour Casino will remain the only full-service casino in
the State of New South Wales for 12 years following commencement
of gaming operations in the interim casino. While only 13.9% of
casino revenues were generated by slot machines, in 1994 (the
most recently available public information), in excess of
approximately 70,000 slot machines were permitted in
approximately 1,800 hotels and approximately 1,500 non-profit
private clubs in New South Wales. Hotels are limited to a
maximum of ten slot machines each. In 1994, over 50% of the
private clubs contained 25 slot machines or less; however, the
largest private club contained in excess of 800 slot machines.
Sydney Harbour Casino expects to compete with the local slot
clubs and with the casinos throughout Australia and the Pacific
Rim by offering excellent service and an attractive facility
containing hotel operations, bars and restaurants, sports and
recreation facilities, entertainment centers, car parking,
theatres, convention facilities and retail shopping.
MARKETING
The Company's revenues and operating income depend primarily
upon the level of gaming activity at its casinos, although the
Company also seeks to maximize revenues from food and beverage,
lodging and other retail operations. Therefore, the primary goal
of the Company's marketing efforts is to attract gaming customers
to its casinos. Specifically, the Company's marketing strategy
at the Atlantic City Showboat and the Las Vegas Showboat is to
develop a high volume of traffic through the casinos, emphasizing
slot machine play which accounted for
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73.9% and 85.5% of casino revenues of the Atlantic City Showboat
and the Las Vegas Showboat, respectively, in 1995. The Atlantic
City Showboat targets slot machine customers by providing
competitive games and excellent service in an attractive
convenient facility and by using a variety of marketing
techniques. Customers are attracted to the Las Vegas Showboat by
competitive slot machines, bingo, moderately priced food and
accommodations, a friendly "locals" atmosphere and a 106-lane
bowling center. The Sydney Harbour Casino intends to target
gaming patrons by positioning itself as a complete entertainment
venue with restaurants, bars, free live entertainment and gaming.
The Company advertises its hotel-casinos on television and radio,
in newspapers and magazines and on outdoor signs and billboards.
The Company markets its slot machine customers by means of
promotions, including players' clubs, and direct mailings. The
Company also sponsors special events designed to attract its
target customers.
REGULATION AND LICENSING
NEW JERSEY GAMING
Casino gaming activities in Atlantic City are subject to the
New Jersey Casino Control Act ("New Jersey Act") and the
regulations of the New Jersey Casino Control Commission (the "New
Jersey Commission"). No casino may operate unless the required
licenses and approvals are obtained from the New Jersey
Commission. The New Jersey Commission is authorized under the
New Jersey Act to adopt regulations covering a broad spectrum of
gaming, gaming-related activities and non-gaming-related
activities and to prescribe the methods and forms of applications
for licenses. The New Jersey Commission: (i) approves license
applications; (ii) regulates the design of casino facilities and
determines the allowable amount of casino space based upon the
number of hotel rooms; (iii) monitors operating methods and
financial accounting practices of licensees; and (iv) determines
and imposes sanctions for violations of the New Jersey Act and
the New Jersey Commission regulations. The New Jersey Act also
establishes a Division of Gaming Enforcement (the "Division")
which is a branch of the New Jersey Attorney General's office.
The Division investigates all applications for the granting and
renewal of licenses, enforces the provisions of the New Jersey
Act and prosecutes before the New Jersey Commission proceedings
for violations of the New Jersey Act. The Division conducts
audits and continuing reviews of all casino operations.
The New Jersey Commission has extremely broad discretion
with regard to the issuance, renewal and revocation or suspension
of licenses. A casino license is not transferable and must be
renewed by the licensee at certain intervals. The first two
license renewal periods are one year. Thereafter, the casino
licenses may be renewed for up to four years, subject to the New
Jersey Commission's authority to reconsider license eligibility
during any term. A casino license may be revoked or suspended at
any time by the New Jersey Commission upon a finding of
disqualification or noncompliance. The holder of a casino license
must also obtain an operation certificate which may be revoked or
suspended at any time by the New Jersey Commission upon a finding
of noncompliance.
In order to obtain or renew a casino license, an applicant
must demonstrate to the New Jersey Commission: (i) its financial
stability, integrity and responsibility; (ii) its business
ability and casino experience; (iii) its good character, honesty
and integrity; and (iv) the qualification of all its
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financial sources, security holders and holding and intermediate
companies. Moreover, each officer, director, principal employee,
lender or person directly or indirectly holding any beneficial
interest or ownership of the securities of the corporate
licensee, and any person deemed by the New Jersey Commission as
having the ability to control the corporate licensee or elect a
majority of the board of directors of the corporate licensee or
other person deemed appropriate by the New Jersey Commission must
be found qualified. ACSI's casino license was granted on
March 27, 1987, effective April 2, 1987. ACSI's casino license
was renewed on January 25, 1995 for the period commencing
January 31, 1995 and ending January 31, 1997. In connection
therewith, the Company and OSI were required to satisfy the
licensure standards set forth above.
The New Jersey Commission imposes certain restrictions upon
the ownership of securities issued by a corporation which holds a
casino license or is a holding company of a corporate casino
licensee. Among other restrictions, the sale, assignment,
transfer, pledge or other disposition of any security issued by a
corporation which holds a casino license is subject to approval
by the New Jersey Commission. If the New Jersey Commission finds
an individual owner or holder of any security of a corporate
casino licensee or any of its holding companies or a "financial
source," or any of its security holders to be disqualified, the
New Jersey Commission may take any necessary remedial action,
including requiring divestiture by the disqualified security
holder. If disqualified security holders of either the corporate
licensee or the holding company fail to divest themselves of such
security interests, the New Jersey Commission may revoke or
suspend ACSI's casino license. Disqualified security holders are
prohibited from: (i) receiving any dividends or interest on their
securities; (ii) exercising, directly or through any trustee or
nominee, any rights conferred by such securities; and (iii)
receiving any remuneration in any form from the corporate
licensee for services rendered or otherwise. The corporate
licensee and its non-publicly traded holding companies are
required to include in their charter or articles of incorporation
a provision establishing the right of prior approval by the New
Jersey Commission with regard to transfers of securities, shares
and other interests in the corporation. The corporate licensees'
publicly traded holding companies are required to provide in
their charter or articles of incorporation a provision that any
securities of the corporation are held subject to the condition
that if a holder thereof is disqualified, such holder shall
dispose of his interest. The Company and OSI are holding
companies of ACSI, a New Jersey casino licensee. The Company,
OSI and ACSI have charters or articles of incorporation that
comply with these regulatory requirements.
The New Jersey Commission regulations include detailed
provisions concerning, among others: (i) the rules of games,
including minimum and maximum wagers, and methods of supervision
of games and of selling and redeeming gaming chips; (ii) the
granting and duration of credit, the operation of junkets, and
the extension of and accounting for complimentary services;
(iii) the manufacture, distribution and sale of gaming equipment;
(iv) the security standards, management control procedures,
accounting and cash control methods and the reporting of such
matters to gaming authorities; (v) casino advertising; (vi) the
deposit of checks from patrons of casinos; (vii) the reporting of
currency transactions with patrons in amounts exceeding $10,000
to the Division; and (viii) the standards for entertainment and
distribution of alcoholic beverages in hotel-casinos.
All contracts and leases entered into by a casino licensee
are subject to the review of the New Jersey Commission and, if
reviewed and found unacceptable, may be voided. All enterprises
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providing gaming-related equipment or services to a casino
licensee must be licensed or good cause must be shown for a
waiver of such licensing requirements. All other enterprises
dealing with a casino licensee must register with the New Jersey
Commission, which may require that they be licensed if they
regularly engage in business with casino licensees.
The New Jersey Commission could appoint a conservator upon
the revocation of or failure to renew a casino license. A
conservator would be vested with title to the hotel-casino of the
former or suspended licensee, subject to valid liens and
encumbrances. The conservator would act subject to the general
supervision of the New Jersey Commission and would be charged
with the duty of conserving, preserving and continuing the
operation of the hotel-casino. During the period of any such
conservatorship, the conservator may not make any distributions
of net earnings without the prior approval of the New Jersey
Commission. The New Jersey Commission may direct that all or a
portion of such net earnings be paid to the Casino Revenue Fund,
provided, however, that a suspended or former licensee is
entitled to a fair rate of return out of net earnings, if any.
Except during the pendency of a suspension or during any appeal
from any action precipitating the appointment of a conservator,
and after appropriate consultations with the former licensee, a
conservator, subject to the prior approval of the New Jersey
Commission, would be authorized to sell, assign, convey or
otherwise dispose of the hotel-casino of a former licensee
subject to all valid liens, claims and encumbrances, and to remit
the net proceeds to the former licensee.
After completion of its first full year of operation, and
continuing for 30 years thereafter, a casino licensee is subject
to a New Jersey investment obligation. To satisfy this
obligation, the Company may either: (i) pay an investment
alternative tax equal to 2 1/2 of its annual gross revenues from
gaming operations; or (ii) purchase bonds issued by, or invest in
other development projects approved by, the Casino Reinvestment
Development Authority, a state agency, in an amount equal to
1 1/4% of its annual gross revenues from gaming operations.
All corporations doing business in New Jersey are subject to
a corporate franchise tax, based on allocated net income, at a 9%
annual rate. Interest on indebtedness is deductible under New
Jersey law. There is also an 8% tax on the gross win revenues of
New Jersey casinos, in addition to an annual $500 fee for each
slot machine.
Atlantic City imposes a real property tax and a luxury tax
applicable to certain sales, including, but not limited to, the
sale of alcoholic beverages, tickets to entertainment events and
rental of hotel rooms. In 1992, the New Jersey legislature
adopted laws imposing a fee of $2.00 per occupied casino hotel
room per day ($1.00 for non-casino hotel rooms). These fees are
dedicated exclusively to a fund to market Atlantic City as a
tourist destination and resort. In addition, the state of New
Jersey, effective July 1, 1993, imposed a $1.50 per day fee for
each patron's car that is parked at an Atlantic City casino.
ACSI has elected to absorb the parking fee as a marketing
expense, and not to collect the fee from patrons as do the
majority of Atlantic City casinos. ACSI has incurred parking fees
of approximately $1.9 million, $1.8 million and $.8 million in
1995, 1994 and 1993, respectively.
From time to time new laws and regulations, as well as
amendments to existing laws and regulations, relating to gaming
activities in New Jersey are proposed or adopted.
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In addition, the New Jersey casino regulatory authorities
from time to time may change their laws, regulations or
procedures, including their procedures for renewing licenses.
The Company cannot predict what effect, if any, new or amended
laws, regulations or procedures would have on the Company. While
in the last few years the changes to New Jersey gaming laws,
regulations or procedures have generally not been restrictive to
New Jersey licenses, changes in such laws, regulations or
procedures could have an adverse effect on the Company.
The Company is subject to various other federal, state and
local laws and regulations and, on a periodic basis, has to
obtain various licenses and permits, including those required to
sell alcoholic beverages. In particular, the United States
Department of the Treasury has adopted regulations pursuant to
which a casino is required to file a report of each deposit,
withdrawal or exchange of currency or other payment or transfer
by, through or to a casino which involves a transaction in
currency of more than a predetermined amount ($10,000 for 1995)
per gaming day. Such reports are required to be made on forms
prescribed by the Secretary of the Treasury and must be filed
with the Commissioner of the Internal Revenue Service. In
addition, a casino is required to maintain detailed records
(including the names, addresses, social security numbers or other
information with respect to its customers) dealing with, among
other items, a customer's deposit and withdrawal of funds and the
maintenance of a line of credit.
The Company, through SBOC, conducts casino gaming operations
in Las Vegas, Nevada. The Company is not required to obtain the
prior approval of the Nevada Gaming Authorities to conduct casino
gaming operations outside Nevada. However, the Company must
submit quarterly reports to the Nevada Board regarding (i) any
changes in ownership or control of any interest in ACSI or OSI;
(ii) any changes in officers, directors or key employees of ACSI
or OSI; (iii) all complaints, disputes, orders to show cause and
disciplinary actions, related to gaming, instituted or presided
over by an entity of the United States, a state or any other
governmental jurisdiction concerning ACSI or OSI; (iv) any arrest
of an employee of ACSI or OSI involving cheating or theft related
to gaming in New Jersey; and (v) any arrest or conviction of an
officer, director, key employee or equity owner of ACSI or OSI
for certain offenses. The Company, through its New Jersey
subsidiaries, must provide to the Nevada Board all documents
filed with the state of New Jersey relating to the Atlantic City
Showboat, the systems of accounting and internal control utilized
in connection with the Atlantic City Showboat, and annual
operational and regulatory reports describing compliance with
regulations, procedures for audit, and procedures for
surveillance relating to the Atlantic City Showboat. The Company
must also comply with any additional reporting requirements which
may be imposed by the Nevada Board. New laws and regulations as
well as amendments to existing laws and regulations pertaining to
gaming activities in Nevada from time to time are proposed or
adopted. Changes in such laws, regulations and procedures could
have an adverse effect on the Company.
NEVADA GAMING
The ownership and operation of casino gaming facilities in
Nevada are subject to: (i) the Nevada Gaming Control Act and the
regulations promulgated thereunder (collectively "Nevada Act");
and (ii) various local regulations. The Company's gaming
operations are subject to the licensing and regulatory control of
the Nevada Gaming Commission ("Nevada Commission"), the Nevada
State Gaming Control Board ("Nevada Board"), and the City Council
of the City of Las
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Vegas ("City Board"). The Nevada Commission, the Nevada Board,
and the City Board are collectively referred to as the "Nevada
Gaming Authorities."
The laws, regulations and supervisory procedures of the
Nevada Gaming Authorities are based upon declarations of public
policy which are concerned with, among other things: (i) the
prevention of unsavory or unsuitable persons from having a direct
or indirect involvement with gaming at any time or in any
capacity; (ii) the establishment and maintenance of responsible
accounting practices and procedures; (iii) the maintenance of
effective controls over the financial practices of licensees,
including the establishment of minimum procedures for internal
fiscal affairs and the safeguarding of assets and revenues,
providing reliable record keeping and requiring the filing of
periodic reports with the Nevada Gaming Authorities; (iv) the
prevention of cheating and fraudulent practices; and (v) to
provide a source of state and local revenues through taxation and
licensing fees. Change in such laws, regulations and procedures
could have an adverse effect on the Company's gaming operations.
SBOC, which operates the Las Vegas Showboat, is required to
be licensed by the Nevada Gaming Authorities. The gaming license
requires the periodic payment of fees and taxes and is not
transferable. The Company is registered by the Nevada Commission
as a publicly traded corporation ("Registered Corporation") and
as such, it is required periodically to submit detailed financial
and operating reports to the Nevada Commission and furnish any
other information which the Nevada Commission may require. No
person may become a shareholder of, or receive any percentage of
profits from, SBOC without first obtaining licenses and approvals
from the Nevada Gaming Authorities. The Company and SBOC have
obtained from the Nevada Gaming Authorities the various
registrations, approvals, permits and licenses required in order
to engage in gaming activities in Nevada.
The Nevada Gaming Authorities may investigate any individual
who has a material relationship to, or material involvement with,
the Company or SBOC in order to determine whether such individual
is suitable or should be licensed as a business associate of a
gaming licensee. Officers, directors and certain key employees
of SBOC must file applications with the Nevada Gaming Authorities
and may be required to be licensed or found suitable by the
Nevada Gaming Authorities. Officers, directors and key employees
of the Company who are actively and directly involved in gaming
activities of SBOC may be required to be licensed or found
suitable by the Nevada Gaming Authorities. The Nevada Gaming
Authorities may deny an application for licensing for any cause
which they deem reasonable. A finding of suitability is
comparable to licensing, and both require submission of detailed
personal and financial information followed by a thorough
investigation. The applicant for licensing or a finding of
suitability must pay all the costs of the investigation. Changes
in licensed positions must be reported to the Nevada Gaming
Authorities and in addition to their authority to deny an
application for a finding of suitability or licensure, the Nevada
Gaming Authorities have jurisdiction to disapprove a change in a
corporate position.
If the Nevada Gaming Authorities were to find an officer,
director or key employee unsuitable for licensing or unsuitable
to continue having a relationship with the Company or SBOC, the
companies involved would have to sever all relationships with
such person. In addition, the Nevada Commission may require the
Company or SBOC to terminate the
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employment of any person who refuses to file appropriate
applications. Determinations of suitability or of questions
pertaining to licensing are not subject to judicial review in
Nevada.
The Company and SBOC are required to submit detailed
financial and operating reports to the Nevada Commission.
Substantially all material loans, leases, sales of securities and
similar financing transactions by SBOC must be reported to, or
approved by, the Nevada Commission.
If it were determined that the Nevada Act was violated by
SBOC the gaming licenses it holds could be limited, conditioned,
suspended or revoked, subject to compliance with certain
statutory and regulatory procedures. In addition, SBOC, the
Company, and the persons involved could be subject to substantial
fines for each separate violation of the Nevada Act at the
discretion of the Nevada Commission. Further, a supervisor could
be appointed by the Nevada Commission to operate the Company's
gaming properties and, under certain circumstances, earnings
generated during the supervisor's appointment (except for the
reasonable rental value of the Company's gaming properties) could
be forfeited to the state of Nevada. Limitation, conditioning or
suspension of any gaming license or the appointment of a
supervisor could (and revocation of any gaming license would)
materially adversely affect the Company's gaming operations.
Any beneficial holder of the Company's voting securities,
regardless of the number of shares owned, may be required to file
an application, be investigated, and have his suitability as a
beneficial holder of the Company's voting securities determined
if the Nevada Commission has reason to believe that such
ownership would otherwise be inconsistent with the declared
policies of the state of Nevada. The applicant must pay all
costs of investigation incurred by the Nevada Gaming Authorities
in conducting any such investigation.
The Nevada Act requires any person who acquires more than 5%
of the Company's voting securities to report the acquisition to
the Nevada Commission. The Nevada Act requires that beneficial
owners of more than 10% of the Company's voting securities apply
to the Nevada Commission for a finding of suitability within
thirty days after the Chairman of the Nevada Board mails the
written notice requiring such filing. Under certain
circumstances, an "institutional investor," as defined in the
Nevada Act, which acquires more than 10%, but not more than 15%,
of the Company's voting securities may apply to the Nevada
Commission for a waiver of such finding of suitability if such
institutional investor holds the voting securities for investment
purposes only. An institutional investor shall not be deemed to
hold voting securities for investment purposes unless the voting
securities were acquired and are held in the ordinary course of
business as an institutional investor and not for the purpose of
causing, directly or indirectly, the election of a majority of
the members of the board of directors of the Company, any change
in the Company's corporate charter, bylaws, management, policies
or operations of the Company, or any of its gaming affiliates, or
any other action which the Nevada Commission finds to be
inconsistent with holding the Company's voting securities for
investment purposes only. Activities which are not deemed to be
inconsistent with holding voting securities for investment
purposes only include: (i) voting on all matters voted on by
stockholders; (ii) making financial and other inquiries of
management of the type normally made by securities analysts for
informational purposes and not to cause a change in its
management, policies or operations; and (iii) such other
activities as the Nevada Commission may determine to be
consistent with such investment intent. If the beneficial holder
of voting securities who must be found suitable is a corporation,
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partnership or trust, it must submit detailed business and
financial information including a list of beneficial owners. The
applicant is required to pay all costs of investigation.
Any person who fails or refuses to apply for a finding of
suitability or a license within 30 days after being ordered to do
so by the Nevada Commission, or the Chairman of the Nevada Board,
may be found unsuitable. The same restrictions apply to a record
owner if the record owner, after request, fails to identify the
beneficial owner. Any shareholder found unsuitable and who
holds, directly or indirectly, any beneficial ownership of the
common stock of the Company beyond such period of time as may be
prescribed by the Nevada Commission may be guilty of a criminal
offense. The Company is subject to disciplinary action if, after
it receives notice that a person is unsuitable to be a
shareholder or to have any other relationship with the Company or
SBOC, the Company (i) pays that person any dividend or interest
upon voting securities of the Company, (ii) allows that person to
exercise, directly or indirectly, any voting right conferred
through securities held by that person, (iii) pays remuneration
in any form to that person for services rendered or otherwise, or
(iv) fails to pursue all lawful efforts to require such
unsuitable person to relinquish his voting securities for cash at
fair market value.
The Nevada Commission may, in its discretion, require the
holder of any debt security of a Registered Corporation to file
applications, be investigated and be found suitable to own the
debt security of a Registered Corporation. If the Nevada
Commission determines that a person is unsuitable to own such
security, then pursuant to the Nevada Act, the Registered
Corporation can be sanctioned, including the loss of its
approvals, if without the prior approval of the Nevada
Commission, it: (i) pays to the unsuitable person any dividend,
interest, or any distribution whatsoever, (ii) recognizes any
voting right by such unsuitable person in connection with such
securities, (iii) pays the unsuitable person remuneration in any
form, or (iv) makes any payment to the unsuitable person by way
of principal, redemption, conversion, exchange, liquidation, or
similar transaction.
The Company is required to maintain a current stock ledger
in Nevada which may be examined by the Nevada Gaming Authorities
at any time. If any securities are held in trust by an agent or
by a nominee, the record holder may be required to disclose the
identity of the beneficial owner to the Nevada Gaming
Authorities. A failure to make such disclosure may be grounds
for finding the record holder unsuitable. The Company is also
required to render maximum assistance in determining the identity
of the beneficial owner. The Nevada Commission has the power at
any time to require the Company's stock certificates to bear a
legend indicating that the securities are subject to the Nevada
Act. However, to date, the Nevada Commission has not imposed
such a requirement on the Company.
The Company may not make a public offering of its securities
without the prior approval of the Nevada Commission if the
securities or the proceeds therefrom are intended to be used to
construct, acquire or finance gaming facilities in Nevada, or
retire or extend obligations incurred for such purposes. In
November 1995, the Nevada Commission granted the Company prior
approval to make public offerings for a period of one year,
subject to certain conditions ("Shelf Approval"). The Shelf
Approval also applies to any affiliated company wholly owned by
the Company (a "Gaming Affiliate") which is a publicly traded
corporation or would thereby become a publicly traded corporation
pursuant to a public offering. The Shelf Approval also includes
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approval for the Company's licensed Nevada subsidiaries to
guaranty any security issued by, or to hypothecate their assets
to secure the payment or performance of any obligations issued by
the Company or a Gaming Affiliate in a public offering under the
Shelf Approval. However, the Shelf Approval may be rescinded for
good cause without prior notice upon the issuance of an
interlocutory stop order by the Chairman of the Nevada Board and
the Shelf Approval must be renewed annually. The Shelf Approval
does not constitute a finding, recommendation or approval by the
Nevada Commission or the Nevada Board as to the accuracy or
adequacy of the prospectus or the investment merits of the
securities offered. Any representation to the contrary is
unlawful.
Changes in control of the Company through merger,
consolidation, stock or asset acquisitions, management or
consulting agreements, or any act or conduct by a person whereby
he obtains control, may not occur without the prior approval of
the Nevada Commission. Entities seeking to acquire control of a
Registered Corporation must satisfy the Nevada Board and Nevada
Commission in a variety of stringent standards prior to assuming
control of such Registered Corporation. The Nevada Commission
may also require controlling stockholders, officers, directors
and other persons having a material relationship or involvement
with the entity proposing to acquire control, to be investigated
and licensed as part of the approval process relating to the
transaction.
The Nevada legislature has declared that some corporate
acquisitions opposed by management, repurchases of voting
securities and corporate defense tactics affecting Nevada gaming
licensees, and Registered Corporations that are affiliated with
those operations, may be injurious to stable and productive
corporate gaming. The Nevada Commission has established a
regulatory scheme to ameliorate the potentially adverse effects
of these business practices upon Nevada's gaming industry and to
further Nevada's policy to: (i) assure the financial stability of
corporate gaming operators and their affiliates; (ii) preserve
the beneficial aspects of conducting business in the corporate
form; and (iii) promote a neutral environment for the orderly
governance of corporate affairs. Approvals are, in certain
circumstances, required from the Nevada Commission before the
Company can make exceptional repurchases of voting securities
above the current market price thereof and before a corporate
acquisition opposed by management can be consummated. The Nevada
Act also requires prior approval by the Nevada Commission of a
plan of recapitalization proposed by the Company's Board of
Directors in response to a tender offer made directly to its
shareholders for the purpose of acquiring control of the Company.
The sale of alcoholic beverages by the casino is subject to
licensing, control and regulation by the applicable local
authorities. All licenses are revocable and are not
transferable. The agencies involved have full power to limit,
condition, suspend or revoke any such license, and any such
disciplinary action could (and revocation would) have a material
adverse affect upon the operations of the casino.
License fees and taxes, computed in various ways depending
on the type of gaming or activity involved, are payable to the
state of Nevada and to the counties and cities in which the
Nevada licensee's respective operations are conducted. Depending
upon the particular fee or tax involved, these fees and taxes are
payable either monthly, quarterly or annually and are based upon
either: (i) a percentage of the gross revenues received;
(ii) the number of gaming devices
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operated; or (iii) the number of table games operated. A casino
entertainment tax is also paid by casino operations where
entertainment is furnished in connection with the selling of food
or refreshments. Nevada licensees that hold a license as an
operator of a slot route, or a manufacturer's or distributor's
license, also pay certain fees and taxes to the state of Nevada.
Any person who is licensed, required to be licensed,
registered, required to be registered, or is under common control
with such persons (collectively, "Licensees"), and who proposes
to become involved in a gaming venture outside of Nevada is
required to deposit with the Nevada Board, and thereafter
maintain, a revolving fund in the amount of $10,000 to pay the
expenses of investigation of the Nevada Board of their
participation in such foreign gaming. The revolving fund is
subject to increase or decrease in the discretion of the Nevada
Commission. Thereafter, Licensees are required to comply with
certain reporting requirements imposed by the Nevada Act.
Licensees are also subject to disciplinary action by the Nevada
Commission if it knowingly violates any laws of the foreign
jurisdiction pertaining to the foreign gaming operation, fails to
conduct the foreign gaming operation in accordance with the
standards of honesty and integrity required of Nevada gaming
operations, engages in activities that are harmful to the state
of Nevada or its ability to collect gaming taxes and fees, or
employs a person in the foreign operation who has been denied a
license or finding of suitability in Nevada on the ground of
personal unsuitability.
NEW SOUTH WALES GAMING
The NSWCCA was created pursuant to the Casino Control Act
1992 (NSW) ("Casino Act") to maintain and administer systems for
licensing, supervision and control of a casino.
In considering an application for a casino license,
Section 11 of the Casino Act requires the NSWCCA to have regard
to the following matters: (i) the suitability of applicants and
close associates of applicants; (ii) the standard and nature of
the proposed casino, and the facilities to be provided in, or in
conjunction with, the proposed casino; (iii) the likely impact of
the use of the premises concerned as a casino on tourism,
employment and economic development generally in the place or
region in which the premises are located; (iv) the expertise of
the applicant, having regard to the obligations of the holder of
a casino license under the Casino Act; and (v) such other matters
as the NSWCCA considers relevant.
The NSWCCA is to determine an application by either granting
a casino license to the applicant or declining to grant a casino
license. The casino license may be granted subject to such
conditions as the NSWCCA thinks fit and is granted for the
location specified in the casino license. A casino license
confers no right of property and cannot be assigned or mortgaged,
charged or otherwise encumbered.
The conditions of a casino license may be amended by being
substituted, varied, revoked or added to by the NSWCCA subject to
the right of the licensee to make submissions to the NSWCCA in
regard to any such proposal. The NSWCCA may also cancel or
suspend, or amend the terms or conditions, of a casino license
where there are grounds for disciplinary action, including:
(i) the casino license being improperly obtained; (ii) the casino
operator, a person in charge of the casino, an agent of the
casino operator or a casino employee contravening a
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provision of the Casino Act or a condition of the license;
(iii) the casino premises no longer being suitable for the
conduct of the casino operations; (iv) the licensee being
considered to be no longer a suitable person to give effect to
the casino license and the Casino Act; and (v) the public
interest that the casino license should no longer remain in
force. No right of compensation against the government arises
for the cancellation, suspension or variation of the terms and
conditions of the casino license.
The NSWCCA must not grant an application for a casino
license unless it is satisfied that the applicant and each close
associate is a suitable person to be concerned in or associated
with the management and operation of a casino. In making the
determination as to the suitability of the applicant, the NSWCCA
must consider whether: (a) the applicant and each close
associate are of good repute, having regard to character, honesty
and integrity; (b) the applicant and each close associate is of
sound and stable financial background; (c) in the case of an
applicant that is not a natural person, the applicant has or has
arranged a satisfactory ownership, trust or corporate structure;
(d) the applicant has or is able to obtain financial resources
that are both suitable and adequate for insuring the financial
viability of the proposed casino; (e) the applicant has or is
able to obtain the services of persons who have sufficient
experience in the management and operation of a casino; (f) the
applicant has sufficient business ability to establish and
maintain a successful casino; (g) the applicant or any close
associate who has any business association with any person, body
or association who, in the opinion of the NSWCCA is not of good
repute, having regard to character, honesty and integrity or has
undesirable or unsatisfactory financial sources; and (h) each
director, partner, trustee, executive officer and secretary and
any other officer or person determined by the NSWCCA to be
associated or connected with the ownership, administration or
management of the operations or business of the applicant or a
close associate of the applicant is a suitable person to act in
that capacity.
On receiving an application for a casino license, the NSWCCA
must carry out all such investigations and inquiries as it deems
necessary. The costs of the investigation by the NSWCCA are
payable to the NSWCCA by the applicant unless the NSWCCA
determines otherwise.
The NSWCCA may give written direction to a casino operator
as to the conduct, supervision or control of operations of the
casino. The NSWCCA may investigate a casino from time to time at
the discretion of the NSWCCA. Not later than three years after
the grant of the casino license, and thereafter in intervals not
exceeding three years, the NSWCCA must investigate and form an
opinion as to whether or not the casino operator is a suitable
person to continue to give effect to the casino license and
determine that it is in the public interest the casino license
should continue in force.
A casino operator must not enter into a controlled contract
without first notifying the NSWCCA. A controlled contract is a
contract that relates wholly or partly to the supply of goods or
services to a casino, but does not include a contract that
relates solely to the construction of the casino or to the
alteration of premises used or to be used as a casino, or such
other contracts as may be defined by the NSWCCA.
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Gaming is not to be conducted in the casino unless the
facilities provided in relation to the conduct and monitoring of
operations of the casino are in accordance with the plans,
diagrams and specifications that are approved by the NSWCCA. The
NSWCCA may approve the games to be played in the casino. A
casino operator must not conduct a game in a casino unless there
is an order in force approving the game and the game is conducted
in accordance with the rules approved by such order.
The casino is to be open to the public on such days and at
such times as are directed by the NSWCCA in writing. The casino
must be closed on days and at times that are not days or times
specified by the NSWCCA.
A casino operator must not (i) accept a wager made otherwise
than by means of money or chips, (ii) lend money, chips or any
other valuable thing; provide money or chips as part of a
transaction involving a credit card or debit card, (iii) extend
any other form of credit, or (iv) wholly or partly discharge any
debt. The casino operator may issue chips in exchange for
checks.
INDIANA GAMING
In 1993, the state of Indiana passed a Riverboat Gambling
Act which created the Indiana Commission. The Indiana Commission
is given extensive powers and duties for the purposes of
administering, regulating and enforcing the system of riverboat
gaming. It is authorized to award no more than 11 gaming
licenses (five to counties contiguous to Lake Michigan, five to
counties contiguous to the Ohio River and one to a county
contiguous to Patoka Lake).
The Indiana Commission has jurisdiction and supervision over
all riverboat gaming operations in Indiana and all persons on
riverboats where gaming operations are conducted. These powers
and duties include authority to (1) investigate all applicants
for riverboat gaming licenses, (2) select among competing
applicants those that promote the most economic development in a
home dock area and that best serve the interest of the citizens
of Indiana, (3) establish fees for licenses, and (4) prescribe
all forms used by applicants. The Indiana Commission shall adopt
rules pursuant to statute for administering the gaming statute
and the conditions under which riverboat gaming in Indiana may be
conducted. The Indiana Commission has promulgated certain formal
rules and has proposed additional rules governing the application
procedure. The Indiana Commission may suspend or revoke the
license of a licensee or impose civil penalties, in some cases
without notice or hearing. The Indiana Commission will
(1) authorize the route of the riverboat and stops that the
riverboat may make, (2) establish minimum amounts of insurance
and (3) after consulting with the U.S. Army Corps of Engineers,
determine which waterways are navigable waterways for purposes of
the Indiana Riverboat Gambling Act and determine which navigable
waterways are suitable for the operation of riverboats.
Additionally, the Indiana Commission may adopt emergency orders
concerning navigability of waters for extreme weather conditions
or other extreme circumstances.
The Indiana Riverboat Gambling Act requires an extensive
disclosure of records and other information concerning an
applicant, including disclosure of all directors, officers and
persons holding one percent (1%) or more direct or indirect
beneficial interest.
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In determining whether to grant an owner's license to an
applicant, the Indiana Commission shall consider (1) the
character, reputation, experience and financial integrity of the
applicant and any person who (a) directly or indirectly controls
the applicant, or (b) is directly or indirectly controlled by
either the applicant or a person who directly or indirectly
controls the applicant, (2) the facilities or proposed facilities
for the conduct of riverboat gaming, (3) the highest total
prospective revenue to be collected by the state from the conduct
of riverboat gaming, (4) the good faith affirmative action plan
to recruit, train and upgrade minorities in all employment
classifications, (5) the financial ability of the applicant to
purchase and maintain adequate liability and casualty insurance,
(6) whether the applicant has adequate capitalization to provide
and maintain the riverboat for the duration of the license and
(7) the extent to which the applicant meets or exceeds other
standards adopted by the Indiana Commission. The Indiana
Commission may also give favorable consideration to applicants
for economically depressed areas and applicants who provide for
significant development of a large geographic area. Each
applicant must pay an application fee of $50,000 and an
additional investigation fee of $55,000. If the applicant is
selected, the applicant must pay an initial license fee of
$25,000 and post a bond. A person holding an owner's gaming
license issued by the Indiana Commission may not own more than a
ten percent (10%) interest in another such license. An owners
license expires five years after the effective date of the
license; however, after three years the holder of an owner's
license will undergo a reinvestigation to ensure continued
suitability for licensure. Unless the license has been
terminated, expired or revoked, the gaming license may be renewed
if the Indiana Commission determines that the licensee has
satisfied all statutory and regulatory requirements. A gaming
license is a revocable privilege and is not a property right. In
connection with its application for an owner's license, the
Company, SMP and Waterfront declared to the Indiana Commission
that if SMP, or upon the transfer of the certificate of
suitability to the subsidiary partnership, the subsidiary
partnership receives a riverboat owner's license for East
Chicago, Indiana, they shall not commence more than one other
casino gaming operation within a fifty-mile radius of East
Chicago Showboat for a period of five years beginning on the date
of issuance of an owner's license by the Indiana Commission to
SMP or the subsidiary partnership, as applicable. Adherence to
the non-competition declaration is a condition of the certificate
of suitability and the owner's license. There can be no
assurance that SMP or the subsidiary partnership will obtain an
owner's license.
Some municipalities have initiated their own review process.
The Indiana Commission has passed a resolution stating that
certain evaluations by local governments will be important
factors in the Indiana Commission's economic development
evaluation process, however, the Indiana Commission retains the
sole authority to award a license.
Minimum and maximum wagers on games are not established by
regulation but are left to the discretion of the licensee.
Wagering may not be conducted with money or other negotiable
currency. Riverboat gaming excursions are limited to a duration
of four hours unless expressly approved by the Indiana
Commission. No gaming may be conducted while the boat is docked
except (1) for 30-minute time periods at the beginning and end of
a cruise while the passengers are embarking and disembarking,
(2) if the master of the riverboat reasonably determines that
specific weather or water conditions present a danger to the
riverboat, its passengers and crew, (3) if either the vessel or
the docking facility is undergoing mechanical or structural
repair, (4) if water traffic conditions present a danger to (a)
the riverboat, riverboat passengers, and crew, or
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(b) other vessels on the water, or (5) if the master has been
notified that a condition exists that would cause a violation of
federal law if the riverboat were to cruise.
An admission tax of $3.00 for each person admitted to the
gaming excursion is imposed upon the license owner. An
additional twenty percent (20%) tax is imposed on the adjusted
gross receipts received from gaming operations, which is defined
as the total of all cash and property (including checks received
by the licensee whether collected or not) received, less the
total of all cash paid out as winnings to patrons and uncollected
gaming receivables. The gaming license owner shall remit the
admission and wagering taxes before the close of business on the
day following the day on which the taxes were incurred.
Legislation is currently before the Indiana Legislature
permitting the imposition of property taxes on the riverboats at
rates to be determined by local taxing authorities of the
jurisdiction in which a riverboat operates.
The Indiana Commission is authorized to license suppliers
and certain occupations related to riverboat gaming. Gaming
equipment and supplies customarily used in conducting riverboat
gaming may be purchased or leased only from licensed suppliers.
The Indiana Riverboat Gambling Act places special emphasis
upon minority and women's business enterprise participation in
the riverboat industry. Any person issued a gaming owners
license must establish goals of expending at least ten percent
(10%) of the total dollar value of the licensee's contracts for
goods and services with minority business enterprises and five
percent (5%) of the total dollar value of the licensees contracts
for goods and services with women's business enterprises. The
Indiana Commission may suspend, limit or revoke the gaming owners
license or impose a fine for failure to comply with statutory
requirements.
MISSOURI GAMING
Gaming was originally authorized in the state of Missouri in
November 1992. On April 29, 1993, new legislation (the "Missouri
Act") was enacted which replaced the 1992 legislation. In
January 1994 the Missouri Supreme court handed down a decision
which held that the operation of certain games of chance such as
traditional slot machines was prohibited by the constitution of
the state of Missouri. On November 8, 1994, the people of
Missouri voted in favor of an amendment to the Missouri
constitution to allow slot machine gaming in the state. The
Missouri Act provides for the licensing and regulation of
excursion gambling boat operations on the Mississippi and
Missouri Rivers in the state of Missouri and the licensing and
regulation of persons who distribute gaming equipment and
supplies to gaming licensees. An excursion gambling boat is a
boat, ferry or other floating facility on which gaming is
allowed. The Missouri Act limits the loss per individual on each
excursion to $500, but does not otherwise limit the amount which
may be wagered on any bet or the amount of space in the vessel
which may be utilized for gaming.
The Missouri Act is to be implemented and enforced by a five-
member Missouri Commission. The Missouri Commission is empowered
to issue such number of riverboat gaming licenses as it
determines to be appropriate. A gaming license cannot be granted
to any gaming operator unless the voters in such operator's "home
dock" city or county have authorized gaming activities on gaming
riverboats.
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Gaming boats in Missouri must generally resemble boats from
Missouri's riverboat history and must contain nongaming areas,
food service and a Missouri theme gift shop. The boats must
cruise unless public safety requires continuous docking. Annual
license fees will be set by the Missouri Commission but may not
be less than $25,000. Each licensee also must post a bond or
other form of surety (in an amount determined by the Missouri
Commission) to secure performance of its obligations under the
Missouri Act and the regulations of the Missouri Commission.
On September 1, 1993, the Missouri Commission adopted rules
and regulations (the "Missouri Regulations") governing the
licensing, operation and administration of riverboat gaming in
the state of Missouri and the form of application for such
licensure. SLP has submitted its gaming application. There can
be no assurance that SLP will be selected for investigation for
licensing or if so selected that a Missouri gaming license will
be issued. In addition, the Missouri Regulations remain subject
to amendment and interpretation, and may further limit or
otherwise adversely affect the Company and its Missouri gaming
operations.
Directors and certain officers and key persons of the
Company and SLP must file personal disclosure forms with the
gaming license application and must be found suitable by the
Missouri Commission. Further, the Missouri Regulations require
that all employees of SLP who are involved in gaming operations
must file applications for and receive Missouri gaming
occupational licenses. The Missouri Regulations require
disclosure by the Company and SLP of any person or entity holding
any direct or indirect ownership interest in SLP. SLP is also
required to disclose the names of the holders of all of SLP's
debt including a description of the nature and terms of such
debt. The Missouri Commission may, in its sole discretion,
request additional information with respect to such holders.
Missouri gaming licenses must be renewed annually during the
first two years of an entity's licensure and renewed every two
years thereafter.
Under Missouri law, gaming licenses are not transferable,
and under the Missouri Regulations the transfer of (i) any
ownership interest in a privately held business entity or (ii) a
5% or greater interest in a publicly traded company directly or
indirectly holding a Missouri gaming license is prohibited
without the approval of the Missouri Commission. Further,
without the prior approval of the Missouri Commission, the
Missouri Regulations prohibit withdrawals of capital, loans,
advances or distribution of any assets in excess of 5% of
accumulated earnings by a license holder to anyone with an
ownership interest in the license holder.
The Missouri Regulations specifically provide that any
action of the Missouri Commission shall not indicate or suggest
that the Missouri Commission has considered or passed in any way
on the marketability of the applicant or licensee's securities,
or on any other matter, other than the applicant or licensee's
suitability for licensure under Missouri law. A Missouri gaming
license holder can be disciplined in Missouri for gaming related
acts occurring in another jurisdiction which results in
disciplinary action in the other jurisdiction.
In addition to any other taxes or fees payable to state and
local governmental authorities, gaming licensure in the state of
Missouri will subject SLP to a 20% Adjusted Gross Receipts tax.
Adjusted Gross Receipts is generally defined as gross receipts
from gaming less payouts to
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customers as winnings. Also, a $2.00 admission is payable to the
Missouri Commission for each person admitted to the riverboat.
The Missouri Commission has broad powers to require
additional disclosure by an applicant during the processing of a
gaming application, to deny gaming licensure and to
administratively fine or suspend or revoke a gaming license for
failure to comply with or for violation of the Missouri Act or
Missouri Regulations. Further, in certain situations, the
Missouri Commission can appoint a supervisor to continue the
operations of a license holder after lapse, suspension or
revocation of a gaming license.
The supervisor may operate and sell the facility with
earnings or proceeds being paid to the former owners only after
deduction of the costs and expenses of the supervisorship and
establishment of reserves.
U.S. COAST GUARD
Each riverboat also is regulated by the U.S. Coast Guard,
whose regulations affect boat design, construction, operation
(including requirements that each vessel be operated by a minimum
complement of licensed personnel) and maintenance, in addition to
restricting the number of persons who can be aboard the boat at
any one time. All vessels operated by the Company must hold a
Certificate of Inspection. Loss of the Certificate of Inspection
of a vessel would preclude its use as an operating riverboat.
The vessel must be drydocked periodically for inspection of the
hull, which will result in a loss of service that can have an
adverse effect on the Company. For vessels of the Company's
type, the inspection cycle is every five years. Less stringent
rules apply to permanently moored vessels. The Company believes
that these regulations, and the requirements of operating and
managing cruising gaming vessels generally, make it more
difficult to conduct riverboat gaming than to operate land-based
casinos.
All shipboard employees of the Company employed on U.S.
Coast Guard regulated vessels, even those who have nothing to do
with the actual operation of the vessel, such as dealers,
cocktail hostesses and security personnel, may be subject to the
Jones Act which, among other things, exempts those employees from
state limits on workers' compensation awards. The Company
intends to obtain such insurance to cover employee claims.
SHIPPING ACT OF 1916; MERCHANT MARINE ACT OF 1936
In order for the Company's vessels to have United States
flag registry, the Company must maintain "United States
citizenship" as defined in the Merchant Marine Act of 1920, as
amended, and the Shipping Act of 1916. A corporation or
partnership operating any vessel in the coastwise trade is not
considered a United States citizen unless United States citizens
own 75% of the equity of the Company or the partnership and, if a
partnership, all general partners must be United States citizens.
ITEM 2.PROPERTIES.
The Company believes that its properties are generally in
good condition, are well maintained, and are generally suitable
and adequate to carry on the Company's business. In 1995,
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the Company's gaming properties operated at satisfactory levels
of utilization; however, approximately 40% of the main casino
space at the Las Vegas Showboat was closed for approximately six
months of 1995 as a result of a renovation.
ATLANTIC CITY FACILITIES
The Atlantic City Showboat is located on approximately 12
acres, 10 1/2 acres of which is leased from Griffin Gaming &
Enterprises, Inc. f/k/a Resorts International, Inc. ("Resorts")
pursuant to a 99-year lease dated October 26, 1983 (as amended,
"Lease"). The remaining acreage is held in fee by ACSI. In
addition, ACSI owns two nearby surface level parking lots which
consist of approximately nine acres in the aggregate.
Under the New Jersey Act, both Resorts and ACSI, because of
their lessor-lessee relationship, are jointly and severally
liable for the acts of the other with respect to any violations
of the New Jersey Act by the other. In order to limit the
potential liability which could result from this provision, ACSI,
OSI, and Resorts have agreed to indemnify each other from all
liabilities and losses which may arise as a result of the joint
and several liability imposed by the New Jersey Act. However,
the New Jersey Commission could determine that the party seeking
indemnification is not entitled to or is barred from such
indemnification.
Pursuant to the New Jersey Act, the New Jersey Commission
approved, subject to certain changes, an Assumption Agreement
("Assumption Agreement") executed by Trump Taj Mahal Associates
Limited Partnership and Trump Taj Mahal Realty Corp.
(collectively, "Trump Taj"), ACSI and Resorts in connection with
Trump Taj's acquisition of the land on which the Taj Mahal Casino
Hotel is constructed and pursuant to which Trump Taj assumed some
of Resorts' obligations in the Lease. The New Jersey Commission
ruled that the Assumption Agreement is a lease under the New
Jersey Act for casino regulatory purposes. As a result, for
casino regulatory purposes, a lessor-lessee relationship is
deemed to exist among ACSI, Resorts, and Trump Taj making them
jointly and severally liable for the acts of the other with
respect to any violations of the New Jersey Act by the others.
In order to limit their potential liability, ACSI, Resorts and
Trump Taj have entered into an agreement to indemnify each other
from all liabilities and losses which may arise as a result of
the joint and several liability imposed upon them by the New
Jersey Act. However, the New Jersey Commission could determine
that the party seeking indemnification is not entitled to or is
barred from such indemnification.
In the event Resorts is unable under the laws of New Jersey
to act as lessor of the site to the Atlantic City Showboat
("Premises"), ACSI has an option to purchase the Premises for the
greater of $66.0 million or the fair market value of the "leased
fee estate" (determined by appraisal in the case of
disagreement), subject to a maximum purchase price of 11 times
the annual rent in the option year. However, if the appraisal is
not completed within the time period specified by the New Jersey
Commission, the purchase price is equal to the lesser of $66.0
million or 11 times the annual rent in the option year. If ACSI
is unable to continue operating the Atlantic City Showboat under
the New Jersey gaming laws, Resorts has a similar option to
purchase ACSI's interest in the Premises together with the
Atlantic City Showboat building and all furniture, fixtures and
equipment thereon for their fair market value as of the option
date (determined by appraisal in the case of disagreement).
Also, should Resorts elect to sell its
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interest in the Lease or the Premises to an unaffiliated third
party, ACSI has a first right of purchase unless such sale is
made to a person who acquires all of the assets and liabilities
of Resorts (subject to the Lease). Similarly, Resorts has a
first right of purchase of ACSI's leasehold interest in the
Premises or the Atlantic City Showboat if ACSI elects to sell the
same to any person other than an affiliate of ACSI or a mortgagee
of ACSI's leasehold interest and improvements on the leased land.
Any such transfer by ACSI, other than to a permitted transferee,
requires Resorts' consent which cannot be unreasonably withheld.
The Lease and all amendments thereto are subject to review
and approval by the New Jersey Commission, and Resorts and ACSI
have agreed that they will accept any reasonable modification to
the Lease that may be required by the New Jersey Commission. If
either party determines that the requested Lease modifications
are unduly burdensome, the Lease may be terminated, subject to
arbitration in the case of disagreement. The Lease, as amended
to date, has been approved by the New Jersey Commission. In
addition, Resorts, pursuant to a ruling by the New Jersey
Commission, in its capacity as lessor of the site of the Atlantic
City Showboat, must obtain a casino service industry license.
Resorts presently holds a casino service industry license, which
must be renewed every three years.
The 9 1/4 First Mortgage Bonds due 2008 (the "First Mortgage
Bonds") and the Company's $25.0 million revolving loan ("$25.0
Million Revolving Loan") from NatWest Bank, N.A. are each secured
by leasehold mortgages on (i) ACSI's interest in the Lease, (ii)
the Atlantic City Showboat (including the 20-story hotel tower
and four-story podium as well as certain personal property
therein) and future improvements on the leased real property,
(iii) the 17-story hotel tower as well as certain personal
property therein and the underlying real property held in fee,
and (iv) the two surface parking lots held in fee. Such
mortgages are subject and subordinate to Resorts' rights under
the Lease and its fee interest in the Premises. Subject to
certain limited exceptions, the Lease may not be amended without
the consent of the trustee under the Indenture governing the
First Mortgage Bonds unless certain opinions are delivered to the
effect that the amendment does not materially impair the security
of the mortgage. An event of default under the Lease constitutes
an event of default under the respective mortgage and Indenture.
In addition to its rental payment obligations under the
Lease, ACSI is obligated to contribute up to one-third of the
costs of certain infrastructure improvements to be constructed on
a 56-acre tract ("Urban Renewal Tract"). The Atlantic City
Showboat is located on a portion of the Urban Renewal Tract owned
by Resorts. ACSI is obligated to contribute only toward
improvements of which it is the beneficiary or which are expected
to benefit ACSI and all future occupants of the Urban Renewal
Tract. ACSI has contributed to infrastructure improvements
involving the construction of certain sewer and water lines and
the realigning of a portion of Delaware Avenue ("Realigned
Delaware Avenue") to permit direct ingress and egress from the
Realigned Delaware Avenue to the Atlantic City Showboat, which
improvements have been completed. As a part of a settlement
agreement executed on December 14, 1995, between ACSI, the
Housing Authority and Urban Redevelopment Agency of the City of
Atlantic City ("Housing Authority") and Forest City Ratner
Companies, ACSI will no longer be required to expend
approximately $15.0 million to construct a parking garage on the
Urban Renewal Tract.
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Realigned Delaware Avenue has not yet been dedicated to the
City of Atlantic City. Pending dedication of the Realigned
Delaware Avenue to the City, the Housing Authority granted to
ACSI a permanent easement and right of way ("Easement") for the
Realigned Delaware Avenue for the benefit of ACSI and ACSI's
employees, agents, guests, suppliers, visitors, invitees and all
others seeking access to the Atlantic City Showboat. Until
acceptance of a deed of dedication of the Realigned Delaware
Avenue by the City of Atlantic City, ACSI shall maintain at its
expense and pay, if billed separately, the real property taxes
associated with the Easement, or reimburse Resorts for its
allocable share of such real property taxes for the Easement.
ACSI leases a 63,200 square-foot warehouse and office in Egg
Harbor Township, New Jersey, approximately 15 miles from the
Atlantic City Showboat. The lease term is through July 31, 2001.
ACSI holds an option to purchase the warehouse for $1.9 million.
This option may be exercised by ACSI on or after January 1, 1996,
and shall remain in effect until March 31, 2001.
ACSI leases a parking area for its employees from the City
of Atlantic City for 400 parking spaces. The lease renews every
90 days unless terminated by either party on 30-days written
notice. ACSI provides, through an independent contractor, a
shuttle service for its employees between the employee parking
area and the Atlantic City Showboat. In 1993, ACSI purchased a
vacant city block from private owners which currently provides
approximately 450 parking spaces for ACSI customers and
employees. In December 1995, ACSI received title to real
property comprising approximately a city block resulting from its
settlement of certain litigation against the Housing Authority
and the Forest City Ratner Companies. The property currently
provides approximately 500 parking spaces for ACSI customers and
employees.
LAS VEGAS FACILITIES
Las Vegas Showboat is located on the eastern edge of the
City of Las Vegas approximately two and one-half miles from both
downtown Las Vegas and the area commonly known as the "Strip"
where many of Las Vegas' major resort hotel-casinos are located.
The Las Vegas Showboat is primarily a two-story structure with an
eighteen-story high-rise hotel and a 620-car parking garage. The
hotel registration area, bowling center, restaurants, bars and
entertainment lounge surround the casino area and are on the
first floor of the Las Vegas Showboat. The buffet, 1,300-seat
bingo room, meeting and banquet facilities, employee dining room,
and the Company's executive offices are located on the second
floor. The Las Vegas Showboat's high-rise tower contains 352 of
the Showboat's 453 guest rooms. The entire facility covers
approximately 26 acres, which includes approximately 19.25 acres
of improved parking area.
The facilities at the Las Vegas Showboat are constantly
monitored to make sure that the needs of the Company's business
and customers are met. During 1995, the Company completed an
approximately $21.0 million renovation of the casino, dining
rooms and bar areas, all of which were substantially completed in
1995. The renovation included the replacement of the roof over a
portion of the casino which resulted in higher ceilings and the
removal of a number of support pillars, giving the casino a more
expansive appearance. An internal balcony was added which
provides an overview of the casino. The renovation also included
a number of alterations and expansions to the dining and bar
areas to improve their variety and overall ambiance. The coffee
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<PAGE>
shop was expanded to include patio seating which looks into the
casino. The Mardi Gras Lounge, formerly the Carnival Lounge, was
doubled in size to meet the demand of patrons when popular
entertainers perform, and the casino bar adjacent to the lounge
was expanded to include an additional seating area and a large
screen television. Additionally, the facilities power plant and
HVAC systems were replaced, a new pool building was constructed,
new carpeting was installed throughout the property, the buffet
and coffee shop kitchens and the employee dining room were
remodeled and enlarged and an employee learning center was added.
As a result of this extensive renovation construction during
1995, approximately 40% of the main casino space of the Las Vegas
Showboat was closed for approximately six months of 1995.
The Company holds fee title to the above-described real
property, buildings and improvements at the Las Vegas Showboat,
which secures the Company's First Mortgage Bonds and the $25.0
Million Revolving Loan. The Company leases such property,
buildings and improvements to SBOC.
SYDNEY FACILITIES
SHCP subleases a site located at Wharves 12 and 13 at
Pyrmont Bay in Sydney, Australia from the NSWCCA, which site is
owned by the City West Development Corporation. SHCH renovated
an existing building on the interim site to permit the operation
of the interim casino. The subleases for the interim site have a
combined term which commenced on December 14, 1994 and continue
until the commencement of operations at the permanent Sydney
Harbour Casino. SCHP is not required to perform any material
work on the interim site after the interim casino ceases
operation. For the first three years following completion of the
interim casino, SHCP pays net annual rent to the NSWCCA in the
amount of A$4.125 million. After the initial three year period,
the net annual rent for the interim site is subject to adjustment
in accordance with the terms of the lease.
SHCP also entered into leases with the NSWCCA for the
permanent Sydney Harbour Casino site, which site is located on an
8.4 acre site on Pyrmont Bay adjacent to Darling Harbour. The
permanent site is approximately one mile from Sydney's central
business district and within walking distance of a monorail
station. The permanent site will have a light rail station and
is anticipated to have access to a ferry wharf. The permanent
site is also close to four major car parks in Darling Harbour and
has good access to arterial road routes. The leases for the
permanent site have a combined term of 99 years commencing on
December 14, 1994. SHCP prepaid the net rent to the NSWCCA for
the first 12 years under the leases with a payment of A$120.0
million. For the remaining term, the net annual rent is
A$250,000. Upon termination of the leases, title to the
improvements reverts to the NSWCCA without payment or
compensation. Alternatively, SHCP could be directed by the
NSWCCA to demolish any and all improvements erected on the land,
leaving it in a safe condition.
ITEM 3.LEGAL PROCEEDINGS.
ACSI V. HOUSING AUTHORITY AND FOREST CITY RATNER COMPANIES
("FCR"), Docket Nos. ATL-L-811-95 and ATL-L-1898-95, instituted
on March 9, 1995, in the Atlantic County Superior Court. ACSI
filed an action against the Housing Authority and FCR to protect
its
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<PAGE>
ownership of, and its right to develop, two parcels of beach-
block land, including an 80-foot easement, adjacent to the
Atlantic City Showboat which were purchased by ACSI in 1993 for
$4.6 million (collectively, the "Parcels"). The complaint
alleged, among other things, that the Housing Authority
improperly sought to force ACSI to convey the Parcels back to the
Housing Authority so that the Housing Authority could lease the
Parcels to FCR as a site for a strip mall construction project.
FCR filed a counterclaim seeking specific performance and
damages. On December 14, 1995, ACSI entered into certain
agreements with the Housing Authority and FCR to settle their
disputes. The terms of the settlement agreements required ACSI
to convey portions of the Parcels, along with the 80-foot
easement, to the Housing Authority. In return, ACSI received
from the Housing Authority (i) a Certificate of Completion to the
real property on which the 17-story hotel tower was constructed;
(ii) a release from its requirement to expend approximately $15.0
million to construct a parking garage on one of the Parcels; and
(iii) title in fee simple, free of any encumbrances, to another
parcel of property adjacent to the ACSI, comprising approximately
an entire city block. In addition, ACSI agreed to donate $2.5
million of its Casino Reinvestment Development Authority funds
toward construction of planned community facilities in the Urban
Renewal Tract, including, but not limited to, a public skating
rink. The settlement was consummated as of December 31, 1995 and
the Atlantic City Superior Court dismissed the legal proceedings
on January 18, 1996.
DARLING HARBOUR CASINO LIMITED ("DHCL") V. NSWCCA, SHCL AND
CHIEF SECRETARY AND MINISTER FOR ADMINISTRATIVE SERVICES
("MINISTER FOR ADMINISTRATIVE SERVICES"), Case No. 30091/94,
instituted in December 1994, in the Administrative Law Division
of the Supreme Court of New South Wales, Sydney Registry. DHCL,
the unsuccessful applicant for the casino license in New South
Wales, initiated an action against NSWCCA, SHCL and the Minister
for Administrative Services seeking, among other things, the
revocation of the casino license awarded to SHCL on December 14,
1994. On November 8, 1995, the New South Wales Court of Appeal
dismissed the legal proceedings filed by DHCL. DHCL has been
granted leave to appeal to the High Court of Australia.
Management believes that the DHCL's action is without merit and
intends to defend vigorously the action.
DHCL V. NSWCCA, SHCL AND NEW SOUTH WALES MINISTER FOR
PLANNING ("MINISTER FOR PLANNING"), Case No. 40227/94 and
40230/94, instituted in December 1994, in the Land and
Environment Court of the State of New South Wales, Australia.
DHCL initiated an action against the NSWCCA and the Minister for
Planning alleging that the development plans for Sydney Harbour
Casino were improperly approved. SHCL was joined as a party to
those proceedings in view of its interest in their outcome. On
April 21, 1995, the Land and Environmental Court dismissed the
legal proceedings filed by DHCL. On August 18, 1995, DHCL filed
an appeal with the New South Wales Court of Appeal against the
April 21, 1995 decision of the Land and Environment Court.
Management believes that DHCL's action is without merit and
intends to defend vigorously the action.
WILLIAM H. AHERN V. CAESARS WORLD, INC., ET AL., Case No. 94-
532-Civ-Orl-22, instituted on May 10, 1994 ("Ahern Complaint")
and WILLIAM POULOUS V. CAESARS WORLD, INC., ET AL., Case No. 94-
478-Civ-Orl-22, instituted on April 26, 1994 ("Poulos Complaint")
(collectively, the Ahern Complaint and the Poulos Complaint are
referred to as the "Complaints"). Two individuals, each
purportedly representing a class, filed the Complaints in the
United States
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District Court, Middle District of Florida, against numerous
manufacturers, distributors and casino operators of video poker
and electronic slot machines, including the Company. The
plaintiffs intend to seek class certification of the interests
they claim to represent. 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 seeks damages in excess of $1.0
billion. The cases have been consolidated and removed to the
United States District Court for the District of Nevada, Southern
District. Management believes that the Complaints are without
merit and intends to defend vigorously the allegations.
LARRY SCHREIER V. CAESARS WORLD, INC. ET AL., Case No. 95-
923-LDG (RJJ), instituted on September 26, 1995, in the United
States District Court for the District of Nevada, Southern
District. An individual, purportedly representing a class, filed
a complaint against four manufacturers, three distributors and 38
casino operators, including the Company, that manufacture,
distribute or offer for play video poker and electronic slot
machines. The individual allegedly intends to seek class
certification of the interests he claims to represent. The
complaint alleges 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 complaint alleges violations of the Racketeer
Influenced and Corrupt Organizations Act, as well as claims of
common law fraud, unjust enrichment and negligent
misrepresentation, and seeks damages in excess of $1.0 billion.
The complaint is similar to the Poulos complaint and the Ahern
Complaint. The Company filed a motion to dismiss the complaint.
The court has not yet ruled on the motion. Plaintiff's attempts
to consolidate this action with the Ahern Complaint and Poulous
Complaint were not successful. Management believes that the
complaint is without merit and intends to defend vigorously the
allegations.
ITSI TV PRODUCTIONS, INC. V. BALLY'S GRAND, INC., ET AL.,
Case No. CV-N-90-314-HDM, instituted on June 29, 1990 in the
United States Court, District of Nevada (the "Nevada action").
The plaintiff claims that Showboat infringed on the plaintiff's
copyright by displaying to Showboat's sports book customers
certain horse race broadcasts. Numerous other hotel-casinos
located in Las Vegas, Nevada are defendants in this lawsuit. The
plaintiff seeks to recover damages for copyright infringement in
an unknown amount. A motion to dismiss the complaint has been
filed on behalf of Showboat denying the existence of an
enforceable copyright and asserting statue of limitations
defenses. The motion is currently pending. The same factual
issues are pending in an action filed in the United States
District Court for the Eastern District of California (the
"California action") in which Showboat is not a party. The
United States District Court for the District of Nevada has
stayed and administratively stayed the Nevada action pending
resolution of the liability issues in the pending California
action. The California action was tried in 1993 and therein the
Court found that although the plaintiff owned the copyright,
there was no infringement. The decision of the California action
is currently on appeal before the Ninth Circuit Court of Appeals.
Management believes that the plaintiff is not entitled to damages
and intends to defend vigorously the allegations.
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<PAGE>
FLORIDA HORSEMEN'S BENEVOLENT AND PROTECTIVE ASSOCIATION V.
HILEAH PARK, INC. ET AL., Case No. 95-1358-CIV-KIWG, instituted
on June 26, 1995 in the United States District Court for the
District of the Southern District of Florida. The Company has
been advised that the Florida Horsemen's Benevolent and
Protective Association, which represents about 5,000 horsemen
nationwide, filed the lawsuit against 76 casino and race track
operators, including the Company. As of the date hereof, the
Company has not been served with summons and complaint. The
action purportedly claims that the defendants illegally accepted
nearly $11.0 million in off-track wagers. In December 1995, the
Company entered into a settlement agreement with respect to
Showboat for $400.
HYLAND, ET AL. V. GRIFFIN INVESTIGATION, ET AL., Case No. 95-
CV-2236 (JEI), instituted on May 5, 1995, in the United States
District Court for the District of New Jersey (Camden Division).
The Company was served with a First Amended Complaint on
August 29, 1995. Seventy-six casino operators, including the
Company, and others were originally named as defendants in the
action. The action, brought on behalf of "card counters,"
alleges that the casino operators exclude card counters from play
and share information about card counters. The action is based
on alleged violations of federal antitrust law, the Fair Credit
Reporting Act, and various state consumer protection laws. On
October 25, 1995, the plaintiffs filed a "Notice of Dismissal
Without Prejudice Only As To Defendant Showboat, Inc.," with the
District Court Clerk.
GLOBAL GAMING TECHNOLOGY, INC. V. TRUMP PLAZA FUNDING, INC.,
ET AL., Case No. 94-2021 (JHR), instituted on May 5, 1994, in the
United States District Court for the District of New Jersey. The
plaintiff, Global Gaming Technology, Inc., filed a complaint
against eight casino operators in Atlantic City, New Jersey. The
complaint alleges a patent infringement with respect to certain
of the electronic slot machines used by the defendants, including
the Atlantic City Showboat. The plaintiff seeks to recover
damages for copyright infringement in excess of $500 million.
The manufacturers of the slot machines in question have assumed
the defense and have indemnified the Atlantic City Showboat and
other casinos in this matter. The manufacturers filed a
complaint against the plaintiff in the United States District
Court for the District of Nevada, Southern District. The United
States District Court for the District of New Jersey stayed the
New Jersey action pending resolution of the issues in the pending
Nevada action. Several of the manufacturers have reached a
settlement with the plaintiff for the release of all claims. The
discovery cut-off is May 1, 1996 and the trial date is scheduled
for September 1996 in the Nevada action.
EDWARD H. EGIPIACO V. INDIANA GAMING COMMISSION, Case No. 45C01-
95-10-MI0 1845, instituted on October 17, 1995, in the Circuit
Court for Lake County, Indiana. The plaintiff, Edward H.
Egipiaco, filed a complaint on behalf of himself and the
residents of the City of East Chicago requesting a preliminary
injunction to enjoin the Indiana Commission from conducting a
hearing on SMP's application for the sole riverboat casino
license in East Chicago, Indiana, and from issuing a certificate
of suitability to SMP. The complaint alleges that the City of
East Chicago failed to hold an open public bidding process in
selecting its applicants, and such failure is in conflict with
Indiana gaming laws. On October 19, 1995, the Indiana Commission
commenced the hearing on the East Chicago application, but was
served with a temporary restraining order and halted the
proceedings. Subsequently, in November 1995 the temporary
restraining order was dissolved on the basis that no triable
issues existed. The Indiana
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<PAGE>
Commission thereafter conducted further proceedings and
granted the certificate of suitability to SMP on January 8, 1996.
No assurance can be given that the plaintiff or others may not
seek another temporary restraining order or injunction at a later
time. An unfavorable outcome of such litigation could have a
material adverse effect on SMP and its proposed riverboat casino
project in East Chicago, Indiana.
The Company (including its subsidiaries) is also a defendant
in various other lawsuits, most of which relate to routine
matters incidental to its business. Management does not believe
that the outcome of such pending litigation, in the aggregate,
will have a material adverse effect on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of security
holders during the fourth quarter of 1995.
46
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Company's common stock is listed on the New York Stock
Exchange under the symbol SBO. The range of high and low sales
prices for the Company's common stock for each quarter in the
last two years is as follows:
<TABLE>
<CAPTION>
Dividends
High Low Declared
<S> <C> <C> <C>
1996
First quarter (through March 15, 1996) 28 1/2 21 .025
1995
First quarter 15 3/4 13 1/2 .025
Second quarter 18 5/8 13 1/2 .025
Third quarter 24 3/8 17 1/2 .025
Fourth quarter 29 3/8 21 .025
1994
First quarter 21 16 1/4 .025
Second quarter 22 7/8 15 3/8 .025
Third quarter 17 7/8 13 1/8 .025
Fourth quarter 14 1/2 11 1/2 .025
</TABLE>
On March 15, 1996, the closing price of the Company's common
stock on the New York Stock Exchange was $25 1/2.
The Company has paid quarterly dividends since 1970. The
declaration and payment of dividends is at the discretion of the
Board of Directors. The Board of Directors considers, among
other factors, the Company's earnings, financial condition and
capital spending requirements in determining an appropriate
dividend.
The Company is restricted in the payment of cash, dividends,
loans or other similar transactions by the terms of Indentures
executed by it in connection with the issuance of First Mortgage
Bonds and the 13% Senior Subordinated Notes due 2009,
respectively. See Note 6 to the Consolidated Financial
Statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The approximate number of shareholders of record of the
common stock as of March 15, 1996 was 1,605.
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<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993
INCOME STATEMENT DATA: (In thousands, except per share data)
<S> <C> <C> <C>
Net revenues $428,592 $401,333 $375,727
Income from operations 46,674 51,828 45,419
Income before extraordinary
items and cumulative effect
of change in method of
accounting for income
taxes (a)(b)(c)(d)(e)(g) 13,175 15,699 13,464
Net income 13,175 15,699 7,341
Income before extraordinary
items and cumulative effect
of change in method of
accounting for income
taxes per share (a)(b)(c)(d)
(e)(g) .84 1.02 .89
Net income per share .84 1.02 .49
Cash dividends declared per
common share .10 .10 .10
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
1992 1991
INCOME STATEMENT DATA: (In thousands, except per share data)
<S> <C> <C>
Net revenues $355,236 $331,560
Income from operation 46,508 35,501
Income before extraordinary
items and cumulative effect
of change in method of
accounting for income
taxes (a)(b)(c)(d)(e)(g) 15,857 6,014
Net income 12,449 6,194
Income before extraordinary
items and cumulative effect
of change in method of
accounting for income
taxes per share (a)(b)(c)(d)
(e)(g) 1.37 .53
Net income per share 1.08 .55
Cash dividends declared per
common share .10 .10
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
December 31,
1995 1994 1993
BALANCE SHEET DATA: (In thousands)
<S> <C> <C> <C>
Total assets (a)(f) $649,395 $623,691 $470,700
Long-term debt (including
current maturities) (a)(b)
(c)(f) 392,391 392,035 280,617
Shareholders' equity (f) 173,941 157,461 135,158
Shares outstanding at year-
end (f) 15,720 15,369 14,980
</TABLE>
<TABLE>
<CAPTION>
December 31,
1992 1991
BALANCE SHEET DATA: (In thousands)
<S> <C> <C>
Total assets (a)(f) $384,900 $320,032
Long-term debt (including
current maturities) (a)(b)
(c)(f) 209,116 213,004
Shareholders' equity (f) 126,018 64,133
Shares outstanding at year-
end (f) 14,804 11,350
</TABLE>
(a) In the year ended December 31, 1991, the Company
recognized an extraordinary gain of $.2 million, net
of tax, as a result of the purchase of $12.1 million
of its 11 3/8% Mortgage-Backed Bonds Due 2002
("Mortgage-Backed Bonds").
(b) In the year ended December 31, 1992, the Company
recognized an extraordinary loss of $3.4 million net
of tax, as a result of the planned redemption of all
of its outstanding 13% Subordinated Sinking Fund
Debentures ("Debentures").
(c) The Company adopted FAS 109 in 1993 and reported the
cumulative effect of the change in method of
accounting for income taxes as of January 1, 1993 in
the 1993 Consolidated Statement of Income.
(d) In the year ended December 31, 1993, the Company
recognized an extraordinary loss of $6.7 million, net
of tax, as a result of the redemption of all of its
outstanding Mortgage-Backed Bonds. See Note 8 to the
Consolidated Financial Statements.
(e) In 1993, the Company acquired a 30% equity interest in
SSP which was engaged in the development of a
riverboat casino on Lake Pontchartrain in New Orleans,
Louisiana. Operation of the riverboat casino commenced
on November 8, 1993. The Company's share of the
partnership's loss from the commencement of operations
through December 31, 1993, is included in income from
operations for the year ended December 31, 1993,
including the write-off of preopening costs, of $1.3
million. In March 1994, the Company increased its
equity interest in SSP to 50%. The Company's share of
the net income of the partnership was $12.8 million
and is included in income for operations for the year
ended December 31, 1994. In March 1995, the Company
acquired the remaining 50% of the equity of SSP. In
March 1995, SSP sold certain of its assets, and the
Company sold all of its equity in SSP, resulting in a
pretax gain of $2.6 million to the Company which is
included in the 1995 Consolidated Statement of Income
as gain on sale of affiliate.
(f) In the year ended December 31, 1992, the Company sold
3.45 million shares of its common stock in a public
offering. Net proceeds of the offering were $50.4
million. Proceeds of the offering were used in
January 1993 to redeem all of the Company's Debentures
and to prepay the outstanding balance of its
construction and term loan.
(g) In the year ended December 31, 1995, the Company
recognized a pre-tax write-down of $1.4 million on its
investment in SMG.
49
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
GENERAL
Showboat, Inc. and subsidiaries (collectively, the "Company"
or "SBO"), (i) owns and operates the Showboat Casino Hotel
fronting the Boardwalk in Atlantic City, New Jersey (the
"Atlantic City Showboat"), (ii) owns and operates the Showboat
Hotel, Casino and Bowling Center in Las Vegas, Nevada (the "Las
Vegas Showboat"), and (iii) beneficially owns a 26.3% interest
in, and manages the Sydney Harbour Casino in Sydney, New South
Wales, Australia, which commenced gaming operations in an interim
casino on September 13, 1995. The Company, through subsidiaries,
also owns (i) a 55% partnership interest in Showboat Marina
Partnership, which received a certificate of suitability on
January 8, 1996 for a riverboat owner's license in East Chicago,
Indiana, and (ii) an 80% interest in Southboat Limited
Partnership which has submitted an application with the Missouri
Gaming Commission for a riverboat gaming license near Lemay,
Missouri. From July 1993 to March 31, 1995, the Company owned an
interest in, and managed the Showboat Star Casino, a riverboat
casino then located on Lake Pontchartrain in New Orleans,
Louisiana.
The consolidated financial statements include all domestic
and foreign subsidiaries which are more than 50% owned and
controlled by Showboat, Inc. Investments in unconsolidated
affiliates which are at least 20% owned by Showboat, Inc. are
carried at cost plus equity in undistributed earnings or loss
since acquisition. All material intercompany balances have been
eliminated in consolidation.
In March 1995, the Company purchased an additional 50% of
the equity of Showboat Star Partnership ("SSP"), which operated
the Showboat Star Casino on Lake Pontchartrain in New Orleans,
Louisiana, bringing the Company's total equity interest in SSP to
100%. The purchase price of the additional equity interest was
$25.0 million coupled with a distribution of certain of the
current assets of SSP to partners other than the Company. On
March 9, 1995, the Company ceased all operations at the Showboat
Star Casino as a result of certain legal issues related to
conducting dockside gaming in the Orleans Parish. In a series of
unrelated transactions, SSP sold certain of its assets, and the
Company sold all of its equity interest in SSP, resulting in a
pretax gain to the Company of $2.6 million which is included in
the 1995 Consolidated Statement of Income as gain on sale of
affiliate.
In August, 1994, Showboat Australia Pty Limited ("SA"), a
wholly-owned subsidiary of the Company, invested approximately
$100.0 million for a 26.3% interest in Sydney Harbour Casino
Holdings Limited ("SHCH"), which, through wholly-owned
subsidiaries, owns the Sydney Harbour Casino and holds the casino
license required to operate the Sydney Harbour Casino. In
December 1994, the New South Wales Casino Control Authority
granted the only full-service casino license in the State of New
South Wales to Sydney Harbour Casino Pty Limited ("SHCL"). SA
also has an 85% interest in the management company which manages
the Sydney Harbour Casino. SA has agreed to forego the first
A$19.1 million of its 85% portion of the fees due under the
management agreement, of which amount approximately A$15.1
million remains as of December 31, 1995. SHCL commenced gaming
operations on September 13, 1995 in a 60,000
50
<PAGE>
square foot interim casino. Pursuant to the terms of the
construction contract and subject to certain exceptions, the
permanent facility must be completed within 38 months of the
award of the casino license to SHCL. SHCL anticipates that the
permanent facility will commence operations by early 1998. The
Company's equity in earnings of SHCL's operations has been
reduced to zero due to the write-off of certain preopening
costs.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995 (1995)
COMPARED TO YEAR ENDED DECEMBER 31, 1994 (1994)
REVENUES
Net revenues for the Company increased to $428.6 million in
1995 from $401.3 million in 1994, an increase of $27.3 million or
6.8%. Casino revenues increased $28.1 million or 8.0% to $379.5
million in 1995 from $351.4 million in 1994. Nongaming revenues,
which consist principally of room, food, beverage, management fee
and bowling revenues, were $88.9 million in 1995 compared to
$83.2 million in 1994, an increase of $5.7 million or 6.9%.
The Atlantic City Showboat generated $368.9 million of net
revenues in the year ended December 31, 1995 compared to $320.2
million for the same period in the prior year, an increase of
$48.7 million or 15.2%. Casino revenues were $337.2 million for
the year ended December 31, 1995 compared to $292.4 million for
the same period in the prior year, an increase of $44.8 million
or 15.3%. The increase in casino revenues was due primarily to
an increase in gross slot revenues of $35.4 million or 16.1% with
a 14.7% increase in slot units at the Atlantic City Showboat.
The increase in slot revenues compares to a 12.0% growth in slot
revenues in the Atlantic City market for the year ended December
31, 1995 and a 10.0% increase in average slot units in the
Atlantic City market. Also contributing to the increase in
casino revenues was the mild winter weather during the first
quarter 1995 compared to the harsh winter weather during the same
period in the prior year. The favorable comparison to the prior
year is attributed to the addition of 15,000 square feet of
casino space and approximately 600 slot machines added throughout
1994, and the addition of approximately 200 slot machines in May
1995. The Atlantic City Showboat also added approximately 200
slot machines in December 1995 raising the total number of
machines to approximately 3,450 as of December 31, 1995.
Atlantic City Showboat slot revenues accounted for 73.9% of total
casino revenues for the year ended December 31, 1995 and 73.6%
for the year ended December 31, 1994. Table game revenues
increased $11.3 million or 15.9% to $82.9 million for the year
ended December 31, 1995 compared to $71.6 million for the same
period in the prior year. Contributing to the increase in table
game revenues was the 1995 expanded marketing programs and the
introduction of the Caribbean stud poker in late 1994. The
Company's table game growth of 15.9% compares to a 4.5% growth in
table game revenues in the Atlantic City market for the year
ended December 31, 1995. Food and beverage revenues were $42.1
million for the year ended December 31, 1995 compared to $36.2
million for the same period in the prior year, an increase of
$5.9 million or 16.4%. This increase is attributable to increased
food promotional programs during the year ended December 31,
1995.
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The Las Vegas Showboat achieved net revenues of $59.5
million for the year ended December 31, 1995, compared to $79.2
million in the same period in 1994, a decrease of $19.7 million
or 24.9%. Casino revenues decreased to $42.3 million in 1995
from $59.0 million in 1994, a decrease of $16.7 million or 28.3%.
Food and beverage revenues decreased to $11.8 million for the
year ended December 31, 1995 from $14.4 million in the same
period in 1994, a decrease of $2.6 million or 18.1%. The
decreases in revenues were attributable to construction
activities within the property for the second half of 1995 and
increased competition along the Boulder Strip throughout the
entire year. The Company anticipates that revenues at the Las
Vegas Showboat will continue to be impacted until the excess
casino capacity is absorbed by the Las Vegas market. During the
construction period, casino capacity was reduced by approximately
40% and service to food outlets was substantially disrupted.
INCOME FROM OPERATIONS
The Company's income from operations declined $5.1 million
or 9.9% to $46.7 million in 1995 from $51.8 million in 1994. The
decline is attributable to the cessation of operations of SSP
(which resulted in a $12.8 million reduction in income from
operations), a decline in operating results at the Las Vegas
Showboat and an increase in corporate and development expenses.
These decreases were partially offset by the improved performance
at the Atlantic City Showboat.
Atlantic City Showboat's income from operations, before
management fees, increased to $72.4 million in the year ended
December 31, 1995 compared to $50.7 million from the same period
in 1994, an increase of $21.7 million or 42.9%. Operating
expenses at the Atlantic City Showboat increased $26.9 million or
10.0% to $296.4 million for the year ended December 31, 1995
compared to $269.5 million for the same period in the prior year.
The increased operating expenses included a $14.2 million
increase in casino division expenses (which includes: $4.1
million increase in marketing expenses, $5.4 million increase in
promotional allowance costs and $3.6 million increase in gaming
taxes), a $8.0 million increase in general and administrative
expenses which is primarily related to increased payroll, real
estate taxes, and rent related to the expanded property, and a
$3.4 million increase in depreciation expense for the Atlantic
City Showboat's expanded facility. The Atlantic City Showboat's
operating margin, before management fees, increased to 19.6% in
1995 compared to 15.8% in 1994.
For the year ended December 31, 1995, the Las Vegas Showboat
had a loss from operations, before management fees and
intercompany rent, of $3.7 million compared to income of $4.4
million in the same period in 1994. Operating expenses declined
to $63.3 million in 1995 compared to $74.8 million in 1994, a
decrease of $11.6 million or 15.5%. The Company anticipated a
reduction in revenues during the construction period and
concentrated on reducing expenses. Expenses declined in all
departments for the year ended December 31, 1995. However,
significant decreases were not realized in certain promotional
and marketing utilized at the Las Vegas Showboat in order to
compete with the other gaming facilities on the Boulder Strip
during the renovation of the facility.
Corporate and development expenses totaled $21.7 million in
1995 compared to $17.0 million in 1994. The increased
development expense is attributed to (i) the maintenance of a
comprehensive development effort to pursue expansion
opportunities, which includes $2.9 million
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expended for the proposed riverboat casino project near Lemay,
Missouri, (ii) preopening support for new projects, and (iii)
$1.2 million for insurance costs which were previously recorded
by the respective operating properties.
OTHER (INCOME) EXPENSE
In 1995, other (income) expense consisted of $29.7 million
of interest expense, net of $13.1 million of capitalized
interest, and $6.2 million of interest income. Foreign currency
gain was $.3 million during 1995 and a net gain on the sale and
write-down of affiliates totaled $1.1 million. In 1994, other
(income) expense consisted of $29.5 million of interest expense,
net of $3.3 million of capitalized interest, and $4.9 million of
interest income. In connection with its renovation project at
the Las Vegas Showboat and the Company's investment in Sydney
Harbour Casino, the Company capitalized interest of $.5 million
and $12.6 million respectively in 1995.
INCOME TAXES
In 1995, the Company incurred income taxes of $11.4 million,
or an effective tax rate of 46.5% compared to $11.5 million or an
effective tax rate of 42.4% in 1994. Differences between the
Company's effective tax rate and the statutory federal tax rates
are due to permanent differences between financial and tax
reporting and state income taxes.
NET INCOME
In 1995, the Company realized net income of $13.2 million or
$.84 per share. In 1994, the Company realized net income of
$15.7 million or $1.02 per share.
YEAR ENDED DECEMBER 31, 1994 (1994)
COMPARED TO YEAR ENDED DECEMBER 31, 1993 (1993)
REVENUES
Net revenues for the Company increased to $401.3 million in
1994 from $375.7 million in 1993, an increase of $25.6 million or
6.8%. Casino revenues increased $21.9 million or 6.7% to $351.4
million in 1994 from $329.5 million in 1993. Nongaming revenues,
which consist principally of room, food, beverage, management fee
and bowling revenues, were $83.2 million in 1994 compared to
$78.3 million in 1993, an increase of $4.9 million or 6.3%.
The Atlantic City Showboat generated $320.2 million of net
revenues in 1994 compared to $294.2 million in 1993, an increase
of $26.0 million or 8.8%. Casino revenues were $292.4 million in
1994 compared to $268.8 million in 1993, an increase of $23.6
million or 8.8%. The increase in casino revenues was primarily
due to increases in both slot machine and table game revenues.
Slot machine revenues at the Atlantic City Showboat increased
$18.3 million or 9.3% in 1994. This compares favorably to 3.7%
growth in slot machine revenues in the Atlantic City market
during the same period. The improved slot revenue growth
experienced by the Atlantic City Showboat is primarily attributed
to the addition of 609 slot machines throughout 1994 for a total
of 3,027 slot machines by December 31, 1994. Table game revenues
increased $2.9 million or 4.2% in 1994. Casino revenues were
also favorably impacted by the mid-1994 addition of
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keno and the mid-1993 addition of poker and horse race
simulcasting. Nongaming revenues increased $3.3 million or 6.2%
in 1994 to $56.0 million from $52.7 million in 1993. This
increase was primarily due to increased complimentary room
revenue of $1.2 million and non-complimentary food revenues of
$2.2 million.
At the Las Vegas Showboat, net revenues decreased to $79.2
million in 1994 from $81.1 million in 1993, a decrease of $1.9
million or 2.3%. The decrease in net revenues primarily resulted
from an approximate 37% increase in slot machine capacity on the
Boulder Strip in the third quarter of 1994. The Company
anticipates that revenues at the Las Vegas Showboat will be
negatively impacted until the excess casino capacity on the
Boulder Strip is absorbed by the Las Vegas market. Casino
revenues decreased to $59.0 million in 1994 from $60.7 million in
1993, a decrease of $1.7 million or 2.8%. Nongaming revenues
increased $.2 million in 1994 primarily as a result of increased
hotel occupancy due to increased effectiveness of certain hotel
marketing programs.
Lake Pontchartrain Showboat, Inc., a wholly-owned subsidiary
of the Company, managed the Showboat Star Casino and generated
$3.5 million of management fee revenues, before an intercompany
elimination of $1.6 million, in 1994 compared to $.4 million in
1993. Showboat Star Casino, which opened November 8, 1993,
generated net revenues of $98.4 million in 1994 consisting
primarily of casino revenues of $97.2 million. In 1993, Showboat
Star Casino generated net revenues of $12.1 million and casino
revenues of $10.9 million.
INCOME FROM OPERATIONS
The Company's income from operations increased to $51.8
million in 1994 from $45.4 million in 1993, an increase of $6.4
million or 14.1%. Improvements in income from operations at the
Atlantic City Showboat and the Showboat Star Casino were offset
by a decline in income from operations at the Las Vegas Showboat
and by an increase in corporate and development expenses.
Income from operations at the Atlantic City Showboat, before
intercompany management fees, was $50.7 million in 1994 compared
to $44.0 million in 1993, an increase of $6.7 million or 15.3%.
The increase in income from operations was primarily due to
increased revenues that were offset by a $19.3 million or 7.7%
increase in operating expenses before intercompany management
fees to $269.5 million in 1994 from $250.2 million in 1993. The
increase in operating expenses was primarily due to the increased
capacity and volume of business as a result of the expansion of
the Atlantic City facility. General and administrative expenses
were also impacted by a $1.5 million or 22.0% increase in real
estate taxes and an increase of $1.0 million in a parking
assessment absorbed by the Atlantic City Showboat. Partially
offsetting these increases was the decrease of $1.0 million in
insurance costs borne by the parent company.
Income from operations at the Las Vegas Showboat, before
intercompany management fees, declined $3.8 million or 46.4% in
1994 to $4.4 million in 1994 from $8.2 million in 1993. The
decrease was primarily due to increased competition on the
Boulder Strip that resulted in a decrease in net revenue. In
addition, operating expenses increased to $74.8 million in 1994
from
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$72.9 million in 1993, an increase of $1.9 million or 2.7%.
Increases in expenses were due to increased payroll and payroll
related costs and increased advertising costs.
SSP realized net income of $24.8 million on net revenues of
$98.4 million in 1994. Operations at the Showboat Star Casino
contributed $13.7 million in 1994 to the Company's income from
operations. In 1993, SSP recognized a loss of $2.8 million
primarily as a result of the write-off of preopening costs.
Corporate and development expenses totaled $17.0 million in
1994 compared to $5.5 million in 1993. The Company established a
separate corporate and development office in late 1993. Prior to
this time, a significant portion of corporate expenses were
absorbed by operating subsidiaries. In addition, the Company has
expanded the scope of its activities related to the pursuit of
expansion opportunities in jurisdictions outside Nevada and New
Jersey.
OTHER (INCOME) EXPENSE
In 1994, other (income) expense consisted of $29.5 million
of interest expense, net of $3.3 million of capitalized interest,
and $4.9 million of interest income. In 1993, other (income)
expense consisted of $24.7 million of interest expense, net of
capitalized interest, and $3.2 million of interest income. The
increase in interest expense is due to an increase in long-term
debt during the period. In connection with its expansion project
at the Atlantic City Showboat and the Company's 1994 investment
in Sydney Harbour Casino, the Company capitalized interest of
$2.7 million and $.6 million, respectively, in 1994.
INCOME TAXES
In 1994, the Company incurred income taxes of $11.5 million,
or an effective tax rate of 42.4% compared to $10.5 million,
before the income tax benefit of an extraordinary loss, or an
effective tax rate of 43.8% in 1993. Differences between the
Company's effective tax rate and the statutory federal tax rates
are due to permanent differences between financial and tax
reporting and state income taxes.
NET INCOME
In 1994, the Company realized net income of $15.7 million or
$1.02 per share. In 1993, income before an extraordinary loss
and a cumulative effect adjustment was $13.4 million or $.89 per
share. In 1993, the Company recognized an extraordinary loss net
of tax of $6.7 million, or $.44 per share, as a result of the
redemption of all of its 11 3/8% Mortgage-Backed Bonds Due 2002.
Net income for 1993, after recognition of the extraordinary loss
and the cumulative effect adjustment, was $7.3 million or $.49
per share.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flow from operations was $53.2 million in
1995 compared to $55.4 million in 1994. Cash used in investing
activities was $41.2 million in 1995 compared to $193.5 million
in 1994. The decrease resulted from fewer capital expenditures
in 1995 and a reduction in investments in unconsolidated
affiliates, offset by the proceeds from the sale of SSP in 1995.
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Cash provided from financing activities was $4.5 million in 1995
compared to $105.8 million in 1994. The decrease was primarily
due to the issuance of $120.0 million of 13% Senior Subordinated
Notes in 1994.
In 1995, the Company expended approximately $49.6 million on
capital improvements primarily related to its Atlantic City and
Las Vegas facilities which were funded from operations and
proceeds of the 1994 sale of $120.0 million of 13% Senior
Subordinated Notes due 2009. The Board of Directors has
authorized capital expenditures for the Atlantic City Showboat
and Las Vegas Showboat for 1996 totaling $21.7 million and $6.0
million, respectively. In addition, cash requirements include
capital improvements approved during 1995 that will be incurred
in 1996 totaling $5.3 million and $6.0 million for the Atlantic
City Showboat and the Las Vegas Showboat, respectively.
The Company is eligible to receive approximately $8.8
million in credits reserved by the Casino Reinvestment
Development Authority ("CRDA"), which is being redistributed in
cash, as a result of the completion of additional hotel rooms
added as part of the approximately $93.0 million expansion and
renovation program at the Atlantic City Showboat. To date the
Company has received approximately $2.9 million of the $8.8
million. In 1995, a court ruling not involving the Company,
disallowed the payment of CRDA disbursement of funding credits
for an unrelated expansion project. As a result, the CRDA has
suspended disbursement of funding credits until such time as the
appeal court overturns the lower court's decision. ACSI, in
December 1995, entered into an agreement with the Atlantic City
Housing Authority and Forest City Ratner Companies in which ACSI
conditionally covenanted to donate $2.5 million of its CRDA funds
toward construction of planned community facilities in the Urban
Renewal Tract, including, but not limited to, a public skating
rink.
The Company completed a $21.0 million renovation of the Las
Vegas Showboat. The construction project required the closure of
approximately 40% of casino space for six months during the
second half of 1995. As a result, revenues and results of
operations at the Las Vegas Showboat were adversely impacted by
business disruption during the construction period. The Company
anticipates that the renovated facility will improve its
competitive position on the Boulder Strip. No assurance can be
given, however, that the renovated facility will be successful in
attracting former or new customers to the Las Vegas Showboat.
On August 4, 1995, the Company obtained a two year secured
line of credit for general working capital purposes totaling
$25.0 million. At the end of the two year term, the line of
credit may convert to a three year term loan. The bank received
security pari passu with the holders of the Company's $275.0
million 9 1/4% First Mortgage Bonds due 2008. Interest is
payable monthly at the bank's prime rate plus .5% or LIBOR plus
2.5% at the election of the Company. The interest rate charged
at the date the line of credit is converted to a term loan will
be the bank's prime rate plus 1% or the fixed rate designated by
the bank at the election of the Company. In the event the line
of credit is utilized for equity investments in or loans to
entities constituting new projects, the Company will be required
to pay the bank a fee equal to .75% of the advance. As of
December 31, 1995, all the funds under this line of credit are
available for use by the Company. This line of credit replaced
the Atlantic City Showboat's unsecured line of credit which
expired in August of 1995.
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On May 18, 1993, the Company issued $275.0 million of 9 1/4%
First Mortgage Bonds due 2008 (the "Bonds"). The Bonds are
unconditionally guaranteed by Showboat Operating Company
("SBOC"), a wholly-owned subsidiary of the Company, Ocean
Showboat, Inc. ("OSI"), a wholly-owned subsidiary of the Company,
and Atlantic City Showboat, Inc. ("ACSI"), a wholly-owned
subsidiary of OSI. The Bond Indenture was amended in July 1994.
Interest on the Bonds is payable semi-annually on May 1 and
November 1 of each year. The Bonds are not redeemable prior to
May 1, 2000. Thereafter, the Bonds will be redeemable, in whole
or in part, at redemption prices specified in the Indenture for
the Bonds (the "Bond Indenture"), as amended. The Bonds are
senior secured obligations of the Company and rank senior in
right of payment to all existing and future subordinated
indebtedness of the Company and pari passu with the Company's
senior indebtedness. The Bonds are secured by a deed of trust
representing a first lien on the Las Vegas Showboat (other than
certain assets), by a pledge of all outstanding shares of capital
stock of OSI, an intercompany note by ACSI in favor of the
Company and a pledge of certain intellectual property rights of
the Company. OSI's obligation under its guarantee is secured by
a Pledge of all outstanding shares of capital stock of ACSI.
ACSI's obligation under its guarantee is secured by a leasehold
mortgage representing a first lien on the Atlantic City Showboat
(other than certain assets). SBOC's guarantee is secured by a
pledge of certain assets related to the Las Vegas Showboat.
Additional security is or will be provided to the holders of the
Bonds from other subsidiaries of SBO which are not unrestricted
subsidiaries.
The Bond Indenture, as amended, place significant
restrictions on SBO and its subsidiaries including restrictions
on making loans and advances by SBO to subsidiaries that are Non-
Recourse subsidiaries or subsidiaries in which SBO owns less than
50% of the equity. All capitalized terms not otherwise defined
in this paragraph have the meanings assigned to them in the Bond
Indenture, as amended. The Bond Indenture, as amended, also
places significant restrictions on the incurrence of additional
Indebtedness by SBO and its subsidiaries, the creation of
additional Liens on the Collateral securing the Bonds,
transactions with Affiliates and the investment by SBO and its
subsidiaries in certain investments. In addition, the terms of
the Bond Indenture, as amended, prohibit SBO and its subsidiaries
from making a Restricted Payment unless, at the time of such
Restricted Payment: (i) no Default or Event of Default has
occurred or would occur as a consequence of such Restricted
payment; (ii) SBO, at the time of such Restricted Payment other
than in an investment in a subsidiary in a gaming related
business or a Quarterly Dividend, and after giving pro forma
effect thereto as if such Restricted payment had been made at the
beginning of the applicable four-quarter period, would have been
permitted to incur at least $1.00 of additional Indebtedness,
and; (iii) such Restricted Payment, together with the aggregate
of all other Restricted Payments by SBO and its subsidiaries is
less than the sum of (x) 50% of the Consolidated Net Income of
SBO for the period (taken as one accounting period) from April 1,
1993 to the end of SBO's most recently ended fiscal quarter for
which internal financial statements are available plus, (y) 100%
of the aggregate net cash proceeds received by SBO from the
issuance of sale of Equity Interests of SBO since the Issue Date,
plus (z) Excess Non-Recourse Subsidiary Cash Proceeds received
after the Issue Date. The term Restricted Payment does not
include, among other things, the payment of any dividend if, at
the time of declaration of such dividend, the dividend would have
complied with the provisions of the Bond Indenture, as amended;
the redemption, repurchase, retirement, or other acquisition of
any Equity Interest of SBO out of proceeds of the substantially
concurrent sale of other Equity Interests of
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SBO; Investments by SBO in an amount not to exceed $75.0 million
in the aggregate in any Non-Recourse Subsidiary engaged in a
Gaming Related Business, Investments by SBO in any Non-Recourse
Subsidiary engaged in a Gaming Related Business in an amount not
to exceed in the aggregate 100% of all cash received by SBO from
any Non-Recourse Subsidiary up to $75.0 million in the aggregate
and thereafter, 50% of all cash received by SBO from any
Non-Recourse Subsidiary other than cash required to be repaid or
returned to such Non-Recourse Subsidiary provided that the
aggregate amount of Investments pursuant thereto does not exceed
$125.0 million in the aggregate; Investments in Controlled
Entities; and the purchase, redemption, defeasance of any pari
passu indebtedness with a substantially concurrent purchase,
redemption, defeasance, or retirement of the Bonds (on a pro rata
basis). Notwithstanding the foregoing, the Company is permitted
to make investments in a Controlled Entity only if from July 18,
1994 until December 31, 1996 the Company's Fixed Charge Coverage
Ratio for the Company's most recently ended twelve months is
greater than 1.5 to 1 and for the period commencing after
December 31, 1996 the Company's Fixed Charge Coverage Ratio is
greater than 1.75 to 1. For all other Restricted Payments,
other than a Regular Quarterly Dividend or a Restricted
Investment in a Subsidiary engaged in a Gaming Related Business,
the Company's Fixed Charge Ratio Coverage for the most recently
ended four full fiscal quarters, after giving effect to such
Restricted Payment must be greater than 2.25 to 1. As of
December 31, 1995, the Company's Fixed Charge Coverage Ratio was
3.41 to 1. Additionally, the Bond Indenture, as amended,
permits the Company to issue up to $150.0 million of debt (of
which $120.0 million has been issued) without compliance with the
debt incurrence tests stated therein.
On August 10, 1994, the Company issued $120.0 million of 13%
Senior Subordinated Notes due 2009 (the "Notes"). The Notes are
unconditionally guaranteed by OSI, ACSI and SBOC. Interest on
the Notes is payable semi-annually on February 1 and August 1 of
each year commencing on February 1, 1995. The Notes are not
redeemable prior to August 1, 2001. Thereafter, the Notes will
be redeemable, in whole or in part, at redemption prices
specified in the Indenture for the Notes (the "Note Indenture").
The Notes are unsecured general obligations of the Company,
subordinated in right of payment to all Senior Debt (as defined
in the Note Indenture) of the Company. The Note Indenture
permits the issuance of an additional $30.0 million of Notes at
the discretion of the Company.
The Note Indenture places significant restrictions on the
Company, many of which are similar to the restrictions placed on
the Company by the Bond Indenture, as amended, including
covenants restricting or limiting the ability of the Company and
its Restricted Subsidiaries (as defined in the Note Indenture)
to, among other things, (i) pay dividends or make other
Restricted Payments, (ii) incur additional Indebtedness and issue
Preferred Stock, (iii) create Liens, (iv) create dividend and
other payment restrictions affecting Restricted Subsidiaries, (v)
enter into mergers, consolidations, or make sale of all or
substantially all assets, (vi) enter into transactions with
Affiliates and (vii) engage in other lines of business.
The Company is actively pursuing potential opportunities in
certain jurisdictions where gaming has recently been legalized,
as well as jurisdictions where gaming is not yet legalized.
There can be no assurance that (i) legislation to legalize gaming
will be enacted in any additional jurisdictions, (ii) properties
in which the Company has invested will be compatible with any
gaming legislation so enacted, (iii) legalized gaming will
continue to be authorized in any
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jurisdiction that the Company currently operates or has pending
applications to operating a gaming establishment, or (iv) 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, or any project under development will be
completed, or result in any significant contribution to the
Company's cash flow or earnings. Casino gaming operations are
highly regulated and new casino development is subject to a
number of risks.
Sydney Harbour Casino Properties Pty Limited ("SHCP"), a
wholly-owned subsidiary of SHCH, entered into a contract with a
construction contractor in April 1994. SHCP is currently
reviewing the design of the permanent Sydney Harbour Casino with
the view to improving its operational efficiency and product
quality and to match the changing competitive environment.
Additionally, SHCP and Leighton Properties are discussing matters
in relation to the administration and management of the project
under the construction contract, including an accelerated
completion date for the project, firming up on monetary allowances
and resolution of certain claims notified by Leighton Properties
to SHCP. Subject to the completion of the final plans, financing
and required approvals and agreements, the current cost estimate
of the Sydney Harbour Casino project is A$771.0 million.
The total development cost is, however, subject
to change based upon the final modifications resulting from
SHCP's review of the design for the permanent Sydney Harbour
Casino and the result of SHCP's discussions with Leighton
Properties relating to the administration and management of
the project. As with any construction contract, the final
amount of such contract will be subject to modification based
upon change orders and the occurrence of certain 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 budgeted amounts.
The Company is a member of a partnership, Showboat Marina
Partnership ("SMP"), consisting of Showboat Indiana Investment
Limited Partnership, a limited partnership owned by the Company,
and Waterfront Entertainment and Development, Inc.
("Waterfront"), an unrelated Indiana corporation. SMP received
its certificate of suitability from the Indiana Gaming Commission
("Indiana Commission") for a riverboat owner's license allocated
by statute to East Chicago, Indiana on January 8, 1996. SMP has
applied to the Indiana Commission to transfer the certificate of
suitability to a subsidiary partnership. No assurance can be
given that the Indiana Commission will approve the transfer of
the certificate of suitability to the subsidiary partnership.
Additionally, no assurance can be given that SMP or the
subsidiary partnership, as applicable, will receive an owner's
license from the Indiana Commission. A certificate of
suitability indicates that the recipient has been chosen for
licensure and is valid for 180 days, unless extended by the
Indiana Commission. The Company will apply to the Indiana
Commission to extend the effectiveness of the certificate of
suitability beyond its initial 180 days. Although the Indiana
Commission has extended the effectiveness of certificates of
suitability held by other gaming operators, no assurance can be
given that the Indiana Commission will extend the effectiveness
of SMP's certificate of suitability beyond 180 days from the date
of issuance.
The certificate of suitability requires SMP or the
subsidiary partnership, as applicable, to invest no less than, in
the aggregate, $170.0 million in the proposed riverboat casino
and related facilities (collectively, the "East Chicago Project")
and in economic incentives to East Chicago. The East Chicago
Project is expected to cost approximately $195.0 million. The
Company anticipates that it will contribute approximately $40.0
million to SMP of which $8.9 million had
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been funded as of December 31, 1995. In addition to funds
contributed by the partners, SMP or the subsidiary partnership,
as applicable, intends to obtain a combination of debt and
equipment financings for an aggregate of approximately $156.0
million to develop the East Chicago Project. No assurance can be
given that SMP or the subsidiary partnership will successfully
obtain the necessary financings, or if such financings are
available, the financings will be available on favorable terms.
Under the current partnership agreement, the Company will receive
a 12% preferred return on its investment in SMP. In addition,
subject to certain qualifications and exceptions, the Company has
agreed to provide a completion guarantee 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, should a lender
require a completion guarantee in connection with any development
financing. In addition, subject to certain qualifications and
exceptions, the Company has agreed to provide a standby equity
commitment pursuant to which it will cause to be made up to an
aggregate of $30.0 million in additional capital contributions
to the SMP or the subsidiary partnership if, during the first
three full four fiscal quarters following the commencement of
operations, the East Chicago Project's combined cash flow (as
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 SMP or the subsidiary partnership
more than $15.0 million in respect of any one such full four
quarter period. If the Company is required to provide a standby
equity commitment, Waterfront has agreed to pay the Company $5.2
million, which amount shall accrue interest at 12% per annum
until paid, from Waterfront's share of distributable cash from
SMP.
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 (the "Southboat Casino
Site"). On June 1, 1995, the St. Louis County Council named SLP
as the preferred developer/operator for a dockside gaming
facility at the Southboat Casino Site. On October 13, 1995, SLP
entered into a lease agreement with the St. Louis County Port
Authority ("Port Authority") for the lease of the Southboat
Casino Site for a term of 99 years, commencing upon the
investigation of SLP for a Missouri gaming license and the
receipt of all permits from the U.S. Army Corps of Engineers.
Fees and rent for the Southboat Casino Site are payable as
follows: (i) a $500,000 acceptance fee upon completion of a due
diligence period; (ii) a $750,000 security deposit on the
commencement date of the lease; (iii) a $2.5 million fee on the
commencement date of the lease; (iv) a $2.5 million fee on the
opening date of the Southboat Casino Project; (v) rent in the
amount of $2.0 million per annum payable in equal monthly
installments, beginning on the commencement date and continuing
until the opening of the Southboat Casino Project; and (iv) rent
in the amount of the greater of 4% of adjusted gross receipts or
Minimum Rent (as defined below), beginning on the opening date of
the Southboat Casino Project and continuing until the expiration
of the term of the lease. "Minimum Rent" means $3.0 million
during the first 12-month period occurring after the opening of
the Southboat Casino Project; $2.8 million during the second 12-
month period; $2.6 million during the third 12-month period; $2.4
million during the fourth 12-month period; $2.2 million during
the fifth 12-month period; and $2.0 million beginning on the
fifth anniversary of the opening of the Southboat Casino Project
and continuing through the 15th lease year ("Guarantee Period").
The Company has guaranteed SLP's payment
60
<PAGE>
of Minimum Rent for the Guarantee Period and SLP's timely
completion of, construction of, and payment for all improvements
and installations in connection with SLP's development of the
Southboat Casino Project. If SLP fails to pay any monthly
installment of Minimum Rent, or if the lease is terminated at
any time within the Guarantee Period due to an event of default
by SLP, the Company must pay either (i) the full sum of unpaid
Minimum Rent due for the remainder of the Guarantee Period, or
(ii) if it posts a $2.0 million letter of credit, make monthly
payments of Minimum Rent. In addition, the Company agreed to
provide a Guarantee of Completion to the Port Authority which
provides, in material part, that the Company will complete the
construction of the Southboat Casino Project should SLP, after
the commencement of work, abandon the project for a period of 30
days after receipt of notice from the Port Authority. On October
17, 1995, SLP filed its application for a gaming license with the
Missouri Gaming Commission. The total cost of the Southboat
Casino Project is expected to be $117.0 million. The limited
partnership agreement provides that the Company's initial capital
contribution is $19.5 million and that Showboat Lemay, on behalf
of SLP, will arrange for a $75.0 million loan to develop the
Southboat Casino Project and to arrange for equipment financing
for the remaining costs of the Southboat Casino Project. The
Company has also agreed to provide a loan to SLP in the amount of
approximately $4.5 million to assist in the development of the
Southboat Casino Project. SLP has entered into a commitment
letter to receive to $75.0 million of financing from an unrelated
party for the construction of a riverboat and related site
improvements subject to certain conditions. The financing
commitment expires May 10, 1996. No assurance can be given that
SLP will be selected for investigation for a gaming license prior
to the expiration of the financing commitment. 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.
In July 1995, the Company and Rockingham Venture, Inc.
("RVI"), which owns the Rockingham Park, a thoroughbred racetrack
in New Hampshire, entered into agreements to develop and manage
any additional gaming that may be authorized at Rockingham Park.
In December 1994, the Company loaned RVI approximately $8.9
million, which loan is secured by a second mortgage on Rockingham
Park. The unpaid principal and all accrued interest with respect
to the loan becomes due on December 28, 1999. Subject to certain
conditions, RVI may extend the maturity date of the loan up to an
additional 24 months. At this time, casino gaming is not
permitted in the State of New Hampshire. No assurance can be
given that casino gaming legislation will be enacted in the State
of New Hampshire or, if enacted, such legislation will authorize
casino gaming at Rockingham Park. Depending upon the number and
types of gaming, if any, legalized by the necessary authorities,
the Company and RVI will make certain capital contributions. At
a minimum, the Company will contribute the promissory note
representing the loan. If casino enabling legislation permits
more than 500 slot machines or any combination of slot machines
and table games, then the Company, subject to available
financing, will contribute funds not to exceed 30% of cash funds
required for the project. At this time, the cost of the project
has not been determined.
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, however, 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
61
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.
In March 1995, the Financial Accounting Standards Board
issued SFAS No. 321, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of" ("SFAS No.
121"). SFAS No. 121 becomes effective for fiscal years beginning
after December 15, 1995. The Company is currently assessing the
impact of SFAS No. 121 on its financial statements.
In October 1995, the Financial Accounting Standards Board
issued SFAS No. 123, "Accounting for Stock-Based Compensation"
("SFAS No. 123"). SFAS No. 123 is effective for transactions
entered into in fiscal years beginning after December 15, 1995.
The Company will not be adopting the recognition and measurement
criteria of SFAS No. 123 and thus, the impact of SFAS No. 123 on
the Company's financial statements will not be material.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Independent Auditors' Report;
Consolidated Balance Sheets as of December 31, 1995 and
1994;
Consolidated Statements of Income for the Years Ended
December 31, 1995, 1994 and 1993;
Consolidated Statements of Shareholders' Equity for the
Years Ended December 31, 1995, 1994 and 1993;
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993; and
Notes to Consolidated Financial Statements
62
<PAGE>
Independent Auditors' Report
The Shareholders and Board of Directors
Showboat, Inc.:
We have audited the accompanying consolidated balance sheets of Showboat,
Inc. and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, shareholders' equity and cash flows for
each of the years in the three-year period ended December 31, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Showboat, Inc. and subsidiaries as of December 31, 1995 and 1994, and
the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1995, in conformity
with generally accepted accounting principles.
As discussed in Notes 1 and 9 to the consolidated financial statements,
the Company changed its method of accounting for income taxes in 1993
to adopt the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes".
KPMG PEAT MARWICK LLP
Las Vegas, Nevada
March 11, 1996
63
SHOWBOAT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
ASSETS 1995 1994
------------ -----------
(In thousands)
Current assets:
Cash and cash equivalents $106,927 $90,429
Receivables, net 8,448 8,890
Income tax receivable 2,076 -
Inventories 2,808 2,591
Prepaid expenses 4,728 4,736
Investment in unconsolidated
affiliate held for sale - 30,346
Current deferred income taxes 9,744 6,529
------------ -----------
Total current assets 134,731 143,521
------------ -----------
Property and equipment:
Land 11,536 9,545
Land improvements 12,184 10,142
Buildings 316,723 316,884
Furniture and equipment 176,127 164,388
Construction in progress 25,216 5,240
------------ -----------
541,786 506,199
Less accumulated depreciation
and amortization 186,872 168,531
------------ -----------
354,914 337,668
------------ -----------
Other assets:
Investments in unconsolidated affiliates 120,090 108,853
Deposits and other assets 28,911 22,537
Debt issuance costs, net of
accumulated amortization of $1,860,000
and $955,000 at December 31, 1995 and 1994,
respectively 10,749 11,112
------------ -----------
159,750 142,502
------------ -----------
$649,395 $623,691
============ ===========
64 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
(continued)
LIABILITIES AND SHAREHOLDERS' EQUITY 1995 1994
------------ -----------
Current liabilities: (In thousands)
Current maturities of long-term debt $22 $19
Accounts payable 15,143 11,059
Income taxes payable - 4,562
Dividends payable 392 384
Accrued liabilities 38,158 34,286
------------ -----------
Total current liabilities 53,715 50,310
------------ -----------
Long-term debt, excluding current maturities 392,369 392,016
------------ -----------
Other liabilities 5,028 5,144
------------ -----------
Deferred income taxes 22,319 18,760
------------ -----------
Minority Interest 2,023 -
------------ -----------
Commitments and contingencies (Notes 7 and 15)
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 15,794,578
shares at December 31, 1995 and 1994 15,795 15,795
Additional paid-in capital 80,078 76,845
Retained earnings 80,434 68,809
------------ -----------
176,307 161,449
Cumulative foreign currency translation adjustment 285 3,490
Cost of shares in treasury, 74,333 shares and
425,823 shares at December 31, 1995 and
1994, respectively (587) (3,364)
Unearned compensation for restricted stock (2,064) (4,114)
------------ -----------
Total shareholders' equity 173,941 157,461
------------ -----------
$649,395 $623,691
============ ===========
See accompanying notes to consolidated financial statements.
65
SHOWBOAT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31, 1995, 1994 and 1993
(In thousands except per share data)
1995 1994 1993
------------ ------------ -----------
Revenues:
Casino $379,494 $351,436 $329,522
Food and beverage 53,894 50,624 48,669
Rooms 25,694 20,587 19,355
Sports and special events 3,924 4,168 4,251
Management fees 190 1,861 279
Other 5,189 5,938 5,703
------------ ------------ -----------
468,385 434,614 407,779
Less complimentaries 39,793 33,281 32,052
------------ ------------ -----------
Net revenues 428,592 401,333 375,727
------------ ------------ -----------
Operating costs and expenses:
Casino 177,644 169,786 160,855
Food and beverage 32,150 34,287 31,742
Rooms 8,339 7,847 8,029
Sports and special events 3,206 3,321 3,198
General and administrative 119,568 109,058 92,739
Selling, advertising and promotion 9,456 9,647 9,592
Depreciation and amortization 31,533 28,387 23,303
------------ ------------ -----------
381,896 362,333 329,458
------------ ------------ -----------
Income from operations from
consolidated subsidiaries 46,696 39,000 46,269
Equity in income (loss) of
unconsolidated affiliate (22) 12,828 (850)
------------ ------------ -----------
Income from operations 46,674 51,828 45,419
------------ ------------ -----------
66 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31, 1995, 1994 and 1993
(In thousands except per share data)
(continued)
1995 1994 1993
------------ ------------ -----------
Income from operations $46,674 $51,828 $45,419
------------ ------------ -----------
Other (income) expense:
Interest income (6,225) (4,872) (3,215)
Gain on sale of affiliate (2,558) - -
Write-down of investment in affiliate 1,426 - -
Foreign currency transaction gain (271) - -
Interest expense, net of
amounts capitalized 29,692 29,452 24,696
------------ ------------ -----------
22,064 24,580 21,481
------------ ------------ -----------
Income before income tax expense,
extraordinary items and cumulative
effect adjustment 24,610 27,248 23,938
Income tax expense 11,435 11,549 10,474
------------ ------------ -----------
Income before extraordinary items and
cumulative effect adjustment 13,175 15,699 13,464
Extraordinary items, net of income tax - - (6,679)
Cumulative effect of change in method of
accounting for income taxes - - 556
------------ ------------ -----------
Net income $13,175 $15,699 $7,341
============ ============ ===========
Income per common and equivalent share:
Income before extraordinary items and
cumulative effect adjustment $0.84 $1.02 $0.89
Extraordinary items, net of income tax - - (0.44)
Cumulative effect of change in method of
accounting for income taxes - - 0.04
------------ ------------ -----------
Net income $0.84 $1.02 $0.49
============ ============ ===========
See accompanying notes to consolidated financial statements
67
<TABLE>
SHOWBOAT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years Ended December 31, 1995, 1994 and 1993
<CAPTION>
Cumulative
foreign
currency
Additional transla- Unearned
Common paid-in Retained tion Treasury compen-
stock capital earnings adjustment stock sation Total
---------- ----------- ------------ ------------ ----------- ----------------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1992 $15,795 $69,374 $48,778 - ($7,761) ($168) $126,018
Net income - - 7,341 - - - 7,341
Cash dividends ($.10
per share) - - (1,491) - - - (1,491)
Share transactions
under stock plan - 1,788 - - 1,391 - 3,179
Amortization of unearned
compensation - - - - - 111 111
---------- ----------- ------------ ------------ ----------- ----------------------
Balance, December 31,
1993 15,795 71,162 54,628 - (6,370) (57) 135,158
Net income - - 15,699 - - - 15,699
Cash dividends ($.10
per share) - - (1,518) - - - (1,518)
Warrants issued - 1,953 - - - - 1,953
Share transactions
under stock plan - 3,730 - - 3,006 (6,021) 715
Amortization of unearned
compensation - - - - - 1,964 1,964
Foreign currency trans-
lation adjustmen - - - 3,490 - - 3,490
---------- ----------- ------------ ------------ ----------- ----------------------
Balance, December 31,
1994 15,795 76,845 68,809 3,490 (3,364) (4,114) 157,461
Net income 13,175 13,175
Cash dividends ($.10
per share) (1,550) (1,550)
Share transactions
under stock plans 3,233 2,777 (116) 5,894
Amortization of un-
earned compensation 2,166 2,166
Foreign currency trans-
lation adjustment (3,205) (3,205)
---------- ----------- ------------ ------------ ----------- ----------------------
Balance, December 31,
1995 $15,795 $80,078 $80,434 $285 ($587) ($2,064) $173,941
========== =========== ============ ============ =========== ======================
</TABLE>
See accompanying notes to consolidated financial statements.
68
SHOWBOAT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1995, 1994 and 1993
1995 1994 1993
------------ ------------ -----------
(In thousands)
Cash flows from operating activities:
Net income $13,175 $15,699 $7,341
Adjustments to reconcile net income to
net cash provided by operating
activities:
Allowance for doubtful accounts 1,605 950 1,849
Depreciation and amortization 31,533 28,387 23,303
Amortization of original issue
discount and debt issuance costs 1,281 820 744
Provision for deferred income taxes 2,069 256 813
Amortization of unearned
compensation 2,166 1,964 111
Provision for loss on Casino
Reinvestment Development
Authority obligation 1,414 1,018 1,122
(Earnings) loss of unconsolidated
affiliate, net of distributions 2,768 (3,596) 850
(Gain) loss on sale and write-down
of affiliates (1,132) - -
Extraordinary loss on
extinguishment of debt - - 11,166
(Gain) loss on disposition of
property and equipment (36) (251) 517
Increase in receivables, net (2,492) (2,580) (2,670)
Increase in inventories and
prepaid expenses (209) (924) (23)
Increase in deposits and
other assets (656) (1,378) (554)
Pension costs, net of payments 882 995 -
Increase in accounts payable 4,566 396 85
Increase (decrease) in income
taxes payable (5,168) 3,051 968
Increase (decrease) in
accrued liabilities 1,384 10,566 (1,503)
------------ ------------ -----------
Net cash provided by operating
activities 53,150 55,373 44,119
------------ ------------ -----------
69 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1995, 1994 and 1993
(continued)
1995 1994 1993
------------ ------------ -----------
(In thousands)
Cash flows from investing activities:
Acquisition of property and equipment ($49,573) ($72,471) ($59,686)
Proceeds from sale of property
and equipment 1,065 290 78
Proceeds from sale of affiliate 51,366 - -
Investments in unconsolidated
affiliates (36,551) (110,979) (18,600)
(Advances to) repayments from
unconsolidated affiliates 1,210 (899) -
(Increase) decrease in deposits and
other assets (4,639) (8,850) 4,046
Deposit for Casino Reinvestment
Development Authority obligation,
net of refunds (4,052) (599) (3,289)
------------ ------------ -----------
Net cash used in investing
activities (41,174) (193,508) (77,451)
------------ ------------ -----------
Cash flows from financing activities:
Principal payments of long-term debt (20) (3,575) (3,914)
Proceeds from issuance of
long-term debt - 120,000 275,000
Early extinguishment of debt - - (208,085)
Debt issuance costs (542) (4,474) (7,593)
Payment of dividends (1,543) (1,509) (1,400)
Distribution to bond holders - (5,195) -
Issuance of common stock 4,604 530 2,510
Minority interest contributions 2,023 - -
------------ ------------ -----------
Net cash provided by financing
activities 4,522 105,777 56,518
------------ ------------ -----------
Net increase (decrease) in cash and
cash equivalents 16,498 (32,358) 23,186
Cash and cash equivalents at
beginning of year 90,429 122,787 99,601
Cash and cash equivalents at ------------ ------------ -----------
end of year $106,927 $90,429 $122,787
============ ============ ===========
70 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1995, 1994 and 1993
(continued)
1995 1994 1993
------------ ------------ -----------
(In thousands)
Supplemental disclosures of cash flow
information and non-cash investing and
financing activities:
Cash paid during the year for:
Interest, net of amount capitalized $28,021 $22,522 $25,741
Income taxes 14,533 8,242 3,650
Foreign currency translation
adjustment (3,205) 3,490 -
See accompanying notes to consolidated financial statements.
71
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations and Principles of Consolidation
Showboat, Inc. and subsidiaries, collectively the Company or SBO,
conduct casino gaming operations in Las Vegas, Nevada, Atlantic City,
New Jersey and until March 9, 1995, in New Orleans, Louisiana. In
addition, the Company operates support services including hotel,
restaurant, bar, and convention facilities. On September 13, 1995, the
Sydney Harbour Casino commenced gaming operations in an interim casino in
Sydney, Australia. The Company, through its wholly owned subsidiary,
Showboat Australia Pty. Ltd. (SA), owns approximately 26.3% of Sydney
Harbour Casino Holdings Limited, the parent corporation of the casino
licensee, Sydney Harbour Casino Pty. Limited (SHCL). SA also owns 85% of
the manager of the Sydney Harbour Casino. The Company also owns a 55%
interest in a general partnership formed to own and operate a proposed
riverboat casino in East Chicago, Indiana. A certificate of suitability
was awarded by the Indiana Gaming Commission on January 8, 1996 for the
East Chicago, Indiana project and the owner's riverboat license from the
Commission is pending. The Company has an 80% interest in a limited
partnership formed to own and operate a proposed riverboat casino in
Lemay, Missouri. The gaming application for the Missouri project is
pending. Gaming operations at both the East Chicago, Indiana and Lemay,
Missouri projects cannot commence until a gaming license is awarded by
the respective Gaming Commissions.
The 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.
72 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Casino Revenue and Complimentaries
Casino revenues represent the net win from gaming wins and
losses. Revenues include the retail value of room, food, beverage,
and other goods and services provided to customers without charge.
Such amounts are then deducted as promotional allowances. The
estimated cost of providing these promotional allowances was charged
to the casino department in the following amounts:
Year Ending December 31,
1995 1994 1993
------------ ------------ -----------
(In thousands)
Food and beverage $27,119 $23,893 $23,866
Room 7,197 5,883 5,054
Other 1,346 2,066 2,037
------------ ------------ -----------
Total $35,662 $31,842 $30,957
============ ============ ===========
Cash Equivalents
The Company considers all highly liquid investments purchased with
an original maturity of three months or less to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out method.
Fair Value of Certain Financial Instruments
The carrying amount of cash equivalents, receivables
and all current liabilities approximates fair value because of the
short term maturity of these instruments. See Notes 5 and 6 for
additional fair value disclosures.
73 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Property and Equipment
Property and equipment are stated at cost. Depreciation,
including amortization of capitalized leases, is computed using the
straight-line method. The cost of maintenance and repairs is
charged to expense as incurred; significant renewals and
betterments are capitalized.
Estimated useful lives for property and equipment are 5 to 15
years for land improvements, 10 to 40 years for buildings and 2 to
10 years for furniture and equipment.
Interest Costs
Interest is capitalized in connection with the construction of
major facilities. Further, interest is capitalized on investments in
and loans and advances made to unconsolidated companies
accounted for by the equity method of accounting during the period
the investee company is undergoing activities necessary to start
its planned principal operations and those activities include the
use of funds to acquire assets qualifying for interest
capitalization. The capitalized interest is recorded as part of
the asset to which it relates and is amortized over the asset's
estimated useful life. For the years ended December 31, 1995,
1994 and 1993, $13,148,000, $3,378,000, and $1,085,000,
respectively, of interest cost was capitalized.
Preopening and Development Costs
The Company is currently investigating expansion opportunities
in new gaming jurisdictions. Costs associated with these
investigations are expensed as incurred until such time as a
particular opportunity is determined to be viable, generally when
the Company is selected as the operator of a new gaming facility
or the Company's gaming license application is under consideration for
the jurisdiction in which the Company plans to operate.
Costs incurred during the construction and preopening phase are
capitalized. Types of costs capitalized include professional fees,
salaries and wages, temporary office expenses, marketing expenses
and training costs. When the new operation opens for business,
preopening costs will be expensed over a period not to exceed 12
months.
74 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Retirement Benefits
The Company has a defined benefit pension plan that provides
retirement benefits for certain key employees. Pension costs under
this pension plan are actuarially computed. The benefits provided
under this plan are not funded until due.
Income Taxes
Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes"
(FAS 109)and has reported the cumulative effect of that change in
accounting method in the 1993 Consolidated Statement of Income. Under the
asset and liability method of FAS 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable
to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under FAS 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in the period that includes the enactment date.
The Company and its domestic subsidiaries file a consolidated federal
income tax return. For tax reporting purposes, the Company files on a
fiscal year ending June 30.
Amortization of Original Issue Discount and Debt Issuance Costs
Original issue discount is amortized over the life of the
related indebtedness using the effective interest method.
Costs associated with the issuance of debt have been deferred
and are being amortized over the life of the related indebtedness
using a weighted average method based on retirement schedules
specified in the debt indentures.
75 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Per Common and Equivalent Share
Income per common and equivalent share is based on the weighted
average number of shares outstanding. Such averages were
15,730,478, 15,457,061, and 15,099,147 for the years ended December
31, 1995, 1994 and 1993, respectively. Fully-diluted and primary
income per common and equivalent share are the same.
Foreign Currency Translation
The financial statements of foreign subsidiaries are converted to U.S.
generally accepted accounting principles. Balance sheet accounts are then
translated into U.S. dollars at current exchange rates in effect at the
balance sheet date. Items of revenue and expense are translated at
average exchange rates during the reporting period. Gains and losses
resulting from foreign currency transactions are included in income
currently. Gains and losses resulting from translation of financial
statements are excluded from the Consolidated Statements of Income and
are credited or charged directly to a separate component of Shareholders'
Equity.
Use of Estimates
Management of the Company has made estimates and assumptions relating
to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements
in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.
Reclassifications
Certain prior year balances have been reclassified to conform
to the current year's presentation.
76 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
2.RECEIVABLES, NET
Receivables, net consist of the following:
December 31,
------------ -----------
1995 1994
------------ -----------
(In thousands)
Casino $7,224 $6,983
Hotel 1,113 993
Other 2,792 3,314
------------ -----------
11,129 11,290
Less allowance for doubtful accounts 2,681 2,400
------------ -----------
Receivables, net $8,448 $8,890
============ ===========
3.ACCRUED LIABILITIES
Accrued liabilities consist of the following:
December 31,
------------ -----------
1995 1994
------------ -----------
(In thousands)
Salaries and wages $12,827 $11,113
Interest 10,740 10,350
Medical and liability claims 4,125 3,110
Taxes, other than taxes on income 4,032 3,380
Advertising and promotion 2,113 2,201
Outstanding chips and tokens 1,713 1,897
Other 2,608 2,235
------------ -----------
Total accrued liabilities $38,158 $34,286
============ ===========
77 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
4.INVESTMENTS IN UNCONSOLIDATED AFFILIATES
Showboat Louisiana, Inc. (SLI) was formed in 1993 to hold a 30%
equity interest in Showboat Star Partnership (SSP) which owned a
riverboat casino and was managed by Lake Pontchartrain Showboat, Inc.
(LPSI), a wholly-owned subsidiary of the Company. In 1993, the Company
invested $18,600,000 in SSP for its 30% equity interest in the
riverboat casino. Effective March 1, 1994, the Company purchased an
additional 20% equity interest from its partner for $9,000,000. In
March 1995, the Company purchased an additional 50% of the equity of
SSP bringing the Company's total equity interest in SSP to 100%. The
purchase price of the additional equity interest was $25.0 million
coupled with a distribution of certain of the current assets of SSP to
partners other than the Company. On March 9, 1995, the Company ceased
all operations at the Showboat Star Casino as a result of certain legal
issues related to conducting dockside gaming in Orleans Parish. In a
series of unrelated transactions, SSP sold certain of its assets and
the Company sold its equity interest in SSP resulting in a net pretax
gain of $2,558,000 which is included in the 1995 Consolidated
Statement of Income as gain on sale of affiliate.
Operation of the riverboat casino commenced on November 8, 1993. The
investment by SLI in SSP has been accounted for under the equity method
of accounting. The Company's equity in the income or loss of SSP is
included in the Consolidated Statement of Income as equity in income or
loss of unconsolidated affiliate. LPSI received a management fee from
SSP of 5.0% of casino revenues net of gaming taxes of 18.5% and
boarding fees. Intercompany management fees have been eliminated in
consolidation.
78 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
4.INVESTMENTS IN UNCONSOLIDATED AFFILIATES (continued)
The Company's wholly-owned subsidiary, Showboat Australia Pty. Ltd.,
(SA), invested approximately $100.0 million for a 26.3% interest in
Sydney Harbour Casino Holdings Limited, (SHCH), which through its wholly
owned subsidiaries, owns the Sydney Harbour Casino and holds the casino
license required to operate the Sydney Harbour Casino. SA also owns 85%
of the company engaged to manage the casino for a management fee. On
September 13, 1995, the Sydney Harbour Casino commenced gaming operations
in an interim facility and is expected to commence operations in a
permanent facility in early 1998. The net income of the interim casino
included in equity in income (loss) of unconsolidated affiliate in the
Consolidated Statement of Income has been reduced to zero due to the
write-off of preopening costs. Approximately A$44.0 million Australian
dollars(US$33.7 million) have been incurred in preopening costs, and for
the year ended December 31, 1995, approximately A$23.4 million (US$17.4
million) of preopening costs have been expensed. The remaining preopening
costs will be expensed in 1996.
In addition to its 26.3% equity interest in SHCH, SA has an option to
purchase an additional 37,446,553 ordinary shares or approximately 7% of
the fully diluted equity of SHCH at an exercise price of A$1.15 per
share. SA's option may be exercised no earlier than July 1, 1998 and
expires June 30, 2000.
In March 1995, the Company, with an unrelated corporation, formed
Showboat Mardi Gras, L.L.C. (SMG), formerly known as Randolph Riverboat
Company, L.L.C., to own and operate, subject to licensing, a riverboat
casino near Kansas City, Missouri. SMG was not selected by the Missouri
Gaming Commission for a license and therefore is currently seeking a
buyer for its riverboat. The Company has invested approximately $5.1
million in a combination of both equity and advances to SMG for the
completion of the riverboat, costs incurred in the licensing process and
other general and administrative expenses. The company owns 35% of the
equity of SMG and has reported a pretax loss of $1,426,000 which is
included in the 1995 Consolidated Statement of Income as write-down of
investment in affiliate to reflect its investment in SMG at its estimated
net realizable value at December 31, 1995.
79 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
4.INVESTMENTS IN UNCONSOLIDATED AFFILIATES (continued)
Summarized condensed financial information of SSP and SHCH (the only
significant unconsolidated affiliates) as of and for the years ending
December 31, 1995, 1994 and 1993 is as follows:
1995 1994 1993
------------ ------------ -----------
Showboat Star Partnership (Unaudited): (In thousands)
Income statement data:
Net revenues $11,044 $97,989 $12,062
Net income (loss) (10,719) 24,782 (2,836)
Company's share of net income (loss)
including closing costs and loss
on sale of assets (5,211) 12,828 (850)
Balance sheet data:
Assets
Current assets $ - $16,624 $8,150
Property and equipment, net - 35,135 36,236
Other assets - 19,522 20,481
------------ ------------ -----------
Total assets $ - $71,281 $64,867
============ ============ ===========
Liabilities and partners'
capital accounts:
Current liabilities $ - $3,950 $6,268
Partners' capital accounts - 67,331 58,599
------------ ------------ -----------
Total liabilities and
partners' capital accounts $ - $71,281 $64,867
============ ============ ===========
The amount reported above as the Company's share of net loss for the
year ended December 31, 1995 from SSP is exclusive of the gain the
Company realized on the ultimate disposition of its ownership interest in
SSP. The Consolidated Statement of Income includes the Company's share of
the loss on operations (approximately $22,000) of SSP for 1995 as equity
in income (loss) of unconsolidated affiliate. The Company's share of
additional losses incurred by SSP related to closing costs and sale of
certain assets were offset against the Company's gain on sale of its
equity interest in SSP resulting in a net gain of $2,558,000, which is
reported as gain on sale of affiliate.
80 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
4.INVESTMENTS IN UNCONSOLIDATED AFFILIATES (continued)
1995 1994 1993
------------ ------------ -----------
Sydney Harbour Casino Holdings Ltd. (In thousands)
(Unaudited)
Income statement data:
Net revenues $90,800 $ - $ -
Net income (loss) - - -
Company's share of net income
(loss) - - -
Balance sheet data:
Assets:
Property and equipment, net $229,100 $20,000 $ -
Other assets 325,400 386,500 -
------------ ------------ -----------
Total assets $554,500 $406,500 $ -
============ ============ ===========
Liabilities and shareholders'
equity:
Liabilities $182,200 $8,600 $ -
Shareholders' equity:
Company's 97,900 104,600 -
Other shareholders' 274,400 293,300 -
------------ ------------ -----------
Total liabilities and
shareholders' equity $554,500 $406,500 $ -
============ ============ ===========
The difference between the Company's equity in SHCH shown above and
the amounts reported as investments in unconsolidated affiliates
in the Company's Consolidated Balance Sheets is primarily due to
capitalized interest of approximately $13,100,000 and $600,000 in 1995
and 1994, respectively, and debt and stock issuance costs of
approximately $5,800,000 and $3,500,000 in 1995 and 1994 respectively.
The remaining amount relates to SMG.
81 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
5.NEW JERSEY INVESTMENT OBLIGATION
The New Jersey Casino Control Act (Act) provides, among other
things, for an assessment on a gaming licensee based upon its gross
casino revenues after completion of its first full year of
operation. This assessment may be satisfied by investing in
qualified direct investments, purchasing bonds issued by the Casino
Reinvestment Development Authority (CRDA), or paying an
"alternative tax". In order for direct investments to be eligible,
they must be approved by the CRDA.
Deposits with the CRDA bear interest at two-thirds of market
rates resulting in a current value lower than cost. At December
31, 1995 and 1994, deposits and other assets include $7,198,000 and
$5,277,000, respectively, representing the Company's deposit with
the CRDA of $10,458,000 as of December 31, 1995 and $7,716,000
as of December 31, 1994, net of a valuation allowance of
$3,260,000 and $2,439,000, respectively. The carrying value of
these deposits, net of the valuation allowance, approximates fair
value.
The CRDA, as an agency of the City of Atlantic City, is
responsible for the redevelopment of the area surrounding the
Boardwalk. As of December 31, 1995, the CRDA approved the use of
$9,029,000 of the Company's deposits for use in connection with the
expansion and improvement of a City street leading to the Atlantic City
Showboat. In connection with its approval, the CRDA required the Company
to donate $2,500,000 of its deposits with the CRDA to certain public
programs. Expansion of the city street was completed in 1994, with
additional improvements being completed in 1995. The Company
reclassified these CRDA deposits, net of the valuation allowance,
totaling approximately $7,686,000 to property and equipment.
The Company has applied for and received approval for
approximately $ 8,800,000 in funding credits from the CRDA in
connection with the construction of Atlantic City Showboat's
additional hotel rooms. In connection with the Company's Credit
Agreement with the CRDA, which states the terms and conditions by
which the Company may receive funding credit, the Company applied
for and received funds from the CRDA, net of a processing fee, of
approximately $ 2,955,000, as a credit for expenditures made relating to
the construction of the hotel rooms. The balance of the funding credits
may be applied to portions of future CRDA deposits. In 1995, a court
ruling, not involving the Company, disallowed the payment of CRDA
disbursement of funding credits for an unrelated expansion project. As a
result the CRDA has suspended disbursement of funding credits until such
time as the appeal court overturns the lower court's decision.
82 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6.LONG-TERM DEBT
Long-term debt consists of the following:
December 31,
------------ -----------
1995 1994
------------ -----------
(In thousands)
9 1/4% First Mortgage Bonds due 2008
net of unamortized discount of
$4,632,000 and $5,008,000 at
December 31, 1995 and 1994, respectively $270,368 $269,992
13% Senior Subordinated Notes due 2009 120,000 120,000
Capital lease obligations 2,023 2,043
------------ -----------
392,391 392,035
Less current maturities 22 19
------------ -----------
$392,369 $392,016
============ ===========
On May 18, 1993, the Company issued $275,000,000 of 9 1/4%
First Mortgage Bonds due 2008 (Bonds). The proceeds from the sale
of the Bonds were $268,469,000, net of underwriting discounts and
commissions. Proceeds from the sale of the Bonds were used to
redeem all of the outstanding 11 3/8% Mortgage-Backed Bonds Due
2002 at 105.7% of the principal amount plus accrued interest. The
remaining proceeds were reserved by the Company to benefit existing
facilities and to expand into new facilities or gaming
jurisdictions.
On July 1, 1994, the Company obtained consents to amend
(Amendments) its Indenture governing its Bonds (Bond Indenture).
The Company received consents from holders of approximately
$259,772,000 or 94% of the Bonds approving the Amendments. In
consideration for their consent, the consenting Bond holders
received 2% of the face value of the Bonds. On July 28, 1994, the
Company paid $5,195,000 to the consenting Bond holders. As the
amount paid does not represent a significant modification of the
terms of the Bonds, it is reflected as a discount on the Bonds and
is being amortized as an adjustment to yield over the remaining
life of the Bonds using the effective interest method.
83 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6.LONG-TERM DEBT (continued)
The Bonds are unconditionally guaranteed by Ocean Showboat,
Inc. (OSI), Atlantic City Showboat, Inc. (ACSI) and Showboat Operating
Company (SOC),subsidiaries effectively owned 100% by the Company.
Interest on the Bonds is payable semi-annually on May 1 and November 1 of
each year. The Bonds are not redeemable prior to May 1, 2000.
Thereafter, the Bonds will be redeemable, in whole or in part, at
redemption prices specified in the Bond Indenture. The Bonds are senior
secured obligations of the Company and rank senior in right of payment to
all existing and future subordinated indebtedness of the Company and pari
passu with the Company's senior indebtedness. The Bonds are secured by a
deed of trust representing a first lien on the Las Vegas hotel casino
(other than certain assets), by a pledge of all outstanding shares of
capital stock of OSI, an intercompany note by ACSI in favor of SBO, a
pledge of certain intellectual property rights of the Company, and by
investments in Controlled Entities (as defined in the Bond Indenture, as
amended). OSI's obligation under its guarantee is secured by a pledge of
all outstanding shares of capital stock of ACSI. ACSI's obligation under
its guarantee is secured by a leasehold mortgage representing a first
lien on the Atlantic City hotel casino (other than certain assets).
SOC's guarantee is secured by a pledge of certain assets related to the
Las Vegas hotel casino.
The Bond Indenture, as amended, places significant restrictions
on the incurrence of additional indebtedness by SBO and its subsidiaries,
the creation of additional liens on the collateral securing the Bonds,
transactions with affiliates and payment of certain restricted payments
(as defined), including certain investments made by SBO and its
subsidiaries. In order for the Company to incur additional indebtedness
or make a restricted payment, other than a regular quarterly dividend (as
defined), the Company must, among other things, meet a specified fixed
charge coverage ratio.
Dividends are included as a restricted payment under the Bond Inden-
ture. Regular quarterly dividends (as defined) can be paid as long as
no event of default has occurred or is continuing and the
dividend payable, together with the aggregate of all other restricted
payments made by the Company is less than the sum of 50% of the
consolidated net income (as defined) of the Company for the period
commencing April 1, 1993 to the end of the Company's most recently ended
fiscal quarter for which internal financial statements are available at
the time of the payment plus 100% of the cash net proceeds from the sale
of certain equity interests (as defined) plus certain cash proceeds
received from the non-recourse subsidiaries. The Company was in
compliance with the Bond Indenture Covenants as of December 31, 1995.
84 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6.LONG-TERM DEBT (continued)
On August 10, 1994, the Company issued $120,000,000 of 13%
Senior Subordinated Notes due 2009 (Notes). The proceeds from the
sale of the Notes (Note Offering) were $116,520,000, net of
underwriting discounts and commissions. Proceeds from the Note
Offering were reserved for or used to invest approximately $100,000,000
for an approximately 26.3% equity interest in SHCH and renovate the Las
Vegas Showboat.
The Notes are unconditionally guaranteed by OSI, ACSI and SOC.
Interest on the Notes is payable semi-annually on February 1 and
August 1 of each year. The Notes will be redeemable, in whole or
in part, at redemption prices specified in the Indenture for the
Notes (Note Indenture). The Notes are general obligations of the
Company, subordinated in right of payment to all Senior Debt (as
defined in the Note Indenture) of the Company. The Note Indenture
permits the issuance of an additional $30,000,000 of Notes at the
discretion of the Company.
The Note Indenture places significant restrictions on the
Company, many of which are substantially similar to the
restrictions placed on the Company by the Bond Indenture, as
amended. The Company was in compliance with all the Note Indenture
Covenants as of December 31, 1995.
On August 4, 1995, the Company obtained a two year secured line of
credit for general working capital purposes totaling $25.0 million. At
the end of the two year term, the line of credit may convert to a three
year term loan. The bank received security pari passu with the holders
of the Bonds. Interest is payable monthly at the bank's prime rate plus
.5% or LIBOR plus 2.5% at the election of the Company. The interest rate
charged at the date the line of credit is converted to a term loan will
be the bank's prime rate plus 1% or a fixed rate designated by the bank
at the election of the Company. In the event the line of credit is
utilized for equity investments in or loans to entities constituting new
projects, the Company will be required to pay the bank a fee equal to
.75% of the advance. As of December 31, 1995, all of the funds under
this line of credit are available for use by the Company. This line of
credit replaced the Atlantic City Showboat's unsecured line of credit
which expired in August of 1995.
85 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6.LONG-TERM DEBT (continued)
Maturities of the Company's long-term debt exclusive of unamortized
discount are as follows:
Year ending (In thousands)
December 31,
1996 $22
1997 25
1998 29
1999 19
2000 0
Thereafter 396,928
------------
$397,023
============
The fair value of the Company's Bonds and Notes were
$261,938,000 and $135,600,000 respectively, at December 31, 1995,
and $229,969,000 and $114,300,000 respectively, at December 31, 1994,
based on the quoted market prices. The carrying amount of capital
leases approximates fair value at December 31, 1995.
7.LEASES
The Company leases certain furniture and equipment and a
warehouse under long-term capital lease agreements. The leases covering
furniture and equipment expire in 1999 and the warehouse lease
expires in 2001. The Company has an option to purchase the warehouse
from January 1, 1996 through March 31, 2001 at an option price of
approximately $1,928,000.
Property leased under capital leases by major classes are as
follows:
December 31,
------------ -----------
1995 1994
------------ -----------
(In thousands)
Building - warehouse $2,050 $2,050
Furniture and equipment 152 152
------------ -----------
2,202 2,202
Less accumulated amortization 1,361 1,203
------------ -----------
$841 $999
============ ===========
86 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
7.LEASES (continued)
ACSI is leasing 10 1/2 acres of Boardwalk property in Atlantic
City, New Jersey for a term of 99 years which commenced October 1983.
Annual rent payments, which are payable monthly, commenced upon
opening of the Atlantic City Showboat. The rent is adjusted
annually based upon changes in the Consumer Price Index. In April
1995, the annual rent increased $227,000 to $8,501,000. ACSI is
responsible for taxes, assessments, insurance and utilities.
The following is a schedule of future minimum lease payments
for capital leases and operating leases (with initial or remaining
terms in excess of one year) as of December 31, 1995:
Capital Operating
Leases Leases
------------ -----------
Year ending (In thousands)
December 31,
1996 $286 $10,277
1997 286 10,119
1998 286 9,959
1999 272 9,396
2000 253 9,261
Thereafter 1,928 704,969
------------ -----------
Total minimum lease payments 3,311 $753,981
===========
Less amount representing interest
(10.4% to 12.9%) 1,288
------------
Present value of net minimum
capital lease payments $2,023
============
Rent expense for all operating leases was $11,241,000,
$10,380,000 and $9,287,000 for the years ended December 31, 1995,
1994 and 1993, respectively.
87 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
8.EXTRAORDINARY ITEMS
On June 18, 1993, the Company redeemed all of its remaining
11 3/8% Mortgage-Backed Bonds Due 2002 at 105.7% plus accrued and
unpaid interest up to and including the redemption date. The
Company recognized an extraordinary loss before any income tax
benefit of $11,166,000 as a result of the write-off of the
unamortized debt issuance costs of $2,666,000 and the payment of a
5.7% redemption premium of $8,500,000. The after tax loss was
$6,679,000 or $.44 per share.
9.INCOME TAXES
As discussed in Note 1, the Company adopted FAS 109 effective
January 1, 1993. The cumulative effect of the change in method of
accounting for income taxes of $556,000 is determined as of January
1, 1993 and is reported separately in the Consolidated Statement of
Income for the year ended December 31, 1993. Prior year financial
statements have not been restated to apply the provisions of FAS
109.
Total income tax expense was allocated as follows:
Year ended December 31,
------------ ------------ -----------
1995 1994 1993
------------ ------------ -----------
(In thousands)
Continuing operations $11,435 $11,549 $10,474
Extraordinary item - - (4,487)
Shareholders' equity, related to
cumulative foreign currency
translation adjustment (1,726) 1,879 -
Shareholders' equity, related to
compensation expense deferred and
reported as a reduction of
shareholders' equity for financial
reporting purposes (1,471) (241) (661)
------------ ------------ -----------
$8,238 $13,187 $5,326
============ ============ ===========
88 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
9.INCOME TAXES (continued)
Income tax expense attributable to income from continuing
operations consists of:
Year ended December 31,
------------------------- -----------
1995 1994 1993
------------ ------------ -----------
(In thousands)
U.S. federal
Current $5,489 $8,793 $7,910
Deferred 2,477 323 965
------------ ------------ -----------
7,966 9,116 8,875
------------ ------------ -----------
State and local
Current 3,877 2,500 1,195
Deferred (408) (67) 404
------------ ------------ -----------
3,469 2,433 1,599
------------ ------------ -----------
Total
Current 9,366 11,293 9,105
Deferred 2,069 256 1,369
------------ ------------ -----------
$11,435 $11,549 $10,474
============ ============ ===========
89 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
9.INCOME TAXES (continued)
Income tax expense attributable to income from continuing
operations differed from the amounts computed by applying the U.S.
federal income tax rate of 35% for the years ended December 31,
1995, 1994 and 1993 to pretax income from continuing operations as a
result of the following:
Year ended December 31,
------------ ------------ -----------
1995 1994 1993
------------ ------------ -----------
(In thousands)
Computed "expected" tax expense $8,614 $9,537 $8,378
Increase (reduction) in income
taxes resulting from:
Change in the beginning of the
year balance of the valuation
allowance for deferred tax
assets allocated to income tax
expense 476 (161) 224
Adjustment to deferred tax
assets and liabilities for
enacted changes in tax rates - - 383
State and local income taxes,
net of federal tax benefit 2,174 1,715 930
Impact of settlement of
Internal Revenue Service
examination 32 307 619
Other, net 139 151 (60)
------------ ------------ -----------
Income tax expense $11,435 $11,549 $10,474
============ ============ ===========
90 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
9.INCOME TAXES (continued)
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities at December 31, 1995 and 1994 are as follows:
1995 1994
------------ -----------
(In thousands)
Deferred tax assets:
Preopening costs ($2,236) ($2,191)
Accrued vacations (1,786) (1,803)
Casino Reinvestment Development
Authority obligation (1,332) (1,002)
Allowance for doubtful accounts (1,091) (991)
Accrued state income taxes (250) (800)
Long-term incentive plan (1,005) (772)
Accrued bonuses (2,191) (269)
Executive deferred compensation (657) (348)
Accrued medical claims (803) (492)
Alternative minimum tax credit
carryforwards (572) (697)
Other (2,602) (1,920)
------------ -----------
Total gross deferred tax assets (14,525) (11,285)
Less valuation allowance 916 440
------------ -----------
Net deferred tax assets (13,609) (10,845)
------------ -----------
Deferred tax liabilities:
Depreciation and amortization 18,894 18,655
Capitalized interest 7,034 2,494
Cumulative foreign currency
translation adjustment 153 1,879
Other 103 48
------------ -----------
Total gross deferred tax liabilities 26,184 23,076
------------ -----------
Net deferred tax liability $12,575 $12,231
============ ===========
At December 31, 1995, the Company had available $572,000 of
alternative minimum tax credit carryforwards which are available to
reduce future federal regular income taxes, if any, over an indefinite
period.
91 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
10 EMPLOYEE BENEFIT PLANS
The Company maintains a retirement and savings plan for
eligible employees who are not covered by a collective bargaining
agreement or by another plan to which the Company contributes.
Under the terms of the plan, eligible employees may defer up to 3%
of their compensation, as defined, of which 100% of the deferral is
matched by the Company. Eligible employees may contribute an
additional 12% of their compensation which will not be matched by
the Company. Contributions by the Company vest over a five-year
period. The Company contributed an aggregate of $1,932,000,
$1,826,000 and $1,525,000 to this and another Company plan merged
into this plan for the years ended December 31, 1995, 1994 and
1993, respectively.
The Company's union employees are covered by union-sponsored,
collectively-bargained, multi-employer pension plans. The Company
contributed and charged to expense $1,326,000, $1,298,000 and
$1,197,000 during the years ended December 31, 1995, 1994 and 1993,
respectively. These contributions are determined in accordance
with the provisions of negotiated labor contracts and generally are
based on the number of hours worked.
In August 1994, the Company implemented a Supplemental
Executive Retirement Plan (SERP) for a select group of senior line
staff and management personnel to ensure that the Company's overall
executive compensation program will attract, retain and motivate
qualified senior management personnel. The participants receive
benefits based on years of service and final compensation. This
defined benefit plan is noncontributory and unfunded. The pension
costs are determined actuarially and are based on the assumption
that all eligible personnel will participate in the SERP.
The net pension cost for the years ended December 31, 1995 and 1994
consists of the following:
December 31,
------------ -----------
1995 1994
------------ -----------
(In thousands)
Service costs of benefits earned $368 $376
Interest cost on projected benefit
obligations 387 335
Amortization of unrecognized prior
service costs 284 284
------------ -----------
$1,039 $995
============ ===========
92 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
10EMPLOYEE BENEFIT PLANS (continued)
The status of the defined benefit plan at December 31, 1995 and
1994 is as follows:
December 31,
------------ -----------
1995 1994
------------ -----------
(In thousands)
Fair value of plan assets $ - $ -
------------ -----------
Actuarial present value of benefit obligations:
Vested benefit obligation 2,558 2,512
Non-vested benefit obligation 2,470 1,637
------------ -----------
Accumulated benefit obligation 5,028 4,149
Effect of projected future salary increases 711 512
------------ -----------
Projected benefit obligation 5,739 4,661
------------ -----------
Plan assets less than projected
benefit obligation (5,739) (4,661)
Unrecognized prior service costs 3,692 3,964
Unrecognized (gain)loss 170 (298)
Adjustment to recognize minimum liability (3,151) (4,149)
------------ -----------
Accrued pension cost included in
other liabilities (5,028) (5,144)
------------ -----------
Prior service costs to be recognized in income in future years
of $3,151,000 and $4,149,000 at December 31, 1995 and 1994, respectively,
are included in deposits and other assets on the Consolidated Balance
Sheet.
The assumptions used in computing the information above were as
follows:
1995 1994
------------ -----------
Discount rate 7.00% 7.50%
Future compensation growth rate 4.50% 4.50%
93 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
11STOCK PLANS
The Company has various incentive plans under which stock
options or restricted shares may be granted to key employees,
members of the Board of Directors and all other full and part-time
employees. A total of 3,720,000 shares have been reserved for
issuance as stock options or restricted shares under these plans.
Restricted shares and options granted to key employees vest over a
five-year period. All other options vest over a one-year period.
The options are exercisable, subject to vesting, over ten years at
option prices not less than 100% of the fair market value of the
Company's common stock determined on the date of grant of the
options.
Unearned compensation in connection with restricted stock
issued for future services is recorded on the date of grant at the
fair market value of SBO's common stock and is being amortized
ratably from the date of grant over the five-year vesting period as
it is earned. Compensation expense of $2,166,000 , $1,964,000 and
$111,000 was recognized for the years ended December 31, 1995, 1994
and 1993, respectively. Unearned compensation has been shown as a
reduction of shareholders' equity in the accompanying Consolidated
Balance Sheets.
A summary of certain stock option information is as follows:
Year ended December 31,
------------------------- -----------
1995 1994 1993
------------ ------------ -----------
Options outstanding at January 1 1,916,570 812,320 901,080
Granted 240,000 1,228,750 96,550
Exercised (344,790) (37,160) (176,560)
Forfeited (137,800) (87,340) (8,750)
------------ ------------ -----------
Options outstanding at December 31 1,673,980 1,916,570 812,320
============ ============ ===========
Option price range at December 31 $6.50 to $6.50 to $6.50 to
$20.25 $20.25 $18.00
Options exercisable at December 31 670,280 644,320 529,495
============ ============ ===========
94 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
12SHAREHOLDERS' EQUITY
On May 6, 1994, in connection with the Company's investment
in SHCH, the Company issued warrants to purchase 150,000 shares of
Showboat, Inc. common stock with an exercise price of $15.50 per
share. The warrants were exercisable on issuance and are scheduled
to expire on May 6, 1999. At December 31, 1995, all warrants were
outstanding. The value of the warrants of $1,953,000 has been
reported as part of the investment in SHCH and will be amortized
over the life of the principal assets.
On October 5, 1995, the Board of Directors of the Company declared
a dividend distribution of one Preferred Stock Purchase Right ("Right")
for each outstanding share of common stock of the Company. The
distribution was payable as of October 16, 1995 to stockholders of record
on that date. Each Right entitles the registered holder to purchase from
the Company one one-hundredth (1/100th) of a share of preferred stock of
the Company, designated as a Series A Junior Preferred Stock at a price
of $120.00 per one one-hundredth (1/100th) of a share. The Rights expire
on October 5, 2005, unless earlier redeemed. The Company may redeem the
rights in whole, but not in part, at a price of $.01 per Right. The
Rights, unless earlier redeemed by the Company, will become exercisable
following a public announcement that a person or group has acquired 15%
or more of the common stock or has commenced (or announced an intention
to make) a tender or exchange offer for 30% or more of the common stock.
200,000 shares of preferred stock have been reserved for issuance upon
exercise of the Rights. The Company did not believe the Rights had a
material value upon declaration of the dividend.
Each share of Preferred Stock will be entitled to receive when, as and
if declared, a quarterly dividend in an amount equal to the greater of
$120.00 per share or 100 times the cash dividends declared on the
Company's common stock. In the event of liquidation, the holders of
Preferred Stock will be entitled to receive for each share of Series A
Preferred Stock, a liquidation payment in an amount equal to the greater
of $12,000.00 or 100 times the payment made per share of common stock.
Each share of Preferred Stock will have 100 votes, voting together with
the common stock. In the event of any merger, consolidation or other
transaction in which common stock is exchanged, each share of Preferred
Stock will be entitled to receive 100 times the amount received per share
of common stock. The rights of Preferred Stock as to dividends,
liquidation and voting are protected by anti-dilution provisions.
95 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
13SELECTED QUARTERLY DATA (Unaudited)
Summarized unaudited financial data for interim periods for the
years ended December 31, 1995 and 1994 are as follows:
Quarter ended (a) Year
------------------------------------------------ ended
3/31/95 6/30/95 9/30/95 12/31/95 12/31/95
---------- ----------- ------------ ------------ -----------
(In thousands except per share data)
Net revenues $98,679 $111,864 $119,569 $98,480 $428,592
Income from
operations 7,424 14,274 18,994 5,982 46,674
Net income
(loss)(b) (c) 1,783 4,959 7,826 (1,393) 13,175
Net income (loss)
per share 0.12 0.32 0.50 (0.10) 0.84
Quarter ended (a) Year
------------------------------------------------ ended
3/31/94 6/30/94 9/30/94 12/31/94 12/31/94
---------- ----------- ------------ ------------ -----------
(In thousands except per share data)
Net revenues $88,432 $102,395 $113,231 $97,275 $401,333
Income from
operations 11,088 14,041 17,262 9,437 51,828
Net income 3,440 5,354 5,915 990 15,699
Net income per
share 0.23 0.35 0.38 0.06 1.02
(a)Quarterly results may not be comparable due to the seasonal
nature of operations.
(b)In March 1995, SSP sold certain of its assets and the Company
sold its equity interest in SSP resulting in a net pretax gain
of $2.6 million which is included in net income for the quarter ended
March 31, 1995.
(c)In the quarter ended December 31, 1995, the Company recognized a
$1.4 million pretax write-down related to its 35% investment in
SMG.
96 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
14SUPPLEMENTAL FINANCIAL INFORMATION
A summary of additions and deductions to the allowance for doubtful
accounts receivable for the years ended December 31, 1995, 1994, and 1993
follows:
Balance at Balance
Allowance for beginning at end of
doubtful accounts: of year Additions Deductions Year
--------------- ---------- ---------- ---------- ----------
Year ended
December 31, 1995 $2,400 $1,605 $1,324 $2,681
--------------- ---------- ---------- ---------- ----------
Year ended
December 31, 1994 $2,946 $950 $1,496 $2,400
--------------- ---------- ---------- ---------- ----------
Year ended
December 31, 1993 $3,079 $1,849 $1,982 $2,946
--------------- ---------- ---------- ---------- ----------
15COMMITMENTS AND CONTINGENCIES
In February 1994, the Company and Waterfront Entertainment and
Development, Inc. formed the Showboat Marina Partnership (SMP) to own and
operate a riverboat casino in East Chicago, Indiana (the East Chicago
Project). The Company through its wholly owned subsidiaries owns 55% of
SMP. SMP received its certificate of suitability from the Indiana Gaming
Commission on January 8, 1996. A certificate of suitability indicates
that the recipient has been chosen for licensure and is valid for 180
days, unless extended by the Indiana Gaming Commission. SMP has not yet
received the required owner's license to operate the riverboat. The
certificate of suitability requires SMP to invest no less than an
aggregate of $170.0 million in the East Chicago Project and certain
economic incentives to the city of East Chicago. The Company anticipates
that it will contribute approximately $40.0 million to SMP of which
approximately $8.9 million has been funded as of December 31, 1995. SMP
intends to obtain a combination of debt and equipment financing for an
aggregate of approximately $156.0 million to develop the East Chicago
Project.
Subject to certain qualifications and exceptions, the Company has
agreed to provide a completion guarantee 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. In addition, subject to certain qualifications and
exceptions, the Company has agreed to provide a standby equity commitment
pursuant to which it will agree to cause to be made up to an aggregate of
97 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
15COMMITMENTS AND CONTINGENCIES (continued)
$30.0 million in additional capital contributions during the first three
full four fiscal quarters following the commencement of operations at the
East Chicago Project if the East Chicago Project's combined cash flow (as
defined) is less than $35.0 million for any such full four quarter
period. However, in no event will the Company be required to cause to be
contributed more than $15.0 million in respect of any one such full four
quarter period. If the Company is required to provide a standby equity
commitment, Waterfront Entertainment and Development, Inc. has agreed to
pay the Company $5.2 million, which amount will accrue interest at 12%
per annum until paid, from its share of distributable cash from SMP.
The Company through its subsidiary, Showboat Lemay, Inc., has an 80%
interest in Southboat Limited Partnership (SLP) which, subject to
licensing, plans to build and operate a riverboat and dockside gaming
facility (the Southboat Casino Project) on the Mississippi River in
Lemay, Missouri. The limited partnership agreement sets forth that the
Company's initial capital contribution is $19.5 million and that Showboat
Lemay, Inc., on behalf of SLP, will arrange for a $75.0 million loan to
develop the Southboat Casino Project and to arrange for equipment
financing for the remaining costs of the project. The Company has also
agreed to provide a loan to SLP in the amount of approximately $4.5
million to assist in the development of the Southboat Casino Project.
SLP has entered into a commitment letter to receive up to $75.0 million
of financing from an unrelated third party for the Southboat Casino
Project. The financing commitment expires on May 10, 1996.
On October 13, 1995, SLP executed a 99 year lease for the Southboat
Casino site which commences upon the investigation of SLP for a Missouri
gaming license and the receipt of all permits from the U.S. Army Corps of
Engineers. Fees and rent for the Southboat Casino site are as follows:
(i) a $500,000 acceptance fee, (ii) a $750,000 deposit, (iii) a $2.5
million fee on commencement of the lease and a $2.5 million fee upon the
opening of the Southboat Casino Project, (iv) rent in the amount of $2.0
million per year from commencement of the lease until opening and
(v) rent in the amount of 4% of adjusted gross receipts or Minimum Rent
(as defined) whichever is greater. The Minimum Rent requires a total of
$33.0 million in lease payments from the date of opening through the 15th
lease year (Guarantee Period). The Company has guaranteed SLP's payment
of the Minimum Rent for the Guarantee Period and SLP's timely completion
of construction of, and payment for, all improvements and installations
in connection with SLP's development of the Southboat Casino Project.
The total cost of the Southboat Casino Project is expected to be
approximately $117.0 million. All costs related to SLP have been
expensed by the Company through December 31, 1995.
98 (continued)
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
15COMMITMENTS AND CONTINGENCIES (continued)
In July, 1995 the Company and Rockingham Venture, Inc. (RVI), which
owns the Rockingham Park, a thoroughbred racetrack in New Hampshire,
entered into agreements to develop and manage any additional gaming that
may be authorized at Rockingham Park. In December 1994, the Company
loaned RVI approximately $8.9 million, which loan is secured by a second
mortgage on Rockingham Park. At this time, casino gaming is not
permitted in the State of New Hampshire. Depending upon the number and
types of gaming, if any, legalized by the necessary authorities, the
Company and RVI will make certain capital contributions. At a minimum,
the Company will contribute the promissory note representing the loan.
If casino enabling legislation permits more than 500 slot machines or any
combination of slot machines and table games, then the Company, subject
to available financing, will contribute funds not to exceed 30% of cash
funds required for the project.
The Company is involved in various claims and legal actions arising
in the ordinary course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse
effect on the Company's financial position or results of operations.
99 (continued)
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
This information is incorporated by reference from the
Company's Proxy Statement to be filed with the Commission in
connection with the Company's Annual Meeting of Shareholders on
May 30, 1996.
ITEM 11. EXECUTIVE COMPENSATION.
This information is incorporated by reference from the
Company's Proxy Statement to be filed with the Commission in
connection with the Company's Annual Meeting of Shareholders on
May 30, 1996.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
This information is incorporated by reference from the
Company's Proxy Statement to be filed with the Commission in
connection with the Company's Annual Meeting of Shareholders on
May 30, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
This information is incorporated by reference from the
Company's Proxy Statement to be filed with the Commission in
connection with the Company's Annual Meeting of Shareholders on
May 30, 1996.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K.
(a)(l) The following consolidated financial statements of the
Company and its subsidiaries have been filed as a part
of this report (See "Item 8: Financial Statements and
Supplementary Data"):
Independent Auditors' Report;
Consolidated Balance Sheets as of December 31, 1995 and
1994;
Consolidated Statements of Income for the Years Ended
December 31, 1995, 1994 and 1993;
100
<PAGE>
Consolidated Statements of Shareholders' Equity for the
Years Ended December 31, 1995, 1994 and 1993;
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993; and
Notes to Consolidated Financial Statements
(a)(2) All schedules are omitted because they are not
required, inapplicable, or the information is otherwise
shown in the financial statements or notes thereto.
(a)(3) Exhibits1
EXHIBIT
NO. DESCRIPTION
3.01 Restated Articles of Incorporation of Showboat, Inc.
dated June 10, 1994, is incorporated herein by
reference to Showboat, Inc.'s Amendment No. 1 to
Registration Statement on Form S-3 (file no. 33-54325)
dated July 8, 1994, Item 16, Exhibit 4.02.
3.02 Restated Bylaws of Showboat, Inc. dated October 24,
1995, is incorporated herein by reference to Showboat,
Inc.'s Form 10-Q (file no. 1-7123) for the nine month
period ended September 30, 1995, Part II, Item 6(a),
Exhibit 3.01.
4.01 Specimen Common Stock Certificate for the Common Stock
of Showboat, Inc. is incorporated herein by reference
to Showboat, Inc.'s Amendment No. 1 to Registration
Statement on Form S-3 (file no. 33-54325) dated
July 8, 1994, Item 16, Exhibit 4.01.
4.02 Rights Agreement dated October 5, 1995, between
Showboat, Inc. and American Stock Transfer and Trust
Company; Form of Right Certificate; and Certificate of
Designation of Rights and Preferences of Series A
Junior Preferred Stock of Showboat, Inc., are
incorporated herein by reference to Showboat, Inc.'s
Form 8-K (file no. 1-7123) dated October 5, 1995, Item
7(c), Exhibit 4.01.
4.03 Indenture dated May 18, 1993, for the 9 1/4% First
Mortgage Bonds due 2008 among Showboat, Inc., Ocean
Showboat, Inc., Atlantic City Showboat, Inc., Showboat
Operating Company, and IBJ Schroder Bank & Trust
Company; Guaranty by Ocean Showboat, Inc., Atlantic
City Showboat, Inc. and Showboat Operating Company in
favor of IBJ Schroder Bank & Trust Company; and Form
of Bond Certificate for the 9 1/4% First Mortgage
Bonds due 2008, are incorporated herein by reference
to Showboat, Inc.'s Form 8-K (file no. 1-7123) dated
May 18, 1993, Item 7(c), Exhibit 28.01. First
Supplemental Indenture dated July 18, 1994, for the 9
1/4% First Mortgage Bonds due 2008 among Showboat,
Inc., Ocean Showboat, Inc., Atlantic City Showboat,
Inc., Showboat Operating Company and IBJ
101
<PAGE>
Schroder Bank & Trust Company is incorporated herein
by reference to Showboat, Inc.'s Form 10-K (file no.
1-7123) for the year ended December 31, 1994, Part IV,
Item 14(a)(3), Exhibit 4.02.
4.04 Indenture dated August 10, 1994, for the 13% Senior
Subordinated Notes due 2009 among Showboat, Inc.,
Ocean Showboat, Inc., Atlantic City Showboat, Inc.,
Showboat Operating Company, and Marine Midland Bank;
Guaranty by Ocean Showboat, Inc., Atlantic City
Showboat, Inc. and Showboat Operating Company in favor
of Marine Midland Bank; and Form of Note Certificate
for the 13% Senior Subordinated Notes due 2009, are
incorporated herein by reference to Showboat, Inc.'s
Form 8-K (file no. 1-7123) dated August 10, 1994, Item
7(c), Exhibit 4.01.
10.01 Parent Services Agreement dated November 21, 1985,
between Showboat, Inc. and Atlantic City Showboat,
Inc., is incorporated herein by reference to Showboat,
Inc.'s Form 8-K (file no. 1-7123) dated November 25,
1985, Item 7(c), Exhibit 10.01. Amendment No. 1 to
Parent Services Agreement dated February 1, 1987,
between Showboat, Inc. and Atlantic City Showboat,
Inc., is incorporated herein by reference to Showboat,
Inc.'s Form 10-K (file no. 1-7123) for the year ended
June 30, 1987, Part IV, Item 14(a)(3), Exhibit 10.17.
Amendment No. 2 to Parent Services Agreement dated
December 31, 1990, between Showboat, Inc. and Atlantic
City Showboat, Inc., is incorporated herein by
reference to Showboat, Inc.'s Form 8-K (file no. 1-
7123) dated December 31, 1990, Item 7(c),
Exhibit 28.01. Amendment No. 3 to Parent Services
Agreement dated May 8, 1991, between Showboat, Inc.
and Atlantic City Showboat, Inc., is incorporated
herein by reference to Showboat, Inc.'s Form 10-K
(file no. 1-7123) for the year ended December 31,
1991, Part IV, Item 14(a)(3), Exhibit 10.14.
Amendment No. 4 to Parent Services Agreement dated
August 17, 1993, between Showboat, Inc. and Atlantic
City Showboat, Inc., is incorporated herein by
reference to Showboat, Inc.'s Form 10-K (file no. 1-
7123) for the year ended December 31, 1993, Part IV,
Item 14(a)(3), Exhibit 10.11.
10.02 Tax Allocation Agreement effective May 10, 1993, among
Showboat, Inc. and each of its subsidiaries, is
incorporated herein by reference to Showboat, Inc.'s
Form 10-K (file no. 1-7123) for the year ended
June 30, 1987, Part IV, Item 14(a)(3), Exhibit 10.11.
First Amendment to Tax Allocation Agreement effective
May 10, 1993, among Showboat, Inc. and each of its
subsidiaries, is incorporated herein by reference to
Showboat, Inc.'s Form 10-K (file no. 1-7123) for the
year ended December 31, 1993, Part IV, Item 14(a)(3),
Exhibit 10.07.
10.03 Management Services Agreement dated January 1, 1989,
between Showboat, Inc. and Showboat Operating Company,
is incorporated herein by reference to Showboat,
Inc.'s Form 8-K (file no. 1-7123) dated January 1,
1989, Item 7(c), Exhibit 28.03.
10.04 Showboat, Inc. 1989 Long Term Incentive Plan, as
amended and restated on February 25, 1993, is
incorporated herein by reference to Showboat, Inc.'s
Form 10-K (file no. 1-7123)
102
<PAGE>
for the year ended December 31, 1992, Part IV, Item
14(a)(3), Exhibit 10.23.
10.05 Showboat, Inc. 1989 Directors' Stock Option Plan, as
amended and restated February 25, 1993, is
incorporated herein by reference to Showboat, Inc.'s
Form 10-K (file no. 1-7123) for the year ended
December 31, 1992, Part IV, Item 14(a)(3),
Exhibit 10.27.
10.06 Showboat, Inc. 1994 Executive Long Term Incentive Plan
effective May 25, 1994, is incorporated herein by
reference to Showboat, Inc.'s Form 10-K (file no. 1-
7123) for the year ended December 31, 1994, Part IV,
Item 14(a)(3), Exhibit 10.36.
10.07 Showboat, Inc. Supplemental Executive Retirement Plan
effective April 1, 1994, is incorporated herein by
reference to Showboat, Inc.'s Form 10-K (file no. 1-
7123) for the year ended December 31, 1994, Part IV,
Item 14(a)(3), Exhibit 10.37.
10.08 Showboat, Inc. Restoration Plan effective April 1,
1994, is incorporated herein by reference to Showboat,
Inc.'s Form 10-K (file no. 1-7123) for the year ended
December 31, 1994, Part IV, Item 14(a)(3), Exhibit
10.38.
10.09 Statement regarding Showboat, Inc.'s Incentive Bonus
Plans, is incorporated herein by reference to
Showboat, Inc.'s Form 10-K (file no. 1-7123) for the
year ended December 31, 1992, Part IV, Item 14(a)(3),
Exhibit 10.12.
10.10 Atlantic City Showboat, Inc. Executive Medical
Reimbursement Plan, effective August 15, 1991, is
incorporated herein by reference to Showboat, Inc.'s
Form 10-K (file no. 1-7123) for the year ended
December 31, 1991, Part IV, Item 14(a)(3), Exhibit
10.23.
10.11 Atlantic City Showboat, Inc. Executive Health
Examinations Plan effective January 1, 1989, is
incorporated herein by reference to Showboat, Inc.'s
Form 10-K (file no. 1-7123) for the year ended
December 31, 1989, Part IV, Item 14(a)(3), Exhibit
10.24.
10.12 Form of Severance Agreement between Showboat, Inc. and
certain executive officer and key employees of
Showboat, Inc. and its subsidiaries, is incorporated
herein by reference to Showboat, Inc.'s Form 10-K
(file no. 1-7123) for the year ended December 31,
1994, Part IV, Item 14(a)(3), Exhibit 10.39.
10.13 Form of Indemnification Agreement between Showboat,
Inc. and each director and officer of Showboat, Inc.,
is incorporated herein by reference to Showboat,
Inc.'s Form 10-K (file no. 1-7123) for the year ended
December 31, 1987, Part IV, Item 14(a)(3), Exhibit
10.13.
10.14 Warrant Agreement dated May 6, 1994, between Showboat,
Inc. and DLJ Bridge Finance, Inc., is incorporated by
reference from Showboat, Inc.'s Form 10-K (file no. 1-
7123) for the year ended December 31, 1993, Part IV,
Item 14(a)(3), Exhibit 99.01.
103
<PAGE>
10.15 Lease dated January 1, 1989, between Showboat, Inc.
and Showboat Operating Company, is incorporated herein
by reference to Showboat, Inc.'s Form 8-K (file no. 1-
7123) dated January 1, 1989, Item 7(c), Exhibit 28.01.
10.16 Lease dated January 14, 1994, between Showboat, Inc.
and Exber, Inc.; and Sublease dated November 5, 1966,
between Dodd Smith and John D. Gaughan and Leslie C.
Schwartz, is incorporated herein by reference to
Showboat, Inc.'s Form 10-K (file no. 1-7123) for the
year ended December 31, 1993, Part IV, Item 14(a)(3),
Exhibit 10.39.
10.17 Lease of Retail Store No. 7 dated April 10, 1987,
among Atlantic City Showboat, Inc., R. Craig Bird and
Debra E. Bird; and Guaranty of Lease among Atlantic
City Showboat, Inc., R. Craig Bird and Debra E. Bird,
are incorporated herein by reference to Showboat,
Inc.'s Form 10-K (file no. 1-7123) for the year ended
December 31, 1988, Part IV, Item 14(a)(3), Exhibit
10.24.
10.18 Promissory Note dated August 5, 1993, in the principal
amount of $20,400.69 among Showboat, Inc., R. Craig
Bird and Debra E. Bird, is incorporated herein by
reference to Showboat, Inc.'s Form 10-K for the year
ended December 31, 1993, Part IV, Item 14(a)(3),
Exhibit 10.15.
10.19 Promissory Note dated December 31, 1993, in the
principal amount of $56,801.75 between Showboat, Inc.
and Frank A. Modica, is incorporated herein by
reference to Showboat, Inc.'s Form 10-K (file no. 1-
7123) for the year ended December 31, 1993, Part IV,
Item 14(a)(3), Exhibit 10.08.
10.20 Ground Lease dated October 26, 1983, between Ocean
Showboat, Inc. and Resorts International, Inc., is
incorporated herein by reference to Showboat, Inc.'s
Form 8-K (file no. 1-7123) as amended by a Form 8
filed with the Securities and Exchange Commission on
November 28, 1983. Assignment and Assumption of
Leases dated December 3, 1985, between Ocean Showboat,
Inc. and Atlantic City Showboat, Inc.; First Amendment
to Lease Agreement dated January 15, 1985, between
Resorts International, Inc. and Atlantic City
Showboat, Inc.; Second Amendment to Lease Agreement
dated July 5, 1985, between Resorts International,
Inc. and Atlantic City Showboat, Inc., are
incorporated herein by reference to the Form 10-K
(file no. 1-7123) for the year ended June 30, 1985,
Part IV, Item 14(a)(3), Exhibit 10.02. Restated Third
Amendment to Lease Agreement dated August 28, 1986,
between Resorts International, Inc. and Atlantic City
Showboat, Inc., is incorporated herein by reference to
the Form 10-K (file no. 1-7123) for the year ended
June 30, 1986, Part IV, Item 14(a)(3), Exhibit 10.08;
Fourth Amendment to Lease Agreement dated December 16,
1986, between Resorts International, Inc. and Atlantic
City Showboat, Inc.; Fifth Amendment to Lease
Agreement dated March 2, 1987, between Resorts
International, Inc. and Atlantic City Showboat, Inc.;
Sixth Amendment to Lease Agreement dated March 13,
1987, between Resorts International, Inc. and Atlantic
City Showboat, Inc.; Indemnity Agreement dated
January 15, 1985, among Resorts
104
<PAGE>
International, Inc., Atlantic City Showboat, Inc. and
Ocean Showboat, Inc.; and Amended Indemnity Agreement
dated December 3, 1985, among Resorts International,
Inc., Atlantic City Showboat, Inc. and Ocean Showboat,
Inc., are incorporated herein by reference to
Showboat, Inc.'s Form 10-K (file no. 1-7123) for
the year ended June 30, 1987, Part IV, Item 14(a)(3),
Exhibit 10.02; Seventh Amendment to Lease Agreement
dated October 18, 1988, between Resorts International,
Inc. and Atlantic City Showboat, Inc., is incorporated
herein by reference to Showboat, Inc.'s Form 8-K
(file no. 1-7123) dated November 16, 1988, Item
7(c), Exhibit 28.01; Eighth Amendment to Lease
Agreement between Atlantic City Showboat, Inc.
and Resorts International, Inc. International, Inc.
dated May 18, 1993, is incorporated herein by
reference to Showboat, Inc.'s Form 8-K (file no.
1-7123) dated May 18, 1993, Item 7(c), Exhibit 28.06.
10.21 Closing Escrow Agreement dated September 21, 1988,
among Housing Authority and Urban Redevelopment Agency
of the City of Atlantic City, Resorts International,
Inc., Atlantic City Showboat, Inc., Trump Taj Mahal
Associates Limited Partnership, and Clapp & Eisenberg,
P.C.; Agreement as to Assumption of Obligations with
respect to Properties dated September 21, 1988, among
Atlantic City Showboat, Inc., Trump Taj Mahal
Associates Limited Partnership and Trump Taj Mahal
Realty Corp.; First Amendment of Agreement as to
Assumption of Obligations with respect to Properties
dated September 21, 1988, among Atlantic City
Showboat, Inc., Trump Taj Mahal Associates Limited
Partnership and Trump Taj Mahal Realty Corp.;
Settlement Agreement dated October 18, 1988, among
Atlantic City Showboat, Inc., Trump Taj Mahal
Associates Limited Partnership, Trump Taj Mahal Realty
Corp., Resorts International, Inc. and the Housing
Authority and Urban Redevelopment Agency of the City
of Atlantic City; Tri-Party Agreement dated
October 18, 1988, among Resorts International, Inc.,
Atlantic City Showboat, Inc. and Trump Taj Mahal
Associates Limited Partnership; Declaration of
Easement and Right of Way Agreement dated October 18,
1988, between the Housing Authority and Urban
Redevelopment Agency of the City of Atlantic City, and
Atlantic City Showboat, Inc.; and Certificate of Trump
Taj Mahal Associates Limited Partnership and Resorts
International, Inc. dated November 16, 1988, are
incorporated herein by reference to Showboat, Inc.'s
Form 8-K (file no. 1-7123) dated November 16, 1988,
Item 7(c), Exhibit 28.01. Revised Second Amendment to
Agreement as to Assumption of Obligations with respect
to Properties dated May 24, 1989, among Atlantic City
Showboat, Inc., Trump Taj Mahal Associates Limited
Partnership and Trump Taj Mahal Realty Corp., is
incorporated herein by reference to Showboat, Inc.'s
Form 10-K (file no. 1-7123) for the year ended
December 31, 1989, Part IV, Item 14(a)(3), Exhibit
10.17.
10.22 Letter agreement dated September 23, 1992, between
Trump Taj Mahal Associates and Atlantic City Showboat,
Inc.; and letter agreement dated October 26, 1992 to
Trump Taj Mahal Associates from Atlantic City
Showboat, Inc., are incorporated herein by reference
to Showboat, Inc.'s Form 10-K (file no. 1-7123) for
the year ended December 31, 1992, Part IV, Item
14(a)(3), Exhibit 10.24.
105
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10.23 Lease dated December 22, 1994, between Housing
Authority and Urban Redevelopment Agency of the City
of Atlantic City and Atlantic City Showboat, Inc.; Tri-
Party Agreement dated May 26, 1994, among Housing
Authority and Urban Redevelopment Agency of the City
of Atlantic City, Forest City Ratner Companies and
Atlantic City Showboat, Inc.; Terms and Conditions
Part II of Contract for Sale of Land for Private
Redevelopment between Housing Authority and Urban
Redevelopment Agency of the City of Atlantic City and
Atlantic City Showboat, Inc.; and Rider to Contract
for Sale of Land for Private Redevelopment between
Housing Authority and Urban Redevelopment Agency of
the City of Atlantic City and Atlantic City Showboat,
Inc., are incorporated herein by reference to
Showboat, Inc.'s Form 10-K (file no. 1-7123) for the
year ended December 31, 1994, Part IV, Item 14(a)(3),
Exhibit 10.46.
10.24 Agreement Amending and Restating the Tri-Party
Agreement Dated as of May 26, 1994, among the Housing
Authority and Urban Redevelopment Agency of the City
of Atlantic City, Forest City Ratner Companies and
Atlantic City Showboat, Inc. regarding Development of
a Portion of the Uptown Urban Renewal Tract dated
December 14, 1995; Release and Subordination Agreement
dated December 14, 1995, between IBJ Schroder Bank &
Trust Company and Atlantic City Showboat, Inc.; First
Amendment to Leasehold in Pari Passu Mortgage,
Assignment of Rents and Security Agreement and
Collateral Assignment of Easement Rights-Mortgage
Spreader Agreement dated December 15, 1995, between
Atlantic City Showboat, Inc. and NatWest Bank, N.A.;
Third Amendment to Leasehold Mortgage, Assignment of
Rents and Security Agreement Dated as of May 19, 1993
- Mortgage Spreader Agreement dated December 14, 1995,
between Atlantic City Showboat, Inc. and IBJ Schroder
Bank & Trust Company; Fourth Amendment to Leasehold
Mortgage, Assignment of Rents and Security Agreement
Dated as of May 18, 1993 - Release of Part of
Mortgaged Property and Subordination Agreement dated
December 14, 1995, between IBJ Schroder Bank & Trust
Company and Atlantic City Showboat, Inc.
10.25 Securities Purchase Contract dated March 29, 1988,
between the Casino Reinvestment Development Authority
and Atlantic City Showboat, Inc., is incorporated
herein by reference to Showboat, Inc.'s Form 10-K
(file no. 1-7123) for the year ended December 31,
1988, Part IV, Item 14(a)(3), Exhibit 10.23.
10.26 Deed of Trust, Assignment of Rents, and Security
Agreement dated May 18, 1993, by Showboat, Inc. to
Nevada Title Company in favor of IBJ Schroder Bank &
Trust Company; Showboat, Inc. Security and Pledge
Agreement dated May 18, 1993, between Showboat, Inc.
and the IBJ Schroder Bank & Trust Company; Trademark
Security Agreement dated May 18, 1993, by Showboat,
Inc. in favor of IBJ Schroder Bank & Trust Company;
Unsecured Indemnity Agreement dated May 18, 1993, by
Showboat, Inc. in favor of IBJ Schroder Bank & Trust
Company; and Showboat Operating Company Security
Agreement dated May 18, 1993, between Showboat
Operating Company and IBJ Schroder Bank & Trust
Company, are incorporated by reference to Showboat,
Inc.'s Form 8-K (file no. 1-7123) dated May 18, 1993,
Item 5, Exhibit 28.02. Leasehold Mortgage, Assignment
of Rents, and Security Agreement dated May 18, 1993,
by Atlantic City Showboat, Inc. in favor of IBJ
Schroder Bank & Trust Company; Assignment of Leases
and Rents dated May 18, 1993, between Atlantic City
Showboat, Inc. and IBJ Schroder Bank & Trust Company;
and Ocean Showboat, Inc. Security and Pledge Agreement
dated May 18, 1993, between Ocean Showboat, Inc. and
IBJ Schroder Bank & Trust Company, are incorporated by
reference to Showboat, Inc.'s Form 8-K (file no. 1-
7123) dated May 18, 1993, Item 7(c), Exhibit 28.03.
Intercompany Note dated May 18, 1993, in the principal
amount of $215.0 million; Assignment of Lease and
Rents dated May 18, 1993, between Atlantic City
Showboat, Inc. and Showboat, Inc.; and Issuer
Collateral Assignment dated May 18, 1993, by Atlantic
City Showboat, Inc. in favor of IBJ Schroder Bank &
Trust Company, are incorporated by reference to
Showboat, Inc.'s Form
106
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8-K (file no. 1-7123) dated May 18, 1993, Item 7(c),
Exhibit 28.04. Showboat Development Company Security
and Pledge Agreement dated July 18, 1994, between
Showboat Development Company and IBJ Schroder Bank &
Trust Company; and Showboat Louisiana, Inc. Security
and Pledge Agreement dated July 18, 1994, between
Showboat Louisiana, Inc. and IBJ Schroder Bank &
Trust Company, are incorporated herein by reference to
Showboat, Inc.'s Form 10-K (file no. 1-7123) for
the year ended December 31, 1994, Part IV, Item
14(a)(3), Exhibit 4.02.
10.27 First Amendment to the Leasehold Mortgage, Assignment
of Rents and Security Agreement dated July 9, 1993,
between Atlantic City Showboat, Inc. and Showboat,
Inc., is incorporated by reference to Showboat, Inc.'s
Form 8-K (file no. 1-7123) dated July 7, 1993,
Item 7(c), Exhibit 28.01. First Amendment to the
Leasehold Mortgage, Assignment of Rents and Security
Agreement dated July 9, 1993, between Atlantic City
Showboat, Inc. and IBJ Schroder Bank & Trust Company,
is incorporated by reference to Showboat, Inc.'s Form
8-K (file no. 1-7123) dated July 7, 1993, Item 7(c),
Exhibit 28.02. Assignment of Rights under Agreement
dated July 9, 1993, by Atlantic City Showboat, Inc. in
favor of IBJ Schroder Bank & Trust Company, is
incorporated by reference to Showboat, Inc.'s Form 8-K
(file no. 1-7123) dated July 7, 1993, Item 7(c),
Exhibit 28.03. Form of Deed for Sale of Land for
Private Redevelopment for Tract 1 and Tract 2 each
dated July 7, 1993, is incorporated by reference to
Showboat, Inc.'s Form 8-K (file no. 1-7123) dated
July 7, 1993, Item 7(c), Exhibit 28.04. Use and
Occupancy Agreement dated July 7, 1993, between
Atlantic City Housing Authority and Urban
Redevelopment Agency and Atlantic City Showboat, Inc.,
is incorporated by reference to Showboat, Inc.'s Form
8-K (file no. 1-7123) dated July 7, 1993, Item 7(c),
Exhibit 28.05.
10.28 Agreement for Sale of Partnership interests dated
March 31, 1995, among Lake Pontchartrain Showboat,
Inc., Showboat Louisiana, Inc., Showboat, Inc., Player
Riverboat, LLC, Players Riverboat Management, Inc. and
Players International, Inc., is incorporated herein by
reference to Showboat, Inc.'s Form 8-K (file no. 1-
7123) dated March 31, 1995, Item 7(c), Exhibit 28.01.
107
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10.29 Purchase and Sale Agreement dated January 4, 1995,
between Showboat Star Partnership and Belle of
Orleans, L.L.C.; Assignment of Leases dated January 4,
1995, between Showboat Star Partnership and Belle of
Orleans, L.L.C.; and Sublease dated January 4, 1995,
between Showboat Star Partnership and Belle of
Orleans, L.L.C., are incorporated herein by reference
to Showboat, Inc.'s Form 10-K (file no. 1-7123) for
the year ended December 31, 1994, Part IV, Item
14(a)(3), Exhibit 10.41.
10.30 Promissory Note dated January 1, 1995, in the
principal amount of $23,807,832 by Showboat Louisiana,
Inc. in favor of Showboat, Inc., is incorporated
herein by reference to Showboat, Inc.'s Form 10-K
(file no. 1-7123) for the year ended December 31,
1994, Part IV, Item 14(a)(3), Exhibit 10.43.
10.31 Promissory Note dated March 2, 1995, in the principal
amount of $25,000,000 by Lake Pontchartrain Showboat,
Inc. and Showboat Louisiana, Inc. in favor of
Showboat, Inc., is incorporated herein by reference to
Showboat, Inc.'s Form 10-K (file no. 1-7123) for the
year ended December 31, 1994, Part IV, Item 14(a)(3),
Exhibit 10.44.
10.32 Casino Operations Agreement (excluding exhibits) dated
April 22, 1994, among Leighton Properties Pty
Limited, New South Wales Casino Control Authority,
Showboat Australia Pty Limited, Showboat Operating
Company, Sydney Casino Management Pty Limited, Sydney
Harbour Casino Holdings Limited, Sydney Harbour Casino
Pty Limited and Sydney Harbour Casino Properties Pty
Limited; First Amending Deed dated October 6, 1994;
Second Amending Deed (undated); Third Amending Deed
dated December 13, 1994; Casino Complex Management
Agreement dated April 21, 1994, among Sydney Harbour
Casino Properties Pty Limited, Showboat Australia Pty
Limited and Sydney Casino Management Pty Limited; and
Development Agreement dated April 21, 1994, between
Leighton Properties Pty Limited and Sydney Harbour
Casino Properties Pty Limited.
10.33 Agreement dated September 13, 1993, among Showboat,
Inc., Showboat Indiana, Inc., Showboat Operating
Company, Showboat Development Company, Showboat
Indiana Investment Limited Partnership and Waterfront
Entertainment and Development, Inc.; and Showboat
Marina Partnership Agreement dated January 31, 1994,
between Waterfront Entertainment and Development, Inc.
and Showboat Investment Limited Partnership, are
incorporated herein by reference to Showboat, Inc.'s
Form 10-K (file no. 1-7123) for the year ended
December 31, 1993, Part IV, Item 14(a)(3), Exhibit
10.38. Amended and Restated Showboat Marina
Partnership Agreement dated March 1, 1996, between
Waterfront Entertainment and Development, Inc. and
Showboat Indiana Investment Limited Partnership;
Agreement of Partnership of Showboat Marina Investment
Partnership dated March 1, 1996, between Showboat
Indiana Investment Limited Partnership and Waterfront
Entertainment and Development, Inc.; Agreement of
Partnership of Showboat Marina Casino Partnership
dated March 1, 1996, between Showboat Marina
Partnership and Showboat Marina Investment
Partnership; Letter agreement regarding economic
development dated April 8, 1994, by Showboat Marina
Partnership in favor of the City of East Chicago;
Letter agreement regarding economic development dated
April 18, 1995, by Showboat Marina Partnership in
favor of the City of East Chicago; Redevelopment
Project
108
<PAGE>
Lease dated October 19, 1995, between Showboat
Marina Partnership and the City of East Chicago; and
Promissory Note dated January 1, 1996, in the
principal amount of $9,316,367 by Showboat Indiana
Investment Limited Partnership in favor of Showboat,
Inc.
10.34 Agreement of Limited Partnership of Southboat Limited
Partnership effective May 1, 1995, between Showboat
Lemay, Inc. and Futuresouth, Inc.; Management
Agreement dated May 2, 1995, between Southboat
Partnership (a predecessor of Southboat Limited
Partnership) and Showboat Operating Company; Trademark
License Agreement dated May 2, 1995, between Southboat
Partnership and Showboat, Inc.; Lease and Development
Agreement dated October 13, 1995, between the St.
Louis County Port Authority and Southboat Limited
Partnership; Escrow Agreement dated October 13, 1995,
between the St. Louis County Port Authority, Southboat
Limited Partnership, Showboat, Inc. and Boatmen's
Trust Company; Guarantee of Minimum Rent dated
October 13, 1995, by Showboat, Inc.; Guarantee of
Completion dated October 13, 1995, by Showboat, Inc.,
are incorporated herein by reference to Showboat,
Inc.'s Form 8-K (file no. 1-7123) dated October 1,
1995, Item 7(c), Exhibits 10.01 through 10.06,
inclusive.
10.35 Non-Negotiable Mortgage Promissory Note dated
December 28, 1994, in the principal amount of
$8,850,000, by Rockingham Venture, Inc. in favor of
Showboat, Inc.; Mortgage and Security Agreement dated
December 28, 1994, between Rockingham Venture, Inc.
and Showboat, Inc., is incorporated herein by
reference to Showboat, Inc.'s Form 10-K (file no. 1-
7123) for the year ended December 31, 1994, Part IV,
Item 14(a)(3), Exhibit 10.42. Limited Liability
Company Agreement of Showboat Rockingham Company,
L.L.C. dated July 27, 1995, among Rockingham Venture,
Inc., Showboat New Hampshire, Inc. and Showboat
Rockingham Company, L.L.C.; Management Agreement
dated July 27, 1995, among Showboat Rockingham Company
L.L.C., Showboat Operating Company and Rockingham
Venture, Inc.; Administrative Services Agreement dated
July 27, between Showboat Operating Company and
Showboat Rockingham Company, L.L.C.; and Trademark
License Agreement dated July 27, 1995, between
Showboat, Inc. and Showboat Rockingham Company, L.L.C.
10.36 Promissory Note dated March 19, 1995, in the principal
amount of $15,000,000 by Atlantic City Showboat, Inc.
in favor of Showboat, Inc., is incorporated herein by
reference to Showboat, Inc.'s Form 10-K (file no. 1-
7123) for the year ended December 31, 1994, Part IV,
Item 14(a)(3), Exhibit 10.45.
10.37 Operating Agreement dated January 25, 1995, between
Showboat Missouri, Inc. and Randolph Riverboat
Company, Inc.; Management Agreement dated January 25,
1995, between Showboat Operating Company and Randolph
Riverboat Company, Inc.; Administrative Services
Agreement dated January 25, 1995, between Showboat
Operating Company and Randolph Riverboat Company,
L.L.C.; and Trademark License Agreement dated
January 25, between Showboat, Inc. and Randolph
Riverboat Company, L.L.C., are
109
<PAGE>
incorporated herein by reference to Showboat, Inc.'s
Form 10-K (file no. 1-7123) for the year ended
December 31, 1994, Part IV, Item 14(a)(3), Exhibit
10.40. Promissory Note dated January 1, 1996, in the
principal amount of $5,024,470 by Showboat Missouri,
Inc. in favor of Showboat, Inc.
10.38 Loan and Guaranty Agreement dated July 14, 1995, among
NatWest Bank, N.A., Showboat, Inc. and Atlantic City
Showboat, Inc., Ocean Showboat, Inc. and Showboat
Operating Company; Revolving Note dated July 14, 1995,
in the principal amount of $25.0 million by Showboat,
Inc. in favor of NatWest Bank, N.A.; Deed of Trust,
Assignment of Rents and Security Agreement dated
July 14,1995, by Showboat, Inc. in favor of Nevada
Title Company for the benefit of NatWest Bank, N.A.;
Leasehold in Pari Passu Mortgage, Assignment of Rents
and Security Agreement dated July 14, 1995, between
NatWest Bank and Atlantic City Showboat, Inc.;
Assignment of Leases and Rents dated July 14, 1995,
between NatWest Bank and Atlantic City Showboat, Inc.;
Intercreditor Agreement for Pari Passu Indebtedness
Relating to Atlantic City Showboat dated July 14, 1995,
among Showboat, Inc., Atlantic City Showboat, Inc.,
IBJ Schroder Bank & Trust Company and NatWest Bank,
N.A.; and Intercreditor Agreement for Pari Passu
Indebtedness Relating to Las Vegas Showboat dated
July 14, 1995, among Showboat, Inc., IBJ Schroder Bank
& Trust Company and NatWest Bank, N.A.
10.39 Promissory Note dated January 1, 1996, in the
principal amount of $51,314,536 by Showboat Fifteen,
Inc. in favor of Showboat, Inc.
21.01 List of Subsidiaries.
23.01 Consent of KPMG Peat Marwick LLP.
27.01 Financial Data Schedule.
(b) REPORTS ON FORM 8-K.
Form 8-K, Item 5, dated October 13, 1995, reporting the
execution of a lease and development agreement by and between SLP
and the St. Louis County Port Authority.
Form 8-K, Items 5 and 7, dated October 5, 1995, reporting a
dividend of Preferred Stock Purchase Rights.
110
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by this undersigned,
thereunto duly authorized.
REGISTRANT: SHOWBOAT, INC.
By: /s/ J. Kell Houssels, III
J. Kell Houssels, III,
President and Chief
Executive Officer
(principal executive
officer)
DATE: March 19, 1996
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
March 19, 1996 By: /s/ J. K. Houssels
J.K. Houssels, Chairman of
the Board
March 19, 1996 By: /s/ J. Kell Houssels, III
J. Kell Houssels, III,
President, Chief
Executive Officer and
Director
March 19, 1996 By: /s/ R. Craig Bird
R. Craig Bird, Executive
Vice President- Finance
Administration and Chief
Financial Officer
(principal accounting
officer)
March 19, 1996 By: /s/ William C. Richardson
William C. Richardson,
Director
111
<PAGE>
March 19, 1996 By: /s/ John D. Gaughan
John D. Gaughan, Director
March 19, 1996 By: /s/ Jeanne S. Stewart
Jeanne S. Stewart,
Director
March 19, 1996 By: /s/ Frank A. Modica
Frank A. Modica, Director
March 19, 1996 By: /s/ H. Gregory Nasky
H. Gregory Nasky,
Executive Vice President,
Secretary and Director
March 19, 1996 By: /s/ George A. Zettler
George A. Zettler,
Director
March 19, 1996 By: /s/ Carolyn M. Sparks
Carolyn M. Sparks,
Director
112
<PAGE>
EXHIBIT INDEX
EXHIBIT PAGE
NO. DESCRIPTION NO.
3.01 Restated Articles of Incorporation of Showboat,
Inc. dated June 10, 1994, is incorporated herein
by reference to Showboat, Inc.'s Amendment No. 1
to Registration Statement on Form S-3 (file no.
33-54325) dated July 8, 1994, Item 16, Exhibit
4.02.
3.02 Restated Bylaws of Showboat, Inc. dated
October 24, 1995, is incorporated herein by
reference to Showboat, Inc.'s Form 10-Q (file
no. 1-7123) for the nine month period ended
September 30, 1995, Part II, Item 6(a),
Exhibit 3.01.
4.01 Specimen Common Stock Certificate for the Common
Stock of Showboat, Inc. is incorporated herein
by reference to Showboat, Inc.'s Amendment No. 1
to Registration Statement on Form S-3 (file no.
33-54325) dated July 8, 1994, Item 16, Exhibit
4.01.
4.02 Rights Agreement dated October 5, 1995, between
Showboat, Inc. and American Stock Transfer and
Trust Company; Form of Right Certificate; and
Certificate of Designation of Rights and
Preferences of Series A Junior Preferred Stock
of Showboat, Inc., are incorporated herein by
reference to Showboat, Inc.'s Form 8-K (file no.
1-7123) dated October 5, 1995, Item 7(c),
Exhibit 4.01.
4.03 Indenture dated May 18, 1993, for the 9 1/4%
First Mortgage Bonds due 2008 among Showboat,
Inc., Ocean Showboat, Inc., Atlantic City
Showboat, Inc., Showboat Operating Company,
and IBJ Schroder Bank & Trust Company; Guaranty
by Ocean Showboat, Inc., Atlantic City Showboat,
Inc. and Showboat Operating Company in favor
of IBJ Schroder Bank & Trust Company; and Form
of Bond Certificate for the 9 1/4% First
Mortgage Bonds due 2008, are incorporated herein
by reference to Showboat, Inc.'s Form 8-K
(file no. 1-7123) dated May 18, 1993, Item
7(c), Exhibit 28.01. First Supplemental
Indenture dated July 18, 1994, for the 9 1/4%
First Mortgage Bonds due 2008 among Showboat,
Inc., Ocean Showboat, Inc., Atlantic City
Showboat, Inc., Showboat Operating Company and
IBJ Schroder Bank & Trust Company is
incorporated herein by reference to Showboat,
Inc.'s Form 10-K (file no. 1-7123) for the year
ended December 31, 1994, Part IV, Item 14(a)(3),
Exhibit 4.02.
4.04 Indenture dated August 10, 1994, for the 13%
Senior Subordinated Notes due 2009 among
Showboat, Inc., Ocean Showboat, Inc., Atlantic
City Showboat, Inc., Showboat Operating Company,
and Marine Midland Bank; Guaranty by Ocean
Showboat, Inc., Atlantic City Showboat, Inc. and
Showboat Operating
113
<PAGE>
Company in favor of Marine Midland Bank; and
Form of Note Certificate for the 13% Senior
Subordinated Notes due 2009, are incorporated
herein by reference to Showboat, Inc.'s Form
8-K (file no. 1-7123) dated August 10, 1994,
Item 7(c), Exhibit 4.01.
10.01 Parent Services Agreement dated November 21,
1985, between Showboat, Inc. and Atlantic City
Showboat, Inc., is incorporated herein by
reference to Showboat, Inc.'s Form 8-K (file no.
1-7123) dated November 25, 1985, Item 7(c),
Exhibit 10.01. Amendment No. 1 to Parent
Services Agreement dated February 1, 1987,
between Showboat, Inc. and Atlantic City
Showboat, Inc., is incorporated herein by
reference to Showboat, Inc.'s Form 10-K (file
no. 1-7123) for the year ended June 30, 1987,
Part IV, Item 14(a)(3), Exhibit 10.17.
Amendment No. 2 to Parent Services Agreement
dated December 31, 1990, between Showboat, Inc.
and Atlantic City Showboat, Inc., is
incorporated herein by reference to Showboat,
Inc.'s Form 8-K (file no. 1-7123) dated
December 31, 1990, Item 7(c), Exhibit 28.01.
Amendment No. 3 to Parent Services Agreement
dated May 8, 1991, between Showboat, Inc. and
Atlantic City Showboat, Inc., is incorporated
herein by reference to Showboat, Inc.'s Form 10-
K (file no. 1-7123) for the year ended
December 31, 1991, Part IV, Item 14(a)(3),
Exhibit 10.14. Amendment No. 4 to Parent
Services Agreement dated August 17, 1993,
between Showboat, Inc. and Atlantic City
Showboat, Inc., is incorporated herein by
reference to Showboat, Inc.'s Form 10-K (file
no. 1-7123) for the year ended December 31,
1993, Part IV, Item 14(a)(3), Exhibit 10.11.
10.02 Tax Allocation Agreement effective May 10, 1993,
among Showboat, Inc. and each of its
subsidiaries, is incorporated herein by
reference to Showboat, Inc.'s Form 10-K (file
no. 1-7123) for the year ended June 30, 1987,
Part IV, Item 14(a)(3), Exhibit 10.11. First
Amendment to Tax Allocation Agreement effective
May 10, 1993, among Showboat, Inc. and each of
its subsidiaries, is incorporated herein by
reference to Showboat, Inc.'s Form 10-K (file
no. 1-7123) for the year ended December 31,
1993, Part IV, Item 14(a)(3), Exhibit 10.07.
10.03 Management Services Agreement dated January 1,
1989, between Showboat, Inc. and Showboat
Operating Company, is incorporated herein by
reference to Showboat, Inc.'s Form 8-K (file no.
1-7123) dated January 1, 1989, Item 7(c),
Exhibit 28.03.
10.04 Showboat, Inc. 1989 Long Term Incentive Plan, as
amended and restated on February 25, 1993, is
incorporated herein by reference to Showboat,
Inc.'s Form 10-K (file no. 1-7123) for the year
ended December 31, 1992, Part IV, Item 14(a)(3),
Exhibit 10.23.
114
<PAGE>
10.05 Showboat, Inc. 1989 Directors' Stock Option
Plan, as amended and restated February 25, 1993,
is incorporated herein by reference to Showboat,
Inc.'s Form 10-K (file no. 1-7123) for the year
ended December 31, 1992, Part IV, Item 14(a)(3),
Exhibit 10.27.
10.06 Showboat, Inc. 1994 Executive Long Term
Incentive Plan effective May 25, 1994, is
incorporated herein by reference to Showboat,
Inc.'s Form 10-K (file no. 1-7123) for the year
ended December 31, 1994, Part IV, Item 14(a)(3),
Exhibit 10.36.
10.07 Showboat, Inc. Supplemental Executive Retirement
Plan effective April 1, 1994, is incorporated
herein by reference to Showboat, Inc.'s Form 10-
K (file no. 1-7123) for the year ended
December 31, 1994, Part IV, Item 14(a)(3),
Exhibit 10.37.
10.08 Showboat, Inc. Restoration Plan effective
April 1, 1994, is incorporated herein by
reference to Showboat, Inc.'s Form 10-K (file
no. 1-7123) for the year ended December 31,
1994, Part IV, Item 14(a)(3), Exhibit 10.38.
10.09 Statement regarding Showboat, Inc.'s Incentive
Bonus Plans, is incorporated herein by reference
to Showboat, Inc.'s Form 10-K (file no. 1-7123)
for the year ended December 31, 1992, Part IV,
Item 14(a)(3), Exhibit 10.12.
10.10 Atlantic City Showboat, Inc. Executive Medical
Reimbursement Plan, effective August 15, 1991,
is incorporated herein by reference to Showboat,
Inc.'s Form 10-K (file no. 1-7123) for the year
ended December 31, 1991, Part IV, Item 14(a)(3),
Exhibit 10.23.
10.11 Atlantic City Showboat, Inc. Executive Health
Examinations Plan effective January 1, 1989, is
incorporated herein by reference to Showboat,
Inc.'s Form 10-K (file no. 1-7123) for the year
ended December 31, 1989, Part IV, Item 14(a)(3),
Exhibit 10.24.
10.12 Form of Severance Agreement between Showboat,
Inc. and certain executive officer and key
employees of Showboat, Inc. and its
subsidiaries, is incorporated herein by
reference to Showboat, Inc.'s Form 10-K (file
no. 1-7123) for the year ended December 31,
1994, Part IV, Item 14(a)(3), Exhibit 10.39.
10.13 Form of Indemnification Agreement between
Showboat, Inc. and each director and officer of
Showboat, Inc., is incorporated herein by
reference to Showboat, Inc.'s Form 10-K (file
no. 1-7123) for the year ended December 31,
1987, Part
115
<PAGE>
IV, Item 14(a)(3), Exhibit 10.13.
10.14 Warrant Agreement dated May 6, 1994, between
Showboat, Inc. and DLJ Bridge Finance, Inc., is
incorporated by reference from Showboat, Inc.'s
Form 10-K (file no. 1-7123) for the year ended
December 31, 1993, Part IV, Item 14(a)(3),
Exhibit 99.01.
10.15 Lease dated January 1, 1989, between Showboat,
Inc. and Showboat Operating Company, is
incorporated herein by reference to Showboat,
Inc.'s Form 8-K (file no. 1-7123) dated
January 1, 1989, Item 7(c), Exhibit 28.01.
10.16 Lease dated January 14, 1994, between Showboat,
Inc. and Exber, Inc.; and Sublease dated
November 5, 1966, between Dodd Smith and John D.
Gaughan and Leslie C. Schwartz, is incorporated
herein by reference to Showboat, Inc.'s Form 10-
K (file no. 1-7123) for the year ended
December 31, 1993, Part IV, Item 14(a)(3),
Exhibit 10.39.
10.17 Lease of Retail Store No. 7 dated April 10,
1987, among Atlantic City Showboat, Inc., R.
Craig Bird and Debra E. Bird; and Guaranty of
Lease among Atlantic City Showboat, Inc., R.
Craig Bird and Debra E. Bird, are incorporated
herein by reference to Showboat, Inc.'s Form 10-
K (file no. 1-7123) for the year ended
December 31, 1988, Part IV, Item 14(a)(3),
Exhibit 10.24.
10.18 Promissory Note dated August 5, 1993, in the
principal amount of $20,400.69 among Showboat,
Inc., R. Craig Bird and Debra E. Bird, is
incorporated herein by reference to Showboat,
Inc.'s Form 10-K for the year ended December 31,
1993, Part IV, Item 14(a)(3), Exhibit 10.15.
10.19 Promissory Note dated December 31, 1993, in the
principal amount of $56,801.75 between Showboat,
Inc. and Frank A. Modica, is incorporated herein
by reference to Showboat, Inc.'s Form 10-K (file
no. 1-7123) for the year ended December 31,
1993, Part IV, Item 14(a)(3), Exhibit 10.08.
10.20 Ground Lease dated October 26, 1983, between
Ocean Showboat, Inc. and Resorts International,
Inc., is incorporated herein by reference to
Showboat, Inc.'s Form 8-K (file no. 1-7123) as
amended by a Form 8 filed with the Securities
and Exchange Commission on November 28, 1983.
Assignment and Assumption of Leases dated
December 3, 1985, between Ocean Showboat, Inc.
and Atlantic City Showboat, Inc.; First
Amendment to Lease Agreement dated January 15,
1985, between Resorts International, Inc. and
Atlantic City Showboat, Inc.; Second Amendment
to Lease Agreement dated July 5, 1985, between
Resorts International, Inc. and Atlantic City
Showboat, Inc., are
116
<PAGE>
incorporated herein by reference to the Form
10-K (file no. 1-7123) for the year ended June
30, 1985, Part IV, Item 14(a)(3), Exhibit
10.02. Restated Third Amendment to Lease
Agreement dated August 28, 1986, between Resorts
International, Inc. and Atlantic City Showboat,
Inc., is incorporated herein by reference to the
Form 10-K (file no. 1-7123) for the year ended
June 30, 1986, Part IV, Item 14(a)(3), Exhibit
10.08; Fourth Amendment to Lease Agreement
dated December 16, 1986, between Resorts
International, Inc. and Atlantic City Showboat,
Inc.; Fifth Amendment to Lease Agreement dated
March 2, 1987, between Resorts International,
Inc. and Atlantic City Showboat, Inc.; Sixth
Amendment to Lease Agreement dated March 13,
1987, between Resorts International, Inc. and
Atlantic City Showboat, Inc.; Indemnity
Agreement dated January 15, 1985, among Resorts
International, Inc., Atlantic City Showboat,
Inc. and Ocean Showboat, Inc.; and Amended
Indemnity Agreement dated December 3, 1985,
among Resorts International, Inc., Atlantic City
Showboat, Inc. and Ocean Showboat, Inc., are
incorporated herein by reference to Showboat,
Inc.'s Form 10-K (file no. 1-7123) for the year
ended June 30, 1987, Part IV, Item 14(a)(3),
Exhibit 10.02; Seventh Amendment to Lease
Agreement dated October 18, 1988, between
Resorts International, Inc. and Atlantic City
Showboat, Inc., is incorporated herein by
reference to Showboat, Inc.'s Form 8-K (file no.
1-7123) dated November 16, 1988, Item 7(c),
Exhibit 28.01; Eighth Amendment to Lease
Agreement between Atlantic City Showboat, Inc.
and Resorts International, Inc. International,
Inc. dated May 18, 1993, is incorporated herein
by reference to Showboat, Inc.'s Form 8-K (file
no. 1-7123) dated May 18, 1993, Item 7(c),
Exhibit 28.06.
10.21 Closing Escrow Agreement dated September 21,
1988, among Housing Authority and Urban
Redevelopment Agency of the City of Atlantic
City, Resorts International, Inc., Atlantic City
Showboat, Inc., Trump Taj Mahal Associates
Limited Partnership, and Clapp & Eisenberg,
P.C.; Agreement as to Assumption of Obligations
with respect to Properties dated September 21,
1988, among Atlantic City Showboat, Inc., Trump
Taj Mahal Associates Limited Partnership and
Trump Taj Mahal Realty Corp.; First Amendment of
Agreement as to Assumption of Obligations with
respect to Properties dated September 21, 1988,
among Atlantic City Showboat, Inc., Trump Taj
Mahal Associates Limited Partnership and Trump
Taj Mahal Realty Corp.; Settlement Agreement
dated October 18, 1988, among Atlantic City
Showboat, Inc., Trump Taj Mahal Associates
Limited Partnership, Trump Taj Mahal Realty
Corp., Resorts International, Inc. and the
Housing Authority and Urban Redevelopment Agency
of the City of Atlantic City; Tri-Party
Agreement dated October 18, 1988, among Resorts
International, Inc., Atlantic City Showboat,
Inc. and Trump Taj Mahal Associates Limited
Partnership; Declaration of Easement and Right
of Way Agreement dated October 18, 1988, between
the
117
<PAGE>
Housing Authority and Urban Redevelopment
Agency of the City of Atlantic City, and
Atlantic City Showboat, Inc.; and Certificate of
Trump Taj Mahal Associates Limited Partnership
and Resorts International, Inc. dated
November 16, 1988, are incorporated herein by
reference to Showboat, Inc.'s Form 8-K (file no.
1-7123) dated November 16, 1988, Item 7(c),
Exhibit 28.01. Revised Second Amendment to
Agreement as to Assumption of Obligations with
respect to Properties dated May 24, 1989, among
Atlantic City Showboat, Inc., Trump Taj Mahal
Associates Limited Partnership and Trump Taj
Mahal Realty Corp., is incorporated herein by
reference to Showboat, Inc.'s Form 10-K (file
no. 1-7123) for the year ended December 31,
1989, Part IV, Item 14(a)(3), Exhibit 10.17.
10.22 Letter agreement dated September 23, 1992,
between Trump Taj Mahal Associates and Atlantic
City Showboat, Inc.; and letter agreement dated
October 26, 1992 to Trump Taj Mahal Associates
from Atlantic City Showboat, Inc., are
incorporated herein by reference to Showboat,
Inc.'s Form 10-K (file no. 1-7123) for the year
ended December 31, 1992, Part IV, Item 14(a)(3),
Exhibit 10.24.
10.23 Lease dated December 22, 1994, between Housing
Authority and Urban Redevelopment Agency of the
City of Atlantic City and Atlantic City
Showboat, Inc.; Tri-Party Agreement dated
May 26, 1994, among Housing Authority and Urban
Redevelopment Agency of the City of Atlantic
City, Forest City Ratner Companies and Atlantic
City Showboat, Inc.; Terms and Conditions Part
II of Contract for Sale of Land for Private
Redevelopment between Housing Authority and
Urban Redevelopment Agency of the City of
Atlantic City and Atlantic City Showboat, Inc.;
and Rider to Contract for Sale of Land for
Private Redevelopment between Housing Authority
and Urban Redevelopment Agency of the City of
Atlantic City and Atlantic City Showboat, Inc.,
are incorporated herein by reference to
Showboat, Inc.'s Form 10-K (file no. 1-7123) for
the year ended December 31, 1994, Part IV, Item
14(a)(3), Exhibit 10.46.
10.24 Agreement Amending and Restating the Tri-Party
Agreement Dated as of May 26, 1994, among the
Housing Authority and Urban Redevelopment Agency
of the City of Atlantic City, Forest City Ratner
Companies and Atlantic City Showboat, Inc.
regarding Development of a Portion of the Uptown
Urban Renewal Tract dated December 14, 1995;
Release and Subordination Agreement dated
December 14, 1995, between IBJ Schroder Bank &
Trust Company and Atlantic City Showboat, Inc.;
First Amendment to Leasehold in Pari Passu
Mortgage, Assignment of Rents and Security
Agreement and Collateral Assignment of Easement
Rights-Mortgage Spreader Agreement dated
December 15, 1995, between Atlantic City
Showboat, Inc. and NatWest
118
<PAGE>
Bank, N.A.; Third Amendment to Leasehold
Mortgage, Assignment of Rents and Security
Agreement Dated as of May 19, 1993 - Mortgage
Spreader Agreement dated December 14, 1995,
between Atlantic City Showboat, Inc. and IBJ
Schroder Bank & Trust Company; Fourth Amendment
to Leasehold Mortgage, Assignment of Rents and
Security Agreement Dated as of May 18, 1993 -
Release of Part of Mortgaged Property and
Subordination Agreement dated December 14, 1995,
between IBJ Schroder Bank & Trust Company and
Atlantic City Showboat, Inc.
10.25 Securities Purchase Contract dated March 29,
1988, between the Casino Reinvestment
Development Authority and Atlantic City
Showboat, Inc., is incorporated herein by
reference to Showboat, Inc.'s Form 10-K (file
no. 1-7123) for the year ended December 31,
1988, Part IV, Item 14(a)(3), Exhibit 10.23.
10.26 Deed of Trust, Assignment of Rents, and Security
Agreement dated May 18, 1993, by Showboat, Inc.
to Nevada Title Company in favor of IBJ Schroder
Bank & Trust Company; Showboat, Inc. Security
and Pledge Agreement dated May 18, 1993, between
Showboat, Inc. and the IBJ Schroder Bank & Trust
Company; Trademark Security Agreement dated
May 18, 1993, by Showboat, Inc. in favor of IBJ
Schroder Bank & Trust Company; Unsecured
Indemnity Agreement dated May 18, 1993, by
Showboat, Inc. in favor of IBJ Schroder Bank &
Trust Company; and Showboat Operating Company
Security Agreement dated May 18, 1993, between
Showboat Operating Company and IBJ Schroder Bank
& Trust Company, are incorporated by reference
to Showboat, Inc.'s Form 8-K (file no. 1-7123)
dated May 18, 1993, Item 5, Exhibit 28.02.
Leasehold Mortgage, Assignment of Rents, and
Security Agreement dated May 18, 1993, by
Atlantic City Showboat, Inc. in favor of IBJ
Schroder Bank & Trust Company; Assignment of
Leases and Rents dated May 18, 1993, between
Atlantic City Showboat, Inc. and IBJ Schroder
Bank & Trust Company; and Ocean Showboat, Inc.
Security and Pledge Agreement dated May 18,
1993, between Ocean Showboat, Inc. and IBJ
Schroder Bank & Trust Company, are incorporated
by reference to Showboat, Inc.'s Form 8-K (file
no. 1-7123) dated May 18, 1993, Item 7(c),
Exhibit 28.03. Intercompany Note dated May 18,
1993, in the principal amount of $215.0 million;
Assignment of Lease and Rents dated May 18,
1993, between Atlantic City Showboat, Inc. and
Showboat, Inc.; and Issuer Collateral Assignment
dated May 18, 1993, by Atlantic City Showboat,
Inc. in favor of IBJ Schroder Bank & Trust
Company, are incorporated by reference to
Showboat, Inc.'s Form 8-K (file no. 1-7123)
dated May 18, 1993, Item 7(c), Exhibit 28.04.
Showboat Development Company Security and Pledge
Agreement dated
119
<PAGE>
July 18, 1994, between Showboat Development
Company and IBJ Schroder Bank & Trust Company;
and Showboat Louisiana, Inc. Security and
Pledge Agreement dated July 18, 1994, between
Showboat Louisiana, Inc. and IBJ Schroder Bank
& Trust Company, are incorporated herein by
reference to Showboat, Inc.'s Form 10-K (file
no. 1-7123) for the year ended December 31,
1994, Part IV, Item 14(a)(3), Exhibit 4.02.
10.27 First Amendment to the Leasehold Mortgage,
Assignment of Rents and Security Agreement dated
July 9, 1993, between Atlantic City Showboat,
Inc. and Showboat, Inc., is incorporated by
reference to Showboat, Inc.'s Form 8-K (file no.
1-7123) dated July 7, 1993, Item 7(c), Exhibit
28.01. First Amendment to the Leasehold
Mortgage, Assignment of Rents and Security
Agreement dated July 9, 1993, between Atlantic
City Showboat, Inc. and IBJ Schroder Bank &
Trust Company, is incorporated by reference to
Showboat, Inc.'s Form 8-K (file no. 1-7123)
dated July 7, 1993, Item 7(c), Exhibit 28.02.
Assignment of Rights under Agreement dated
July 9, 1993, by Atlantic City Showboat, Inc. in
favor of IBJ Schroder Bank & Trust Company, is
incorporated by reference to Showboat, Inc.'s
Form 8-K (file no. 1-7123) dated July 7, 1993,
Item 7(c), Exhibit 28.03. Form of Deed for Sale
of Land for Private Redevelopment for Tract 1
and Tract 2 each dated July 7, 1993, is
incorporated by reference to Showboat, Inc.'s
Form 8-K (file no. 1-7123) dated July 7, 1993,
Item 7(c), Exhibit 28.04. Use and Occupancy
Agreement dated July 7, 1993, between Atlantic
City Housing Authority and Urban Redevelopment
Agency and Atlantic City Showboat, Inc., is
incorporated by reference to Showboat, Inc.'s
Form 8-K (file no. 1-7123) dated July 7, 1993,
Item 7(c), Exhibit 28.05.
10.28 Agreement for Sale of Partnership interests
dated March 31, 1995, among Lake Pontchartrain
Showboat, Inc., Showboat Louisiana, Inc.,
Showboat, Inc., Player Riverboat, LLC, Players
Riverboat Management, Inc. and Players
International, Inc., is incorporated herein by
reference to Showboat, Inc.'s Form 8-K (file no.
1-7123) dated March 31, 1995, Item 7(c), Exhibit
28.01.
10.29 Purchase and Sale Agreement dated January 4,
1995, between Showboat Star Partnership and
Belle of Orleans, L.L.C.; Assignment of Leases
dated January 4, 1995, between Showboat Star
Partnership and Belle of Orleans, L.L.C.; and
Sublease dated January 4, 1995, between Showboat
Star Partnership and Belle of Orleans, L.L.C.,
are incorporated herein by reference to
Showboat, Inc.'s Form 10-K (file no. 1-7123) for
the year ended December 31, 1994, Part IV, Item
14(a)(3), Exhibit 10.41.
10.30 Promissory Note dated January 1, 1995, in the
principal amount of $23,807,832 by Showboat
Louisiana, Inc. in favor of Showboat, Inc., is
incorporated herein by reference to Showboat,
Inc.'s Form 10-K (file no. 1-7123) for the year
ended December 31, 1994, Part IV, Item 14(a)(3),
Exhibit 10.43.
120
<PAGE>
10.31 Promissory Note dated March 2, 1995, in the
principal amount of $25,000,000 by Lake
Pontchartrain Showboat, Inc. and Showboat
Louisiana, Inc. in favor of Showboat, Inc., is
incorporated herein by reference to Showboat,
Inc.'s Form 10-K (file no. 1-7123) for the year
ended December 31, 1994, Part IV, Item 14(a)(3),
Exhibit 10.44.
10.32 Casino Operations Agreement (excluding exhibits)
dated April 22, 1994, among Leighton Properties
Pty Limited, New South Wales Casino Control
Authority, Showboat Australia Pty Limited,
Showboat Operating Company, Sydney Casino
Management Pty Limited, Sydney Harbour Casino
Holdings Limited, Sydney Harbour Casino Pty
Limited and Sydney Harbour Casino Properties Pty
Limited; First Amending Deed dated October 6,
1994; Second Amending Deed (undated); Third
Amending Deed dated December 13, 1994; Casino
Complex Management Agreement dated April 21,
1994, among Sydney Harbour Casino Properties Pty
Limited, Showboat Australia Pty Limited and
Sydney Casino Management Pty Limited and
Development Agreement dated April 21, 1994
between Leighton Properties Pty Limited and
Sydney Harbour Casino Properties Pty Limited.
10.33 Agreement dated September 13, 1993, among
Showboat, Inc., Showboat Indiana, Inc., Showboat
Operating Company, Showboat Development Company,
Showboat Indiana Investment Limited Partnership
and Waterfront Entertainment and Development,
Inc.; and Showboat Marina Partnership Agreement
dated January 31, 1994, between Waterfront
Entertainment and Development, Inc. and Showboat
Investment Limited Partnership, are incorporated
herein by reference to Showboat, Inc.'s Form 10-
K (file no. 1-7123) for the year ended
December 31, 1993, Part IV, Item 14(a)(3),
Exhibit 10.38. Amended and Restated Showboat
Marina Partnership Agreement dated March 1,
1996, between Waterfront Entertainment and
Development, Inc. and Showboat Indiana
Investment Limited Partnership; Agreement of
Partnership of Showboat Marina Investment
Partnership dated March 1, 1996, between
Showboat Indiana Investment Limited Partnership
and Waterfront Entertainment and Development,
Inc.; Agreement of Partnership of Showboat
Marina Casino Partnership dated March 1, 1996,
between Showboat Marina Partnership and Showboat
Marina Investment Partnership; Letter agreement
regarding economic development dated April 8,
1994, by Showboat Marina Partnership in favor of
the City of East Chicago; Letter agreement
regarding economic development dated April 18,
1995, by Showboat Marina Partnership in favor of
the City of East Chicago; Redevelopment Project
Lease dated October 19, 1995, between Showboat
Marina Partnership and the City of East Chicago;
and Promissory Note dated January 1, 1996, in
the principal amount of $9,316,367 by Showboat
Indiana Investment Limited Partnership in favor
of Showboat, Inc.
10.34 Agreement of Limited Partnership of Southboat
Limited Partnership effective
121
<PAGE>
May 1, 1995, between Showboat Lemay, Inc.
and Futuresouth, Inc.; Management Agreement
dated May 2, 1995, between Southboat Partnership
(a predecessor of Southboat Limited Partnership)
and Showboat Operating Company; Trademark
License Agreement dated May 2, 1995, between
Southboat Partnership and Showboat, Inc.; Lease
and Development Agreement dated October 13,
1995, between the St. Louis County Port
Authority and Southboat Limited Partnership;
Escrow Agreement dated October 13, 1995,
between the St. Louis County Port Authority,
Southboat Limited Partnership, Showboat, Inc.
and Boatmen's Trust Company; Guarantee of
Minimum Rent dated October 13, 1995, by
Showboat, Inc.; Guarantee of Completion dated
October 13, 1995, by Showboat, Inc., are
incorporated herein by reference to Showboat,
Inc.'s Form 8-K (file no. 1-7123) dated
October 1, 1995, Item 7(c), Exhibits 10.01
through 10.06, inclusive.
10.35 Non-Negotiable Mortgage Promissory Note dated
December 28, 1994, in the principal amount of
$8,850,000, by Rockingham Venture, Inc. in favor
of Showboat, Inc.; Mortgage and Security
Agreement dated December 28, 1994, between
Rockingham Venture, Inc. and Showboat, Inc., is
incorporated herein by reference to Showboat,
Inc.'s Form 10-K (file no. 1-7123) for the year
ended December 31, 1994, Part IV, Item 14(a)(3),
Exhibit 10.42. Limited Liability Company
Agreement of Showboat Rockingham Company, L.L.C.
dated July 27, 1995, among Rockingham Venture,
Inc., Showboat New Hampshire, Inc. and Showboat
Rockingham Company, L.L.C.; Management
Agreement dated July 27, 1995, among Showboat
Rockingham Company L.L.C., Showboat Operating
Company and Rockingham Venture, Inc.;
Administrative Services Agreement dated July 27,
between Showboat Operating Company and Showboat
Rockingham Company, L.L.C.; and Trademark
License Agreement dated July 27, 1995, between
Showboat, Inc. and Showboat Rockingham Company,
L.L.C.
10.36 Promissory Note dated March 19, 1995, in the
principal amount of $15,000,000 by Atlantic City
Showboat, Inc. in favor of Showboat, Inc., is
incorporated herein by reference to Showboat,
Inc.'s Form 10-K (file no. 1-7123) for the year
ended December 31, 1994, Part IV, Item 14(a)(3),
Exhibit 10.45.
10.37 Operating Agreement dated January 25, 1995,
between Showboat Missouri, Inc. and Randolph
Riverboat Company, Inc.; Management Agreement
dated January 25, 1995, between Showboat
Operating Company and Randolph Riverboat
Company, Inc.; Administrative Services Agreement
dated January 25, 1995, between Showboat
Operating Company and Randolph Riverboat
Company, L.L.C.; and Trademark License Agreement
dated January 25, between Showboat, Inc. and
Randolph Riverboat Company,
122
<PAGE>
L.L.C., are incorporated herein by reference
to Showboat, Inc.'s Form 10-K (file no. 1-7123)
for the year ended December 31, 1994, Part IV,
Item 14(a)(3), Exhibit 10.40. Promissory Note
dated January 1, 1996, in the principal amount
of $5,024,470 by Showboat Missouri, Inc. in
favor of Showboat, Inc.
10.38 Loan and Guaranty Agreement dated July 14, 1995,
among NatWest Bank, N.A., Showboat, Inc. and
Atlantic City Showboat, Inc., Ocean Showboat,
Inc. and Showboat Operating Company; Revolving
Note dated July 14, 1995, in the principal
amount of $25.0 million by Showboat, Inc. in
favor of NatWest Bank, N.A.; Deed of Trust,
Assignment of Rents and Security Agreement dated
July 14,1995, by Showboat, Inc. in favor of
Nevada Title Company for the benefit of NatWest
Bank, N.A.; Leasehold in Pari Passu Mortgage,
Assignment of Rents and Security Agreement dated
July 14, 1995, between NatWest Bank and Atlantic
City Showboat, Inc.; Assignment of Leases and
Rents dated July 14, 1995, between NatWest Bank
and Atlantic City Showboat, Inc.; Intercreditor
Agreement for Pari Passu Indebtedness Relating
to Atlantic City Showboat dated July 14, 1995,
among Showboat, Inc., Atlantic City Showboat,
Inc., IBJ Schroder Bank & Trust Company and
NatWest Bank, N.A.; and Intercreditor Agreement
for Pari Passu Indebtedness Relating to Las
Vegas Showboat dated July 14, 1995, among
Showboat, Inc., IBJ Schroder Bank & Trust
Company and NatWest Bank, N.A.
10.39 Promissory Note dated January 1, 1996, in the
principal amount of $51,314,536 by Showboat
Fifteen, Inc. in favor of Showboat, Inc.
21.01 List of Subsidiaries.
23.01 Consent of KPMG Peat Marwick LLP.
27.01 Financial Data Schedule.
123
<PAGE>
_______________________________
1Copies of exhibits to this Form 10-K will be furnished to any
requesting security holder who furnishes the Company a list
identifying the exhibits to be copied by the Company at a charge
of $.25 per page.
EXHIBIT 10.24
<PAGE>
AGREEMENT AMENDING AND RESTATING THE
TRI-PARTY AGREEMENT DATED AS OF MAY 26, 1994, AMONG
HOUSING AUTHORITY AND URBAN REDEVELOPMENT AGENCY OF THE
CITY OF ATLANTIC CITY, FOREST CITY RATNER COMPANIES,
AND ATLANTIC CITY SHOWBOAT, INC., REGARDING DEVELOPMENT
OF A PORTION OF THE UPTOWN URBAN RENEWAL TRACT
DECEMBER 14, 1995
<PAGE>
TABLE OF CONTENTS
Paragraph Pages
1. SCOPE, INTENT AND BINDING NATURE 6
OF THIS AGREEMENT
2. LANDS AFFECTED 8
3. TRACT 1 DEVELOPMENT 9
(A) Tract 1/Phase I Tower 9
(B) 80' FT. EASEMENT 11
4. TRACT 2 11
5. TRACT 3 14
6. PARCEL 11 16
7. PARCEL 15 17
8. TIMING OF CONVEYANCES/TAXES 19
9. PRIOR AGREEMENTS 21
10. ENTRANCE DRIVE ISSUES 25
(A) Transfer of Land 27
(B) Use 27
(C) Cost of Combined Service Drive 29
and Interim Service Drive
i
<PAGE>
Paragraph Pages
(D) Loading Dock 31
(E) Configuration & Construction of 32
the Combined Service Drive
11. PHASE II HOTEL TOWER 33
12. VACATION OF RECONVEYED TRACTS 35
BY SHOWBOAT
13. DISPUTE RESOLUTION 37
14. ASSIGNMENT 40
(A) Assignment By FCRC and Showboat 40
(B) Assignment By ACHA 40
(C) Binding Effect 41
15. MISCELLANEOUS 42
(A) Building Height Restriction 42
(B) Pedestrian Bridges 42
(C) Relocation of Utilities 42
(D) (Intentionally Deleted and Omitted)
(E) Recording 43
(F) Notices 43
(G) Governing Law 44
(H) Entire Agreement 44
(I) Execution of Agreement 44
(J) CRDA Funding 44
(K) Settlement/Dismissal of Suit 45
(L) Covenants Implicitly Surviving
Closing 46
ii
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
(A) Plan to accompany Re-stated Tri-Party Agreement dated
12/1/95. Block 13, Lots 144.03, 144.04, 144.05 and 144.06 Dated
9/15/95, revised to 11/7/95.
(B) Legal Description - "Portion of Tract 1 to be conveyed to ACHA
7,333.57 SF"
(C) Legal Description - "Portion of Tract 1 to be Retained by Showboat
55,288.43 SF"
(D) Legal Description - "Portion of Tract 2 to be Conveyed to ACHA
57,435.09 SF"
(E) Legal Description - "Portion of Tract 2 to be Retained by Showboat
11,874.91 SF"
(F) Legal Description - "Portion of Tract 3 to be Conveyed to Showboat
1,200 SF"
(G) Legal Description - "Portion of Tract 3 to be Retained by ACHA
117,440 SF"
(H) Proposed Subdivision Plan Dated September 25, 1995, Revised to
November 7, 1995.
(I) Legal Description - "Portion of Service Road owned or to be owned
by ACHA 11,077.22 SF"
(J) Legal Description - "3243.52 SF P/O Service Road to be Retained
by Showboat"
(K) Legal Description - "Portion of Service Road owned or to be owned
by ACHA 8,654.45 SF"
(L) Legal Description - Block 15
(M) Legal Description - 80' Easement to be conveyed to ACHA
(N) Plan depicting FCRC Building set back restriction.
iii
<PAGE>
EXHIBITS (CONT'D)
(O) Pages 10, 11 and 12 of Parcel
15 lease
(P) Surrender of Certificate of Deposit Assignment
(Q) Plan Showing improvements to landscape for property of Atlantic
City Showboat, Inc. dated 11/6/95 and 11/29/95
(R) Inter Party Releases
(S) Legal Description - "Fire Access Way, Service Road and Utility
Easement - 22,975.19 SF".
(T) Form of Deed - Parcel 15
(U) Form of Deed - "Portion of Tract 3 to be conveyed to Showboat -
1,200 SF"
(V) Form of Deed - "Portion of Tract 1 to be conveyed to ACHA -
7,333.57 SF" and Combined Service Drive
Easement;
"Portion of Tract 2 to be conveyed to ACHA -
57,435.09 SF" and Combined Service Drive
Easement;
80' Easement
Declaration of restriction as to portion of
Tract 2 to be retained by Showboat.
(W) Paragraphs 8(h), 8(i) 8(k) and 8(q) of Part I of the Showboat
Development Agreement and Paragraph 801 of Part II of the
Showboat Development Agreement
</TABLE>
iv
<PAGE>
AGREEMENT AMENDING AND RESTATING
TRI-PARTY AGREEMENT AMONG
HOUSING AUTHORITY AND URBAN REDEVELOPMENT AGENCY OF THE
CITY OF ATLANTIC CITY, FOREST CITY RATNER COMPANIES,
AND ATLANTIC CITY SHOWBOAT, INC., REGARDING DEVELOPMENT
OF A PORTION OF THE UPTOWN URBAN RENEWAL TRACT
THIS AGREEMENT by and among Housing Authority and Urban
Redevelopment Agency of the City of Atlantic City (hereinafter
"ACHA"), Forest City Ratner Companies (hereinafter "FCRC") and
Atlantic City Showboat, Inc. (hereinafter "Showboat") dated
December 14, 1995, sets forth the amended and restated agreement
among those parties with respect to a portion of the Uptown Urban
Renewal Tract in the City of Atlantic City (hereinafter "UURT").
WHEREAS, ACHA, FCRC, and Showboat had, previous to May 26,
1994, entered into various memoranda and agreements specifically
identified as: (1) a Memorandum of Understanding dated May 24,
1993, between FCRC and ACHA (hereinafter "the FCRC MOU"), (2) a
Memorandum of Understanding by and among Showboat, FCRC and ACHA
dated May 24, 1993, also known as the "tripartite" Memorandum of
Understanding (hereinafter "the Tripartite MOU"), and (3) a
Contract For The Sale Of Land For Private Development entered
into between ACHA and Showboat dated June 11, 1993, along with
all Parts, Riders, and Exhibits annexed thereto and amendments
(hereinafter "The Showboat Development Agreement"), and
<PAGE>
WHEREAS, the parties were granted certain rights, accepted
certain responsibilities and reached binding and non-binding
understandings with respect to the UURT pursuant to the
aforementioned Memoranda and Agreements regarding the development
of land within the UURT by both FCRC and Showboat, and
WHEREAS, certain development has taken place within the UURT
by Showboat in a manner consistent with the aforementioned
Agreements and Memoranda, and
WHEREAS, on May 26, 1994, the parties entered into that
certain agreement entitled "Tri-Party Agreement Among Housing
Authority and Urban Redevelopment Agency of the City of Atlantic
City, Forest City Ratner Companies, and Atlantic City Showboat,
Inc.", regarding development of a portion of the Uptown Urban
Renewal Tract (hereinafter referred to as "the TPA"); and
WHEREAS, also on May 26, 1994, Showboat and ACHA entered
into Amendment No. 1 to the Showboat Development Agreement; and
WHEREAS, on January 25, 1995, ACHA, pursuant to the TPA,
declared FCRC to have "commenced development" of an
"entertainment complex" and entered into a certain agreement
(hereinafter referred to as "The FCRC Development Agreement");
and
WHEREAS, Showboat, in response to ACHA's determination of
January
2
<PAGE>
25, 1995, as aforesaid, filed suit in the Superior Court of New
Jersey, Atlantic County, Law Division, inter alia contesting
ACHA's determination that FCRC had "commenced development" of its
entertainment complex pursuant to the TPA and subsequently ACHA
and FCRC filed certain counter-claims with respect to the subject
matter here in issue; and
WHEREAS, on May 25, 1995, ACHA declared Showboat in default
of the Showboat Development Agreement on account of the subject
matter of the TPA and of the Showboat Development Agreement; and
WHEREAS, in response to said declaration of default Showboat
filed a certain lawsuit in the Superior Court of New Jersey,
Atlantic County; and
WHEREAS, Showboat desires ACHA to rescind said default and
to issue to Showboat a Certificate of Completion as defined in
Part II of the Showboat Development Agreement for the
improvements Showboat has caused to be erected upon the portions
of Tract 1 that Showboat will retain as hereinafter described.
See Exhibit C; and
WHEREAS, Showboat desires ACHA also to issue to it a
Certificate of Completion for a portion of Tract 2 to be retained
by Showboat and portion of Tract 3 which is to be conveyed to
Showboat pursuant to this Restated Agreement. See Exhibits E and
F;
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WHEREAS, the parties sincerely desire to settle their
differences, once and for all, with respect to the subject matter
of the aforesaid lawsuits and with respect to the future
development of the UURT and otherwise so that: (1)The
development of the undeveloped portions of the UURT may proceed;
(2) Showboat relinquishes any rights it may claim to influence or
control, or object to or contest, in any fashion the future
development of the UURT provided such development is consistent
with the redevelopment plan dated August 25, 1994, as amended by
Ordinance #102 of 1994 adopted on November 23, 1994, as may be
amended from time to time ("the Redevelopment Plan"), and with
other applicable land use laws. Showboat, however, reserves the
right to object to or contest any future development solely on
the grounds that such development is not in compliance with the
Redevelopment Plan or any other applicable land use law; (3)
Showboat's right and ability to develop its retained portion (as
hereinafter defined) of the UURT is preserved; and (4) the
Atlantic City community may enjoy the benefits of the
developments herein agreed to and described; and
WHEREAS, on December 22, 1994, Showboat entered into a
certain lease with ACHA for that certain parcel known as Parcel
15, City of Atlantic City, and pursuant to said lease has caused
certain improvements to be made on Parcel 15; and
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WHEREAS, Showboat wishes to acquire and ACHA, for the
consideration hereinafter recited, wishes to convey to Showboat
in fee simple all right, title and interest in and to Parcel 15
free of any and all requirements, restrictions, reverters or
encumbrances whatsoever, Showboat's use and ownership of said
Parcel 15 being subject only to any applicable land use laws, the
Redevelopment Plan and covenants contained in the deed of
conveyance; and
WHEREAS, pursuant to the aforementioned discussions ACHA,
FCRC and Showboat have reached agreement as to their respective
rights and responsibilities between Showboat and ACHA or between
Showboat and FCRC regarding certain portions of the UURT and
desire to memorialize those agreements in writing in order to
clearly establish those rights and responsibilities; and
WHEREAS, this document (hereinafter referred to as "this
Restated Agreement") is intended to set forth the aforementioned
rights and responsibilities between Showboat and ACHA or between
Showboat and FCRC with regard to future development of certain
portions of the UURT and is intended to replace and supersede the
agreements referred to in Paragraph 1(A) below with respect to
the parcels herein affected in their entirety.
IT IS HEREBY AGREED AS FOLLOWS:
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1. SCOPE, INTENT AND BINDING NATURE OF THIS AGREEMENT
(A) ACHA, FCRC and Showboat (hereinafter collectively
referred to as "the parties") hereby agree that this Restated
Agreement shall determine the future rights and obligations of
the parties with respect to certain portions of the UURT as more
specifically defined herein. The parties hereby acknowledge and
agree that this Restated Agreement is to be known as the Amended
and Restated Tri-Party Agreement dated as of December 14, 1995,
and shall take into account and will supersede the FCRC MOU, the
Tripartite MOU, and the Showboat Development Agreement, that
certain Memorandum of Understanding between Showboat and FCRC
dated as of July 24, 1995, and specifically replaces and
supersedes the TPA as well as the previously recited documents in
this Paragraph 1(A) and the Parcel 15 Lease and the Use and
Occupancy Agreement as hereinafter described. Based on that
understanding, the parties acknowledge and agree that they will
be bound by the following purposes and provisions of this
Restated Agreement.
(B) This Restated Agreement shall amend, modify and
supersede in its entirety the Showboat Development Agreement and
the TPA except as provided for in Paragraph 15(L) of this
Restated Agreement. Specifically, the only obligations between
Showboat and ACHA or between Showboat and FCRC that will survive
this Restated Agreement
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shall be as specifically set forth herein. This Restated
Agreement shall, without limitation, supersede the Parcel 15
Lease (except as set forth at paragraph 7 hereof), the Use and
Occupancy Agreement (except as set forth at paragraphs 8 and 12
hereof) and any right with respect to the purchase or sale of
Tract 3. Without limiting the foregoing, the parties agree that
this Restated Agreement shall finally and definitively state and
encompass all of the rights and obligations between Showboat and
ACHA or between Showboat and FCRC with respect to the lands
herein affected as described in Paragraph 2 in the City of
Atlantic City, superseding all prior agreements and
understandings with respect thereto, except as specifically
provided in this Restated Agreement.
(C) This Agreement also provides a procedure for the
expeditious and economical resolution of certain disputes between
Showboat and FCRC as hereinafter provided.
(D) As used in this Restated Agreement, the term "FCRC"
shall mean FCRC or any successor developer designated by ACHA,
and "ACHA" shall mean any successor, assign or designee of ACHA.
2. LANDS AFFECTED
This Restated Agreement shall govern the following portions
of the UURT with regard to existing and future development within
those areas:
(A) Tract 1 on the Plan prepared by Arthur W. Ponzio
Company & Associates, dated May 12, 1993
(hereinafter "the Plan"), annexed
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to the TPA as Exhibit A, also known as Block 13,
Lot 144.03 on the tax map of the City of
Atlantic City as it existed on November 1, 1995
("the Tax Map").
(B) Tract 2 identified on the Plan also known as Block
13, Lot 144.04 on the Tax Map.
(C) Tract 3 identified on the Plan also known as Block
13, Lots 144.05 and 144.06 on the Tax Map.
(D) all portions known as "the 80' easement" identified
on the Plan also known as Block 13, Lot 144.06 on the
Tax Map.
(E) all portions of Block 13, Lots 144.01 and 144.02 on
the Tax Map.
(F) all portions of Parcel 11, bounded by Atlantic Avenue
on the North, New Jersey Avenue on the East,
Pacific Avenue on the South and Delaware Avenue on
the West, previously known as Block 11, Lots 77
and 78, as well as all portions thereof affected
by realigned Delaware Avenue (now known as Block 11,
Lot 79 on the Tax Map)
(G) all portions of Parcel 15, bounded by Atlantic Avenue
on the North, Delaware Avenue on the East, Pacific
Avenue on the South and Maryland Avenue on the West,
previously known as Block 15, Lots 80, 81, 82 83,
84 and 85 and United States Avenue, as well as all
portions thereof affected by realigned Delaware
Avenue (now known as Block 15, Lots 88 and 89 on the
Tax Map), more
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particularly described in Exhibit L of this Restated
Agreement.
(H) All Portions of Block 10 on the Tax Map.
(I) All portions of Block 7, Lots 216.01, 216.02 and 217
on the Tax Map.
3. TRACT 1 DEVELOPMENT
(A) Tract 1\Phase I Tower. It is acknowledged by all
parties that pursuant to previous agreements and memoranda,
Showboat has developed a Hotel Tower on a portion of Tract 1.
Said Tract 1 was conveyed by ACHA to Showboat pursuant to the
Showboat Development Agreement. Tract 1 shall be subdivided as
depicted at Exhibits A and H of this Restated Agreement.
Showboat shall reconvey to ACHA as part of the consideration
recited in paragraph 7 of this Restated Agreement, that portion
of Tract 1 identified on Exhibit A to this Restated Agreement as
"Portion of Tract 1 to be conveyed to ACHA 7,333.57 SF". Said
portion of Tract 1 is more particularly described at Exhibit B of
this Restated Agreement. Showboat shall retain that portion of
Tract 1 identified on Exhibit A as "Portion of Tract 1 to be
retained by Showboat 55,288.43 SF". See Exhibit C. Showboat
agrees that it shall also grant to ACHA an easement within a
portion of the "Portion of Tract 1 to be Retained by Showboat"
(See Exhibit C) and within the parcel identified at Exhibit A of
this Agreement as
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"Portion of Tract 2 to be retained by Showboat 11,874.91 SF" as
more particularly discussed in paragraph 10 of this Restated
Agreement. ACHA acknowledges and agrees that Showboat has
completed development of the portion of Tract 1 to be retained in
accordance with the Showboat Development Agreement. Showboat has
submitted to ACHA and ACHA has approved that certain plan being
Exhibit Q of this Restated Agreement which pertains to
landscaping of that portion of Tract 1 identified at Exhibit A of
this Restated Agreement as "Area Reserved for Future Showboat
Hotel Tower Construction". Except as othewise provided in this
Restated Agreement, all other prior plans or agreements with
respect to Tract 1 are hereby superseded. ACHA agrees that,
immediately upon completion of the improvements to Tract 1
described at Exhibit Q of this Restated Agreement, it will issue
to Showboat a Certificate of Completion for Tract 1 as defined in
Part II of the Showboat Development Agreement and ACHA further
agrees that it will not withhold issuance of said Certificate of
Completion for any reason whatsoever other than Showboat's
failure to make the improvements depicted and described at
Exhibit Q of this Restated Agreement. Should a Certificate of
Completion not be issued to Showboat at Closing for any reason,
Showboat shall be permitted to request a Certificate of
Completion within a reasonable time after
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<PAGE>
Closing.
(B) 80 Ft. Easement. Pursuant to the Showboat Development
Agreement and the Tripartite MOU, Showboat obtained easement
rights to an area known as the "80' easement" which has been
described in the Showboat Development Agreement as an area solely
for pedestrian and/or vehicular ingress and egress to and from
Tract 1. Said 80' easement is more particularly described on the
Plan, as well as Exhibits A and M of this Restated Agreement.
Said 80' easement, pursuant to the Showboat Development
Agreement, had been deemed part of Tract 1 for all purposes
except certain ones provided for in Section 9 of the Rider
thereto. In consideration of providing Showboat an easement over
a portion of the Combined Service Drive as more particularly
provided for in paragraph 10 of this Restated Agreement and as
part of the consideration recited at paragraph 7 of this Restated
Agreement, Showboat's rights to the 80' easement shall cease and
shall be reconveyed by Showboat back to ACHA at Closing in order
to accomplish the intent of this Restated Agreement.
4. TRACT 2
The parties acknowledge that pursuant to the Showboat Development
Agreement and the Tripartite MOU, Showboat has been conveyed an
area within the UURT identified as Tract 2 on the Plan and more
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<PAGE>
specifically identified as Block 13, Lot 144.04 on the Tax Map.
Tract 2 shall be subdivided by Showboat as depicted and described
at Exhibits A and H of this Restated Agreement. Showboat shall
reconvey to ACHA as part of the consideration given pursuant to
paragraph 7 of this Restated Agreement, that portion of Tract 2
identified at Exhibit A to this Restated Agreement as "Portion of
Tract 2 to be conveyed to ACHA 57,435.09 SF". Said portion of
Tract 2 is more particularly described at Exhibit D of this
Restated Agreement. Showboat shall retain that portion of Tract
2 identified at Exhibit A of this Restated Agreement as "Portion
of Tract 2 to be Retained by Showboat 11,874.91 SF" free of all
restrictions, reverters, or requirements (including development
requirements)of any kind other than: (1) the requirement of
completing the improvements depicted at Exhibit Q of this
Restated Agreement;(2) the restriction (to be incorporated into
and recorded with the deed being Exhibit V to this Restated
Agreement) that the 15' wide strip extending along Showboat's
existing driveway from the boundary of Tract 3 shall be utilized
only for purposes of a pedestrian passageway, themeing and
screening in accordance with this Restated Agreement as more
particularly depicted on Exhibit Q of this Restated Agreement.
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<PAGE>
Subsequent to the issuance of a Certificate of Completion,
however, Showboat may at its discretion alter the improvements
depicted at Exhibit Q provided that such alteration remains
consistent with the foregoing restriction and the height
restriction referenced at Paragraph 10(E) of this Restated
Agreement; (3) the Redevelopment Plan; and (4) covenants
contained in the deed of conveyance. Showboat shall have the
right, but not the obligation, to develop a Phase II hotel tower
addition upon the retained portion of Tract 2 as more
particularly discussed at paragraph 11 of this Restated
Agreement, provided that it is consistent with the Redevelopment
Plan. ACHA agrees that immediately upon completion by Showboat of
the improvements depicted on Exhibit Q of this Restated
Agreement, it shall issue Showboat a Certificate of Completion
for the portion of Tract 2 retained by Showboat in accordance
with Part II of the Showboat Development Agreement. ACHA further
agrees that it shall not withhold issuance of such Certificate of
Completion for any reason whatsoever other than Showboat's
failure to complete such improvements. Should a Certificate of
Completion not be issued to Showboat at Closing for any reason,
Showboat shall be permitted to request a Certificate of
Completion within a reasonable time after Closing. The parties
agree that the previously defined rights and
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<PAGE>
obligations of Showboat contained in the agreements described in
Paragraph 1 of this Restated Agreement for its use of Tract 2 are
hereby modified and any rights which Showboat may have in the
portion of Tract 2 to be conveyed to ACHA pursuant to this
Restated Agreement are set forth in this paragraph 4 and are
further defined below in paragraphs 10, 11 and 12.
5. TRACT 3
The parties acknowledge and agree that the portion of the UURT
identified as Tract 3 on the Plan shall be subdivided by Showboat
at Showboat's expense on behalf of ACHA as more particularly
depicted on Exhibits A and H of this Restated Agreement and as
more particularly described at Exhibits F and G of this Restated
Agreement. In consideration of this Restated Agreement, ACHA
shall convey to Showboat at Closing that portion of Tract 3
identified on Exhibit A of this Restated Agreement as "Portion of
Tract 3 to be conveyed to Showboat 1200 SF", see Exhibits A and
F, free of any and all restrictions, reverters, or requirements
(including development requirements) of any kind, subject only to
the restriction that it shall be utilized for purposes of a
pedestrian passageway, theming and/or screening in accordance
with this Restated Agreement as more particularly described and
depicted at Exhibit Q of this Restated
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<PAGE>
Agreement as well as the Redevelopment Plan and covenants set
forth in the deed of conveyance. Subsequent to issuance of a
Certificate of Completion, however, Showboat may at its
discretion alter the improvements depicted at Exhibit Q provided
that such alteration remains consistent with the foregoing
restrictions and the height restriction referenced at Paragraph
10(E) of this Restated Agreement. ACHA agrees that immediately
upon completion by Showboat of the improvements depicted on
Exhibit Q of this Restated Agreement, it shall issue to Showboat
a Certificate of Completion for the portion of Tract 3 granted
to Showboat. ACHA further agrees that it shall not withhold
issuance of such Certificate of Completion for any reason
whatsoever other than Showboat's failure to complete such
improvements. Should a Certificate of Completion not be issued
to Showboat at Closing for any reason, Showboat shall be
permitted to request a Certificate of Completion within a
reasonable time after Closing.
Showboat herein acknowledges and agrees that it relinquishes
any rights which it may have had, or could have claimed, with
respect to Tract 3, with the exception of the Portion of Tract 3
to be conveyed to Showboat-1200 SF (See Exhibit F) pursuant to
this Restated
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<PAGE>
Agreement. Such rights shall include, but not be limited to,
those rights identified in the Showboat Development Agreement,
Section 8, wherein special provisions are identified for the
possible lease or purchase of Tract 3 by Showboat. To the extent
that there is any claim, or may be any claim, that the 80'
easement previously identified in paragraph 3 (B) is appurtenant
to, part of, or within Tract 3, the parties hereby recognize that
ACHA shall have the exclusive right to develop within the areas
of the 80' easement and that Showboat hereby acknowledges and
agrees that it relinquishes all rights that it may have in that
80' easement. Furthermore, the parties acknowledge that the Use
and Occupancy Agreement pertaining to Tract 3 and Block 13, Lot
144.02 on the Tax Map in favor of Showboat shall terminate as of
the date of Closing as recited at paragraph 8 of this Restated
Agreement and neither Showboat nor ACHA shall have any further
obligation with respect to said Use and Occupancy Agreement
subsequent to said date except as set forth in this Restated
Agreement.
6. PARCEL 11
Showboat herein specifically relinquishes any and all rights
which it may have to develop Parcel 11 for surface and/or
structured parking (or for any other use) whether pursuant to any
provision of the
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<PAGE>
Showboat Development Agreement, the TPA or any other agreement
with respect to, without limitation, the location of "additional
parking" within Parcel 11.
7. PARCEL 15
ACHA shall convey to Showboat at Closing the area known as Parcel
15 and which is also formerly known as Block 15, Lots 80, 81, 82
, 83, 84 and 85 and United States Avenue, and which is bounded by
Atlantic Avenue on the North, Maryland Avenue on the West,
Pacific Avenue on the South and realigned Delaware Avenue on the
East (now known as Block 15 Lots 88 and 89 on the Tax Map).
Parcel 15 is more particularly described in Exhibit L of this
Restated Agreement. At Closing and in consideration of this
Restated Agreement FCRC specifically relinquishes any and all
rights which it may have to develop Parcel 15 for surface and/or
structured parking or for any other purpose whatsoever. The
parties acknowledge that Showboat and ACHA entered into a certain
lease dated as of December 22, 1994, pursuant to which Showboat
leased and currently occupies Parcel 15 for a term ending
December 31, 1999. For and in consideration of the following,
ACHA shall convey to Showboat at Closing all right, title and
interest in Parcel 15:
1. Conveyance by Showboat to ACHA of the Portion of Tract 1
described at Exhibit B of this Restated Agreement;
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<PAGE>
2. Conveyance by Showboat to ACHA of the Portion of Tract 2
described at Exhibit D of this Restated Agreement;
3. Conveyance by Showboat to ACHA (and extinguishment) of the
80' easement described at Exhibit M of this Restated
Agreement;
4. Intentionally deleted and omitted.
5. The grant by Showboat to ACHA of the easement for the
Combined Service Drive over portions of Tract 1 and Tract 2
to be retained by Showboat as described at Exhibit J of this
Restated Agreement;
6. Relinquishment by Showboat of all right, title and interest
in and to the sum of $150,000 (together with interest
accrued to the date of Closing) currently being held as
security deposit by ACHA pursuant to the previously
referenced lease of Parcel 15;
7. Showboat's convenant as set forth at paragraph 15(J) of this
Restated Agreement;
8. Payment to ACHA at Closing of the sum of one million eight
hundred ninety-nine thousand dollars ($1,899,000.00),
adjusted as of December 29, 1995, to credit Showboat with:
(1) interest accrued on the above referenced $150,000.00
Parcel 15 security deposit; and (2) the sum of $10,033.75
representing credit for a portion of the payment made by
Showboat to ACHA on or about November 1, 1995, on account of
the Use and Occupancy Agreement;
9. Such other agreements and undertakings as provided in this
Restated Agreement.
ACHA acknowledges that Showboat has complied with all of the
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provisions of the Parcel 15 lease and is not in default thereof.
Upon conveyance of Parcel 15 by ACHA to Showboat, said Parcel 15
lease shall be of no further force or effect, with the exception
of Showboat's obligations set forth at Articles 8 and 9 of the
Parcel 15 lease, wherein Showboat covenanted to indemnify and
insure ACHA with respect to liability. A true copy of Articles 8
and 9 of the Parcel 15 lease is attached hereto as Exhibit O. It
is agreed that such Articles shall survive execution of this
Restated Agreement so that ACHA is protected by the provisions of
said Articles against claims accruing prior to December 29, 1995,
but not thereafter. At Closing, ACHA shall execute on its
letterhead the document being in the form of Exhibit P of this
Restated Agreement evidencing its surrender of its assignment of
a certain certificate of deposit in the amount of $405,000
previously delivered by Showboat to ACHA. ACHA agrees that
Showboat has completed Parcel 15 in accordance with the plans
submitted to and approved by ACHA. ACHA shall convey title to
Parcel 15 which is marketable and insurable at regular rates
without material exception and free of all encumbrances,
restrictions, requirements or reverters other than requirements
set forth in the deed of conveyance (see Exhibit T), the
Redevelopment Plan or in applicable land use laws.
8. TIMING OF CONVEYANCES/TAXES
Showboat at its sole cost and expense has had a Phase I
Environmental
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Site Assessment prepared with respect to Tract 3 and Block 13,
Lot 144.02, the 80' easement and the portions of Tracts 1 and 2
to be reconveyed to ACHA pursuant to this Restated Agreement and
has delivered a copy thereof to ACHA and FCRC. Showboat shall,
prior to Closing, remediate the subject tracts as and to the
extent required under applicable law. In addition, from and
after Closing, Showboat shall indemnify and hold ACHA harmless
from and against any and all loss, cost, damage, claim or expense
from the contamination of such tracts which arose during the
period of Showboat's ownership or occupancy of the subject
tracts.
The parties acknowledge and agree that the conveyances of
property and grants of easements set forth in paragraphs 3, 4, 5,
6, 7 and 10 of this Restated Agreement shall be accomplished by
means of simultaneous conveyances by way of deeds dated as of
December 29, 1995, in the form of the documents being Exhibits T,
U and V of this Restated Agreement. Showboat and ACHA will
convey the parcels previously referred to free of all liens and
encumbrances and at Closing will execute the customary affidavit
of title. The delivery of documents and consideration herein
recited ("the Closing") shall take place at the offices of ACHA
on December 15, 1995, and shall be effective December 29, 1995.
Showboat shall vacate such parcels or tracts on or prior to the
date that Showboat is required to convey
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such parcels or tracts. It is understood, acknowledged and
agreed by the parties that with regard to any tracts or parcels
conveyed between the parties pursuant to this Restated
Agreement, ACHA shall have no real estate tax liability.
Showboat shall pay real property taxes on all parcels which it
owns and on the 80' easement until December 31, 1995.
Thereafter, the real estate taxes on or attributable to any lands
(including the 80' easement) conveyed by Showboat to ACHA
pursuant to this Restated Agreement, shall be paid by FCRC in
accordance with this Restated Agreement. Showboat and FCRC
herein acknowledge that ACHA is a tax exempt public entity which
shall have no obligation for any real estate taxes.
9. PRIOR AGREEMENTS
(A) Prior Showboat-ACHA Agreements. Notwithstanding
any provisions in this Restated Agreement
to the contrary, the following provisions of
The Showboat Development Agreement, true copies
of which are annexed hereto as Exhibit W, shall
survive Closing and shall be binding on
Showboat and ACHA: (1) Paragraphs 8(h), 8(i),
8(k) and 8(q) of Part I of the Showboat
Development Agreement; (2) Paragraph 801 of Part
II of the Showboat Development Agreement.
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(B) Prior FCRC - ACHA Agreements. In addition to any
other provisions contained in this Restated
Agreement, ACHA and FCRC intend to be bound by
the provisions of the FCRC Development
Agreement which is currently in effect subject
to the following:
1. FCRC relinquishes any rights that it may have
pursuant to the FCRC Development Agreement to
any property that Showboat is retaining
pursuant to this Restated Agreement. FCRC
further agrees that it releases ACHA with
regard to any claims or liability which FCRC
could have asserted against ACHA with regard
to any property that Showboat is retaining
pursuant to this Restated Agreement.
2. FCRC and ACHA shall attempt to enter into a
Ground Lease on or before June 30, 1996. In
the event that FCRC and ACHA do not enter
into a Ground Lease by such date for any
reason, the Board of Commissioners of ACHA
shall have the right, in their sole
discretion, to adopt a resolution terminating
the FCRC Development Agreement ("Terminating
Resolution"). In the event that ACHA adopts
a Terminating Resolution, FCRC and
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ACHA agree that the FCRC Development
Agreement shall terminate as of the date the
Terminating Resolution is adopted, that they
shall have no further responsibility to each
other, that FCRC unconditionally relinquishes
any interest it may have had in the FCRC
Development Agreement and property described
in the FCRC Development Agreement and that
they release each other from any and all
claims that they may have against each other
except as provided for in Paragraph 4(a)
of the FCRC Development Agreement with regard
to real estate taxes and the real estate tax
escrow. In the event that the FCRC
Development Agreement is terminated whether
by ACHA adopting a Terminating Resolution or
FCRC notifying ACHA of its election to
terminate the FCRC Development Agreement
before ACHA adopts a Terminating Resolution
and, in either event, FCRC executes a release
by September 30, 1996, providing that FCRC
unconditionally relinquishes any interest it
may have had in the FCRC Development
Agreement and the property described in the
FCRC Development Agreement and that
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FCRC releases ACHA from any and all claims
FCRC may have against ACHA except as provided
for in paragraph 4(a) of the FCRC Development
Agreement with regard to real estate taxes
and real estate tax escrow ("the Release"),
then ACHA shall return the deposit made by
FCRC pursuant to Paragraph 4(a) of the FCRC
Development Agreement, or any unapplied
portion thereof, on or before December 1,
1996. ACHA agrees that in the event the
FCRC Development Agreement is terminated as
provided above and FCRC executes the Release
on or prior to September 30, 1996, the tax
escrow deposit may only be applied to the
real estate taxes assessed and actually
payable for the 1996 tax year, that is, the
period from January 1, 1996, through December
31, 1996. FCRC and ACHA agree, however, that
this Restated Agreement shall not constitute
an "...agreement...to allow Showboat to
continue to own the property in question..."
within the meaning of Paragraph 4(a) of the
FCRC Development Agreement. FCRC and ACHA
further agree that with regard to the June
30, 1996, date in this paragraph,
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TIME IS OF THE ESSENCE and this date shall
not be subject to to cure periods, default
provisions or unavoidable delays pursuant to
the FCRC Development Agreement. The Board of
Commissioners of ACHA reserves the right in
its sole discretion and upon such terms as
ACHA determines are reasonable, to extend the
June 30, 1996, deadline through the adoption
of a Resolution prior to June 30, 1996,
authorizing an extension of the June 30,
1996, deadline.
3. FCRC and ACHA agree that an "Unavoidable
Delay" within the meaning of the FCRC
Development Agreement of nine months has
occured as a result of the Showboat
litigation. As a result, in accordance with
the FCRC Development Agreement, various dates
in the FCRC Development Agreement shall be
adjusted. By way of illustration, with
respect to ACHA's right to sublease pursuant
to Paragraph 4(c)(viii) the date will
extended to July 1, 1996.
10. ENTRANCE DRIVE ISSUES
The parties acknowledge and agree that the FCRC project
contemplates
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a combined fire and service access drive to be constructed on the
land specifically identified at Exhibit A of this Restated
Agreement as "Fire Accessway, Service Road and Utility Easement",
which is more particularly described at Exhibit S of this
Restated Agreement. This constructed driveway shall be
hereinafter referred to as the "Combined Service Drive." The
parties acknowledge and agree that FCRC's obligations under this
Paragraph 10 are conditioned upon its execution of a Ground Lease
with ACHA. Nothing in the preceding sentence, however, shall
relieve any successor developer of FCRC of the obligations as set
forth in this Paragraph 10. The parties also acknowledge and
agree that the Combined Service Drive is being provided for
purposes of providing fire and emergency access to the FCRC
project and for the delivery of various items needed to service
that facility. Likewise, a portion of the Combined Service Drive
will be used by Showboat to accommodate the delivery needs of a
portion of its facility located adjacent to the Combined Service
Drive (to the extent feasible and not inconsistent with the
purpose of providing delivery access to the FCRC project) and
also to provide fire access and emergency egress for the Showboat
facility. More specifically, this facility includes the Phase I
Hotel Tower and may, in the future, also include a Phase II Hotel
Tower which may be
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constructed pursuant to paragraph 11 of this Restated Agreement.
The parties acknowledge and agree that construction of this
Combined Service Drive to be utilized by both FCRC and Showboat
shall require the revision of certain rights and facilities as
follows:
(A) Transfer of Land
The parties acknowledge and agree that it will be necessary to
transfer, or to grant easements over, certain parcels currently
owned or under the control of Showboat in order to accomplish the
construction of the Combined Service Drive. The area within
which the easement shall be granted is more particularly depicted
on Exhibit A of this Restated Agreement and identified thereon as
"3243.52 SF P/O service road to be retained by Showboat" as is
more particularly described on Exhibit J of this Restated
Agreement. There shall be no monetary consideration for the
granting of this easement to ACHA. Subsequent thereto, the
parties acknowledge and agree that the easement identified herein
may be assigned from or rights otherwise granted therein from
ACHA to FCRC.
(B) Use
The Combined Service Drive shall be constructed by FCRC within
lands owned by ACHA or within lands owned by Showboat or to which
Showboat has granted ACHA an easement respectively and may be
used by FCRC for purposes of providing access for deliveries and
other service requirements to the FCRC project as such project
may be modified or
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expanded, and for the construction, installation, maintenance,
repair, replacement and relocation of subterranean utilities,
including without limitation water and sewer lines and drains.
FCRC will require its general contractor for the Combined Service
Drive to deliver to Showboat a certificate evidencing general
liability insurance and naming Showboat as additional insured for
any work to be done on or under the land described at Exhibit J.
As stated above, Showboat shall also have a non-exclusive
easement to use a portion of the Combined Service Drive
identified more particularly at Exhibit S of this Restated
Agreement for purposes of providing for vehicular access for
deliveries and service requirements to a portion of its facility.
In addition, the easement granted by ACHA (with respect to both
the land owned by ACHA and the land over which ACHA has an
easement from Showboat) shall permit the Combined Service Drive
to be used by both FCRC and Showboat for the following purposes:
(1) fire or emergency access required by law or any governmental
entity; (2) the maintenance and repair of utilities or other
public improvements including beach and boardwalk maintenance in
favor of governmental entities and utility companies; and (3)
pedestrian access to the beach and boardwalk. Such easement
shall be conveyed to Showboat by ACHA at Closing and shall be in
the form as appears as Exhibit U to this Restated Agreement.
Showboat and FCRC will indemnify, defend and hold ACHA harmless
for any and all claims or suits for personal injury or property
damage arising out of the utilization of the Combined Service
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<PAGE>
Drive (or Interim Combined Service Drive as the case may be) by
their respective contractors, agents invitees, guests or
employees. The parties also anticipate and recognize Showboat's
need for loading dock access and fire/emergency egress for its
facility prior to construction of the Combined Service Drive but
subsequent to Closing. Therefore, ACHA's grant of easement over
the area in which the Combined Service Drive will be constructed
(see Exhibit S of this Restated Agreement) will include
Showboat's right to utilize such area for such purposes prior to
completion of construction of the Combined Service Drive. The
pre-constructed Combined Service Drive shall hereinafter be
referred to as the Interim Combined Service Drive. In the event
that the Interim Combined Service Drive becomes impassable due to
construction by FCRC, ACHA shall grant to Showboat a non-
exclusive license to utilize a 24 foot wide access-way to be
designated by ACHA to provide for vehicular access to Showboat's
delivery area. FCRC agrees that it shall make a good faith
effort to limit deliveries for the retail portion of the FCRC
project using the Combined Service Drive to normal weekday
business hours (Monday through Friday, 7:00 a.m. to 5:30 p.m.)
except for emergency or extraordinary circumstances. Such
efforts shall be undertaken by FCRC by enforcement of its rules
and regulations for the tenants or other occupants in the retail
portion of the FCRC project which shall limit times of delivery
as set forth above.
(C) Cost of Combined Service Drive and Interim
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Combined Service Drive
It shall be the sole responsibility of FCRC to construct and bear
the cost of the Combined Service Drive. Such costs shall include
any taxes assessed on portions of the Combined Service Drive
constructed over lands owned (or to be owned) by ACHA and
relocation of utilities required to accommodate FCRC's
construction. In the event that a regulatory authority requires
a design change in the Combined Service Drive for purposes of
providing adequate fire access and emergency egress for the
Showboat facility as it exists on the effective date of this
Restated Agreement, FCRC shall bear the cost for such design
changes. Except as set forth in the preceding sentence, any
modification of the design and construction of the Combined
Service Drive at the request of Showboat which differs from that
design shown at Exhibit A, shall be subject to the approval of
ACHA and FCRC (which approval shall not be unreasonably withheld)
and shall be at the sole cost and expense of Showboat.
Notwithstanding the foregoing, however, in the event that
Showboat desires to use the Combined Service Drive to serve the
Phase II Tower, if such additional use, when considered together
with existing use and the actual use of the FCRC project, would
require any improvements or modification to the Combined Service
Drive, such improvements or modifications shall be subject to the
approval of ACHA and FCRC, not to be unreasonably withheld or
delayed, and shall be performed at Showboat's cost and expense,
including the
30
cost of obtaining any permits or approvals in connection
therewith. ACHA and FCRC shall inform Showboat in writing within
45 days of receipt by ACHA and FCRC of Showboat's written request
for any design change (which request must be accompanied by plans
and other information reasonably required to evaluate such
request) of their respective positions on any such request,
specifying with particularity the reasons for withholding any
approval. The work shall be performed by FCRC, or, at FCRC's
election, by Showboat. Any approved modification or improvement
will be performed in a manner which will not unreasonably
interfere with the use of the Combined Service Drive by ACHA,
FCRC or Showboat. Showboat shall be responsible for its
reasonable allocation, based on usage, of the costs of repair and
maintaining the Combined Service Drive but in no event shall such
share exceed 50% of the total costs of such maintenance. In the
event that Showboat elects to cause any improvements to be made
upon the Interim Combined Service Drive, such improvements shall
be at Showboat's sole cost and expense.
(D) Loading Dock
The parties acknowledge and agree, pursuant to the previous
memoranda and agreements entered into by them, that Showboat was
permitted to have access to its loading dock located next to its
facility in the vicinity of the Phase I Hotel Tower. Pursuant to
these previous agreements, Showboat was to reconfigure such
loading dock to accommodate the concerns of both Showboat and
FCRC in the development
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of the FCRC project and the service entrances to be used
therewith. Pursuant to this Restated Agreement, the parties
acknowledge that the proposed FCRC project will be constructed
such that Showboat will have access to its loading dock through
the Interim Combined Service Drive or Combined Service Drive.
However, to the extent that Showboat requires that its current or
proposed loading dock be relocated as a result of the design of
the FCRC project, it is the sole obligation of Showboat to
undertake any such redesign, reconstruction and cost of
relocating or reconfiguring its loading dock. FCRC shall have no
responsibility to contribute to the cost of any such
reconfiguration but agrees to work in concert with Showboat in
order to accommodate any reconfiguration which may be necessary
during the construction of the FCRC project.
(E) Configuration and Construction of the Combined Service
Drive
The parties acknowledge and agree that the Interim Combined
Service Drive and the Combined Service Drive shall be located as
depicted on Exhibit A and as described at Exhibit S of this
Restated Agreement. FCRC acknowledges and agrees that since the
Combined Service Drive is to be located near Showboat's primary
entrance for the public, Showboat is concerned that the
configuration and construction of the Combined Service Drive be
accomplished in such a way as to minimize impacts upon Showboat's
primary entrance. Accordingly, FCRC and
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<PAGE>
Showboat agree that they will cooperate with each other and
coordinate their design efforts for the intersection of the
proposed Combined Service Drive with Pacific Avenue, in order to
develop screening and entry features that are compatible with the
designs and operational needs of each party's facility. Showboat
agrees that any screening feature which it constructs will be
limited in height to the height of the FCRC project building
height in front of which it is constructed. Showboat shall bear
the sole cost and expense of any screening erected on its
property. To the extent that Showboat and FCRC cannot agree to
any particular item involved in the development of the designs
for the Combined Service Drive or the screening and entry
features contained within that area, either party may, by notice
to the other parties, submit such dispute to be conclusively
determined by the dispute resolution procedure set forth in
paragraph 13 to this Restated Agreement.
11. PHASE II HOTEL TOWER
The parties acknowledge and agree that the prior memoranda and
agreements discuss and give certain rights to Showboat with
respect to the construction of a second hotel tower adjacent to
the Phase I Tower. This second tower shall be hereinafter
referred to as the "Phase II Tower". Pursuant to agreements
reached herein, FCRC, Showboat and ACHA agree that the Phase II
Tower location, should
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Showboat at some point in the future in its sole and absolute
discretion decide to build it, will be constructed on portions of
Tract 1 and Tract 2 to be retained by Showboat. Although the
precise location of the Phase II Tower cannot be certainly stated
at this time, the parties anticipate that the Phase II Tower will
extend to the common property line. Showboat and FCRC agree to
cooperate to coordinate construction of their respective
facilities so as to promote and achieve the most expeditious and
economical construction schedule possible. Such specific items
shall include, but not be limited to, the foundations, supports
and pillars required, and the other facilities needed for, the
eventual construction of the Phase II Tower.
In order for Showboat ultimately to construct its Phase II Hotel
Tower, FCRC and Showboat recognize and agree that it will be
necessary for Showboat, prior to or contemporaneous with, FCRC's
construction, to install certain support structures and
foundations on Showboat's property adjacent to the Combined
Service Drive. Such support structures and foundations will
occupy an area extending from the sub-surface up to and possibly
exceeding 28.25 feet Mean Sea Level. Neither the construction,
use nor maintenance of the foundations and support structures
shall substantially interfere with the use of the
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<PAGE>
Combined Service Drive for its intended purposes. Such
foundations and support structures shall not be shared with or
used by FCRC in any way and shall be and remain the exclusive
property of Showboat. In order to facilitate and coordinate
Showboat's construction of said foundations and support
structures with FCRC's construction, FCRC will provide Showboat
with its construction schedule pertinent to the Combined Service
Drive as soon as such schedule becomes available. Showboat in
turn shall provide FCRC with its construction schedule pertinent
to the aforesaid foundations and support structures as soon as
such schedule becomes available. FCRC and Showboat shall allow
each other's contractors reasonable access to all areas of the
construction site reasonably required for each party's
construction efforts provided, however, that neither contractor
impedes or delays the progress of the other. All such access
shall be at the risk of the party entering. FCRC and Showboat
shall also allow each other's architects, contractors or
engineers to make inspections of the construction site and of the
work in progress or completed thereon.
12. VACATION OF RECONVEYED TRACTS BY SHOWBOAT
In recognition of the agreements reached herein with regard to
the use of the various portions of the UURT by FCRC, Showboat
acknowledges that it shall be required to vacate certain portions
of the UURT which will be reconveyed to ACHA pursuant to the
terms of this Restated
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<PAGE>
Agreement as well as Tract 3 and Block 13, Lot 144.02 on the Tax
Map. Consistent with the provisions and acknowledgments herein,
Showboat shall vacate such portions of the UURT immediately upon
consummation of the conveyances herein described. At the time of
reconveyance by Showboat, the parcels so reconveyed shall be free
and clear of all liens, encumbrances, leases or occupancy rights,
vacant and cleared of all debris, improvements or personal
property, subject to the existence of: (1) any subterranean
utilities, fixtures or items previously approved by ACHA; (2) and
subterranean utilities, fixtures or items existing as of July 7,
1993; and (3) surface improvements currently on the 80' easement.
As to the foregoing items (1) ,(2) and (3), Showboat shall have
no obligation to remove or clear. Showboat agrees that it shall
not have any claim against FCRC or ACHA for the loss of value of
any improvements or personal property remaining on the property
after the date for reconveyance. Showboat shall deliver such
property to ACHA in accordance with the provisions of paragraph 8
of this Restated Agreement. FCRC agrees to accept from ACHA the
parcels in the same condition as ACHA received them from
Showboat. ACHA currently holds the sum of seventy five thousand
dollars ($75,000.00) which Showboat has delivered to ACHA as a
security deposit pursuant to the Use and Occupancy Agreement.
ACHA and Showboat agree that ACHA shall continue to hold such
$75,000.00 to secure the performance of Showboat pursuant to the
provisions of this paragraph 12. ACHA shall deliver to Showboat
said $75,000.00
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<PAGE>
immediately upon satisfactory inspection by ACHA of the subject
tracts provided that ACHA in its reasonable discretion is
satisfied that Showboat has complied with the provisions of this
paragraph 12.
13. DISPUTE RESOLUTION
FCRC and Showboat acknowledge that this Restated Agreement calls
for their cooperation with regard to coordination of the
construction and use of the Combined Service Drive. Accordingly,
should such cooperation with respect to any one issue not result
in an agreement between FCRC and Showboat as to how to resolve
that issue, FCRC and Showboat are herein providing for a
methodology to resolve as expeditiously and economically as
possible any disputes which cannot be determined by their
cooperation. Any such dispute which cannot be resolved by FCRC
and Showboat shall be conclusively determined by an arbitration
panel consisting of one arbitrator selected by Showboat, one by
FCRC and a third selected by the first two arbitrators ("the
Panel"). In any instance of this Restated Agreement where
arbitration is specified for the resolution of a dispute, the
party requesting arbitration shall do so by giving notice to that
effect to the other party, specifying in said notice the nature
of the dispute, and said dispute shall be determined by three
arbitrators designated as hereinafter provided. The party
requesting arbitration shall designate in its notice requesting
such arbitration an arbitrator,
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<PAGE>
giving his/her name and address. The other party shall, within
ten days after the effective date of such notice, designate by
notice to the party requesting such arbitration a second
arbitrator, giving his/her name and address. The two arbitrators
so designated shall within ten days after the effective date of
the notice designating the second arbitrator designate a third
arbitrator. If a party who has the right to appoint an
arbitrator pursuant to the preceding sentence fails or neglects
to do so, then the other party (or if the two arbitrators
appointed by the parties fail to appoint a third arbitrator when
required hereunder, then either party) may apply to any court of
competent jurisdiction to appoint such arbitrator. The three
arbitrators shall proceed promptly to the resolution of the
dispute. The arbitrators shall conduct the arbitration in
accordance with the Commercial Rules of the American Arbitration
Association (or successor organization) then in effect. Upon
selection of the Panel to make a determination under this
Restated Agreement, and upon acceptance by the Panel of that
responsibility, the following procedure shall apply:
(1) Upon presentation of the issue in dispute to the Panel
tomake a determination, the Panel shall be designated as a
arbitrator of the outstanding issues between FCRC and Showboat.
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<PAGE>
(2) Within seven (7) days of notification to the Panel that it
shall be called upon to decide any issue in dispute, FCRC and
Showboat shall present to the Panel and to each other their
respective positions in writing, including an explanation of how
each party's position was calculated and any written
documentation to support such position.
(3) Within seven (7) days of receiving the information set forth
in paragraph 2, the Panel shall meet with FCRC and Showboat to
discuss the issues, at which time, the Panel may request any
additional information which it feels is needed to render a
decision. Such meeting shall be informal and shall not be
conducted as an adversarial proceeding nor shall the Rules of
Evidence under the laws of the State of New Jersey apply. At
this meeting, FCRC and Showboat may also present any additional
information which they feel is relevant.
(4) Within fifteen (15) days of conducting the meeting as set
forth in paragraph 3, the Panel shall render its decision in
writing to both FCRC and Showboat, with a copy to ACHA. If the
Panel cannot agree within fifteen days upon a resolution, the
third arbitrator shall determine the dispute, unless all of the
arbitrators agree to extend the determination period, but in no
event longer than an additional fifteen days. Said decision
shall be binding and
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<PAGE>
unappealable as to both FCRC and Showboat and shall be considered
a final decision reached through binding arbitration under the
laws of the State of New Jersey.
(5) When appropriate, Showboat and FCRC may agree to an
alternative form of dispute resolution if such alternative form
is identified in writing and agreed to by both FCRC and Showboat.
(6) FCRC and Showboat shall share equally the costs of
conducting any dispute resolution procedure pursuant to this
paragraph.
(7) ACHA shall be notified of any dispute submitted to
arbitration or dispute resolution and shall receive copies of all
documents submitted as part of the arbitration or dispute
resolution process. ACHA shall have the right to observe any
arbitration or dispute resolution proceedings and Showboat and
FCRC shall provide ACHA with notice of the outcome thereof.
14. ASSIGNMENT
(A) Assignment by FCRC and Showboat
Showboat and FCRC acknowledge and agree that each has the right
to assign this Restated Agreement, in whole or in part, subject
to the prior written approval of ACHA.
(B) Assignment by ACHA
Subject to the provisions of the following sentence, ACHA may
assign
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<PAGE>
this Restated Agreement, or any interest therein, without the
prior written consent of FCRC and Showboat. Notwithstanding the
foregoing, ACHA may not assign, delegate, sub-contract or
otherwise dispose of any of its "ACHA Functions" (as hereinafter
defined) unless such disposition is to a governmental entity and
any attempt to do so in violation of the foregoing shall be null
and void. For purposes of this section 14 (B), the term "ACHA
Functions" shall mean any rights, remedies, responsibilities or
obligations under this Restated Agreement with respect to: (i)
review and approval of FCRC's plans, designs, finishes and
materials for any improvements; (ii) the issuance of
Certificate(s) of Completion for any improvements; (iii)
enforcement of the Redevelopment Plan as it relates to the
parcels or tracts, or any part thereof, or of the affirmative
action requirements of the Redevelopment Plan. Notwithstanding
the foregoing, ACHA reserves the right to delegate or sub-
contract, to one or more parties acting on ACHA's behalf,
anything other than the ultimate responsibility for and decision
making with respect to the ACHA Functions.
(C) Binding Effect
This Restated Agreement shall be binding upon and inure to the
benefit of ACHA, FCRC and Showboat and their respective heirs,
executors, administrators, successors and assigns. However, in
the event that
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<PAGE>
after FCRC commences development, ACHA terminates the FCRC
Development Agreement, ACHA or its successor or assigns shall
have the right but not the obligation to complete the FCRC
project and/or fulfill any of FCRC's obligations pursuant to this
Restated Agreement, except that any successor or assigned must be
bound to complete construction of the Combined Service Drive.
15. MISCELLANEOUS
(A) FCRC agrees that its project shall not exceed fifty-two (52)
feet mean sea level in height within twenty-four (24) feet of
Showboat's property line as depicted at Exhibit N of this
Restated Agreement.
(B) It is also acknowledged and agreed that there may be a
desire by FCRC and Showboat to construct a connecting pedestrian
bridge between the proposed FCRC project and the existing
Showboat Casino Hotel facility to permit patrons to move between
those facilities. The location of any pedestrian bridge(s)
connecting the two facilities shall be mutually agreed upon by
FCRC and Showboat subject to approval by ACHA. The cost of such
pedestrian bridge(s), if constructed, shall be borne equally by
FCRC and Showboat.
(C) The parties anticipate that construction of the FCRC project
will require excavation and relocation of utilities currently
serving the Showboat facility. Such utilities include water,
sewer, drainage, electricity and other subterranean utilities.
To the extent that any utilities or other facilities or
improvements may need to be relocated as a result of the
reconveyance of the Tracts and the 80' easement
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identified herein by Showboat to ACHA and the subsequent
conveyance by ACHA to FCRC, and in order to accommodate the FCRC
project, the expense for such relocation shall be the sole and
exclusive obligation of FCRC. Neither Showboat nor ACHA
undertakes any obligation whatsoever to pay for any such
relocation. However, this responsibility shall not include any
utility or facility relocation required to be undertaken as a
result of any decision by Showboat, pursuant to paragraph 11
hereof, to construct the Phase II Tower. Showboat shall have the
right to review and reasonably approve the design, the method and
timing of the relocation of any utilities that are tied into the
Showboat facilities in order to insure that such relocation will
not unreasonably interrupt utility service to the Showboat Casino
Hotel. Showboat shall respond to any written request for
relocation of utilities within thirty days of receipt. Any such
request must be accompanied by plans and other information
reasonable required to evaluate such requests. If Showboat
decides not to approve any such request, its response will
include a reasonably detailed explanation for its refusal to so
approve.
(D) (Intentionaly deleted and omitted).
(E) The parties agree that this Restated Agreement may be
recorded in the Office of the Atlantic County Clerk.
(F) Any notices consents, requests or approvals which are
required to be given with respect to any portion of this Restated
Agreement shall be given in writing by way of ordinary United
States mail by the party
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giving such notice to both other parties to this Restated
Agreement addressed as follows:
As to Showboat: P.O. Box 840
Atlantic City, NJ 08401
Attention: Legal Department
As to ACHA: 227 N. Vermont Avenue
P.O. Box 1258
Atlantic City, NJ 08404
Attention: Executive Director
As to FCRC: One Metro Tech Center, North
Brooklyn, NY 11201
Attention: Legal Department
(G) This Restated Agreement shall be governed by and construed
under the laws of the State of New Jersey.
(H) This Restated Agreement constitutes the entire understanding
among the parties and may only be amended by a writing executed
by all the parties. The parties affirm that there are no other
agreements between Showboat and ACHA or Showboat and FCRC, with
respect to the issues addressed herein.
(I) This Restated Agreement may be executed in counterparts at
different locations or by signature of any of the parties
transmitted by an electronic means such as telecopier (fax), and
execution by such means shall bind the parties in the same manner
as if executed in person on the date of this Restated Agreement.
(J) Showboat acknowledges that FCRC desires to obtain funding
for
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<PAGE>
certain portions of its project from the Casino Reinvestment
Development Authority ("CRDA"). Showboat is willing to assist
construction of FCRC's project and in furtherance thereof will
provide or cause to be provided CRDA funds, in the form of a
grant in an amount equal to $2.5 million, toward construction of
the planned community facilities, including but not limited to
the skating rink, providing that in no event will Showboat make
any cash outlay on account of any portion of the FCRC project and
its financial assistance will be strictly limited to utilization
of available CRDA funds not to exceed the aforesaid $2.5 million.
Showboat agrees not to take any action to otherwise encumber such
funds for a period of three years from the date of this Restated
Agreement. In addition, Showboat, so long as there is no expense
incurred by it, will render its cooperation and assistance to
FCRC in obtaining any discretionary or "pool" CRDA funds from
CRDA. Showboat's interest in such "pool" CRDA funds shall not be
considered an expense incurred by Showboat for purposes of the
preceding sentence. Showboat makes no warranty or representation
that any funding described in this paragraph 15(J) will be
approved by the CRDA for the use herein contemplated and
Showboat's covenant herein shall be limited solely to making the
appropriate applications to CRDA in furtherance of the purposes
herein described and otherwise acting in good faith with respect
to its obligations as set forth herein.
(K) The parties acknowledge and agree that this Restated
Agreement is
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intended, among other things, to memorialize the settlement
between them of those issues raised in those lawsuits now pending
between and among them being Atlantic City Showboat, Inc. v.
Housing Authority and Urban Redevelopment Agency of the City of
Atlantic City and Forest City Ratner Companies, bearing Docket
Numbers ATL-L-00811-95-PW and ATL-L-001898-95-PW. The parties
hereby agree to stipulate to the dismissal of the above-
referenced lawsuits with prejudice, together with all counter-
claims, within five business days of Closing as described in
paragraph 8 of this Restated Agreement. The parties at the same
time will exchange mutual releases in the form set forth at
Exhibit R of this Restated Agreement.
(L) Notwithstanding any presumptions to the contrary, all
covenants, conditions and representations contained in this
Restated Agreement, which, by their nature, implictly or
expressly, involved performance, in any particular, after
Closing, or which cannot be ascertained to have been fully
performed until after Closing, shall survive Closing to the
extent provided in this Restated Agreement and the deeds
delivered pursuant hereto.
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<PAGE>
AMENDED AND RESTATED
TRI-PARTY AGREEMENT SIGNATURE PAGE
ATTEST: ATLANTIC CITY SHOWBOAT, INC.
/s/ Luther G. Anderson By: /s/ Herbert R. Wolfe
Luther G. Anderson Herbert R. Wolfe
Assistant Secretary President and Chief Executive
Officer
STATE OF NEW JERSEY :
: SS
COUNTY OF ATLANTIC :
BE IT REMEMBERED, that on this 14th day of December, 1995,
before me, the subscriber, personally appeared Herbert R. Wolfe
who I am satisfied is the person who signed the within instrument
as President Chief Executive Officer of Atlantic City Showboat,
Inc., the corporation named therein, and he acknowledged that he
signed, sealed with the corporate seal and delivered the same as
such officer aforesaid, and that the within instrument is the
voluntary act and deed of such corporation, made by virtue of a
Resolution of its Board of Directors.
/s/ Cynthia C. Stern
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<PAGE>
AMENDED AND RESTATED
TRI-PARTY AGREEMENT SIGNATURE PAGE
ATTEST: HOUSING AUTHORITY
AND URBAN REDEVELOPMENT AGENCY OF THE
CITY OF ATLANTIC CITY
/s/ By: /s/ John P. Whittington
Secretary John P. Whittington, Chairman
STATE OF NEW JERSEY :
SS
COUNTY OF ATLANTIC :
BE IT REMEMBERED, that on this 14th day of December, 1995,
before me, the subscriber, personally appeared John P.
Whittington who I am satisfied is the person who signed the
within instrument as Chairman of ATLANTIC CITY HOUSING AUTHORITY
AND URBAN REDEVELOPMENT AGENCY, the Agency named therein, and he
acknowledged that he signed, sealed with the Agency's seal and
delivered the same as such officer aforesaid, and that the within
instrument is the voluntary act and deed of such Agency, made by
virtue of a Resolution of its Members.
/s/ John F. Glowacki
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<PAGE>
AMENDED AND RESTATED
TRI-PARTY AGREEMENT SIGNATURE PAGE
FOREST CITY RATNER COMPANIES
ATTEST: BY RATNER GROUP, INC.,
GENERAL PARTNER
/s/ By: /s/ Bruce C. Ratner
Secretary Bruce C. Ratner, President
STATE OF NEW YORK :
: SS
COUNTY OF KINGS :
BE IT REMEMBERED, that on this 14th day of December, 1995,
before me, the subscriber, personally appeared Bruce C. Ratner
who I am satisfied is the person who signed the within instrument
as President of Ratner Group, Inc., a corporation which is
general partner of Forest City Ratner Companies, and he
acknowledged that he signed, sealed with the corporate seal and
delivered the same as aforesaid officer, and that the within
instrument is the voluntary act and deed of such corporation,
made by virtue of a Resolution of its Board of Directors.
/s/ Concepcion C. Balinong
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<PAGE>
Prepared by:
Record and return to
Arthur E. Sklar, Esq.
Levine, Steller, Sklar, Chan,
Brodsky & Donnelly, P.A. ______________________
3030 Atlantic Avenue Arthur Sklar, Esquire
Atlantic City, NJ 08401
RELEASE OF PART OF MORTGAGED PROPERTY
AND
SUBORDINATION AGREEMENT
THIS AGREEMENT is made as of the 14th day of December, 1995
by and between IBJ Schroder Bank & Trust Company (as Trustee),
whose address is One State Street, New York, New York 10004
(hereinafter referred to as "Mortgagee") and Atlantic City
Showboat, Inc. whose address is 801 Boardwalk, Atlantic City, New
Jersey 08401 (hereinafter referred to as "Mortgagor").
W I T N E S S E T H:
BACKGROUND
A. Mortgagor executed and delivered to Mortgagee (i) a
Leasehold Mortgage, Assignment of Rents and Security Agreement
dated as of May 18, 1993, recorded May 19, 1993 in the Office of
the Clerk of Atlantic County (the "Clerk's Office") in Mortgage
Book 5028, page 1, as amended by First Amendment to the Leasehold
Mortgage, Assignment of Rents and Security agreement dated July
9, 1993, recorded July 28, 1993 in the Clerk's Office in Mortgage
Book 5095, page 209 and Second Amendment to the Leasehold
Mortgage, Assignment of Rents and Security Agreement dated July
6, 1995, recorded September 14, 1995 in the Clerk's Office in
Mortgage Book 5702, page 223 and (ii) an Assignment of Leases and
Rents dated May 18, 1993,
<PAGE>
recorded May 19, 1993 in the Clerk's office in Mortgage Book
5028, page 66 (together, the "Trust Mortgage"). Mortgagee also
holds an obligation for the payment of an indebtedness that is
secured by the Trust Mortgage.
B. Mortgagor executed and delivered to Showboat, Inc., a
Nevada corporation (i) a Leasehold Mortgage, Assignment of Rents
and Security Agreement dated May 18, 1993, recorded May 19, 1993
in the Clerk's Office in Mortgage Book 5028, page 79, amended by
First Amendment to the Leasehold Mortgage, Assignment of Rents
and Security Agreement dated July 9, 1993, recorded July 28, 1993
in Mortgage Book 5095, page 26 and amended by Second Amendment to
the Leasehold Mortgage, Assignment of Rents and Security
Agreement date July 6, 1995, recorded September 14, 1995 in the
Clerk's Office in Mortgage book 5702, page 236 and (ii) an
Assignment of Rents and Leases dated May 18, 1993, recorded in
the Clerk's Office in Mortgage Book 5028, page 144 (together, the
"Assigned Mortgage"). The Assigned Mortgage was assigned by
Showboat, Inc. to Mortgagee by assignment dated May 18, 1993,
recorded May 29, 1993 in the Clerk's Office in Assignment Book
624, page 195. Mortgagee also holds an obligation for the
payment of an indebtedness that is secured by the Assigned
Mortgage.
C. Pursuant to a Tri-Party Agreement among Mortgagor, the
Housing Authority and Urban Redevelopment Agency of the City of
Atlantic City (the "Housing Authority") and Forest City Ratner
dated December 7, 1995 (the "Tri-Party Agreement"), Mortgagor
agreed to convey to the Housing Authority (i) certain land and
premises more particularly described on Exhibit "A" attached
hereto and made a part hereof (the "Release Parcels") and (ii) an
easement over a portion of lands and premises owned by Mortgagor
more particularly described on Exhibit "B" attached hereto and
made a part hereof (the "Easement Parcel") and the Housing
Authority has agreed to convey to Mortgagor the land and premises
described on Exhibit "C" attached hereto and made a
2
<PAGE>
part hereof (the "Authority Lands").
D. On December 6, 1995, the Planning Board of Atlantic
City approved the re-subdivision of Lots 144.03, 144.04, 144.05
and 144.06 in Block 13 on the Tax Map of the City of Atlantic
City as reflected on a subdivision plan prepared by Arthur W.
Ponzio Co. & Associates, Inc., last revised November 7, 1995 (the
"Subdivision Plat"). The Subdivision Plat has been, or is about
to be filed, in the Clerk's Office.
E. Mortgagor has requested Mortgagee to release the
Release Parcels encumbered by the Trust Mortgage and the Assigned
Mortgage and to subordinate the lien of the Trust Mortgage and
the Assigned Mortgage to the Easement Parcel.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Recitals. The recitals set forth above are hereby
incorporated in their entirety as if fully set forth at length.
2. Release of Part of Mortgaged Premises: Subordination.
2.1 Mortgagee hereby releases the Release Parcels from
the lien of the Trust Mortgage and the Assigned Mortgage. The
Release Parcels include (a) the land, (b) all buildings and other
improvements that are located on the land, (c) all fixtures that
are attached to the land or buildings, if any, and (d) all other
present rights of Mortgagee relating to the Release Parcels.
2.2 The rest of the property (not released) described
in the Trust Mortgage and the Assigned Mortgage remains subject
to the lien of such mortgages.
2.3 Subordination to Easement. Mortgagee hereby
subordinates the lien of the Trust Mortgage and the Assigned
Mortgage to the Easement Parcel for the uses and purposes
3
<PAGE>
described therein.
3. Successors and Assigns. This Agreement inures to the
benefit of Mortgagor and is binding upon Mortgagee and their
respective successors and assigns.
IN WITNESS WHEREOF, the undersigned has caused these
presents to be executed the day and year first above written.
ATTEST: IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
________________________ By:________________________________
, Secretary , Vice-President
STATE OF NEW JERSEY :
: ss
COUNTY OF ATLANTIC :
BE IT REMEMBERED that on this_______ day of December,
1995, before me, the subscriber, a Notary Public of New Jersey,
personally appeared __________________________________________,
who, I am satisfied is the person who signed the within
instrument as Vice-President of IBJ Schroder Bank & Trust
Company, as trustee, the corporation named therein, and he
thereupon acknowledged that the said instrument made by the
corporation and seal with its corporate seal, was signed, sealed
with the corporate seal and delivered by him as such officer, and
is the voluntary act and deed of the corporation, as trustee.
____________________________________
4
<PAGE>
TRACT B (Identified in the Restated Agreement as "The 80'
Easement")
BEGINNING at a point in the westerly line of New Jersey Avenue
(50' wide), South 27 degrees, 28'00" seconds east a distance of
862.00' from the southerly line of Pacific Avenue (60' wide), and
extending from said beginning point; thence
1. South 27 degrees, 28'00" east in and along the
westerly line of New Jersey Avenue a distance of
80.00' to a point; thence
2. South 62 degrees, 32'00" west a distance of
140.00' to a point; thence
3. North 27 degrees, 28'00" west a distance of 80.00'
to a point; thence
4. North 62 degrees, 32'00" east a distance of
140.00' to the point and place of BEGINNING
CONTAINING an area of 11,200 square feet and being Block 13,
Lot 144.06 on the Tax Map of the City of Atlantic City as it
existed on November 1, 1995, and also being the lands and
premises over which a certain easement was granted to Grantor by
Grantee by deed dated July 7, 1993, and recorded in the Atlantic
County Clerk's Office in deed book 5524, page 201 et seq.
Exhibit A
page 1 of 3
<PAGE>
TRACT A (Identified in the Restated Agreement as "Portion of
Tract 1 to be conveyed to ACHA-7,333.57SF")
Beginning at a point being South 62 degrees 32'00" West, 140.00'
from the westerly line of New Jersey Avenue (50.00' wide), and
South 27 degrees 28'00" East, 445.00' from the southerly line of
Pacific Avenue (60.00' wide), and extending from said beginning
point; thence
1. South 27 degrees 28'00" East, parallel with New
Jersey Avenue, 497.00' to the northerly line
of lot 144.02 in block 13; thence
2. South 62 degrees 32'00" West, in and along same,
parallel with Pacific Avenue, 13.00'; thence
3. North 27 degrees 28'00" West, parallel with New
Jersey Avenue, 419.73' to a point; thence
4. North 59 degrees 59'37" West, 20.77' to a point;
thence
5. North 27 degrees 28'00" West, parallel with New
Jersey Avenue 41.38' to a point; thence
6. North 59 degrees 59'37" West, 20.46' to a point;
thence
7. North 27 degrees 28'00" West, 1.13' to a point;
thence
8. North 62 degrees 32'00" East, parallel with
Pacific Avenue, 35.17' to the point and
place of BEGINNING.
CONTAINING an area of 7,333.57 square feet and being a
portion Block 13, Lot 144.03, Tax Map of the City of Atlantic
City as it existed on November 1, 1995, and also being a portion
of the lands and premises granted to Mortgagor by the Housing
Authority by deed dated July 7, 1993, and recorded in the
Atlantic County Clerk's Office in deed book 5524, page 201 et
seq.
Exhibit A
page 2 of 3
<PAGE>
[Original typed on letterhead]
September 23, 1995
Metes and Bounds Description for property situate in the City of
Atlantic City, County of Atlantic and State of New Jersey,
located in Block 13 as shown on the Atlantic City Tax Map, and
being a PORTION OF TRACT 2 (LOT 144.04) TO BE CONVEYED TO THE
ATLANTIC CITY HOUSING AUTHORITY as shown on plan prepared by
Arthur W. Ponzio, Jr., Professional Land Surveyor, New Jersey
License No. 28314, plan dated September 25, 1995, bounded and
described as follows:
Beginning at a point being South 62 32'00" West, 251.00' from the
westerly line of New Jersey Avenue (50' wide), and South 27
28'00" East, 80.00' from the southerly line of Pacific Avenue
(60' wide), and extending from said beginning point; thence
1. North 62 32'00" East, parallel with Pacific Avenue,
151.00' to a point; thence
2. South 27 28'00" East, parallel with New Jersey Avenue,
583.00' to a point; thence
3. South 62 32'00" West, parallel with Pacific Avenue,
40.00' to a point; thence
4. North 27 28'00" West, parallel with New Jersey
Avenue, 218.00' to a point; thence
5. South 62 32'00" West, parallel with Pacific
Avenue, 35.17' to a point; thence
6. North 27 28'00" West, parallel with New Jersey
Avenue, 84.40' to a point; thence
7. South 62 32'00" West, parallel with Pacific
Avenue, 75.83' to a point; thence
8. North 27 28'00" West, parallel with New Jersey
Avenue, 280.60' to the point and place of BEGINNING.
CONTAINING an area of 57435.09 square feet
/s/ Arthur W. Ponzio, Jr.
Arthur W. Ponzio, Jr. Professional Land Surveyor
N.J. License No. 28314
Exhibit A
page 3 of 3
<PAGE>
EXHIBIT "B"
EASEMENT PARCEL
TRACT D (Identified in the Restated Agreement as "3,243.52SF P/O
Service Road to be Retained by Showboat")
Beginning at a point being South 62 degrees 32'00" West, 251.00'
from the westerly line of New Jersey Avenue (50.00' wide) and
South 27 degrees 28'00" East, 360.60' from the southerly line of
Pacific Avenue (60.00 wide), and extending from said beginning
point; thence
1. North 62 degrees 32'00" East, parallel with
Pacific Avenue, 24.00' to a point; thence
2. South 27 degrees 28'00" East, parallel with New
Jersey Avenue, 4.25' to a point; thence
3. South 59 degrees 59'37" East, 116.85' to a point;
thence
4. South 27 degrees 28'00" East, parallel with New
Jersey Avenue, 41.38' to a point; thence
5. North 59 degrees 59'37" West, 161.49' to a point;
thence
6. North 27 degrees 28'00" West, parallel with New
Jersey Avenue, 8.00' to the point and place of
BEGINNING
CONTAINING an area of 3243.52 square feet and being a
portion of Block 13 on the Tax Map of the City of Atlantic City
and also being a portion of the lands and premises granted to
Grantor by Grantee by deed dated July 7, 1993, and recorded in
the Atlantic County Clerk's Office in deed book 5524, pages 201
et seq. and 216 et seq. Said easement shall extend from the
subsurface to a height of 28.25 mean sea level and shall be for
the purpose of constructing and utilizing in accordance with the
Restated Agreement that certain improvement identified in the
Restated Agreement as the Combined Service Drive and also for the
purpose of constructing, relocating, maintaining, replacing and
repairing subterranean utilities, including without limitation
water and sewer lines and drains.
<PAGE>
[Original typed on letterhead]
December 7, 1994
METES AND BOUNDS DESCRIPTION
ALL that certain lot, tract or parcel of land and premises
situate, lying and being in the City of Atlantic City, County of
Atlantic and State of New Jersey, bounded and described
as follows:
BEGINNING at the southeasterly corner of Atlantic Avenue (100.00'
wide) and Maryland Avenue (60.00' wide) and extending from said
beginning point; thence
(1) North 62 degrees 32'00" East, in and along the southerly
line of Atlantic Avenue, a distance of 350.00' to the
westerly line of Delaware Avenue (82.00' wide); thence
(2) South 27 degrees 28'00" East, in and along the westerly line
of Delaware Avenue, a distance of 100.00' to a point of
curve; thence
(3) Curving to the left in the arc of a circle having a radius
of 429.00' and in and along the westerly line of Delaware
Avenue, the arc length of 104.82' to a point of tangent;
thence
(4) South 41 degrees 28'00" East, in and along the westerly line
of Delaware Avenue, a distance of 152.53' to a point of
curve; thence
(5) Curving to the right in the arc of a circle having a radius
of 315.00' and in and along the westerly line of Delaware
Avenue, the arc length of 76.97' to a point of tangent;
thence
(6) South 27 degrees 28'00" East, in and along the westerly line
of Delaware Avenue, a distance of 122.01' to the northerly
line Pacific Avenue; thence
(7) South 62 degrees 32'00" West, in and along the northerly
line of Pacific Avenue, a distance of 409.00' to the
easterly line of Maryland Avenue; thence
Exhibit C
page 1 of 4
<PAGE>
(8) North 27 degrees 28'00" West, in and along the easterly line
of Maryland Avenue, a distance of 550.00' to the point and
place of BEGINNING.
BEING KNOWN AS Block 15 as shown on the current official taxing
plan of the City of Atlantic City, with a proposed vacation of
United States Avenue and realignment of Delaware Avenue.
CONTAINING an area of 209,013.13 square feet, or 4.80 Acres
Exhibit C
page 2 of 4
<PAGE>
[Original typed on letterhead]
September 23, 1995
Metes and Bounds Description for property situate in the City of
Atlantic City, County of Atlantic and State of New Jersey,
located in Block 13 as shown on the Atlantic City Tax Map, and
being A PORTION OF TRACT 3 (LOT 144.05) TO BE CONVEYED TO
ATLANTIC CITY SHOWBOAT, INC. as shown on plan prepared by Arthur
W. Ponzio, Jr., Professional Land Surveyor, New Jersey License
No. 28314, plan dated September 25, 1995, bounded and described
as follows:
Beginning at a point in the southerly line of Pacific Avenue
(60.00' wide), South 62 32'00" West, 251.00' from the westerly
line of New Jersey Avenue (50.00' wide), and extending from said
beginning point; thence
1. South 27 28'00" East, parallel with New Jersey Avenue,
80.00' to a point; thence
2. South 62 32'00" West, parallel with Pacific Avenue,
15.00' to the easterly line of lot 140 in block 13; thence
3. North 27 28'00" West, in and along same, parallel with
New Jersey Avenue, 80.00' to the southerly line of Pacific
Avenue; thence
4. North 62 32'00" East, in and along same, 15.00' to the
point and place of BEGINNING.
CONTAINING an area of 1200 square feet.
/s/ Arthur W. Ponzio, Jr.
Arthur W. Ponzio, Jr. Professional Land Surveyor
N.J. License No. 28314
Exhibit C
page 3 of 4
<PAGE>
EASEMENT
Metes and Bounds Description for property situate in the City of
Atlantic City, County of Atlantic and State of New Jersey,
located in Block 13 on the Atlantic City Tax Map, being A
PROPOSED FIRE ACCESSWAY, SERVICE ROAD AND UTILITY EASEMENT, as
shown on plan prepared by Arthur W. Ponzio, Jr., Professional
Land Survey, New Jersey License No. 28314, plan last dated
November 7, 1995, entitled PLAN TO ACCOMPANY RE-STATED TRI-PARTY
AGREEMENT DATED 12/1/95, bounded and described as follows:
Beginning at a point in the southerly line of Pacific Avenue (60'
wide), said point being South 62 degrees 32'00" West, 251.00'
from the westerly line of New Jersey Avenue (50'), and extending
from said beginning point; thence
1. North 62 degrees 32'00" East, parallel with
Pacific Avenue, 24.00' to a point; thence
2. South 27 degrees 28'00" East, parallel with New
Jersey Avenue, 364.85' to a point; thence
3. South 59 degrees 59'37" East, 182.26' to a point;
thence
4. South 27 degrees 28'00" East, parallel with New
Jersey Avenue, 423.48' to the northerly line of
lot 144.02; thence
5. South 62 degrees 32'00" West, in and along same,
parallel with Pacific Avenue, 24.00' to a point;
thence
6. North 27 degrees 28'00" West, parallel with New
Jersey Avenue, 419.73' to a point; thence
7. North 59 degrees 59'37" West, 182.26' to a point;
thence
8. North 27 degrees 28'00" West, parallel with New
Jersey Avenue, 360.68' to the point and place
of BEGINNING.
CONTAINING an area of 22,975.19 square feet.
Exhibit C
page 4 of 4
<PAGE>
Record and return to Prepared by:
William L. Mueller, Esq. /s/ Arthur Sklar
Clark, Ladner, Fortenbaugh & Young Arthur Sklar, Esquire
Woodland Falls Corporate Park
200 Lake Drive East
Suite 300
Cherry Hill, NJ 08002
FIRST AMENDMENT TO LEASEHOLD IN PARI PASSU MORTGAGE,
ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
AND COLLATERAL ASSIGNMENT OF EASEMENT RIGHTS
MORTGAGE SPREADER AGREEMENT
THIS AGREEMENT is made as of this 15th day of December,
1995, by and between Atlantic City Showboat, Inc., a New Jersey
corporation, whose address is 801 Boardwalk, Atlantic City, New
Jersey 08404 (hereinafter referred to as "Mortgagor"), and
NatWest Bank, N.A. (hereinafter referred to as "Mortgagee").
W I T N E S S E T H:
BACKGROUND.
A. Mortgagor executed and delivered to Mortgagee a
Leasehold in Pari Passu Mortgage, Assignment of Rents and
Security Agreement dated as of July 14, 1995, recorded September
14, 1995 in the Office of the Clerk of Atlantic County (the
"Clerk's Office") in Mortgage Book 5702, page 152 (the "NatWest
Mortgage") and related loan documents.
B. Pursuant to the terms of an agreement between Mortgagor
and Mortgagee, Mortgagor agreed to spread the lien of the NatWest
Mortgage to additional lands acquired by Mortgagor not encumbered
by the NatWest Mortgage.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
<PAGE>
Recitals. The recitals set forth above are hereby
incorporated in their entirety as if fully set forth at length.
2. Agreement to Mortgage. Mortgagor hereby mortgages to
Mortgagee and intends that the lien of the Mortgage shall hereby
attach and spread to Mortgagor's right, title and interest in the
land and premises more particularly described on Exhibit "A"
attached hereto and made a part hereof and shall be deemed to be
a valid mortgage lien on such property under and subject to
easements, agreements and restrictions of record.
3. Collateral Assignment. Mortgagor collaterally assigns
to Mortgagee all of Mortgagor's rights in and to a certain
Service Road, Fire Accessway and Utility Easement identified as
proposed new lots 144.08 and 144.09 on Proposed Plan of
Subdivision prepared by Arthur W. Ponzio, Jr., L.S., last revised
December 7, 1995, filed or about to be filed in the Atlantic
County Clerk's Office and more particularly described on Exhibit
"B" attached hereto and made a part hereof.
4. Successors and Assigns. This Agreement inures to the
benefit of Mortgagee, and is binding upon Mortgagor, and their
respective successors and assigns.
IN WITNESS WHEREOF, the undersigned has caused these
presents to be executed the day and year first above written.
ATTEST: ATLANTIC CITY SHOWBOAT, INC.
/s/ Luther G. Anderson By: /s/ Herbert R. Wolfe
Luther G. Anderson, Assistant Herbert R. Wolfe, President
Secretary
<PAGE>
STATE OF NEW JERSEY :
: ss
COUNTY OF ATLANTIC :
BE IT REMEMBERED that on this 20th day of December,
1995, before me, the subscriber, a Notary Public of New Jersey,
personally appeared Herbert R. Wolfe, who, I am satisfied is the
person who signed the within instrument as President of Atlantic
City Showboat, Inc., the corporation named therein, and he
thereupon acknowledged that the said instrument made by the
corporation and sealed with its corporate seal, was signed,
sealed with the corporate seal and delivered by him as such
officer pursuant to a proper resolution of its Board of
Directors, and is the voluntary act and deed of the corporation.
/s/ Cynthia C. Stern
<PAGE>
Metes and Bounds Description for property situate in the City of
Atlantic City, county of Atlantic and State of New Jersey,
located in Block 13 as shown on the Atlantic City Tax Map, and
being PROPOSED NEW LOT 144.10, BLOCK 13 TO BE OWNED BY ATLANTIC
CITY SHOWBOAT, INC. as shown on plan prepared by Arthur W.
Ponzio, Jr., Professional Land Surveyor, New Jersey License No.
28314, plan dated September 25, 1995, last revised December 7,
1995 filed or to be filed in the Atlantic County Clerk's Office,
bounded and described as follows:
Beginning at a point in the southerly line of Pacific Avenue (60'
wide), South 62 degrees 32'00" West, 251.00' from the westerly
line of New Jersey Avenue (50' wide), and extending from said
beginning point; thence
1. South 27 degrees 8'00" East, parallel with New Jersey
Avenue, 360.60' to a point; thence
2. North 62 degrees 2'00" East, parallel with Pacific
Avenue, 75.83 to a point; thence
3. South 27 degrees 8'00" East, parallel with New Jersey
Avenue, 85.53' to a point; thence
4. South 59 degrees 9'37" East, 20.46' to a point; thence
5. South 27 degrees 8'00" East, parallel with New Jersey
Avenue, 41.38' to a point; thence
6. South 59 degrees 9'37" East, 20.77' to a point; thence
7. South 27 degrees 28'00" East, parallel with New Jersey
Avenue, 419.73' to a point in the northerly line of lot 144.02
in block 13; thence
8. South 62 degrees 32'00" West in and along same,
parallel with Pacific Avenue, 113.00' to the easterly line of lot
140 in block 13; thence
9. North 27 degrees 28'00" West, in and along same,
parallel with New Jersey Avenue, 942.00' to the southerly line
of Pacific Avenue; thence
10. North 62 degrees 32'00" East in and along same, 15.00'
to the point and place of BEGINNING.
CONTAINING an area of 68,363.34 square feet.
Exhibit A
page 1 of 2
<PAGE>
ALL that certain lot, tract or parcel of land and premises
situate, lying and being in the City of Atlantic City, County of
Atlantic and State of New Jersey, bounded and described as
follows:
BEGINNING at the southeasterly corner of Atlantic Avenue (100.00'
wide) and Maryland Avenue (60.00' wide) and extending from said
beginning point; thence
(1) North 62 degrees 32' 00" East, in and along the
southerly line of Atlantic Avenue, a distance of 350.00'
to the westerly line of Delaware Avenue (82.00' wide);
thence
(2) South 27 degrees 28' 00" East, in and along the
westerly line of Delaware Avenue, a distance of 100.00' to
a point of curve; thence
(3) Curving to the left in the arc of a circle having a
radius of 429.00' and in and along the westerly line of
Delaware Avenue, the arc length of 104.82' to a point of
tangent; thence
(4) South 41 degrees 28' 00" East, in and along the
westerly line of Delaware Avenue, a distance of 152.53' to
a point of curve; thence
(5) Curving to the right in the arc of a circle having a
radius of 315.00' and in and along the westerly line of
Delaware Avenue, the arc length of 76.97' to a point of
tangent; thence
(6) South 27 degrees 28' 00" East, in and along the
westerly line of Delaware Avenue, a distance of 122.01'
to the northerly line of Pacific Avenue; thence
(7) South 62 degrees 32' 00" West, in and along the
northerly line of Pacific Avenue, a distance of 409.00'
to the easterly line of Maryland Avenue; thence
(8) North 27 degrees 28' 00" West, in and along the
easterly line of Maryland Avenue, a distance of 550.00'
to the point and place of BEGINNING.
BEING KNOWN AS Block 15 as shown on the current official
taxing plan of the City of Atlantic City, with a proposed
vacation of United States Avenue and realignment of Delaware
Avenue.
CONTAINING an area of 209,013.13 square feet, or 4.80 Acres.
Exhibit A
page 2 of 2
<PAGE>
EASEMENT
Metes and Bounds Description for property situate in the City of
Atlantic City, County of Atlantic and State of New Jersey,
located in Block 13 on the Atlantic City Tax Map, being a portion
of A PROPOSED FIRE ACCESS WAY, SERVICE ROAD AND UTILITY
EASEMENT, as shown on plan prepared by Arthur W. Ponzio, Jr.,
Professional Land Survey, New Jersey License No. 28314, plan last
dated November 7, 1995, entitled PLAN TO ACCOMPANY RE-STATED TRI
PARTY AGREEMENT DATED 12/1/95, bounded and described as follows:
BEGINNING at a point in the Southerly line of Pacific Avenue (60'
wide), said point being South 62 degrees 32'00" West, 251.00'
from the Westerly line of New Jersey Avenue (50'), and extending
from said beginning point; thence
1. North 62 degrees 32'00" East, parallel with Pacific
Avenue, 24.00' to a point; thence
2. South 27 degrees 28'00" East, parallel with New Jersey
Avenue, 360.60' to a point; thence
3. South 62 degrees 32'00" West, in and along same,
parallel with Pacific Avenue, 24.00' to a point; thence
4. North 27 degrees 28'00" West, parallel with New Jersey
Avenue, 360.60' to the point and place of BEGINNING.
CONTAINING an area of 8,654.45 square feet and being the
same easement conveyed by Deed dated December 29, 1995, from the
Housing Authority and Redevelopment Agency of the City of
Atlantic City to Atlantic City Showboat, Inc.
SAID easement shall extend from the subsurface to a height of
28.25 feet mean sea level and shall be for the purpose of
constructing and utilizing in accordance with the Restated
Agreement that certain improvement identified in the Restated
Agreement as the combined Service Road and also for the purpose
of constructing, relocating, maintaining, replacing, and
repairing subterranean utilities, including without limitation
water and sewer lines and drains.
Exhibit B
page 1 of 2
<PAGE>
Metes and Bounds Description for property situate in the city of
Atlantic City, County of Atlantic and State of New Jersey,
located in Block 13 as shown on the Atlantic City Tax Map, and
being a portion of a proposed Fire Access Way, Service Road and
Utility Easement (PROPOSED NEW LOT C) to be owned by the Atlantic
City Housing Authority as shown on plan prepared by Arthur W.
Ponzio, Jr., Professional Land Surveyor, new Jersey License No.
28314, plan dated September 25, 1995, bounded and described as
follows:
Beginning at a point in the Northerly line of lot 144.02 in Block
13 as shown on the Atlantic City Tax Map, said point being South
62 degrees 32'00" West, 129.00' from the Westerly line of New
Jersey Avenue (50' wide), and South 27 28'00" East, 942.00'
from the Southerly line of Pacific Avenue (60' wide), and
extending from said beginning point; thence
1. South 62 degrees 32'00" West, in and along the
Northerly line of Lot 144.02, parallel with Pacific Avenue,
24.00' to a point; thence
2. North 27 degrees 28'00" West, parallel with New Jersey
Avenue, 419.73' to a point; thence
3. North 59 degrees 59'37" West, 20.77' to a point; thence
4. North 27 degrees 28'00" West, parallel with New Jersey
Avenue, 41.38' to a point; thence
5. South 59 degrees 59'37" East, 65.41' to a point; thence
6. South 27 degrees 28'00" East, parallel with New Jersey
Avenue, 423.48' to the point and place of BEGINNING.
CONTAINING an area of 11,077.22 square feet.
SAID easement shall extend from the subsurface to a height of
28.25 feet mean sea level and shall be for the purpose of
constructing and utilizing in accordance with the Restated
Agreement that certain improvement identified in the Restated
Agreement as the combined Service Road and also for the purpose
of constructing, relocating, maintaining, replacing, and
repairing subterranean utilities, including without limitation
water and sewer lines and drains.
Exhibit B
page 2 of 2
<PAGE>
Record and return to Prepared by:
Bradley S. Paulsen, Esq.
2 Renaissance Sq.
40 N. Central Avenue /s/ Arthur Sklar, Esq.
Suite 2700 Arthur Sklar, Esq.
Phoenix, Arizona 85003
THIRD AMENDMENT TO THE LEASEHOLD MORTGAGE, ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT DATED AS OF MAY 18, 1993
MORTGAGE SPREADER AGREEMENT
THIS AGREEMENT is made as of this 14th day of December,
1995, by and between Atlantic City Showboat, Inc., a New Jersey
corporation, whose address is 801 Boardwalk, Atlantic City, New
Jersey 08404 (hereinafter referred to as "Mortgagor"), and IBJ
Schroder Bank & Trust Company (as Trustee), whose address is One
State Street, New York, New York 10004 (hereinafter referred to
as "Mortgagee").
W I T N E S S E T H:
BACKGROUND.
A. Mortgagor executed and delivered to Mortgagee (i) a
Leasehold Mortgage, Assignment of Rents and Security Agreement
dated as of May 18, 1993, recorded May 19, 1993 in the Office of
the Clerk of Atlantic County (the "Clerk's Office") in Mortgage
Book 5028, page 1, as amended by First Amendment to the Leasehold
Mortgage, Assignment of Rents and Security Agreement dated July
9, 1993, recorded July 28, 1993 in the Clerk's Office in Mortgage
Book 5095, page 209 and Second Amendment to the Leasehold
Mortgage, Assignment of Rents and Security Agreement dated July
6, 1995, recorded September 14, 1995 in the Clerk's Office in
Mortgage Book 5702, page 223 and (ii) an Assignment of Leases and
Rents dated May 18, 1993,
1
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recorded May 19, 1993 in the Clerk's office in Mortgage
Book 5028, page 66 (together, the "Trust Mortgage").
B. Mortgagor executed and delivered to Showboat, Inc.,
a Nevada corporation (i) a Leasehold Mortgage, Assignment of
Rents and Security Agreement dated May 18, 1993, recorded May
19, 1993 in the Clerk's Office in Mortgage Book 5028, page 79,
amended by First Amendment to the Leasehold Mortgage,
Assignment of Rents and Security Agreement dated July 9, 1993,
recorded July 28, 1993 in Mortgage Book 5095, page 26 and amended
by Second Amendment to the Leasehold Mortgage, Assignment
of Rents and Security Agreement dated July 6, 1995, recorded
September 14, 1995 in the Clerk's Office in Mortgage Book
5702, page 236 and (ii) an Assignment of Rents and Leases dated
May 18, 1993, recorded in the Clerk's Office in Mortgage Book
5028, page 144 (together, the "Assigned Mortgage"). The
Assigned Mortgage was assigned by Showboat, Inc. to Mortgagee
by assignment dated May 18, 1993, recorded May 29, 1993 in
the Clerk's Office in Assignment Book 624, page 195.
C. On December 6, 1995, the Planning Board of Atlantic
City approved a re-subdivision of Lots 144.03, 144.04, 144.05 and
144.06 in Block 13 on the Tax Map of the City of Atlantic City as
reflected on a subdivision plan prepared by Arthur W. Ponzio Co.
& Associates, Inc., last revised November 7, 1995 (the
"Subdivision Plat"). The Subdivision Plat shall be filed in the
Clerk's Office prior to the recording of this Agreement.
D. Pursuant to a Tri-Party Agreement among Mortgagor, the
Housing Authority and Forest City Ratner dated December 14, 1995
(the "Tri-Party Agreement"), Mortgagor agreed to convey to the
Housing Authority (i) all Mortgagor's right, title and interest
in certain land and premises more particularly described on
Exhibit "A" attached hereto and made a part hereof (the
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<PAGE>
"Release Parcels") and (ii) an easement over a portion of
lands and premises owned by Mortgagor more particularly
described on Exhibit "B" attached hereto and made a part hereof
(the "Easement Parcel") and the Housing Authority has agreed
to convey to Mortgagor the land and premises described on
Exhibit "C" attached hereto and made a part hereof (the
"Authority Lands") and to grant to Mortgagor a certain
easement with respect to that certain Proposed Fire Access
way, Service Road and Utility Easement described on Exhibit
"D" attached hereto and made a part hereof (the "Fire Access
way").
E. In consideration for the release by Mortgagee of the
Release Parcels and subordination of the Trust Mortgage and the
Assigned Mortgage to the Easement Parcel, Mortgagor has agreed to
mortgage to Mortgagee the Authority Lands and to collaterally
assign all of its right, title and interest in and to its
easement to utilize the Fire Access way.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Recitals. The recitals set forth above are hereby
incorporated in their entirety as if fully set forth at length.
2. Agreement to Mortgage. Mortgagor hereby mortgages the
Authority Lands to Mortgagee and intends that the lien of the
Mortgage shall hereby attach and spread to Mortgagor's right,
title and interest in the Authority Lands and shall be deemed to
be a valid mortgage lien on such property under and subject to
easements, agreements and restrictions of record.
3. Agreement to Collaterally Assign. Mortgagor
hereby collaterally assigns to Mortgagee its easement to
utilize the Fire Access way.
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4. Successors and Assigns. This Agreement inures to
the benefit of Mortgagee, and is binding upon Mortgagor and
their respective successors and assigns.
IN WITNESS WHEREOF, the undersigned has caused these
presents to be executed the day of the year first above written.
ATTEST: ATLANTIC CITY SHOWBOAT, INC.
/s/ Luther G. Anderson By: /s/ Herbert R. Wolfe
Luther G. Anderson, Herbert R. Wolfe
Assistant Secretary President and CEO
STATE OF NEW JERSEY:
: ss
COUNTY OF ATLANTIC:
BE IT REMEMBERED that on this 20th day of December,
1995, before me, the subscriber, a Notary Public of New Jersey,
personally appeared Herbert R. Wolfe, who, I am satisfied is the
person who signed the within instrument as President of Atlantic
City Showboat, Inc., the corporation named therein, and he
thereupon acknowledged that the said instrument made by the
corporation and sealed with its corporate seal, was signed,
sealed with the corporate seal and delivered by him as such
officer pursuant to a proper resolution of its Board of
Directors, and is the voluntary act and deed of the corporation.
/s/ Cynthia C. Stern
<PAGE>
TRACT B (Identified in the Restated Agreement as "The 80'
Easement")
BEGINNING at a point in the westerly line of New Jersey Avenue
(50' wide), South 27 degrees, 28'00" seconds east a distance
of 862.00' from the southerly line of Pacific Avenue (60' wide),
and extending from said beginning point; thence
1. South 27 degrees, 28'00" east in and along the westerly
line of New Jersey Avenue a distance of 80.00' to a
point; thence
2. South 62 degrees, 32'00" west a distance of 140.00' to
a point; thence
3. North 27 degrees, 28'00" west a distance of 80.00' to a
point; thence
4. North 62 degrees, 32'00" east a distance of 140.00' to
the point and place of BEGINNING
CONTAINING an area of 11,200 square feet and being Block 13,
Lot 144.06 on the Tax Map of the City of Atlantic City as it
existed on November 1, 1995, and also being the lands and
premises over which a certain easement was granted to Grantor by
Grantee by deed dated July 7, 1993, and recorded in the Atlantic
County Clerk's Office in deed book 5524, page 201 et seq.
Exhibit A
page 1 of 3
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TRACT A (Identified in the Restated Agreement as "Portion of
Tract 1 to be conveyed to ACHA-7,333.57SF")
Beginning at a point being South 62 degrees 32'00" West, 140.00'
from the westerly line of New Jersey Avenue (50.00' wide), and
South 27 degrees 28'00" East, 445.00' from the southerly line of
Pacific Avenue (60.00'wide), and extending from said beginning
point; thence
1. South 27 degrees 28'00" East, parallel with New Jersey
Avenue, 497.00' to the northerly line of lot 144.02 in
block 13; thence
2. South 62 degrees 32'00" West, in and along same,
parallel with Pacific Avenue, 13.00'; thence
3. North 27 degrees 28'00" West, parallel with New Jersey
Avenue, 419.73' to a point; thence
4. North 59 degrees 59'37" West, 20.77' to a point; thence
5. North 27 degrees 28'00" West, parallel with New Jersey
Avenue 41.38' to a point; thence
6. North 59 degrees 59'37" West, 20.46' to a point; thence
7. North 27 degrees 28'00" West, 1.13' to a point; thence
8. North 62 degrees 32'00" East, parallel with Pacific
Avenue, 35.17' to the point and place of BEGINNING.
CONTAINING an area of 7,333.57 square feet and being a
portion Block 13, Lot 144.03, Tax Map of the City of Atlantic
City as it existed on November 1, 1995, and also being a portion
of the lands and premises granted to Mortgagor by the Housing
Authority by deed dated July 7, 1993, and recorded in the
Atlantic County Clerk's Office in deed book 5524, page 201 et
seq.
Exhibit A
page 2 of 3
<PAGE>
Metes and Bounds Description for property situate in the City of
Atlantic City, County of Atlantic and State of New Jersey,
located in Block 13 as shown on the Atlantic City Tax Map, and
being a PORTION OF TRACT 2 (LOT 144.04) TO BE CONVEYED TO THE
ATLANTIC CITY HOUSING AUTHORITY as shown on plan prepared by
Arthur W. Ponzio, Jr., Professional Land Surveyor, New Jersey
License No. 28314, plan dated September 25, 1995, bounded and
described as follows:
Beginning at a point being South 62 degrees 32'00" West, 251.00'
from the westerly line of New Jersey Avenue (50' wide), and
South 27 28'00" East, 80.00' from the southerly line of Pacific
Avenue (60' wide), and extending from said beginning point;
thence
1. North 62 degrees 32'00" East, parallel with Pacific
Avenue, 151.00' to a point; thence
2. South 27 degrees 28'00" East, parallel with new Jersey
Avenue, 583.00' to a point; thence
3. South 62 degrees 32'00" West, parallel with Pacific
Avenue, 40.00' to a point, thence
4. North 27 degrees 28'00" West, parallel with New Jersey
Avenue, 218.00' to a point; thence
5. South 62 degrees 32'00" West, parallel with Pacific
Avenue, 35.17' to a point; thence
6. North 27 degrees 28'00" West, parallel with New Jersey
Avenue 84.40' to a point; thence
7. South 62 degrees 32'00" West, parallel with Pacific
Avenue, 75.83' to a point; thence
8. North 27 degrees 28'00" West, parallel with New Jersey
Avenue 280.60' to the point and place of BEGINNING.
CONTAINING an area of 57,435.09 square feet.
Exhibit A
page 3 of 3
<PAGE>
EASEMENT PARCEL
TRACT D (Identified in the Restated Agreement as "3,243.52SF P/O
Service Road to be Retained by Showboat")
Beginning at a point being South 62 degrees 32'00" West, 251.00'
from the westerly line of New Jersey Avenue (50.00' wide) and
South 27 degrees 28'00" East, 360.60' from the southerly line of
Pacific Avenue (60.00 wide), and extending from said beginning
point; thence
1. North 62 degrees 32'00" East, parallel with Pacific
Avenue, 24.00' to a point; thence
2. South 27 degrees 28'00" East, parallel with New Jersey
Avenue, 4.25' to a point; thence
3. South 59 degrees 59'37" East, 116.85' to a point;
thence
4. South 27 degrees 28'00" East, parallel with New Jersey
Avenue, 41.38' to a point; thence
5. North 59 degrees 59'37" West, 161.49' to a point;
thence
6. North 27 degrees 28'00" West, parallel with New Jersey
Avenue, 8.00' to the point and place of BEGINNING
CONTAINING an area of 3243.52 square feet and being a
portion of Block 13 on the Tax Map of the City of Atlantic City
and also being a portion of the lands and premises granted to
Grantor by Grantee by deed dated July 7, 1993, and recorded in
the Atlantic County Clerk's Office in deed book 5524, pages 201
et seq. and 216 et seq. Said easement shall extend from the
subsurface to a height of 28.25 mean sea level and shall be for
the purpose of constructing and utilizing in accordance with the
Restated Agreement that certain improvement identified in the
Restated Agreement as the Combined Service Drive and also for the
purpose of constructing, relocating, maintaining, replacing and
repairing subterranean utilities, including without limitation
water and sewer lines and drains.
Exhibit B
page 1 of 2
<PAGE>
RESTRICTION/MORTGAGOR
Declaration of Restriction. Furthermore, Mortgagor herein
acknowledges and accepts those certain restrictions upon the use
of a certain portion of Block 13, Lot 144.04 on the Tax Map of
the City of Atlantic City as it existed on November 1, 1995, such
restrictions being more particularly set forth at paragraph 3 of
that certain Restated Agreement referenced above. Said portion
of Block 13, Lot 144.04 is a portion of the parcel identified in
the Restated Agreement as "Portion of Tract 2 to be Retained by
Showboat". The parcel of land over which such restriction shall
apply is more particularly described as follows:
Beginning at a point in the easterly line of lot 140 in
block 13, said point being South 62 degrees 32'00" West, 266.00'
from the westerly line of New Jersey Avenue (50' wide), and South
27 degrees 28'00" East, 80.00' from the southerly line of Pacific
Avenue (60' wide) and extending from said beginning point; thence
1. North 62 degrees 32'00" East, parallel with Pacific
Avenue, 15.00' to a point; thence
2. South 27 degrees 28'00" East, parallel with New Jersey
Avenue 280.60' to a point; thence
3. South 62 degrees 32'00" West, parallel with Pacific
Avenue, 15.00' to a point; thence
4. North 27 degrees 28'00" West in and along the easterly
line of said lot 140, parallel with New Jersey Avenue,
280.60'to a point and place of BEGINNING.
CONTAINING an area of 4209 square feet. Such restriction as
set forth in the Restated Agreement shall limit the use of the
above-described parcel so that it may be utilized only for
purposes of a pedestrian passageway, themeing and screening in
accordance with the Restated Agreement.
Exhibit B
page 1 of 2
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METES AND BOUNDS DESCRIPTION
ALL that certain lot, tract or parcel of land and premises
situate, lying and being in the City of Atlantic City, County of
Atlantic and State of New Jersey, bounded and described as
follows:
BEGINNING at the southeasterly corner of Atlantic Avenue (100.00'
wide) and Maryland Avenue (60.00' wide) and extending from said
beginning point; thence
(1) North 62 degrees 32' 00" East, in and along the southerly
line of Atlantic Avenue, a distance of 350.00' to the
westerly line of Delaware Avenue (82.00' wide); thence
(2) South 27 degrees 28' 00" East, in and along the westerly
line of Delaware Avenue, a distance of 100.00' to a point
of curve; thence
(3) Curving to the left in the arc of a circle having a radius
of 429.00' and in and along the westerly line of
Delaware Avenue, the arc length of 104.82' to a point
of tangent; thence
(4) South 41 degrees 28' 00" East, in and along the westerly
line of Delaware Avenue, a distance of 152.53' to a point of
curve; thence
(5) Curving to the right in the arc of a circle having a radius
of 315.00' and in and along the westerly line of
Delaware Avenue, the arc length of 76.97' to a point
of tangent; thence
(6) South 27 degrees 28' 00" East, in and along the westerly
line of Delaware Avenue, a distance of 122.01' to the
northerly line of Pacific Avenue; thence
(7) South 62 degrees 32' 00" West, in and along the northerly
line of Pacific Avenue, a distance of 409.00' to the
easterly line of Maryland Avenue; thence
Exhibit C
page 1 of 3
<PAGE>
(8) North 27 degrees 28' 00" West, in and along the easterly
line of Maryland Avenue, a distance of 550.00' to the
point and place of BEGINNING.
BEING KNOWN AS Block 15 as shown on the current official
taxing plan of the City of Atlantic City, with a proposed
vacation of United States Avenue and realignment of Delaware
Avenue.
CONTAINING an area of 209,013.13 square feet, or 4.80 Acres.
Exhibit C
page 2 of 3
<PAGE>
Metes and Bounds Description for property situate in the City of
Atlantic City, County of Atlantic and State of New Jersey,
located in Block 13 as shown on the Atlantic City Tax map, and
being A PORTION OF TRACT 3 (LOT 144.05) TO BE CONVEYED TO
ATLANTIC CITY SHOWBOAT, INC. as shown on plan prepared by Arthur
W. Ponzio, Jr., Professional Land Surveyor, New Jersey License
No. 28314, plan dated September 23, 1995, bounded and described
as follows:
Beginning at a point in the southerly line of Pacific Avenue
(60.00' wide), south 62 degrees 32'00" West, 251.00' from the
westerly line of New Jersey Avenue (50.00' wide), and extending
from said beginning point; thence
1. South 27 degrees 28'00" East, parallel with New Jersey
Avenue, 80.00' to a point; thence
2. South 62 degrees 32'00" West, parallel with Pacific
Avenue, 15.00' to the easterly line of lot 140 in block 13;
thence
3. North 27 degrees 28'00" West, in and along same,
parallel with New Jersey Avenue, 80.00' to the southerly line
of Pacific Avenue; thence
4. North 62 degrees 32'00" East, in and along same, 15.00'
to the point and place of BEGINNING.
CONTAINING an area of 1200 square feet.
Exhibit C
page 3 of 3
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EASEMENT
Metes and Bounds Description for property situate in the City of
Atlantic City, County of Atlantic and State of New Jersey,
located in Block 13 on the Atlantic City Tax Map, being A
PROPOSED FIRE ACCESS WAY, SERVICE ROAD AND UTILITY EASEMENT, as
shown on plan prepared by Arthur W. Ponzio, Jr., Professional
Land Survey, New Jersey License No. 28314, plan last dated
November 7, 1995, entitled PLAN TO ACCOMPANY RE-STATED TRI-PARTY
AGREEMENT DATED 12/1/95, bounded and described as follows:
Beginning at a point in the Southerly line of Pacific Avenue (60'
wide), said point being South 62 degrees 32'00" West, 251.00'
from the Westerly line of New Jersey Avenue (50'), and extending
from said beginning point; thence
1. North 62 degrees 32'00" East, parallel with Pacific
Avenue, 24.00' to a point; thence
2. South 27 degrees 28'00" East, parallel with New Jersey
Avenue, 360.60' to a point; thence
3. South 62 degrees 32'00" West, in and along same,
parallel with Pacific Avenue, 24.00' to a point; thence
4. North 27 degrees 28'00" West, parallel with New Jersey
Avenue, 360.60' to the point and place of BEGINNING.
CONTAINING an area of 8,654.45 square feet and being the
same easement conveyed by Deed dated December 29, 1995, from the
Housing Authority and Redevelopment Agency to the City of
Atlantic City to Atlantic City Showboat, Inc.
SAID easement shall extend from the subsurface to a height of
28.25 feet mean sea level and shall be for the purpose of
constructing and utilizing in accordance with the Restated
Agreement that certain improvement identified in the Restated
Agreement as the combined Service Road and also for the purpose
of constructing, relocating, maintaining, replacing, and
repairing subterranean utilities, including without limitation
water and sewer lines and drains.
Exhibit D
page 1 of 2
<PAGE>
Metes and Bounds Description for property situate in the city of
Atlantic City, County of Atlantic and State of New Jersey,
located in Block 13 as shown on the Atlantic City Tax Map, and
being a portion of a proposed Fire Access Way, Service Road and
Utility Easement (PROPOSED NEW LOT C) to be owned by the Atlantic
City Housing Authority as shown on plan prepared by Arthur W.
Ponzio, Jr., Professional Land Surveyor, new Jersey License No.
28314, plan dated September 25, 1995, bounded and described as
follows:
Beginning at a point in the Northerly line of lot 144.02 in block
13 as shown on the Atlantic City Tax Map, said point being South
62 degrees 32'00" West, 129.00' from the Westerly line of
New Jersey Avenue (50' wide), and South 27 degrees 28'00" East,
942.00' from the Southerly line of Pacific Avenue (60' wide),
and extending from said beginning point; thence
1. South 62 degrees 32'00" West, in and along the
northerly line of lot 144.02, parallel with Pacific Avenue,
24.00' to a point; thence
2. North 27 degrees 28'00" West, parallel with New Jersey
Avenue, 419.73' to a point; thence
3. North 59 degrees 59'37" West, 20.77' to a point; thence
4. North 27 degrees 28'00" West, parallel with New Jersey
Avenue, 41.38' to a point; thence
5. South 59 degrees 59'37" East, 65.41' to a point; thence
6. South 27 degrees 28'00" East, parallel with New Jersey
Avenue, 423.48' to the point and place of BEGINNING.
CONTAINING an area of 11,077.22 square feet.
SAID easement shall extend from the subsurface to a height of
28.25 feet mean sea level and shall be for the purpose of
constructing and utilizing in accordance with the Restated
Agreement that certain improvement identified in the Restated
Agreement as the combined Service Road and also for the purpose
of constructing, relocating, maintaining, replacing, and
repairing subterranean utilities, including without limitation
water and sewer lines and drains.
Exhibit D
page 2 of 2
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Prepared by:
Arthur E. Sklar, Esq.
Levine, Staller, Sklar, Chan,
Brodsky & Donnelly, P.A. /s/ Arthur E. Sklar
3030 Atlantic Avenue Arthur Sklar, Esquire
Atlantic City, NJ 08401
FOURTH AMENDMENT TO LEASEHOLD MORTGAGE, ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT DATED AS OF MAY 18, 1993
RELEASE OF PART OF MORTGAGED PROPERTY
AND
SUBORDINATION AGREEMENT
THIS AGREEMENT is made as of the 14th day of December, 1995
by and between IBJ Schroder Bank & Trust Company (as Trustee),
whose address is One State Street, New York, New York 10004
(hereinafter referred to as "Mortgagee") and Atlantic City
Showboat, Inc. whose address is 801 Boardwalk, Atlantic City, New
Jersey 08401 (hereinafter referred to as "Mortgagor").
W I T N E S S E T H:
BACKGROUND
A. Mortgagor executed and delivered to Mortgagee (i) a
Leasehold Mortgage, Assignment of Rents and Security Agreement
dated as of May 18, 1993, recorded May 19, 1993 in the Office of
the Clerk of Atlantic County (the "Clerk's Office") in Mortgage
Book 5028, page 1, as amended by First Amendment to the Leasehold
Mortgage, Assignment of Rents and Security Agreement dated July
9, 1993, recorded July 28, 1993 in the Clerk's Office in Mortgage
Book 5095, page 209 and Second Amendment to the Leasehold
Mortgage, Assignment of Rents and Security Agreement dated July
6, 1995, recorded September 14, 1995 in the Clerk's Office in
Mortgage Book 5702, page 223 and (ii) an Assignment of Leases and
Rents dated May 18, 1993, recorded May 19, 1993 in the Clerk's
office in Mortgage Book 5028, page 66 (together, the
<PAGE>
"Trust Mortgage"). Mortgagee also holds an obligation for the
payment of an indebtedness that is secured by the Trust Mortgage.
B. Mortgagor executed and delivered to Showboat, Inc., a
Nevada corporation (i) a Leasehold Mortgage, Assignment of Rents
and Security Agreement dated May 18, 1993, recorded May 19, 1993
in the Clerk's Office in Mortgage Book 5028, page 79, amended by
First Amendment to the Leasehold Mortgage, Assignment of Rents
and Security Agreement dated July 9, 1993, recorded July 28, 1993
in Mortgage Book 5095, page 26 and amended by Second Amendment to
the Leasehold Mortgage, Assignment of Rents and Security
Agreement dated July 6, 1995, recorded September 14, 1995 in the
Clerk's Office in Mortgage Book 5702, page 236 and (ii) an
Assignment of Rents and Leases dated May 18, 1993, recorded in
the Clerk's Office in Mortgage Book 5028, page 144 (together, the
"Assigned Mortgage"). The Assigned Mortgage was assigned by
Showboat, Inc. to Mortgagee by assignment dated May 18, 1993,
recorded May 29, 1993 in the Clerk's Office in Assignment Book
624, page 195. Mortgagee also holds an obligation for the
payment of an indebtedness that is secured by the Assigned
Mortgage.
C. Pursuant to a Tri-Party Agreement among Mortgagor, the
Housing Authority and Urban Redevelopment Agency of the City of
Atlantic City (the "Housing Authority") and Forest City Ratner
dated December 14, 1995 (the "Tri-Party Agreement"), Mortgagor
agreed to convey to the Housing Authority (i) all Mortgagor's
right, title and interest in certain land and premises more
particularly described on Exhibit "A" attached hereto and made a
part hereof (the "Release Parcels") and (ii) an easement over a
portion of lands and premises owned by Mortgagor more
particularly described on Exhibit "B" attached hereto and made a
part hereof (the "Easement Parcel") and the Housing Authority has
agreed to convey to Mortgagor the land and premises
2
<PAGE>
described on Exhibit "C" attached hereto and made a part hereof
and an easement over and across the land described on Exhibit "D"
attached hereto and made a part hereof.
D. On December 6, 1995, the Planning Board of Atlantic
City approved the re-subdivision of Lots 144.03, 144.04, 144.05
and 144.06 in Block 13 on the Tax Map of the City of Atlantic
City as reflected on a subdivision plan prepared by Arthur W.
Ponzio Co. & Associates, Inc., last revised November 7, 1995 (the
"Subdivision Plat"). The Subdivision Plat has been or is about
to filed, in the Clerk's office.
E. Mortgagor has requested Mortgagee to release the
Release Parcels encumbered by the Trust Mortgage and the Assigned
Mortgage and to subordinate the lien of the Trust Mortgage and
the Assigned Mortgage to the Easement Parcel.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Recitals. The recitals set forth above are hereby
incorporated in their entirety as if fully set forth at length.
2. Release of Part of Mortgaged Premises; Subordination.
2.1 Mortgagee hereby releases the Release Parcels
from the lien of the Trust Mortgage and the Assigned Mortgage.
The Release Parcels include (a) the land, (b) all buildings and
other improvements that are located on the land, (c) all fixtures
that are attached to the land or buildings, if any, and (d) all
other present rights of Mortgagee relating to the Release
Parcels.
2.2 The rest of the property (not released)
described in the Trust Mortgage and the Assigned Mortgage remains
subject to the lien of such mortgages.
3
<PAGE>
2.3 Subordination to Easement. Mortgagee hereby
subordinates the lien of the Trust Mortgage and the Assigned
Mortgage to the Easement Parcel and to the terms and conditions
governing the Easement and to the uses and purposes described
herein.
3. Successors and Assigns. This Agreement inures to the
benefit of Mortgagor and is binding upon Mortgagee and their
respective successors and assigns.
IN WITNESS WHEREOF, the undersigned has caused these
presents to be executed the day and year first above written.
ATTEST: IBJ SCHRODER BANK & TRUST
COMPANY, as Trustee
/s/ Susan Lavelle By: /s/ Barbara McCluskey
Susan Lavelle, Asst. Secretary Barbara McCluskey,
Asst. Vice-President
STATE OF NEW YORK :
: ss
COUNTY OF RICHMOND :
BE IT REMEMBERED that on this 14th day of December, 1995,
before me, the subscriber, a Notary Public of New York,
personally appeared Barbara McCluskey, who, I am satisfied is the
person who signed the within instrument as Asst. Vice-President
of IBJ Schroder Bank & Trust Company, as trustee, the corporation
named therein, and he thereupon acknowledged that the said
instrument made by the corporation and sealed with its corporate
seal, was signed, sealed with the corporate seal and delivered by
him as such officer, and is the voluntary act and deed of the
corporation, as trustee.
/s/ Eddie Jackson Jr.
4
<PAGE>
TRACT B (Identified in the Restated Agreement as "The 80'
Easement")
BEGINNING at a point in the westerly line of New Jersey Avenue
(50' wide), South 27 degrees, 28'00" seconds east a distance of
862.00' from the southerly line of Pacific Avenue (60' wide), and
extending from said beginning point; thence
1. South 27 degrees, 28'00" east in and along the westerly
line of New Jersey Avenue a distance of 80.00' to a
point; thence
2. South 62 degrees, 32'00" west a distance of 140.00' to
a point; thence
3. North 27 degrees, 28'00" west a distance of 80.00' to a
point; thence
4. North 62 degrees, 32'00" east a distance of 140.00' to
the point and place of BEGINNING
CONTAINING an area of 11,200 square feet and being Block 13,
Lot 144.06 on the Tax Map of the City of Atlantic City as it
existed on November 1, 1995, and also being the lands and
premises over which a certain easement was granted to Grantor by
Grantee by deed dated July 7, 1993, and recorded in the Atlantic
County Clerk's Office in deed book 5524, page 201 et seq.
Exhibit A
page 1 of 3
5
<PAGE>
TRACT A (Identified in the Restated Agreement as "Portion of
Tract 1 to be conveyed to ACHA-7,333.57SF")
Beginning at a point being South 62 degrees 32'00" West, 140.00'
from the westerly line of New Jersey Avenue (50.00' wide), and
South 27 degrees 28'00" East, 445.00' from the southerly line of
Pacific Avenue (60.00' wide), and extending from said beginning
point; thence
1. South 27 degrees 28'00" East, parallel with New Jersey
Avenue, 497.00' to the northerly line of lot 144.02 in
block 13; thence
2. South 62 degrees 32'00" West, in and along same,
parallel with Pacific Avenue, 13.00'; thence
3. North 27 degrees 28'00" West, parallel with New Jersey
Avenue, 419.73' to a point; thence
4. North 59 degrees 59'37" West, 20.77' to a point; thence
5. North 27 degrees 28'00" West, parallel with New Jersey
Avenue 41.38' to a point; thence
6. North 59 degrees 59'37" West, 20.46' to a point; thence
7. North 27 degrees 28'00" West, 1.13' to a point; thence
8. North 62 degrees 32'00" East, parallel with Pacific
Avenue, 35.17' to the point and place of BEGINNING.
CONTAINING an area of 7,333.57 square feet and being a
portion Block 13, Lot 144.03, Tax Map of the City of Atlantic
City as it existed on November 1, 1995, and also being a portion
of the lands and premises granted to Mortgagor by the Housing
Authority by deed dated July 7, 1993, and recorded in the
Atlantic County Clerk's Office in deed book 5524, page 201 et
seq.
Exhibit A
page 2 of 3
6
<PAGE>
Metes and Bounds Description for property situate in the City of
Atlantic City, County of Atlantic and State of New Jersey,
located in Block 13 as shown on the Atlantic city Tax Map, and
being a PORTION OF TRACT 2 (LOT 144.04) TO BE CONVEYED TO THE
ATLANTIC CITY HOUSING AUTHORITY as shown on plan prepared by
Arthur W. Ponzio, Jr., Professional Land Surveyor, New Jersey
License No. 28314, plan dated September 25, 1995, bounded and
described as follows:
Beginning at a point being South 62 32'00" West, 251.00' from the
westerly line of New Jersey Avenue (50' wide), and South 27
28'00" East, 80.00' from the southerly line of Pacific Avenue
(60' wide), and extending from said beginning point; thence
1. North 62 32'00" East, parallel with Pacific Avenue,
151.00' to a point; thence
2. South 27 28'00" East, parallel with new Jersey Avenue,
583.00' to a point; thence
3. South 62 32'00" West, parallel with Pacific Avenue,
40.00' to a point; thence
4. North 27 28'00" West, parallel with New Jersey Avenue,
218.00' to a point; thence
5. South 62 32'00" West, parallel with Pacific Avenue,
35.17' to a point; thence
6. North 27 28'00" West, parallel with New Jersey Avenue
84.40' to a point; thence
7. South 62 32'00" West, parallel with Pacific Avenue,
75.83' to a point; thence
8. North 27 28'00" West, parallel with New Jersey Avenue
280.60' to the point and place of BEGINNING.
CONTAINING an area of 57,435.09 square feet.
Exhibit A
page 3 of 3
7
<PAGE>
EASEMENT PARCEL
TRACT D (Identified in the Restated Agreement as "3,243.52SF P/O
Service Road to be Retained by Showboat")
Beginning at a point being South 62 degrees 32'00" West, 251.00'
from the westerly line of New Jersey Avenue (50.00' wide) and
South 27 degrees 28'00" East, 360.60' from the southerly line of
Pacific Avenue (60.00 wide), and extending from said beginning
point; thence
1. North 62 degrees 32'00" East, parallel with Pacific
Avenue, 24.00' to a point; thence
2. South 27 degrees 28'00" East, parallel with New Jersey
Avenue, 4.25' to a point; thence
3. South 59 degrees 59'37" East, 116.85 ' to a point;
thence
4. South 27 degrees 28'00" East, parallel with New Jersey
Avenue, 41.38' to a point; thence
5. North 59 degrees 59'37" West, 161.49' to a point;
thence
6. North 27 degrees 28'00" West, parallel with New Jersey
Avenue, 8.00' to the point and place of BEGINNING
CONTAINING an area of 3243.52 square feet and being a
portion of Block 13 on the Tax Map of the City of Atlantic City
and also being a portion of the lands and premises granted to
Grantor by Grantee by deed dated July 7, 1993, and recorded in
the Atlantic County Clerk's Office in deed book 5524, pages 201
et seq. and 216 et seq. Said easement shall extend from the
subsurface to a height of 28.25 mean sea level and shall be for
the purpose of constructing and utilizing in accordance with the
Restated Agreement that certain improvement identified in the
Restated Agreement as the Combined Service Drive and also for the
purpose of constructing, relocating, maintaining, replacing and
repairing subterranean utilities, including without limitation
water and sewer lines and drains.
Exhibit B
8
<PAGE>
METES AND BOUNDS DESCRIPTION
ALL that certain lot, tract or parcel of land and premises
situate, lying and being in the City of Atlantic City, County of
Atlantic and State of New Jersey, bounded and described as
follows:
BEGINNING at the southeasterly corner of Atlantic Avenue (100.00'
wide) and Maryland Avenue (60.00' wide) and extending from said
beginning point; thence
(1) North 62 degrees 32'00" East, in and along the southerly
line of Atlantic Avenue, a distance of 350.00' to the
westerly line of Delaware Avenue (82.00' wide); thence
(2) South 27 degrees 28'00" East, in and along the westerly
line of Delaware Avenue, a distance of 100.00' to a point
of curve; thence
(3) Curving to the left in the arc of a circle having a radius
of 429.00' and in and along the westerly line of Delaware
Avenue, the arc length of 104.82' to a point of tangent;
thence
(4) South 41 degrees 28'00" East, in and along the westerly
line of Delaware Avenue, a distance of 152.53' to a point
of curve; thence
(5) Curving to the right in the arc of a circle having a radius
of 315.00' and in and along the westerly line of Delaware
Avenue, the arc length of 76.97' to a point of tangent;
thence
(6) South 27 degrees 28'00" East, in and along the westerly
line of Delaware Avenue, a distance of 122.01' to the
northerly line of Pacific Avenue; thence
(7) South 62 degrees 32'00" West, in and along the northerly
line of Pacific Avenue, a distance of 409.00' to the
easterly line of Maryland Avenue; thence
Exhibit C
page 1 of 3
9
<PAGE>
(8) North 27 degrees 28'00" West, in and along the easterly
line of Maryland Avenue, a distance of 550.00' to the point
and place of BEGINNING.
BEING KNOWN AS Block 15 as shown on the current official
taxing plan of the City of Atlantic City, with a proposed
vacation of United States Avenue and realignment of
Delaware Avenue.
CONTAINING an area of 209,013.13 square feet, or 4.80
Acres.
Exhibit C
page 2 of 3
10
<PAGE>
Metes and Bounds Description for property situate in the City of
Atlantic City, County of Atlantic and State of New Jersey,
located in Block 13 as shown on the Atlantic City Tax map, and
being A PORTION OF TRACT 3 (LOT 144.05) TO BE CONVEYED TO
ATLANTIC CITY SHOWBOAT, INC. as shown on plan prepared by Arthur
W. Ponzio, Jr., Professional Land Surveyor, New Jersey License
No. 28314, plan dated September 23, 1995, bounded and described
as follows:
Beginning at a point in the southerly line of Pacific Avenue
(60.00' wide), south 62 32'00" West, 251.00' from the westerly
line of New Jersey Avenue (50.00' wide), and extending from said
beginning point; thence
1. South 27 28'00" East, parallel with New Jersey Avenue,
80.00' to a point; thence
2. South 62 32'00" West, parallel with Pacific Avenue,
15.00' to the easterly line of lot 140 in block 13; thence
3. North 27 28'00" West, in and along same, parallel with
New Jersey Avenue, 80.00' to the southerly line of Pacific
Avenue; thence
4. North 62 32'00" East, in and along same, 15.00' to the
point and place of BEGINNING.
CONTAINING an area of 1200 square feet.
Exhibit C
page 3 of 3
11
<PAGE>
EASEMENT
Metes and Bounds Description for property situate in the City of
Atlantic City, County of Atlantic and State of New Jersey,
located in Block 13 on the Atlantic City Tax Map, being a portion
of A PROPOSED FIRE ACCESS WAY, SERVICE ROAD AND UTILITY EASEMENT,
as shown on plan prepared by Arthur W. Ponzio, Jr., Professional
Land Survey, New Jersey License No. 28314, plan last dated
November 7, 1995, entitled PLAN TO ACCOMPANY RE-STATED TRI-PARTY
AGREEMENT DATED 12/1/95, bounded and described as follows:
Beginning at a point in the Southerly line of Pacific Avenue (60'
wide), said point being South 62 degrees 32'00" West, 251.00'
from the Westerly line of New Jersey Avenue (50'), and extending
from said beginning point; thence
1. North 62 degrees 32'00" East, parallel with Pacific
Avenue, 24.00' to a point; thence
2. South 27 degrees 28'00" East, parallel with New Jersey
Avenue, 360.60' to a point; thence
3. South 62 degrees 32'00" West, in and along same,
parallel with Pacific Avenue, 24.00' to a point;
thence
4. North 27 degrees 28'00" West, parallel with New Jersey
Avenue, 360.60' to the point and place of BEGINNING.
CONTAINING an area of 8,654.45 square feet and being the
same easement conveyed by Deed dated December 29, 1995, from the
Housing Authority and Redevelopment Agency of the City of
Atlantic City to Atlantic City Showboat, Inc.
SAID easement shall extend from the subsurface to a height of
28.25 feet mean sea level and shall be for the purpose of
constructing and utilizing in accordance with the Restated
Agreement that certain improvement identified in the Restated
Agreement as the combined Service Road and also for the purpose
of constructing, relocating, maintaining, replacing, and
repairing subterranean utilities, including without limitation
water and sewer lines and drains.
Exhibit D
page 1 of 2
12
<PAGE>
Metes and Bounds Description for property situate in the city of
Atlantic City, County of Atlantic and State of New Jersey,
located in Block 13 as shown on the Atlantic City Tax Map, and
being a portion of a proposed Fire Access Way, Service Road and
Utility Easement (PROPOSED NEW LOT C) to be owned by the Atlantic
City Housing Authority as shown on plan prepared by Arthur W.
Ponzio, Jr., Professional Land Surveyor, new Jersey License No.
28314, plan dated September 25, 1995, bounded and described as
follows:
Beginning at a point in the Northerly line of lot 144.02 in Block
13 as shown on the Atlantic City Tax Map, said point being South
62 32'00" West, 129.00' from the Westerly line of New Jersey
Avenue (50' wide), and South 27 28'00" East, 942.00' from the
Southerly line of Pacific Avenue (60' wide), and extending from
said beginning point; thence
1. South 62 32'00" West, in and along the Northerly line
of Lot 144.02, parallel with Pacific Avenue, 24.00' to a point;
thence
2. North 27 28'00" West, parallel with New Jersey Avenue,
419.73' to a point; thence
3. North 59 59'37" West, 20.77' to a point; thence
4. North 27 28'00" West, parallel with New Jersey Avenue,
41.38' to a point; thence
5. South 59 59'37" East, 65.41' to a point; thence
6. South 27 28'00" East, parallel with New Jersey Avenue,
423.48' to the point and place of BEGINNING.
CONTAINING an area of 11,077.22 square feet.
SAID easement shall extend from the subsurface to a height of
28.25 feet mean sea level and shall be for the purpose of
constructing and utilizing in accordance with the Restated
Agreement that certain improvement identified in the Restated
Agreement as the combined Service Road and also for the purpose
of constructing, relocating, maintaining, replacing, and
repairing subterranean utilities, including without limitation
water and sewer lines and drains.
Exhibit D
page 2 of 2
13
<PAGE>
EXHIBIT 10.32
<PAGE>
SHC
EXHIBIT 8 TO
COMPLIANCE DEED
(Casino Operations Agreement)
-Sydney Casino Project-
22 April 1994
<PAGE>
CLAYTON UTZ
SOLICITORS AND ATTORNEYS
Levels 27-35 No.1 O'Connell Street Sydney NSW 2000 Australia
PO BOX H3 Australia Square Sydney NSW 2000 DX 370 Sydney
Ph (02) 353 4000 Int + 612 353 4000 FAX (02) 251 7832
SYDNEY MELBOURNE BRISBANE PERTH
<PAGE>
SHC
CASINO OPERATIONS AGREEMENT
[Including List of Exhibits]
Date: 1994
New South Wales Casino Control Authority
The Authority
Sydney Harbour Casino Pty. Limited
The Licensee
Sydney Harbour Casino Properties Pty. Limited
SHC Properties
Sydney Harbour Casino Holdings Limited
SHC Holdings
Sydney Casino Management Pty. Limited
Casino Manager
Showboat Australia Pty. Limited
SBA
Leighton Properties Pty. Limited
LPPL
Showboat Operating Company
SOC
CLAYTON UTZ
Solicitors and Attorneys
Levels 27-35
No. 1 O'Connell Street
SYDNEY NSW 2000
Tel: (02) 353 4000
Fax: (02) 251 7832
Copyright Reserved
CONFIDENTIAL
<PAGE>
TABLE OF CONTENTS
Clause Page
1. DEFINITIONS AND INTERPRETATION 2
1.1 Definitions 2
1.2 Interpretation 10
2. CONSIDERATION 12
3. APPROVAL BY MINISTER AND DISCLAIMER 12
3.1 Minister's Approval 12
3.2 Authority/State Not Liable 12
4. GENERAL COVENANTS AND WARRANTS BY CONTRACTING
PARTIES 12
4.1 Covenants and Warranties by Contracting Parties 12
4.2 Covenants and Warranties by Licensee and
Casino Manager l3
4.3 Covenants and Warranties by Licensee 13
4.4 Covenants and Warranties by SHC Holdings 13
4.5 Covenants and Warranties by SHC Properties 13
4.6 Covenants and Warranties by Casino Manager 13
5. COMPLIANCE WITH LICENCE AND ACT 13
6. COMPLIANCE WITH USE AND OCCUPATION OBLIGATIONS 13
6.1 COA Lease Terms 13
6.2 Permanent Site Freehold Lease
7. CASINO COMPLEX MANAGEMENT AGREEMENT 14
7.1 Casino Complex Management Agreement
Valid and Enforceable 14
7.2 Direction 15
7.3 Undertakings about Casino Complex Management
Agreement 15
7.4 Licensee to Procure Certain Compliance by
Casino Manager 15
7.5 Consent to CCA Charge 16
7.6 Termination Notices 16
7.7 No Termination if Authority Directs 16
7.8 Termination if Authority Directs 16
7.9 Not to Terminate if Default Remedied 16
7.10 Notice to Novate Casino Complex Management
Agreement 17
7.11 Contents of Novation Notice 17
7.12 Novation of Casino Complex Management Agreement 18
8 S & A AGREEMENTS 18
<PAGE>
(ii)
Clause Page
8.1 S & A Agreements Valid and Forceable 18
8.2 Direction to SOC 19
8.3 Undertakings about S & A Agreements 19
8.4 Licensee, Casino Manager and SBA to
Procure Certain Compliance 20
8.5 Termination Notices 20
8.6 No Termination if Authority Directs 20
8.7 Termination if Authority Directs 20
8.8 Not to Terminate if Default Remedied 21
8.9 Notice to Novate an S & A Agreement 21
8.10 Contents of Novation Notice 21
8.11 Novation of an S & A Agreement 22
9. ASSIGNMENT DEED 22
10. O & M AGREEMENTS 23
10.1 Existing O & M Agreements 23
10.2 Pre-Conditions to Future O & M Agreements 23
10.3 Undertakings About O & M Agreements 23
10.4 SHC Group and Casino Manager to
Procure Certain Compliance 24
10.5 Restrictions on Termination by SHC
Group or Casino Manager 24
10.6 Termination if Authority Directs 24
11. NO COMPETITION 25
11.1 Non Competition 25
11.2 Severance 25
12. CASINO OPERATIONS AND MANAGEMENT 26
12.1 Best Practice Covenant 26
12.2 Incorporation of the Application 26
12.3 Gaming Equipment 26
12.4 Games 27
12.5 Advertising, Marketing and Promotion 28
12.6 Not used 29
13. GENERAL RESPONSIBILITY TO INFORM AUTHORITY 29
13.1 General Responsibility to Inform 29
13.2 Litigation 29
14. INSPECTION OF RECORDS AND ACCESS TO PREMISES 29
<PAGE>
(iii)
Clause Page
15. REGULAR MEETINGS WITH AUTHORITY 30
15.1 Information 30
15.2 Regular Meetings 30
15.3 Other Meetings 30
15.4 Agenda 30
15.5 Representatives 30
15.6 Minutes 31
16. NOT USED 31
17. FORCE MAJEURE 31
18. COVENANTS, WARRANTS AND INDEMNITIES 34
18.1 Continuing Covenants and Warranties 34
18.2 Covenants and Warranties True and Accurate
and Separate 34
18.3 Covenants and Warranties Survive Termination 34
18.4 Notice of Any Breach of Covenants and Warranties 34
18.5 Indemnity in Respect of Breach 34
18.6 Indemnity Against Third Party Claims 35
18.7 Indemnity Payable on Demand 35
19. CONTRACTING PARTY'S RIGHT OF REMEDY AND
AUTHORITY'S RIGHTS OF TERMINATION 35
19.1 Remedy of Breach 35
19.2 Obligation Default Notices 36
19.3 Deemed Notice 36
19.4 Obligation Licence Conditions 36
19.5 Authority may amend Conditions of Licence,
cancel or suspend Licence 36
20. DEFAULT INTEREST 36
20.1 36
20.2 37
21. Not used 37
22. AUTHORITY'S STATUTORY OBLIGATIONS AND DISCRETIONS 37
22.1 No Fetter of Powers, Rights, Obligations and
Discretions 37
22.2 Authority to Consider Act 37
<PAGE>
(iv)
Clause Page
22.3 Directions by Authority 37
23. EXPENSES AND STAMP DUTY 37
23.1 Expenses 37
23.2 Stamp Duty and Other Taxes 38
24. ASSIGNMENTS 38
24.1 Assignment Subject to Act 38
24.2 Assignment by Contracting Party 38
24.3 Assignment by Authority 38
25. VARIATION OF DEED 39
26. GOVERNING LAW AND JURISDICTION 39
26.1 Governing Law 39
26.2 Jurisdiction 39
27. NO REPRESENTATION BY OR RELIANCE ON AUTHORITY 40
28. DISPUTE RESOLUTION 40
29. NOTICES 42
29.1 Requirements for Notices 42
29.2 Addresses of Parties 43
29.3 Appointment of Local Agent 44
30. CONTINUING OBLIGATION 44
31. FURTHER ASSURANCE 44
32. SEVERABILITY 44
33. WAIVER 45
34. CONSENTS AND APPROVALS 45
35. WRITTEN WAIVER, CONSENT AND APPROVAL 45
36. NON-MERGER 45
<PAGE>
(v)
Clause Page
37. REMEDIES CUMULATIVE 45
38. OPINION BY AUTHORITY 46
39. NO DEDUCTION 46
40. SURVIVAL OF INDEMNITIES 46
41. ATTORNEYS 46
42. COUNTERPARTS 46
SCHEDULE 1 47
SCHEDULE 2 48
SCHEDULE 3 49
SCHEDULE 4 53
SCHEDULE 5 56
SCHEDULE 6 59
SCHEDULE 7 60
SCHEDULE 8 64
SCHEDULE 9 67
SCHEDULE 10 70
SCHEDULE 11 71
<PAGE>
SHC CASINO OPERATIONS AGREEMENT
DEED made at on 1994
BETWEEN NEW SOUTH WALES CASINO CONTROL AUTHORITY a statutory
corporation constituted by the Casino Control Act, 1992
on behalf of the State of New South Wales, pursuant to
section 142 of the Casino Control Act 1992, of Level
17, 309 Kent Street, Sydney, NSW, Australia, 2000
("Authority")
AND SYDNEY HARBOUR CASINO PTY. LIMITED, ACN 060 510 410, a
company duly incorporated in New South Wales, Australia
of 3rd Floor, 472 Pacific Highway, St. Leonards, NSW,
Australia ("Licensee")
AND SYDNEY HARBOUR CASINO PROPERTIES PTY. LIMITED, ACN 050
045 120, a company duly incorporated in New South
Wales, Australia of 3rd Floor, 472 Pacific Highway, St.
Leonards, NSW, Australia ("SHC Properties")
AND SYDNEY HARBOUR CASINO HOLDINGS LIMITED, ACN 064 054
431, a company duly incorporated in New South Wales,
Australia of 3rd Floor, 472 Pacific Highway, St.
Leonards, NSW, Australia ("SHC Holdings")
AND SYDNEY CASINO MANAGEMENT PTY. LIMITED, ACN 060 462 053,
a company duly incorporated in New South Wales,
Australia of 3rd Floor, 472 Pacific Highway, St.
Leonards, NSW, Australia ("Casino Manager")
AND SHOWBOAT AUSTRALIA PTY. LIMITED, ACN 061 299 625, a
company duly incorporated in New South Wales, Australia
of 3rd Floor, 472 Pacific Highway, St. Leonards, NSW,
Australia ("SBA")
AND LEIGHTON PROPERTIES PTY. LIMITED, ACN 001 046 395, a
company duly incorporated in New South Wales, Australia
of 3rd Floor 472 Pacific Highway, St. Leonards, NSW
Australia ("LPPL")
AND SHOWBOAT OPERATING COMPANY, a company duly organised
under the laws of the State of Nevada, USA of 2800
Fremont Street, Las Vegas, Nevada 89104 USA ("SOC")
RECITALS
A. The Authority has on the date of this Deed granted the
Licence to the Licensee.
B. The SHC Group has on the date of this Deed pursuant to the
Casino Complex Management Agreement appointed the Casino
Manager to provide certain services in connection with the
operation and management of the Casino Complex.
C. SOC has agreed pursuant to the S & A Agreements to provide
certain support and
<PAGE>
2.
assistance services to SBA in connection with the operation
and management of the Casino Complex.
D. SBA has agreed pursuant to the Assignment Deed to assign its
right, title and interest under the S & A Agreements to the
Casino Manager.
E. SHC Properties and the Licensee will sub-lease, lease or be
entitled to occupy the Temporary Site, the Permanent Site,
the Casino Complex, furnishings and gaming equipment for the
Casino Complex and all other tangible assets necessary for
the operation of the Casino Complex.
F. The SHC Group acknowledges that the CCA Charge secures to
the Authority, among other things, the obligations owed by
the SHC Group to the Authority under this Deed.
THE DEED WITNESSES
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
The following words have the following meanings in this
Deed unless the contrary intention appears:
"Act" means the Casino Control Act 1992 (New South Wales).
"Administration Event" in respect of a company means each
of the following events:
(a) a meeting of the board of directors of that company
is called to consider a resolution to appoint an
Administrator;
(b) a liquidator or provisional liquidator of the
company determines to execute an appointment of an
Administrator or applies to the court for leave to
appoint himself or herself as the Administrator; or
(c) an Encumbrance over the whole, or substantially the
whole, of the company's property becomes enforceable
(in the sense that the security comprised in the
Encumbrance becomes enforceable).
"Administrative Services Agreement" means the agreement so
entitled of even date between SBA and SOC comprising
Exhibit 1.
"Administrator" has the same meaning as in section 9(1) of
the Corporations Law.
"Ancillary Facilities" means all facilities ancillary to
or connected with the Casino being those identified in the
Application to be constructed on or located within the
Temporary Site or Permanent Site, and including all other
facilities provided by the
<PAGE>
3.
Licensee or the Casino Manager in connection with the
Casino whether or not on the Temporary Site or the
Permanent Site and whether or not identified in the
Application.
"Application" means in respect of the Licensee the
totality of all documents, notes correspondence, drawings,
plans and papers forming part of or lodged or made in
connection with or deemed to be part of the Licensee's
application for the Licence as at the date of this Deed
and as are set out in and referred to in Exhibit 3 of the
Compliance Deed and including such amendments permitted by
the Compliance Deed.
"Assignment Deed" means the deed entered into
contemporaneously with the Compliance Deed between the
Casino Manager and SBA whereby the SBA assigns its right
title and interest under the S & A Agreements to the
Casino Manager as nominee for the Showboat Leighton
Partnership in the form and on the terms set out in
Exhibit 2.
"Authorised Officer" means in respect of any party, any
person nominated as an Authorised Officer for the purposes
of this Deed by notice to the other parties.
"Business Day" means any day (other than a Saturday,
Sunday or public holiday recognised in Sydney and
generally throughout the State of New South Wales).
"Casino" has the meaning given to that term in the Act.
"Casino Complex" means the Casino and Ancillary
Facilities.
"Casino Complex Management Agreement" means the agreement
of even date between the Licensee, the Casino Manager, SHC
Properties, SBA and LPPL as partners in the Showboat
Leighton Partnership and SHC Properties and comprising
Exhibit 3.
"CCA Charge" means the deed between the Licensee, SHC
Properties and SHC Holdings of the one part and the
Authority on behalf of itself and on behalf of the State
of the other part entered into on or around the date of
execution of the Compliance Deed.
"CCA Project Documents" has the same meaning given to it
in the Continuity and Cooperation Agreement.
"COA Lease Terms" means the document in the form of and on
the terms set out in Exhibit 4.
"Compliance Deed" means the deed so entitled between the
Authority, the SHC Group, SBA, LPPL, Leighton Holdings
Limited, the Casino Manager and SOC.
"Contract" means any contract, agreement, arrangement or
understanding, whether formal or informal or written or
oral and whether or not having legal or equitable force
and whether or not based on legal or equitable rights and
includes a Controlled Contract.
<PAGE>
4.
"Contracting Parties" means all parties to this Agreement
(other than the Authority) severally.
"Continuity and Cooperation Agreements" means the deed so
entitled of even date between the Authority, the SHC Group
and the Commonwealth Bank of Australia.
"Controlled Contract" has the meaning giving to it in
section 36 of the Act.
"Controller" has the same meaning as in section 9 of the
Corporations Law.
"Default Party" means:
(a) in relation to the Casino Complex Management
Agreement, the party to that agreement referred to
in clause 7.6(b)(ii);
(b) in relation to the S & A Agreement, the party to
that agreement referred to in clause 8.5(b)(ii).
"Default Rate" has the meaning given to it in the
Compliance Deed.
"Development and Licensibility Agreement" means the
agreement so entitled of even date between SBA and SOC on
the form and on the terms set out in Exhibit 5.
"Dispute" has the meaning given to that term in clause 28.
"Encumbrance" means any mortgage, charge, pledge, lien,
encumbrance, assignment, hypothecation, security interest,
title retention, preferential right, trust arrangement,
contractual right of set-off, or any other security
agreement or arrangement in favour of any person and
includes any agreement to create or grant any of them.
"Event of Default" means, in relation to a Contracting
Party, any of the following (whether or not caused by any
reason whatsoever outside the control of that party):
(a) the party does not pay any money payable under this
Deed in the manner specified:
(i) if the time for payment is specified or provided
for in this Deed, on the date so specified or
provided for; or
(ii) in any other case within 5 Business Days after
being advised in writing by the Authority of the
same being due and payable;
(b) the party defaults in fully performing, observing
and fulfilling any provision of this Deed (other
than a provision requiring the payment of money as
contemplated in paragraph (a));
(c) any representation warranty or statement made or
repeated or deemed to be made or repeated by the
party in this Deed proves to be untrue, incorrect
<PAGE>
5.
or misleading in any respect;
(d) the party breaches any undertaking given at any time
to the Authority or fails to comply with any
conditions imposed by the Authority in agreeing to
any matter (including any consent, waiver or
approval);
(e) any Event of Insolvency occurs in relation to the
party;
(f) the party purports to make an assignment or novation
of this Deed or any of its rights or obligations
under this Deed without the written consent of the
Authority;
(g) the party ceases, or threatens to cease, to carry on
any part of its business which the Authority
reasonably considers to be material to any
Contracting Party's capacity to perform its
obligations under this Deed;
(h) this Deed becomes or is claimed by the party to be
void, voidable or unenforceable in whole or in part;
or
(i) at any time it is unlawful for the party to perform
any of its obligations under this Deed.
"Event of Force Majeure" means, in relation to a
Contracting Party, any act, event or circumstance (or any
combination thereof) which is beyond the control of the
party, including without limitation:
(a) acts of God, perils of the sea, accidents of
navigation, war (whether declared or not), sabotage,
riot, insurrection, civil commotion, national
emergency (whether in fact or law), martial law,
fire, flood, cyclone, earthquake, landslide, storm
or other adverse weather conditions, explosion,
epidemic, quarantine;
(b) action or inaction by any court of competent
jurisdiction, government or governmental or other
competent authority including any expropriation,
restraint, prohibition, intervention, requisition,
requirement, direction or embargo by legislation,
regulation, decree or other legally enforceable
order;
(c) breakdown of machinery or facilities or shortages of
labour, transportation, fuel, power or essential
plant, equipment or material, strikes lockout and
other labour difficulties (whether or not involving
employees of the party concerned), including
conditions directly resulting from any of the
foregoing but in no event does it include:
(d) lack of funds or other financial difficulties
experienced by the party;
<PAGE>
6.
(e) any act, event or cause directly or indirectly
resulting from any neglect, breach or misconduct in
relation to any Transaction Document by the party
thereto;
(f) any act, event or cause which could have been
prevented, overcome or remedied by the exercise by
any party to a Transaction Document (other than the
Authority) of reasonable care and diligence;
(g) any act, event or cause directly or indirectly
resulting from the Authority properly executing its
functions under the Act (including giving directions
or notices under any section).
"Event of Insolvency" means, in relation to each
Contracting Party, any of the following events:
(a) a liquidator, provisional liquidator, trustee,
administrator, manager, Controller or similar
officer is appointed in respect of the party or any
of its assets;
(b) an application is made to a court for an order or an
order is made or a meeting is convened or a
resolution is passed for the purpose of appointing a
person referred to in paragraph (a) or for winding
up the party or for implementing a scheme of
arrangement for the party;
(c) as a result of the operation of the Corporations Law
or any other applicable law, the party is taken to
have failed to comply with a statutory demand;
(d) a moratorium of any debts of the party or an
official assignment or a composition or an
arrangement formal or informal with the party's
creditors or a trustee or any similar proceeding or
arrangement by which the assets of the party are
submitted to the control of its creditors or a
trustee, is applied for ordered or declared;
(e) the party becomes is declared or is deemed insolvent
within the meaning of any applicable law or is
unable or admits in writing its inability to pay its
debts as they fall due;
(f) any distress, execution, attachment or other process
is made or levied against any assets of the party;
or
(g) an Administration Event occurs;
(h) in relation to a party which is not incorporated
under the Corporations Law, an event similar to or
equivalent to any of the events referred to in
paragraphs (a) to (g) inclusive occurs under any law
applicable to or to which such party is subject.
<PAGE>
7.
"Founding Shareholders" has the same meaning given to it
in the Compliance Deed.
"Founding Shareholders Subscription Agreement" has the
same meaning given to it in the Compliance Deed.
"Institutional Investors" means the persons specified in
Schedule 2 and as have been determined pursuant to the
provisions of the Compliance Deed.
"Lender Securities" has the same meaning as in the
Compliance Deed.
"Licence" means the licence granted by the Authority to
the Licensee to operate the Casino pursuant to section
18(1) of the Act.
"Management Support Agreement" means the agreement so
entitled of even date between SBA and SOC on the form and
on the terms set out in Exhibit 7.
"Minister's Approval and Consent Acknowledgment" has the
same meaning as in the Compliance Deed.
"Novation Nominee" means any person nominated by the
Authority as such for the purposes of clauses 7 and 8.
"Novation Notice" means a notice given by the Authority
under any of clauses 7.10 and 8.9.
"Novation Time" means the time of receipt by a Contracting
Party of a Novation Notice.
"O & M Agreements" means any Contract:
(a) (i) to which any of the SHC Group or the
Casino Manager is or may become a party; or
(ii) which has or will be assigned to any of
the SHC Group or the Casino Manager;
and
(b) which has a O & M Material Effect,
but excludes the Casino Complex Management Agreement, the
S & A Agreements and the Assignment Deed.
"0 & M Material Effect" means:
(a) is significant to the overall and/or integrated
operation and management of the Casino Complex; or
<PAGE>
8.
(b) is or could have a material effect on the continued
viability of operations at the Casino Complex.
"O & M Novation Agreement" means an agreement on terms and
conditions acceptable to the Authority to inter alia
novate an O & M Agreement under which provisions are
included in relation to the matters described in Schedule
1.
"0 & M Provider" means a party to an O & M Agreement other
than the SHC Group or the Casino Manager.
"Obligation Default" means any breach giving rise to an
Obligation Default Notice under clause 19.2
"Obligation Licence Condition" means an obligation of a
Contracting Party to the Authority under this Deed which,
under clause 19.4, is considered to be a condition of the
Licence which shall have been contravened.
"Occupation Licence Agreement (Permanent)" means the
document entitled "Occupational Licence - Permanent Site"
between SHC Properties and SHC in the form and on the
terms set out in Annexure A to the COA Lease Terms.
"Occupation Licence Agreement (Temporary)" means the
occupation licence so entitled between SHC Properties and
SHC in the form and on the terms set out in Exhibit 9.
"Parties" or "parties" means the Authority and the
Contracting Parties and "Party" or "party" means any one
of them.
"Partnership Agreements" means the deed entered into on
the same date as the Compliance Deed establishing and
governing the "Showboat Leighton Partnership" made between
SBA and LPPL, in the form and on the terms set out in
Exhibit 10.
"Permanent Site" has the same meaning as Land in the
Permanent Site Construction Lease.
"Permanent Site Construction Lease" has the meaning given
to it in the Compliance Deed.
"Permanent Site Freehold Lease" means the lease to be
entered into by the Authority and SHC Properties in the
form and on the terms set out in Exhibit 19 to the
Permanent Site Construction Lease.
"Permitted Encumbrance" means in relation to a Contracting
Party:
(a) liens arising solely by operation of law in the
ordinary course of the business of that party
(including without limitation retention of title
arrangements) where the amount secured has been due
for less than 30 days or is being contested in good
faith and by appropriate means;
<PAGE>
9.
(b) any mechanics', workmen's or other like lien arising
in the ordinary course of business of that party;
(c) the encumbrances of that party consented to by the
Authority under and in accordance with the
Transaction Documents; and
(d) the Lender Securities,
and for the purposes of clause 12.3(b)(i) only, also
means:
(e) any lease arrangement entered into in the ordinary
course of business, provided that such lease
arrangement contains (in the opinion of the
Authority) proper and adequate safeguards to ensure
the availability of gaming equipment for the
continuity of operation of the Casino.
"Permitted Exception" means the Assignment Deed and
Permitted Encumbrances.
"Related Body Corporate" has the meaning given in section
9 of the Corporations Law.
"Representative" has the meaning given to that term in
clause 28.
"S&A Agreements" means the Development and Licensibility
Agreement, the Administrative Services Agreement, the
Management Support Agreement, the Partnership Agreement,
the Occupation Licence Agreement (Temporary) and the
Occupation Licence Agreement (Permanent).
"S&A Party" means the Licensee, the Casino Manager, LPPL,
SBA and SOC.
"S&A Provider" means the persons who under the S&A
Agreements are providing certain support and assistance to
the Licensee and the Casino Manager to enable them to
properly perform their obligations under the Casino
Complex Management Agreement.
"SHC Group" means the Licensee, SHC Properties and SHC
Holdings, severally.
"State" means the State of New South Wales.
"Taxes" means all present and future taxes, levies,
imposts, deductions, charges, fees and withholdings, in
each case plus interest, related penalties and any
charges, fees or other amounts in connection with any of
them.
"Temporary Site" has the same meaning as "Land" in the
Temporary Site Construction Sub-Lease.
"Temporary Site Construction Sub Lease" has the meaning
given to it in the Compliance Deed.
<PAGE>
10.
"Terminating Party" means:
(a) in relation to the Casino Complex Management
Agreement, a party to the Casino Complex Management
Agreement who intends to terminate that agreement
pursuant to clauses 19.1, 21, 28.1 and 29.4 of that
agreement;
(b) in relation to an S & A Agreement, a party to that S
& A Agreement or the Casino Manager (pursuant to its
rights under the Assignment Deed) who intends to
terminate that S & A Agreement pursuant to clause 4
of Administrative Services Agreement, clause 4 of
the Development and Licensibility Agreement, clause
4 of the Management Support Agreement, clause 20 of
the Partnership Agreement, clause 7 of the
Occupation Licence Agreement (Temporary), or clause
7 of the Occupation Licence Agreement (Permanent)
(as the case may be).
"Transaction Documents" means the documents as so defined
in the Compliance Deed.
"Variation" has in relation to any Controlled Contract the
same meaning as in section 37 of the Act.
"Vary" includes, in relation to any Contract, amend, vary,
modify, supplement, or waive any provision of the
Contract.
1.2 Interpretation
In this Deed unless the contrary intention appears:
(a) a reference to this Deed, or to any other deed,
agreement, document or instrument (other than the
Application) includes this Deed, or that other deed,
agreement, document or instrument as amended,
supplemented, novated, replaced or varied from time
to time;
(b) a reference to a person includes a reference to an
individual, firm, company, corporation, body
corporate, statutory body, body politic, trust,
partnership, joint venture, association whether
incorporated or unincorporated, or an authority as
the case may be;
(c) a reference to a person or to any party to this Deed
includes a reference to that person's or party's
executors, administrators, successors, permitted
substitutes and permitted assigns (including any
person taking by way of novation);
(d) a reference to a clause, Schedule, Exhibit or
Annexure is a reference to a clause, Schedule,
Exhibit or Annexure to or of this Deed and
Schedules, Exhibits and Annexures and clauses
therein form part of this Deed as if expressly set
out in the body of this Deed (except for the
purposes of the definition of Event of Default which
shall exclude a reference to COA Lease
<PAGE>
11.
Terms);
(e) a reference to the singular includes a reference to
the plural and vice versa and words denoting a given
gender shall include all other genders;
(f) headings and sub-headings are for convenience only
and do not affect interpretation;
(g) where any word or phrase is given a defined meaning
any other part of speech or other grammatical form
in respect of such word or part of speech has a
corresponding meaning;
(h) a reference to any legislation, statute, ordinance,
code or other law or to any section or provision
thereof includes all ordinances, by-laws,
regulations, rules, rulings and directions and other
statutory instruments issued thereunder and any
modifications, consolidations, re-enactments,
replacements and substitutions of any of them;
(i) a reference to any monetary amount or payment to be
made hereunder is a reference to an Australian
dollar amount or payment in Australian dollars as
the case may require;
(j) where a reference is made to any body or authority
which has ceased to exist, such reference shall be
deemed a reference to the body or authority as then
serves substantially the same objects as that body
or authority and any reference to the president or
secretary-general of such body or authority shall in
the absence of a president or secretary-general be
read as a reference to the senior officer for the
time being of the body or authority and/or such
other person fulfilling the relevant duties of
president or secretary-general;
(k) where an act, matter or thing required to be done by
this Deed falls to be done on a day which is not a
Business Day that act, matter or thing must be done
on the preceding day which is a Business Day except
in the case of payments due on demand, which may be
made on the next following Business Day;
(1) the calculation of any rate under this Deed shall be
based on a calendar year and all references to
months are references to calendar months;
(m) where the Contracting Parties make a joint promise,
covenant, undertaking, representation or warranty
the same shall be construed to refer to and bind
each of them severally.
1.3 Unless otherwise defined in this Deed, or the context in
this Deed requires otherwise, words, phrases or terms
defined in the Act have the same meanings in this Deed.
<PAGE>
12.
1.4 To the extent of any inconsistency or conflict between the
terms of this Deed and the Act, the Licence, any other
Transaction Document:
(a) the Act shall prevail over the Licence, this Deed
and all other Transaction Documents;
(b) the Licence will prevail over this Deed and all
other Transaction Documents;
(c) this Deed will prevail over all other Transaction
Documents (other than the Continuity and
Co-operation Agreement and the CCA Charge).
1.5 The rights and obligations of the parties under this Deed
are in addition and without prejudice to their respective
rights and obligations under the Act.
2. CONSIDERATION
Each party acknowledges to each other party that it enters
into this Deed and incurs obligations and gives rights
under it for valuable consideration received from the
other parties to this Deed.
3. APPROVAL BY MINISTER AND DISCLAIMER
3.1 Minister's Approval
The Authority warrants that it has full power and
authority to enter into, execute and comply with this Deed
on behalf of the State and that, pursuant to section 142
of the Act, the Minister has approved of both the
Authority entering into this Deed and its terms as
evidenced by the Minister's Approval and Consent
Acknowledgment.
3.2 Authority/State Not Liable
Notwithstanding anything to the contrary expressed in or
which would, but for this clause 3.2, be implied in this
Deed, neither the Authority nor the State of New South
Wales nor its members, employees, delegates, agents,
consultants or advisors shall have any liability
whatsoever to any party in respect of any failure or
breach by the Authority under or in respect of this Deed
or any matter contemplated by this Deed.
4. GENERAL COVENANTS AND WARRANTIES BY CONTRACTING PARTIES
4.1 Covenants and Warranties by Contracting Parties
Each of the Contracting Parties covenants, warrants,
represents and undertakes to and with the Authority in the
terms set out in Schedule 3.
<PAGE>
13.
4.2 Covenants and Warranties by Licensee and Casino Manager
Each of the Licensee and the Casino Manager covenants,
warrants, represents and undertakes to and with the
Authority in the terms set out in Schedule 4.
4.3 Covenants and Warranties by Licensee
The Licensee covenants, warrants, represents and
undertakes to and with the Authority in the terms set out
in Schedules 5 and 6.
4.4 Covenants and Warranties by SHC Holdings
SHC Holdings covenants, warrants, represents and
undertakes to and with the Authority in the terms set out
in Schedule 7.
4.5 Covenants and Warranties by SHC Properties
SHC Properties covenants, warrants, represents and
undertakes to and with the Authority in the terms set out
in Schedule 8.
4.6 Covenants and Warranties by Casino Manager
The Casino Manager covenants, warrants, represents and
undertakes with the Authority in the terms set out in
Schedule 9.
5. COMPLIANCE WITH LICENCE AND ACT
The Licensee shall at all times, and shall procure that the
Casino Manager, SBA and LPPL at all times, comply with and
perform all applicable terms, conditions and provisions of
the Licence, the Act and the regulations made thereunder.
6. COMPLIANCE WITH USE AND OCCUPATION OBLIGATIONS
6.1 COA Lease Terms
(a) From the Lease Commencement Date of the Permanent
Site Freehold Lease (as defined therein), the
Authority and SHC Properties shall at all times,
comply with and perform all of their respective
obligations, and have the benefit of their rights,
as set out in the COA Lease Terms and on the terms
thereof. For these purposes the obligations to be
complied with and performed, and the rights, in
respect of:
(i) the Authority shall be:
(AA) while it is Lessor under the Permanent
Site Freehold Lease, those obligations
and rights contained in the COA Lease
Terms on its part and for its benefit as
if
<PAGE>
14.
the Authority was the Lessor as
referred to therein under a lease on
those terms;
(BB) its obligations and rights in its
capacity as the Casino Control Authority
contained in the COA Lease terms; and
(ii) SHC Properties shall be those obligations and
rights contained in the COA Lease Terms on
its part and for its benefit as if SHC
Properties was the Lessee as referred to
therein under a Lease on those terms.
Furthermore the definition of "Term" in clause 1.2 of the
COA Lease Terms shall have the same meaning as in the
Permanent Site Freehold Lease.
(b) SHC Properties shall ensure that no event described
in clause 10.1 of the COA Lease Terms shall occur.
6.2 Permanent Site Freehold Lease
If whilst clause 6.1 is in force, the Authority and SHC
Properties comply with their obligations under clause 6.1
in all respects, then the Authority or SHC Properties (as
the case may be) will be deemed to have complied with its
obligations under the Permanent Site Freehold Lease and
shall be under no obligation thereunder.
7. CASINO COMPLEX MANAGEMENT AGREEMENT
7.1 Casino Complex Management Agreement Valid and Enforceable
Each of the Licensee, SHC Properties, SBA, LPPL and the
Casino Manager covenant with and warrant to the Authority
that:
(a) the Casino Complex Management Agreement is valid, in
full force and effect and enforceable in accordance
with its terms subject to:
(i) any statute of limitations;
(ii) any laws of bankruptcy, insolvency,
liquidation, reorganisation or other laws
affecting creditors' rights generally; and
(iii) any defence of set-off or counter-claim;
(b) it has fulfilled or taken all action necessary to
fulfill when due all of its obligations under the
Casino Complex Management Agreement; and
(c) there has not occurred any material default or any
event which with the lapse of time or election by it
shall become a material default under the Casino
Complex Management Agreement.
<PAGE>
15.
7.2 Direction
Pursuant to section 38 of the Act the Authority directs
that section 37 of the Act is to apply to each of SHC
Properties, SBA, LPPL, the Casino Manager and SHC Holdings
and each of SHC Properties, SBA, LPPL, the Casino Manager
and SHC Holdings acknowledges the same.
7.3 Undertakings about Casino Complex Management Agreement
Each of the Licensee, SHC Properties, SBA, LPPL and the
Casino Manager undertakes, represents and warrants to the
Authority that:
(a) it will comply with all of its material obligations
under the Casino Complex Management Agreement;
(b) it will give written notice to the Authority as soon
as it becomes aware of any material breach of the
Casino Complex Management Agreement;
(c) it will simultaneously with the giving by it of any
material notice under the Casino Complex Management
Agreement give a copy of the material notice to the
Authority;
(d) it will promptly give to the Authority details of
any material disputes under or in relation to the
Casino Complex Management Agreement;
(e) without limiting the circumstances where a Variation
must not occur, it will not without the Authority's
prior written consent Vary the Casino Complex
Management Agreement;
(f) it will not without the prior written consent of the
Authority assign, novate or otherwise transfer its
rights or obligations or any of them under the
Casino Complex Management Agreement otherwise than
under a Permitted Encumbrance;
(g) not used
(h) it will not without the prior written consent of the
Authority give or permit to be created any
Encumbrance over its rights under the Casino Complex
Management Agreement other than a Permitted
Encumbrance; and
(i) it will not without the prior written consent of the
Authority agree to do any of the things described in
paragraphs (e) - (h) inclusive.
7.4 Licensee to Procure Certain Compliance by Casino Manager
The Licensee undertakes, represents and warrants to the
Authority to procure that each of SHC Properties, SBA,
LPPL and the Casino Manager complies with and duly
<PAGE>
16.
performs their respective material obligations under the
Casino Complex Management Agreement.
7.5 Consent to CCA Charge
The Casino Manager, SBA and LPPL each consent to the
creation by the SHC Group of the CCA Charge which includes
a charge over the respective rights, title and interest of
the SHC Group only in, under and to the Casino Complex
Management Agreement and the Casino Manager, SBA and LPPL
each acknowledge the right title and interest of the
Authority and the State in, under and to the Casino
Complex Management Agreement under and by virtue of the
provisions of the CCA Charge.
7.6 Termination Notices
(a) A Terminating Party must provide to the Authority a
copy of each notice of that party's intention to
terminate the Casino Complex Management Agreement
pursuant to clauses 19.1, 21, 28.1 and 29.4 of the
Casino Complex Management Agreement at least 10
Business Days prior to the proposed termination
date.
(b) Each notice given under clause 7.6(a) must specify:
(i) the nature of the default under the Casino
Complex Management Agreement;
(ii) the party under the Casino Complex Management
Agreement responsible for the default;
(iii) particulars of the events and circumstances
relied on; and
(iv) the particular provision of the Casino
Complex Management Agreement in respect of
which the default has occurred and, if the
default is capable of remedy, an outline of
what acts, matters or things would be
required to remedy the default.
7.7 No Termination if Authority Directs
The Terminating Party must not terminate the Casino
Complex Management Agreement if, prior to the proposed
termination date contained in the notice referred to in
clause 7.6, the Authority gives notice in writing to the
Terminating Party directing the Terminating Party not to
terminate the Casino Complex Management Agreement. The
Authority may only give a notice under this clause 7.7
where the termination of the Casino Complex Management
Agreement will or could, in the reasonable opinion of the
Authority, materially affect the management or operation
of the Casino Complex.
7.8 Termination if Authority Directs
If a material breach on the part of any party to the
Casino Complex Management Agreement other than the
Licensee occurs under the Casino Complex Management
<PAGE>
17.
Agreement, the Licensee must, if directed in writing by
the Authority to do so, terminate the Casino Complex
Management Agreement in accordance with its terms.
7.9 Not to Terminate if Default Remedied
The Terminating Party agrees with the Authority that the
Terminating Party will not exercise its rights of
termination under the Casino Complex Management Agreement
if, prior to the expiration of the period specified in the
notice referred to in clause 7.6, the Authority:
(a) in the case of a default by the Default Party under
an obligation to pay money, pays or procures the
payment of that money;
(b) in the case of a default by the Default Party under
any other obligation which is capable of remedy,
either remedies that default or takes steps for
another person to remedy that default; and
(c) in the case of a default by the Default Party under
any other obligation which is not capable of remedy,
pays or procures the payment to the Terminating
Party of an amount by way of compensation in respect
of the default which is agreed between the Authority
and the Terminating Party or, in default of such
agreement, determined pursuant to clause 28.
7.10 Notice to Novate Casino Complex Management Agreement
Where:
(a) the Terminating Party has given a notice pursuant to
clause 7.6 of its intention to terminate the Casino
Complex Management Agreement; and
(b) where the Default Party is the Casino Manager, the
Licensee has not, within 20 Business Days, appointed
a new Casino Manager approved by the Authority on
such terms as the Authority and the Licensee may
agree,
then, without prejudice to the rights of the Authority
under clause 7.9, the Authority may prior to the
expiration of the period specified in the notice referred
to in paragraph (a) give to the Terminating Party a notice
of intention to novate the Casino Complex Management
Agreement.
7.11 Contents of Novation Notice
A Novation Notice must:
(a) be given by the Authority or a Novation Nominee; and
(b) state that:
<PAGE>
18.
(i) the Authority or the Novation Nominee wishes
to novate the Casino Complex Management
Agreement;
(ii) the Authority or the Novation Nominee
requires the Terminating Party to continue to
perform its obligations under the Casino
Complex Management Agreement; and
(iii) the Authority or the Novation Nominee agrees
to comply with all obligations of the Default
Party falling to be performed as from the
date of the notice as if the Authority or the
Novation Nominee, as the case may be, were as
from that time a party to the Casino Complex
Management Agreement in place of the Default
Party.
7.12 Novation of Casino Complex Management Agreement
Following the Novation Time:
(a) the Casino Complex Management Agreement will
continue in full force and effect;
(b) the Terminating Party will perform and observe all
the obligations on its part contained in the Casino
Complex Management Agreement as if the Authority or
the Novation Nominee, as the case may be, was at all
times a party to the Casino Complex Management
Agreement in place of the Default Party;
(c) the Authority or the Novation Nominee, as the case
may be, will from the Novation Time assume all
obligations on the part of the Default Party falling
to be performed as from the Novation Time under the
Casino Complex Management Agreement and will observe
and perform all those obligations as if it were from
that time a party to the Casino Complex Management
Agreement in place of the Default Party; and
(d) the Default Party will not be released, relieved or
discharged from liability for and the Authority will
not assume any liability for any fees or other
amounts accrued due under the Casino Complex
Management Agreement before the Novation Time, or
liability for any breach or liability to remedy any
breach which the Default Party may have committed
before the Novation Time of any provision of the
Casino Complex Management Agreement.
8. S & A AGREEMENT
8.1 S & A Agreements Valid and Enforceable
Each S&A Party covenants with and warrants to the
Authority in respect of each S&A
<PAGE>
19.
Agreement to which it is a party that:
(a) each S & A Agreement is valid, in full force and
effect and enforceable in accordance with its terms
subject to:
(i) any statute of limitations;
(ii) any laws of bankruptcy, insolvency,
liquidation, reorganisation other laws
affecting creditors' rights generally; and
(iii) any defences of set-off or counter claim;
(b) each of them has fulfilled or taken all action
necessary to fulfil when due all of its obligations
under the S & A Agreement; and
(c) there has not occurred any material default or any
event which with the lapse of time or election of
either of them shall become a material default under
any S & A Agreement.
8.2 Direction to SOC
Pursuant to section 38 of the Act the Authority directs
that section 37 of the Act is to apply to SOC and SOC
acknowledges the same.
8.3 Undertakings about S & A Agreements
Each S&A Party undertakes, represents and warrants to the
Authority that:
(a) it will comply with all of its material obligations
under each S & A Agreement;
(b) it will give written notice to the Authority as soon
as it becomes aware of any material breach of any S
& A Agreement;
(c) it will simultaneously with the giving by it of any
material notice under any S & A Agreement give a
copy of the material notice to the Authority;
(d) it will promptly give to the Authority details of
any material disputes under or in relation to any S
& A Agreement;
(e) without limiting the circumstances where a Variation
must not occur, it will not without the Authority's
prior written consent Vary any S & A Agreement;
(f) it will not without the prior written consent of the
Authority assign, novate or otherwise transfer its
rights or obligations or any of them under any S & A
Agreement otherwise than under a Permitted
Exception;
(g) not used
<PAGE>
20.
(h) it will not without the prior written consent of the
Authority give or permit to be created any
Encumbrance over its rights under any S & A
Agreement other than any Permitted Encumbrance;
(j) it will not without the prior written consent of the
Authority agree to do any of the things described in
paragraphs (e) - (h) inclusive.
8.4 Licensee, Casino Manager and SBA to Procure Certain
Compliance
Each of the Licensee, the Casino Manager and SBA
undertakes, represents and warrants to the Authority to
procure that each of SOC and LPPL complies with and duly
performs their respective material obligations under all
of the S & A Agreements.
8.5 Termination Notices
(a) The Terminating Party must provide to the Authority
a copy of each notice of that party's intention to
terminate any S & A Agreement pursuant to either
clause 4 of the Administrative Services Agreement,
clause 4 of the Development and Licensibility
Agreement, clause 4 of the Management Support
Agreement, clause 20 of the Partnership Agreement,
clause 7 of the Occupation Licence Agreement
(Temporary), or clause 7 of Occupation Licence
Agreement (Permanent) at least 10 Business Days
prior to the proposed termination date.
(b) Each notice given under clause 8.5(a) must specify:
(i) the nature of the default under that S & A
Agreement;
(ii) the party under that S & A Agreement
responsible for the default;
(iii) particulars of the events and circumstances
relied on; and
(iv) the particular provision of that S & A
Agreement in respect of which the default has
occurred and, if the default is capable of
remedy, an outline of what acts, matters or
things would be required to remedy the
default.
8.6 No Termination if Authority Directs
The Terminating Party must not terminate any S & A
Agreement if, prior to the proposed termination date
contained in the notice referred to in clause 8.5, the
Authority gives notice in writing to the Terminating Party
not to terminate that S & A Agreement. The Authority may
only give a notice under this clause 8.6 where the
termination of that S & A Agreement will or could, in the
reasonable opinion of the Authority, materially affect the
management or operation of the Casino Complex.
8.7 Termination if Authority Directs
If a material breach on the part of SOC occurs under the
Development and Licensibility Agreement, the
Administrative Services Agreement or the Management
<PAGE>
21.
Support Agreement, the Casino Manager or SBA must, if
directed in writing by the Authority to do so, terminate
such agreement in accordance with its terms.
8.8 Not to Terminate if Default Remedied
The Terminating Party agrees with the Authority that the
Terminating Party will not exercise its rights of
termination under any S & A Agreement if, prior to the
expiration of the period specified in the notice referred
to in clause 8.5, the Authority:
(a) in the case of a default by the Default Party under
an obligation to pay money, pays or procures the
payment of that money;
(b) in the case of a default by the Default Party under
any other obligation which is capable of remedy,
either remedies that default or takes steps for
another person to remedy that default; and
(c) in the case of a default by the Default Party under
any other obligation which is not capable of remedy,
pays or procures the payment to the Terminating
Party of an amount by way of compensation in respect
of the default which is agreed between the Authority
and the Terminating Party or, in default of such
agreement, determined pursuant to clause 28.
8.9 Notice to Novate an S & A Agreement
Where the Terminating Party has given a notice pursuant to
clause 8.5 of its intention to terminate any S & A
Agreement then, without prejudice to the rights of the
Authority under clause 8.8, the Authority may prior to the
expiration of the period specified in the notice give to
the Terminating Party a notice of intention to novate that
S & A Agreement.
8.10 Contents of Novation Notice
A Novation Notice must:
(a) be given by the Authority or a Novation Nominee; and
(b) state that:
(i) the Authority or the Novation Nominee wishes
to novate a S & A Agreement;
(ii) the Authority or the Novation Nominee
requires the Terminating Party to continue to
perform its obligations under that S & A
Agreement; and
(iii) the Authority or the Novation Nominee agrees
to comply with all obligations of the Default
Party falling to be performed as from the
date of the notice as if the Authority or the
Novation Nominee, as the case may be, were as
from that time a party to
<PAGE>
22.
that S & A Agreement in place of the Default
Party.
8.11 Novation of an S & A Agreement
Following the Novation Time:
(a) the S & A Agreement the subject of a Novation Notice
("RELEVANT S & A AGREEMENT") will continue in full
force and effect;
(b) the Terminating Party will perform and observe all
the obligations on its part contained in the
Relevant S & A Agreement as if the Authority or the
Novation Nominee, as the case may be, was at all
times a party to the Relevant S & A Agreement in
place of the Default Party;
(c) the Authority or the Novation Nominee, as the case
may be, will from the Novation Time assume all
obligations on the part of the Default Party falling
to be performed as from the Novation Time under the
Relevant S & A Agreement and will observe and
perform all those obligations as if it were from
that time a party to the Relevant S & A Agreement in
place of the Default Party; and
(d) the Default Party will not be released, relieved or
discharged from liability for and the Authority will
not assume any liability for any fees or other
amounts accrued due under the Relevant S & A
Agreement before the Novation Time, or liability for
any breach or liability to remedy any breach which
the Default Party may have committed before the
Novation Time of any provision of the Relevant S & A
Agreement.
9. ASSIGNMENT DEED
Each of the Casino Manager and SBA covenants with and
warrants to the Authority that:
(a) the Assignment Deed is valid, in full force and
effect and enforceable in accordance with its terms
subject to:
(i) any statute of limitations;
(ii) any laws of bankruptcy, insolvency,
liquidation, reorganisation or other laws
affecting creditors' rights generally; and
(iii) any defences of set-off or counterclaim;
(b) each of them has fulfilled or taken all action
necessary to fulfil when due all of its obligations
under the Assignment Deed; and
(c) there has not occurred any material default or any
event which with the lapse of time or election of
either of them shall become a material default under
the Assignment Deed.
<PAGE>
23.
10. O & M AGREEMENTS
10.1 Existing O & M Agreements
Each of the SHC Group and the Casino Manager warrant and
represent to the Authority that as at the time of
execution of this Deed there are no O & M Agreements.
10.2 Pre-Conditions to Future O & M Agreements
Each of the SHC Group and the Casino Manager shall procure
that no O & M Agreement to which it is a party, or to
which it will be assigned the benefit of and/or the right
title and interest under, will be entered into unless:
(a) the SHC Group or the Casino Manager (as the case may
be) has notified the Authority of the details of the
proposed O & M Agreement at least 14 days (or such
shorter period as the Authority may approve in a
particular case) before entering into it; and
(b) the Authority has not within that 14 days (or the
shorter approved period) notified the SHC Group or
the Casino Manager (as the case may be) that it
objects to the proposed O & M Agreement; and
(c) the parties to the O & M Agreement have
simultaneously entered into a O & M Novation
Agreement with the Authority.
10.3 Undertakings About O & M Agreements
Each of the SHC Group and the Casino Manager undertakes,
represents and warrants to the Authority that in respect
of the O & M Agreements to which it becomes a party, or to
which it will be assigned the benefit of and/or the right
title and interest thereunder:
(a) it will comply with all of its material obligations
under the O & M Agreements and will use its best
endeavours to procure compliance by each O & M
Provider with all of its material obligations under
the O & M Agreements;
(b) it will give written notice to the Authority as soon
as it becomes aware of any material breach of any O
& M Agreement by any party thereto including itself;
(c) it will simultaneously with the giving or receipt by
it or by any O & M Provider of any material notice
under any O & M Agreement give a copy of the notice
to the Authority;
(d) it will promptly give to the Authority details of
any material disputes under
<PAGE>
24.
or in relation to the O & M Agreements;
(e) without limiting the circumstances where a Variation
must not occur, it will not without the Authority's
prior written consent Vary the O & M Agreement.
(f) it will procure that without the prior written
consent of the Authority no rights or obligations
under any O & M Agreement are assigned, novated or
otherwise transferred other than under a Permitted
Encumbrance; and
(g) it will not without the prior written consent of the
Authority give or permit to be created, or agree to
give or permit to be created, any Encumbrance other
than a Permitted Encumbrance over its rights under
any O & M Agreements.
10.4 SHC Group and (Casino Manager to Procure Certain
Compliance
Each of the SHC Group and the Casino Manager shall in
respect of the O & M Agreements to which it becomes a
party, or to which it assigned the benefit and/or the
right title and interest thereunder, use its best
endeavours to procure performance of and compliance by
each O&M Provider with all of its obligations under the O
& M Agreements.
10.5 Restrictions on Termination by SHC Group or (Casino
Manager
(a) Each of the SHC Group and the Casino Manager shall
in respect of the O & M Agreements to which it
becomes a party, or to which it will be assigned the
benefit of and/or the right title and interest
thereunder, procure that no notice to terminate an O
& M Agreement is given by the SHC Group or the
Casino Manager unless a copy of the proposed notice
has first been provided to the Authority and the
Authority has not within 14 days after receipt of
that proposed notice directed in writing that the O
& M Agreement concerned is not to be terminated.
(b) If the Authority gives such a direction the SHC
Group and the Casino Manager shall in respect of the
O & M Agreements to which it becomes a party, or to
which it will be assigned the benefit of and/or the
right title and interest thereunder, procure that it
is complied with.
10.6 Termination if Authority Directs
Without limiting clause 10.3, each of the SHC Group and
the Casino Manager shall in respect of the O & M
Agreements to which it becomes a party, or to which it
will be assigned the benefit of and/or the right title and
interest thereunder, enforce or procure enforcement of its
rights under the O & M Agreements in accordance with any
direction in writing to do so by the Authority. In
particular but without limiting and without in any way
limiting the Authority's powers under section 39 of the
Act,
<PAGE>
25.
if a material breach on the part of a party (not being
the SHC Group or the Casino Manager) occurs under an O & M
Agreement, the SHC Group or the Casino Manager, as the case
may be, shall, if directed in writing by the Authority
to do so, terminate the O & M Agreement in question
in accordance with its terms.
11. NO COMPETITION
11.1 Non Competition
(a) Each Contracting Party covenants with and undertakes
to the Authority that it will not directly or
indirectly:
(A) (i) do any of the things specified in
Part A of Schedule 10;
(ii) (AA) on its own account;
(BB) jointly with or on behalf of any
other person, firm, company or
trust;
(CC) as a shareholder, consultant,
partner, joint venture participant
or in any other capacity;
(iii) for the periods specified in Part B
of Schedule 10;
or
(B) at any time during the periods specified in
Part B of Schedule 10 be entitled (within the
meaning of section 609 of the Corporations
Law) to shares in any body corporate or
interests in any trust doing any of the
things referred to in Part A of Schedule 10.
(b) The Authority may, upon the request of any
Contracting Party having given such an undertaking
as set out at clause 11.1 (a), vary that undertaking
in its complete and unfettered discretion.
11.2 Severance
If any part of any provision or any part of a provision of
clause 11.1 ("Provisions"), or the application of any part
or provision or part of a provision of clause 11.1 to any
person or circumstance (for the purposes of this clause
11.2 only "Applications"), on its true interpretation is
determined to be void, invalid or otherwise unenforceable,
that Provision or Application shall be read down to such
extent as may be necessary to ensure that it is not void,
invalid or unenforceable and as may be reasonable in all
the circumstances so as to give full and as valid an
operation as possible. Any such determination shall not
affect any other Provisions or Applications all of which
other Provisions or Applications shall remain in full
force and effect. In the event that the infringing
Provision or Application cannot be so read down, it shall
be deemed void and severable to the extent that it is void
or to the extent of the voidability, invalidity or
unenforceability and shall be deemed deleted from this
Deed to the same extent and effect as if never
incorporated herein but the remainder of clause 11. 1
shall remain in
<PAGE>
26.
full force and effect. It is the intention of the parties
that if any Provision or Application of this Deed is
susceptible logically and reasonably of two or more
constructions, one of which would render the Provision
or Application enforceable and the other or others of
which would render the Provision or Application
unenforceable, then the Provision or Application shall
have the meaning which renders it enforceable.
12. CASINO OPERATIONS AND MANAGEMENT
12.1 Best Practice Covenant
The SHC Group covenants with and undertakes to the
Authority that:
(a) it shall use its best endeavours to conduct and
manage the operations of the Casino and the
Ancillary Facilities in the manner contemplated by
paragraph (b);
(b) the operations of the Casino and the Ancillary
Facilities will be conducted and managed:
(i) at a first-class international standard for
casinos and casino complexes in general
having regard to the best operating practices
at them and will be conducted in an efficient
and commercially fair and reasonable manner
and to standards of the highest integrity;
and
(ii) to the standards set out in Schedule 11.
12.2 Incorporation of the Application
(a) The Application is hereby incorporated by reference
into this Deed.
(b) The Licensee covenants and undertakes with the
Authority to and where necessary, procure that SHC
Properties and SHC Holdings will:
(i) operate and conduct the Casino and the
Ancillary Facilities in accordance with the
Application; and
(ii) provide all the features, facilities,
attractions and services and described in the
Application.
12.3 Gaming Equipment
(a) The Licensee will procure gaming equipment for use
in the Casino which will be suitable for the purpose
of lawful gaming in the Casino and which will be
sufficient to enable the Licensee to conduct gaming
operations at the Casino in accordance with the
Application. The gaming equipment shall comply with
the requirements of the Act. The Authority
acknowledges that the Casino Manager, as agent of
the Licensee, may be procuring the gaming equipment
for use in the Casino.
<PAGE>
27.
(b) The Licensee hereby acknowledges and declares that:
(i) it will at all relevant times own the gaming
equipment which is used in the Casino free
and clear from any Encumbrances other than
the Permitted Encumbrances and as a
beneficial owner; and
(ii) it shall not dispose of such gaming
equipment, unless the Authority gives its
prior written consent to the Licensee
permitting it to do otherwise, such
permission not be unreasonably withheld.
(c) The Licensee hereby agrees to replace any gaming
equipment which proves defective or which becomes no
longer operational so as to maintain at all times a
sufficient quantity of Gaming Equipment which will
be suitable for the purpose of lawful gaming at the
Casino and complies with the requirements of this
clause 12.3 and which will enable the Licensee to
conduct gaming operations at the Casino.
(d) For the purposes of assisting the Authority and the
Director in the performance of their respective
obligations and duties under the Act, including
without limitation, under sections 68 and 69 of the
Act, the Licensee shall procure that an independent
expert approved by the Authority will certify to the
Authority that, in its opinion, the gaming equipment
provided by the Licensee from time to time complies
with the requirements of the Act and regulations
passed thereunder and this Deed whenever the
Authority requests such a certificate to be
provided.
12.4 Games
(a) The Licensee may, subject to the Act, conduct in the
Casino only the games permitted in accordance with
the provisions of the Act.
(b) (i) The Licensee will notify the Authority of
of any other game which it proposes to
conduct at the Casino, or any amendment to
the rules of any game which it conducts at
the Casino, earlier than 121 days prior to
the date on which the Licensee proposes to
introduce the game or rule amendment in the
Casino.
(ii) Such notification will set out:
(A) the proposed rules of the game or the
proposed amendments to the rules of the
game; and
(B) the Licensee's estimates of gross revenue
which will be attributable to that game or
the benefits of the proposed amendments
to the rules; and
(C) the estimated direct costs attributable to
conducting the game or the proposed
amendments to the rules.
(iii) Upon receipt of such notice, the Authority
will consult with the Licensee with a view to
determining whether or not the Authority
ought to approve the conduct of the game in
the Casino or the
<PAGE>
28.
amendment to the rules of the game in the
Casino.
(iv) The Authority shall have reasonable regard
to, amongst other matters which it considers
relevant it its absolute discretion, the
interests of the Licensee when determining
whether or not to approve the proposed
conduct of the game in the Casino.
(v) The Director may make recommendations to the
Authority regarding:
(A) the proposed conduct of a game in the
Casino and the rules of such game; and
(B) a proposed amendment to the rules of a
game conducted in the Casino; pursuant to
section 104(1)(e) of the Act.
(vi) The Authority shall notify the Licensee of
its determination regarding a proposed game
and its rules or a proposed amendment to the
rules of a game not later than 120 days after
Receipt of the notice from the Licensee or as
soon as practicable thereafter following
completion of the consultations with the
Licensee.
(c) (i) The Authority may propose to the Licensee by
notice a game which it would like the Licensee
to consider conducting at the Casino.
(ii) Upon receipt of such notice, the Licensee
shall prepare a report on the advisability of
the game and its estimates of gross revenue
attributable to such game and estimated
direct costs attributable to such game.
(iii) Such report shall be furnished by the
Licensee, in a timely manner, to the
Authority for its consideration.
(iv) Upon receipt of such report, the Authority
will consult with a view to agreeing whether
or not the Licensee should be directed to
conduct such game at the Casino.
(v) After having reasonable regard to the
interests of the Licensee, the Authority may
notify the Licensee to conduct such game at
the Casino upon such rules as the Authority
may direct.
12.5 Advertising, Marketing and Promotion
(a) The Licensee shall consistently with clause 12
advertise, market and promote the Casino and the
Ancillary Facilities with the objective of ensuring
the Casino is fully and regularly patronised.
(b) The Licensee shall expend the amount (plus or minus
10%) provided in each budget, a copy of which shall
be provided to the Authority on request, on
advertising, marketing and promotions on such media,
events and activities as it considers most suitable
to achieve the objective set out in clause 12.5(a).
<PAGE>
29.
(c) The Licensee shall certify, quarterly, in writing to
a person nominated by the Authority the amounts
which it has expended on advertising, marketing and
promotions in the period covered by such
certificate, which certificate is to contain a
breakdown of the amounts expended on the various
categories of expenditure.
12.6 Not used
13. GENERAL RESPONSIBILITY TO INFORM AUTHORITY
13.1 General Responsibility to Inform
The Casino Manager and the SHC Group shall at all times
keep the Authority fully informed of all material aspects
of the operation of the Casino Complex and shall
immediately report any occurrence which would materially
adversely effect the Casino Complex.
l3.2 Litigation
Without limiting clause 13.1, the Contracting Parties
shall immediately notify the Authority of any litigation,
arbitration or other dispute subject to a resolution
process to which any of them is a party or with which any
of them is involved which could materially affect their
ability to perform their respective obligations under this
Deed, the Licence, the Casino Complex Management Agreement
or an S & A Agreement.
14. INSPECTION OF RECORDS AND ACCESS TO PREMISES
The Casino Manager and the SHC Group shall, after receipt
of reasonable notice from the Authority, permit authorised
representatives of the Authority (including its employees,
agents and advisers) and the Director:
(a) to enter upon any part of the Casino and Ancillary
Facilities at all reasonable times;
(b) to examine or inspect the Casino and Ancillary
Facilities, their contents and all equipment
necessary for their operation and determine whether
such equipment is in proper operating order;
(c) to examine or inspect all books of account and other
records relating to the Casino, the Ancillary
Facilities, the SHC Group or the Casino Manager and
to take copies or extracts from them;
(d) to determine whether the obligations of the SHC
Group and the Casino Manager under this Deed, the
Casino Complex Management Agreement, the Licence and
the Transaction Documents have been complied with;
(e) to observe the cash count system or any actual
counting; and
<PAGE>
30.
(f) to inspect or test security monitoring systems.
15. REGULAR MEETINGS WITH AUTHORITY
15.1 Information
The SHC Group and the Casino Manager agree to provide the
Authority with such information from time to time as the
Authority may require to ensure the Authority is, in its
opinion, adequately informed in relation to:
(a) the management and operation of the Casino and the
Ancillary Facilities;
and
(b) the performance by the SHC Group and the Casino
Manager of their obligations under this Deed, the
Casino Complex Management Agreement, the Licence and
the Transaction Documents.
15.2 Regular Meetings
Subject to clause 15.3 the Authority may, for the purposes
of clause 15.1, request that the representatives of the
SHC Group and the Casino Manager attend meetings with the
Authority on reasonable written notice (which shall depend
on the circumstances) at such times and places as
specified in such notice. The Authority shall not request
more than one such meeting in any three month period.
15.3 Other Meetings
The Authority may request that the representatives of the
SHC Group and the Casino Manager attend meetings with the
Authority on reasonable written notice (which shall depend
on the circumstances) where the Authority suspects or
forms the view that any of the following events have
occurred, or that any act, matter or thing has arisen
which could lead to any of the following events occurring:
(a) the breach of any condition of the Licence; or
(b) the breach of any clause of any Transaction
Document.
15.4 Agenda
The Authority will include in the notice of a meeting
under this clause 15 an agenda of the matters proposed to
be discussed at the meeting.
15.5 Representatives
For the purposes of clause 15, the representatives
required to attend meetings shall be those persons as
determined by the Authority from time to time in
consultation with the SHC Group and the Casino Manager,
provided that such persons shall include the
<PAGE>
31.
Managing Director of the SHC Group or the Chief Executive
Officer of the Casino Manager only where:
(a) the Authority reasonably requires their presence to
consider or discuss the matters to be dealt with at
that meeting; and
(b) such persons have not been able to persuade the
Authority that their personal attendance is not
required for the Authority to consider the matters
proposed to be discussed as outlined in the agenda
referred to in clause 15.4.
15.6 Minutes
The SHC Group shall prepare accurate minutes of each
meeting referred to in clause 15 and shall deliver copies
of the minutes to the Authority and the Casino Manager
within 3 Business Days after each meeting.
16. NOT USED
17. FORCE MAJEURE
17.1 If by reason of an Event of Force Majeure, a Contracting
Party (affected Contracting Party) is or reasonably
expects to be wholly or partially unable to carry out any
of its obligations under this Deed, it shall give to the
Authority prompt notice of the Event of Force Majeure once
it becomes aware of the same and the obligations affected
together with full particulars of all relevant matters
including:
(a) details of the Event of Force Majeure;
(b) identification of the obligations hereunder
affected;
(c) details of the action that the Affected Contracting
Party has taken to remedy the situation and details
of the action that it proposes to take to remedy the
situation;
(d) an estimate of the time during which the Affected
Contracting Party will be unable to carry out its
obligations due to the Event of Force Majeure; and
(e) an estimate of the costs that the Affected
Contracting Party will incur to remedy the situation
and its proposed funding arrangements.
17.2 Upon the notice under clause 17.1 being given, the
Affected Contracting Party shall be obliged to provide the
Authority with all relevant information pertaining to the
Event of Force Majeure.
17.3 (a) Upon the notice under clause 17.1 having been
given, any party may immediately request a
consultation with the other parties in order to
reach
<PAGE>
32.
agreement as to the best way of resolving the
situation.
(b) If no such request is made within 5 Business Days,
or no agreement is reached between the parties
within 15 Business Days of such request being made,
then subject to clause 17.4, clause 17.5 will apply.
17.4 Within 5 Business Days of the Affected Contracting Party
providing a notice under clause 17.1 to the Authority
(notice), the Authority may notify the Affected
Contracting Party that it disputes the contents of the
Notice (including without limitation, the existence of the
Event of Force Majeure or the obligations claimed to be
affected by the Event of Force Majeure), in which event
clause 28 shall apply.
17.5 Subject to clauses 17.3 and 17.4:
(a) the obligations of the Affected Contracting Party,
identified in the notice issued under clause 17.1
or, if clause 17.4 applies, the obligations in such
notice which are determined by dispute resolution
(under clause 28) to be affected (other than under
this clause 17 and any other clause which is
expressed to survive this clause 17.5(a)), shall be
suspended from the date the notice under clause 17.1
was given but only to the extent and for so long as
the period that such obligations are genuinely
affected by the Event of Force Majeure; and
(b) the Affected Contracting Party shall not be deemed
to be in default under this Deed insofar as its
failure or delay in the observance or performance of
its obligations specified in the notice given under
clause 17.1 or, if clause 17.4(b) applies, the
obligations in such notice which are determined by
dispute resolution (pursuant to clause 28) to be
affected, are caused by the Event of Force Majeure,
PROVIDED THAT if for any reason the Event of Force Majeure
continues for more than 20 Business Days from the date of
the notice issued under clause 17.1 then the Authority may
terminate this Deed with respect to the Affected
Contracting Party and will not be liable to pay any form
of compensation to the Affected Contracting Party (other
than existing liabilities owed by the Authority to the
Affected Contracting Party at the time of termination).
17.6 Upon an Affected Contracting Party being able to
recommence the fulfilment of the obligations under this
Deed previously affected by a notified Event of Force
Majeure:
(a) it shall give to the Authority prompt notice of the
same; and
(b) the period of an Event of Force Majeure shall end.
17.7 Upon an Event of Force Majeure coming to an end pursuant
to clause 17.6 the Affected Contracting Party shall
immediately recommence the fulfillment of the
<PAGE>
33.
obligations which were so previously affected PROVIDED
THAT where the occurrence of the Event of Force Majeure
has resulted in that Affected Contracting Party not
complying with an obligation within the time limit
specified in this Deed for the performance of that
obligation, then the time for performance of that
obligation shall be extended for the shorter of the period
of the Event of Force Majeure (being the time between the
date on which the notice under clause 17.1 was received by
the Authority and the date on which the notice under clause
17.6 was received by the Authority inclusive), and the
period it would take a person of a first class standard
of competence acting diligently to perform the obligation.
17.8 (a) Upon a notice under clause 17.1 being given,
where the Affected Contracting Party reasonably
expects that the occurrence of the Event of Force
Majeure will result in the Affected Contracting
Party not complying with an obligation within the
time limit specified in this Deed for the
performance of that obligation (affected
Obligation.), the Affected Contracting Party may
apply by notice in writing to the Authority for an
extension of time for the performance of the
Affected Obligation. Such notice shall state a fair
and reasonable estimate of the time by which in the
opinion of the Affected Contracting Party the
Affected Obligation could be performed.
(b) Within 5 Business Days of receipt by the Authority
of a notice under clause 17.8(a), the Authority will
make a determination (in its absolute discretion) on
the Affected Contracting Party's application for an
extension of time and shall promptly provide the
Affected Contracting Party with notice of the
determination.
(c) Within 10 Business Days of the Affected Contracting
Party receiving a notification of a determination
under clause 17.8(b) from the Authority, the
Affected Contracting Party may notify the Authority
that it disputes the refusal of an extension of time
or the length of the extension of time, and in that
event the matter shall be referred for dispute
resolution pursuant to clause 28.
17.9 The foregoing provisions of this clause 17 shall not apply
to excuse performance of:
(a) any obligation to pay money under this Deed; or
(b) any obligation of any Contracting Party other than
the Affected Contracting Party.
17.10 Each Contracting Party shall, at its cost, use its best
endeavours to overcome an Event of Force Majeure or remedy
the disability resulting therefrom as promptly as possible
including making reasonable expenditures of funds provided
always that such party shall not be required hereby to
settle any labour dispute on terms contrary to its wishes
nor to test the validity of any law, regulation, decree or
order by way of legal proceedings.
<PAGE>
34.
18. COVENANTS, WARRANTIES AND INDEMNITIES
18.1 Continuing Covenants and Warranties
Unless otherwise expressly stated, the covenants,
warranties, representations and undertakings given in this
Deed are made as at the date of this Deed and are deemed
repeated on each date on which the Authority requests in
writing that the relevant Contracting Party repeat the
covenants, warranties, representations and undertakings
and in any event, every 3 months after the date of this
Deed.
18.2 Covenants and Warranties True and Accurate and Separate
It is a term of this Deed that each of the covenants,
warranties, representations and undertakings given in this
Deed are true and correct in every respect and shall be
construed separately, and the meaning of each shall in no
way be limited by reference to any other clause or
paragraph contained herein.
18.3 Covenants and Warranties Survive Termination
Each of the covenants, warranties, representations and
undertakings herein shall remain in full force and effect
on and after any termination of this Deed for any reason
whatsoever.
18.4 Notice of Any Breach of Covenants and Warranties
The SHC Group, the Casino Manager and the S & A Provider
shall immediately give notice in writing to the Authority
of any breach of any of the representations warranties
covenants or undertakings of this Deed. No such
notification shall affect or in any way limit the
liability of the SHC Group, the Casino Manager or the S &
A Provider.
18.5 Indemnity in Respect of Breach
Each Contracting Party hereby indemnifies and shall at all
times keep indemnified each of the Authority and the State
against any and all loss, damage, claims, penalties,
liabilities and expenses (including special, indirect and
consequential damages and legal costs on the higher of a
full indemnity basis or a solicitor and own client basis
and without the need for taxation) whatsoever caused or
contributed to by breach of this Deed (including clauses
6.1 and 19. l(b) and (c)) by the Contracting Party,
including without limitation as a result of:
(a) the payment, omission to make payment or delay in
making payment of any amount referred to in or
contemplated by this Deed;
(b) a breach of any of its obligations, warranties,
covenants, undertakings or representations under
this Deed;
<PAGE>
35.
(c) any damage to property or death of or injury to any
person of any nature or kind.
18.6 Indemnity Against Third Party Claims
Each Contracting Party hereby indemnifies and shall at all
times keep indemnified each of the Authority and the State
against any and all claims, actions, demands, loss,
damages, liabilities and expenses (including special,
indirect and consequential damages and legal costs on the
higher of a full indemnity basis or a solicitor and own
client basis and without the need for taxation) brought or
claimed by any third party, in connection with the
performance by the Contracting Party of its obligations
under this Deed.
18.7 Indemnity Payable on Demand
Any moneys payable under any of the indemnities in this
clause 18 shall be payable within 5 Business Days of
demand.
19. CONTRACTING PARTY'S RIGHT OF REMEDY AND AUTHORITY'S RIGHTS
OF TERMINATION
19.1 Remedy of Breach
If any breach of the nature referred to in paragraphs (a)
to (d) inclusive of the definition of Event of Default
occurs (including for the avoidance of doubt a failure to
comply with clause 6.1(b) in respect of the COA Lease
Terms):
(a) the Authority may issue a notice to the Licensee
specifying the breach ("Default Notice"); and
(b) if the breach is capable of remedy, the Licensee
shall cause the breach to be remedied (which in the
case of a monetary obligation shall include payment
of interest pursuant to clause 20.1 of this Deed) to
the satisfaction of the Authority within the time
specified in the Default Notice, which time shall be
not less than:
(i) 2 Business Days after issue of the Default
Notice, in the case of an event referred to
in paragraph (a) of the definition of Event
of Default; or
(ii) 10 Business Days after the issue of the
Default Notice, in the case of an event
referred to in any of paragraphs (b) to (d)
inclusive of the definition of Event of
Default; or
(c) if the breach is not capable of remedy, the
Contracting Parties shall comply with any
requirements in relation to such breach or redress
the prejudice arising from the breach in the manner
specified in the Default Notice, whether by the
payment of compensation or damages or otherwise,
within
<PAGE>
36.
the time specified in the Default Notice
which time shall not be less than 5 Business Days
after the issue of the Default Notice.
19.2 Obligation Default Notices
If there is:
(a) an occurrence of an event referred to in any of
paragraphs (e) to (i) inclusive of the definition of
Event of Default in respect of any Contracting
Party; or
(b) a breach of clause 19.1 by any Contracting Party;
then the Authority may issue a notice ("Obligation Default
Notice") to the Licensee specifying the breach as an
Obligation Default.
19.3 Deemed Notice
All Contracting Parties agree and acknowledge that upon
receipt or deemed receipt of a Default Notice pursuant to
clause 19.1 or an Obligation Default Notice pursuant to
clause 19.2 (as the case may be) by the Licensee, the
Default Notice or the Obligation Default Notice (as the
case may be) whether addressed to the Licensee and/or any
other Contracting Party shall be thereupon deemed received
by all Contracting Parties for the purposes of this clause
19.
19.4 Obligation Licence Conditions
If the breach specified in the Obligation Default Notice
is not remedied, or the prejudice arising from the breach
(as specified in the Obligation Default Notice) is not
redressed, in either case to the satisfaction of the
Authority within 10 Business Days after the issue of the
Obligation Default Notice, then the obligation the breach
of which has given rise to the Obligation Default Notice,
shall thereupon and without more be considered to be a
condition of the Licence which shall have been
contravened.
19.5 Authority may amend Conditions of Licence, cancel or
suspend Licence
Each Contracting Party acknowledges and agrees that upon
the occurrence of an Obligation Licence Condition the
Authority may amend the conditions of the Licence, or
cancel or suspend the Licence pursuant to section 23 of
the Act.
20. DEFAULT INTEREST
20.1 If any Contracting Party makes default in payment of any
money payable under this Deed (including under this
clause), or if the Authority shall expend any moneys under
or pursuant to this Deed consequent upon any breach by any
Contracting Party of its provisions, the relevant
Contracting Party shall pay to the Authority interest
(both
<PAGE>
37.
before as well as after any judgment) on such overdue
moneys at the Default Rate from and including the date when
such moneys originally fall due for payment up to the date
they are paid or satisfied, and shall likewise pay to the
Authority interest on moneys so expended at the Default
Rate from the date the same are expended by the Authority
until repaid by the Contracting Party or otherwise
satisfied. Interest as aforesaid shall be calculated
daily and compounded monthly.
20.2 For the avoidance of doubt, it is the intention of the
parties that where interest is payable under sub-clause
10.8 of the COA Lease Terms on any sum payable under the
COA Lease Terms, clause 20.1 of this Deed does not operate
to make interest payable on the same again. In other words
there should be no double-counting of interest payments on
the same sum.
21. Not used
22. AUTHORITY'S STATUTORY OBLIGATIONS AND DISCRETIONS
22.1 No Fetter of Powers, Rights, Obligations and Discretions
Nothing in this Deed shall be taken as, nor is capable of,
fettering or prejudicing the powers, rights, obligations
and discretions imposed or conferred on the Authority
under the Act or imposing on the Authority any obligation
or restriction which conflicts with those powers, rights,
obligations and discretions.
22.2 Authority to Consider Act
In giving any approvals or exercising any powers, rights
or discretions under this Deed, the Authority will have
regard to the provisions of the Act, including without
limitation its objects specified in section 140.
22.3 Directions by Authority
Unless otherwise expressly provided, no provision in this
Deed shall be taken to be a direction by the Authority
under the Act, including without limitation under sections
29, 30, 32 and 38.
23. EXPENSES AND STAMP DUTY
23.1 Expenses
The SHC Group must on demand reimburse the Authority for
and keep the Authority indemnified against all expenses,
including all legal fees, costs and disbursements on a
solicitor/own client basis and without the need for
taxation, incurred by the Authority in connection with:
(a) any subsequent consent, agreement, approval or
waiver under or amendment of this Deed or the
Transaction Documents; and
<PAGE>
38.
(b) the exercise, enforcement, preservation, attempted
enforcement or preservation of any rights under this
Deed or the Transaction Documents, including without
limitation any expenses incurred in the evaluation
of any matter of material concern to the Authority.
23.2 Stamp Duty and Other Taxes
The SHC Group will be liable to:
(a) pay all stamp duties, registration and similar
Taxes, including fines and penalties, financial
institutions duty and federal debits tax in
connection with the execution, delivery,
performance, enforcement or attempted enforcement of
this Deed or any payment or other transaction under
or contemplated in this Deed; and
(b) indemnify and keep indemnified the Authority against
any loss or liability incurred or suffered by it as
a result of the delay or failure by the SHC Group to
pay Taxes.
24. ASSIGNMENTS
24.1 Assignment Subject to Act
Each party's ability to assign, encumber or otherwise
dispose of their rights and obligations under this Deed is
subject to section 142(4) of the Act.
24.2 Assignment by Contracting Party
Without limiting the application of, and in addition to,
clause 24.1 no Contracting Party may assign, transfer,
Encumber or otherwise dispose of all or any part of its
rights or obligations under this Deed other than by way of
the Permitted Encumbrance unless the Authority has given
its prior written consent which consent can be withheld or
made subject to any requirements specified by the
Authority in its absolute discretion, PROVIDED THAT to the
extent to which there is a ministerial consent or approval
in respect of such rights or obligations under the
Minister's Approval and Consent Acknowledgement the
Authority shall be deemed for the purposes of this clause
24.2 to have given its prior written consent.
24.3 Assignment by Authority
The Authority may at any time assign its rights and
obligations under this Deed to:
(a) any other statutory corporation or authority, any
government department or agency which has taken over
the functions or objects of the Authority under the
Act; or
(b) the New South Wales Government,
<PAGE>
39.
provided that the assignee has executed a deed
agreeing to be bound by the terms of this Deed as
if it were an original party in place of the
Authority.
25. VARIATION OF DEED
25.1 If any party (the "Proposing Party") proposes a variation
to the terms of this Deed (including without limitation
the Schedules and Exhibits), the Proposing Party shall
submit to each of the other parties ("Other Parties") a
notice in writing ("Variation Proposal") specifying all
details of the proposed variation including full details
of all financial, corporate, timing and operations and
other changes to the Application.
25.2 Each of the Other Parties shall within 20 Business Days
after receipt of a Variation Proposal or such longer
period as may be agreed between the parties advise in
writing of its approval or rejection of the Variation
Proposal.
25.3 Failure to respond within the time period referred to in
clause 25.2 shall be deemed to be a rejection.
25.4 Where approval under clause 25.2 has been given to a
Variation Proposal then each party shall duly execute a
formal amending agreement or agreements (as the case may
be) to effect the Variation Proposal ("Variation
Agreement") whereupon (and not before) the parties shall
be bound thereby PROVIDED THAT the Variation Agreement
shall have no force or effect and shall not be deemed to
have been entered into by the Authority unless and until
the Authority has received the approvals of the Minister
thereto required pursuant to section 142 of the Act (and
each Variation Agreement shall contain an express
provision to this effect unless such approvals have
previously been obtained). If the Variation Agreement is
not duly executed by any party or the Ministerial
approvals referred to above are not received within 30
Business Days after the date of approval of each of the
Other Parties under clause 25.2 then the Variation
Proposal shall be deemed rejected and any Variation
Agreement shall have and shall be deemed for all purposes,
never to have had, any force or effect.
26. GOVERNING LAW AND JURISDICTION
26.1 Governing Law
This Deed is governed by and construed in accordance with
the laws of the State.
26.2 Jurisdiction
(a) Each party irrevocably submits to and accepts,
generally and unconditionally, the non-exclusive
jurisdiction of the courts and appellate courts and
mediation and arbitration processes of the State
with respect to any action or proceedings which may
be brought at any time relating in any way to this
Deed.
(b) Each party irrevocably waives any objection it may
now or in the future
<PAGE>
40.
have to the venue of any action or proceeding, and
any claim it may now or in the future have that
any action or proceeding has been brought in an
inconvenient forum.
(c) Each party irrevocably waives any immunity in
respect of obligations under this Deed that it may
acquire from the jurisdiction of any court or any
legal or arbitration process for any reason
including without limitation, the service of notice,
attachment prior to judgement, attachment in aid of
execution or execution.
27. NO REPRESENTATION BY OR RELIANCE ON AUTHORITY
Each Contracting Party acknowledges and confirms that:
(a) it has relied on its own inquiries as to all other
parties to this Deed, including the nature and
extent of the entire relationship between them
whether or not recorded in this Deed, and the nature
and effect of this Deed; and
(b) it has not entered into this Deed in reliance on or
as a result of any representation, warranty,
promise, statement, conduct or inducement by or on
behalf of the Authority otherwise than as embodied
in the CCA Project Documents, or as notified in
writing by that party to it before the date of this
Deed.
28. DISPUTE RESOLUTION
28.1 A Party must not commence or maintain any action or court
proceedings (except proceedings seeking interlocutory
relief) in respect of a dispute or difference as to any
matter relating to or arising under this Deed ("Dispute")
unless it has complied with this clause 28.
28.2 A Party claiming that a Dispute has arisen must notify the
other Parties giving details of the Dispute.
28.3 Within 3 Business Days after a notice is given under
clause 28.2, each Party must nominate in writing a
representative authorised to settle the Dispute on its
behalf ("Representative").
28.4 During the period of 10 Business Days after a notice is
given under clause 28.2 (or any longer period agreed
between the Parties), each Party must ensure that its
Representative uses his or her best endeavours, with the
other Representatives to:
(a) resolve the Dispute; or
(b) agree on a process to resolve the Dispute without
court proceedings (e.g. mediation, conciliation,
executive appraisal or independent expert
<PAGE>
41.
determination) including:
(i) the involvement of any dispute resolution
organisation;
(ii) the selection and payment of a third party to
be engaged by the Parties to assist in
negotiating a resolution of the Dispute
without making a decision that is binding on
a Party unless that Party's Representative
has so agreed in writing;
(iii) any procedural rules;
(iv) the timetable, including any exchange of
relevant information and documents; and
(v) the place where meetings will be held.
28.5 If, within the period specified in clause 28.4, the
Representatives have not resolved the Dispute or agreed
upon a process to resolve the Dispute, the Parties may,
within 5 Business Days after expiry of that period, agree
to appoint a person, who is of good repute and is an
expert in the area relevant to the Dispute, to perform the
following functions, which the Parties authorise the
person to do:
(a) act as an independent consultant for the purpose of
resolving the Dispute, as an expert and not as an
arbitrator;
(b) establish the procedures for identifying the issues
relating to the Dispute and the contentions of the
Parties, in accordance with considerations of
procedural fairness;
(c) make a written, reasoned decision to resolve the
Dispute; and
(d) decide how the independent consultant's fees should
be paid by the Parties.
If the Parties cannot agree, within the 5 Business Day
period referred in this subclause, on the appointment of
an independent consultant, the Parties must request the
Secretary General of the Australian Commercial Disputes
Centre Limited to appoint that person.
28.6 A decision by the independent consultant under clause 28.5
shall be final and binding on the Parties. However, a
Party is entitled to take court proceedings to appeal that
decision on a question of law.
28.7 If, by the expiry of the period of 5 Business Days
specified in clause 28.5:
(a) the Dispute has not been resolved;
(b) no process has been agreed under clause 28.4; and
(c) no request has been made under clause 28.5,
then a Party that has complied with clauses 28.2 to
28.4 may terminate the dispute
<PAGE>
42.
resolution process by giving notice to the other Parties,
whereupon clause 28.1 shall no longer operate in relation
to the Dispute.
28.8 Each Party:
(a) must keep confidential all confidential information
and confidential communications made by a
Representative under this clause; and
(b) must not use or disclose that confidential
information or those confidential communications
except to attempt to resolve the Dispute,
but nothing in this sub-clause shall affect the
admissibility into evidence in any court or arbitral
proceedings of extrinsic evidence of facts which, but for
this sub-clause, would be admissible in evidence.
28.9 Each Party must bear its own costs of resolving a Dispute
under this clause 28.
28.10 If a Party does not comply with any provision of clauses
28.2 to 28.4 or, if applicable, clause 28.5 and any
procedural requirements established under clause 28.5(b)
then the other Parties will not be bound by those
sub-clauses in relation to the Dispute.
29. NOTICES
29.1 Requirements for Notices
Every notice or other communication to be given or made
under or arising from this Deed:
(a) must be in writing;
(b) must be signed by an Authorised Officer of the
sender;
(c) will be deemed to have been duly given or made to a
person if delivered or posted by prepaid post to the
address, or sent by fax to the fax number of that
person set out in clause 29.2 (or to any other
address or fax number as is notified in writing by
that person to the other parties from time to time);
and
(d) will be deemed to be given or made (unless a later
time is specified in the notice or communication):
(i) (in the case of prepaid post being sent and
received within Australia) on the third day
after the date of posting as indicated by the
postmark on the notice or communication;
(ii) (in the case of prepaid post being sent or
received outside Australia) on the fifth day
after the date of posting as indicated by the
postmark on the notice or communication;
<PAGE>
43.
(iii) (in the case of delivery by hand) on
delivery, provided that where delivery is
made:
(A) after 5:00 pm on any Business Day in the
city of the recipient of the notice or
communication, then in such case at 9:00
am on the next following Business Day;
(B) on a day which is not a Business Day in
the city of the recipient of the notice
or communication, then in such case at
9:00 am on the next following Business
Day;
(iv) (in the case of fax) on receipt of a
transmission report which indicates that the
facsimile was sent in its entirety to the
facsimile number of the addressee.
29.2 Addresses of Parties
The addresses and fax numbers of the parties for the
purposes of this clause 29 are:
Authority
Address: Level 17, 309 Kent Street, Sydney, NSW,
Australia, 2000
Fax No.: (02) 299 7427
Attention: Mr L Le Compte, Chief Executive
Licensee
Address: 3rd floor, 472 Pacific Highway, St. Leonards,
Australia, 2065
Fax No.: (02) 925 6003
Attention: Mr G Nasky
SHC Properties
Address: 3rd floor, 472 Pacific Highway, St. Leonards,
Australia, 2065
Fax No.: (02) 925 6003
Attention: Mr G Nasky
SHC Holdings
Address: 3rd floor, 472 Pacific Highway, St. Leonards,
Australia, 2065
Fax No.: (02) 925 6003
Attention: Mr G Nasky
Casino Manager
Address: 3rd floor, 472 Pacific Highway, St. Leonards,
Australia, 2065
Fax No.: (02) 925 6003
Attention: Mr G Nasky
<PAGE>
44.
SBA
Address: 3rd floor, 472 Pacific Highway, St. Leonards,
Australia, 2065
Fax No.: (02) 925 6003
Attention: Mr G Nasky
LPPL
Address: 3rd floor, 472 Pacific Highway, St. Leonards,
Australia, 2065
Fax No.: (02) 925 6003
Attention: Mr V Vella
SOC
Address: 2800 Fremont Street, Las Vegas, Nevada 89104 USA
Fax No.: 0015 1702 385 9678
Attention: Mr J K Houssels
29.3 Appointment of Local Agent
SOC hereby appoints SBA as its agent for the service of
any process in any proceedings commenced, or proposed to
be commenced, in New South Wales and SBA hereby
irrevocably consents to and accepts such appointment.
30. CONTINUING OBLIGATION
This Deed constitutes a continuing obligation regardless
of any settlement of account, intervening payment, express
or implied revocation or any other matter or thing, until
termination of this Deed in accordance with the provisions
of this Deed.
31. FURTHER ASSURANCE
Each Contracting Party will at the entire cost and expense
of such party perform all such acts and execute all such
agreements, assurances and other documents and instruments
as the Authority reasonably requires to perfect or improve
the rights and powers afforded, created or intended to be
afforded or created, by this Deed.
32. SEVERABILITY
All provisions and each and every part thereof contained
in this Deed shall be severable and shall be so construed
as not to infringe the law of Australia or the law of any
Australian state or territory or of any other relevant
jurisdiction. If any such provision on its true
interpretation is found to infringe any such law, that
provision shall be read down to such extent as may be
necessary to ensure that it does not so infringe any such
law and as may be reasonable in all the circumstances so
as to give as full and as valid an operation as possible.
In the event that the infringing provision cannot be so
read down, it shall be deemed
<PAGE>
45.
void and severable and shall be deemed deleted from this
Deed to the same extent and effect as if never
incorporated herein and the parties shall negotiate with
each other for the purpose of substituting an appropriate
clause so far as is practicable in lieu of such deleted
provision. It is the intention of the parties that if
any provision of this Deed is logically and reasonably
susceptible of two or more constructions, one of which
would render the provision enforceable and the other or
others of which would render the provision unenforceable,
then the provision shall have the meaning which renders
it enforceable.
33. WAIVER
A failure to exercise or enforce, or a delay in exercising
or enforcing, or the partial exercise or enforcement of
any right, remedy, power or privilege under this Deed by
the Authority will not in any way preclude or operate as a
waiver of the exercise or enforcement of that right,
remedy, power or privilege, or any further exercise or
enforcement of it, or the exercise or enforcement of any
other right, remedy, power or privilege under this Deed or
provided by law.
34. CONSENTS AND APPROVALS
Where under this Deed the consent or approval of the
Authority is required to do any act or thing, then unless
expressly provided otherwise in this Deed, that consent or
approval may be given or withheld in the absolute and
unfettered discretion of the Authority and may be given
subject to such conditions as the Authority thinks fit in
its absolute and unfettered discretion.
35. WRITTEN WAIVER, CONSENT AND APPROVAL
Any waiver, consent or approval given by the Authority
under this Deed will only be effective and will only bind
the Authority if it is given in writing by an Authorised
Officer, or given verbally and subsequently confirmed by
the Authority in writing by an Authorised Officer.
36. NON-MERGER
None of the terms or conditions of this Deed nor any act
matter or thing done under or by virtue of or in
connection with this Deed or any other agreement between
the parties hereto shall operate as a merger of any of the
rights and remedies of the parties in or under this Deed
or in or under any such other agreement all of which shall
continue in full force and effect.
37. REMEDIES CUMULATIVE
The rights and remedies conferred by this Deed on the
Authority are cumulative and in addition to all other
rights or remedies available to the Authority by statute,
by general law, or by virtue of any Transaction Document.
<PAGE>
46.
38. OPINION BY AUTHORITY
Any opinion to be formed by the Authority for the purposes
of this Deed may be formed by the Authority on such
grounds and material as it in its absolute discretion
determines to be sufficient. In forming any such opinion
the Authority shall be deemed to be exercising merely
administrative functions.
39. NO DEDUCTION
All payments by the Contracting Parties under this Deed
will be free of any set-off or counterclaim and without
deduction or withholding for any present or future Taxes
unless the Contracting Parties are compelled by law to
make any deduction or withholding and if this is the case,
the Contracting Parties must pay to the Authority any
additional amounts as are necessary to enable the
Authority to receive, after all those deductions and
withholdings, a net amount equal to the full amount which
would otherwise have been payable had no deduction or
withholding been required to be made.
40. SURVIVAL OF INDEMNITIES
The indemnities contained in this Deed and associated
provisions shall survive the termination of this Deed for
the benefit of the parties respectively entitled hereto.
41. ATTORNEYS
Each of the attorneys executing this Deed states that the
attorney has no notice of the revocation of that
attorney's power of attorney.
42. COUNTERPARTS
This Deed may be executed in any number of counterparts
and by the different parties on different counterparts,
each of which constitutes an original of this Deed, and
all of which together constitute one and the same
instrument.
<PAGE>
47.
SCHEDULE 1
O & M Novation Agreements
1. The parties (apart from the SHC Group and the Authority)
consent to the creation by SHC Group of the CCA Charge
which includes a charge over the SHC Group's rights, title
and interest, in under and to the O & M Agreement
concerned and those parties acknowledge the right, title
and interest of the Authority and the State in, under and
to the O & M Agreement concerned under and by virtue of
the provisions of the CCA Charge.
2. Each party (apart from the Authority) covenants with and
undertakes to the Authority that it will be bound by
section 32 of the Act as if it was the "casino operator"
named in that section.
3. Like provisions as those contained herein in respect of
the obligations of the S & A Providers to the Authority.
<PAGE>
48.
SCHEDULE 2
Institutional Investors
<PAGE>
49.
SCHEDULE 3
Covenants and Warranties by Contracting Parties
1. Capacity
(a) (Legal Binding Obligation): This Deed constitutes a
valid and legally binding obligation of, and is
enforceable against, the Contracting Party in
accordance with its terms subject to:
(i) any statute of limitations;
(ii) any laws of bankruptcy, insolvency,
liquidation, reorganisation or other laws
affecting creditors' rights generally; and
(iii) any defences of set-off or counter claim
other than those referred to in clause 39.
(b) (Execution, Delivery and Performance): The execution
and delivery of this Deed, and the performance of or
compliance with its obligations under this Deed, by
the Contracting Party does not violate any law or
regulation or official directive or any document or
agreement to which the Contracting Party is a party
or which is binding upon it or any of its assets.
(c) (Power): The Contracting Party has the power, and
has taken all corporate and other action required,
to enter into this Deed and to authorise the
execution and delivery of this Deed and all
instruments, documents and agreements to be executed
and delivered in connection herewith, and to perform
its obligations hereunder.
(d) (No Consent Required): No authorisation, approval or
consent is required in order for the Contracting
Party to enter into and perform its obligations
under and pursuant to this Deed.
(e) (Constituent Documents): The execution, delivery and
performance of this Deed does not violate the
Memorandum and Articles of Association of the
Contracting Party (or its Certificate of
Incorporation, By-laws or other constituent
documents in its jurisdiction of incorporation) or
cause a limitation on its powers or cause the powers
of its directors or officers to be exceeded and, if
the Contracting Party is listed on the Australian
Stock Exchange Limited or its subsidiaries or on any
other stock exchange, does not violate the listing
(or equivalent) requirements thereof.
2. Corporate Structure
(a) (Due Incorporation): The Contracting Party is duly
incorporated, is validly existing under the laws of
the jurisdiction of its incorporation and has the
corporate power to own its property and to carry on
its business as it is now being conducted.
(b) (Filings): The Contracting Party has filed all
corporate notices and effected all
<PAGE>
50.
registrations with the Australian Securities
Commission and, if Applicable, the Australian Stock
Exchange Limited or with similar offices in its
jurisdiction of incorporation and in any other
jurisdiction as required by law and all such
filings and registrations are current, complete and
accurate.
(c) (No Event of Insolvency): No Event of Insolvency has
occurred, or to the knowledge of the Contracting
Party could reasonably be expected to occur, in
relation to the Contracting Party.
(d) (No Trusts): The Contracting Party is not the
trustee of any trust nor does it hold any property
subject to or impressed by any trust other than the
Casino Manager as nominee for the Showboat Leighton
Partnership as evidenced by the Partnership
Agreement.
(e) (Commercial Benefit): The execution of this Deed is
in the best commercial interests of the Contracting
Party.
(f) (Compliance with Constituent Documents): The
Contracting Party will at all times comply with its
Memorandum and Articles of Association (or its
Certificate of Incorporation, By-laws or other
constituent documents in its jurisdiction of
incorporation) as amended from time to time.
3. Information
(All information true): All information given at any time
and every statement made at any time by the Contracting
Party to the Authority or its employees, agents or
consultants in connection with this Deed and any
Transaction Document is and will be true in any material
respect and is and will not by omission or otherwise be
misleading in any material respect.
4. Litigation
(a) (No Litigation): No litigation, arbitration,
criminal or administrative proceedings are current,
pending or, to the knowledge of the Contracting
Party, threatened, which, if adversely determined,
would or could have a material adverse effect on the
business assets or financial condition of the
Contracting Party.
(b) (Future Litigation): The Contracting Party will
immediately advise the Authority in writing of any
litigation, arbitration, criminal (including any
summons or other process in respect of an offence)
or administrative (including any statutory notices)
proceedings which, after the date of this Deed, are
commenced or threatened by or against the
Contracting Party and, if adversely determined,
would or could have a material adverse effect on the
business assets or financial condition of the
Contracting Party.
5. Immunity from Jurisdiction
The Contracting Party is not and will not be immune from
the jurisdiction of a court or from any legal or
arbitration process, whether through service of notice,
judgment, attachment in aid of
<PAGE>
51.
execution or otherwise.
6. No Event of Default
(a) (No Event of Default): No event has occurred which
does, or which with the giving of notice, lapse of
time, satisfaction of a condition or determination
could, constitute an Event of Default.
(b) (Notification): The Contracting Party will
immediately notify the Authority in writing upon
becoming aware of any event which does, or which
with the giving of notice, lapse of time,
satisfaction of a condition or determination could,
constitute an Event of Default.
7. Authorities
(a) (All Necessary Authorities): The Contracting Party
has obtained or effected all authorizations,
approvals (including any necessary approvals under
the Foreign Acquisitions and Takeovers Act, 1975),
consents, licences, permits, exemptions, filings,
registrations, notifications and other requirements
of any governmental, judicial or public authority or
body which must be obtained in Australia and in the
jurisdiction of its incorporation before the entry
of the Contracting Party into, or performance of its
obligations under, this Deed ("Authorities") and all
such Authorities are in full force and effect and
any conditions upon which the Authorities were given
have been, and will continue to be, complied with.
(b) (Future Authorities): The Contracting Party will
obtain and maintain in full force and effect and
comply with the conditions of all Authorities which
are required after the date of this Deed in
connection with the performance by the Contracting
Party of its obligations under this Deed.
(c) (No Transfer): The Contracting Party will not
transfer, encumber or surrender any of the
Authorities referred to in paragraphs (a) and (b)
without the Authority's prior written approval.
8. Disciplinary or Investigatory Action
(a) (No Disciplinary or Investigatory Action): The
Contracting Party is not aware, in relation to
itself or in the case of the Licensee any Close
Associate, of any disciplinary or investigatory
action (other than of a routine nature and not going
to fitness as a casino operator or probity
generally) being conducted or likely to be conducted
anywhere in the world in relation to gaming
activities or casino operations.
(b) (Notice to be Given): The Contracting Party will
immediately advise the Authority in writing if it
becomes aware of, or becomes aware of any fact
matter or circumstance which is likely to give rise
to, any such disciplinary or investigatory action in
relation to itself or in the case of the Licensee
any Close Associate.
<PAGE>
52.
9. Compliance with Legal Requirements
The Contracting Party will at all times comply with the
requirements of all applicable laws (including without
limitation the Act), rules, regulations, orders and
decrees of any administrative, governmental or
quasi-governmental authority.
10. Rights of Authority
The Contracting Party will not do anything in derogation
of the rights of the Authority.
<PAGE>
53.
SCHEDULE 4
Covenants and Warranties by Licensee and Amino Manager
1. Corporate Structure
(a) (Authority to approve Directors): The Licensee and
the Casino Manager will obtain the prior written
approval of any appointment of a director or
alternate director of the Licensee or the Casino
Manager.
(b) (Authority can remove Directors): The Licensee and
the Casino Manager will procure the vacation from
office of any of their directors or alternate
directors in accordance with any direction to that
effect by the Authority.
(c) (Authority to approve of Auditor): No person will be
appointed as auditor of the Licensee or the Casino
Manager unless that person's appointment as auditor
has first been approved in writing by the Authority.
(d) (Special Resolutions): The Licensee and the Casino
Manager will deliver to the Authority not later than
7 days before the date of the relevant meeting a
copy of any notice calling an extraordinary general
meeting or proposing any special or extraordinary
resolution of the Licensee or the Casino Manager.
2. Information
(Information required by Authority): The Licensee and the
Casino Manager will give to the Authority all such
information as is necessary to ensure that the Authority
is able to make an informed assessment of their assets and
liabilities, profits and losses and prospects and
otherwise all such information in connection with this
Deed, the Licence and the Casino Complex as the Authority
reasonably requires from time to time.
3. Gaming Licences
(Advice of Revocation of Gaming Licence): The Licensee and
the Casino Manager will immediately advise the Authority
if the Licensee or the Casino Manager or in the case of
the Licensee any of its Close Associates suffer any actual
or threatened revocation, termination or suspension of any
gaming licence or rights anywhere in the world or become
aware of any fact, matter or circumstance which could lead
to such revocation, termination or suspension.
4. Records
All records of the businesses of the Licensee and the
Casino Manager have been fully, properly and accurately
kept and completed in accordance with all legal
requirements and proper business practices and will
continue to be so kept and completed and there are, and
will in the future, be no material inaccuracies or
discrepancies of any kind contained or reflected in any of
them.
<PAGE>
54.
5. Accounts
(a) (Most Recent Accounts): The most recent accounts of
the Licensee and the Casino Manager delivered to the
Authority:
(i) have been prepared in accordance with
accounting principles and practices generally
accepted in Australia; and
(ii) give a true and fair view of the financial
condition of the Licensee and the Casino
Manager as at the date to which they relate
and the results of the Licensee's and the
Casino Manager's operations for the
accounting period ended on that date and
since that date there has been no material
adverse change in the financial condition of
the Licensee and the Casino Manager as shown
in such accounts.
(b) (Proper Books of Account): The Licensee and the
Casino Manager will keep or cause to be kept proper
books of account and will therein make true and
perfect entries of all dealings and transactions now
or in the future conducted by them including in
respect of the businesses contemplated by or
authorised under this Deed and the Licence, and
shall keep the books of account, vouchers and other
documents relating to their affairs and businesses
at the Temporary Site or the Permanent Site, as the
case may be, and shall procure that the same shall
at all reasonable times be available for inspection
and copying by the Authority or any employee, agent
or professional adviser of the Authority as the
Authority may from time to time appoint.
(c) (Compliance with Accounting Standards): The Licensee
and the Casino Manager will ensure that all balance
sheets and profit and loss statements and other
accounts prepared on their behalf are prepared in
accordance with their Articles of Association, the
Corporations Law, any applicable statute and all
accounting principles and practices generally
accepted in Australia consistently applied (or, if
not consistently applied, accompanied by details of
the inconsistencies) and give a true and fair view
of their financial condition and the results of
their operations as at the date and for the period
ending on the date to which such accounts are
prepared.
(d) (Consolidated and Unconsolidated Accounts): The
Licensee and the Casino Manager will ensure that if
any balance sheet or profit and loss statement or
other accounts furnished to the Authority discloses
the consolidated financial condition and results of
the operations of more than one corporation it is
accompanied by an unconsolidated balance sheet and
profit and loss statement for each such corporation
that complies with all other requirements herein
contained in relation to balance sheets and profit
and loss statements generally.
(e) (Notification of Authority): The Licensee and the
Casino Manager will notify the Authority in writing
of all material events or circumstances which could
affect their profitability or the value of their
assets or liabilities by more than 10%.
<PAGE>
55.
6. Change of Control
The Licensee and the Casino Manager will immediately
advise the Authority of any material changes in their
shareholding or the shareholding of any Related Body
Corporate, including without limitation one or more
persons acquiring or materially altering a substantial
shareholding (as that term is defined in the Corporations
Law).
7. Taxes
(a) (File All Returns): The Licensee and the Casino
Manager will file with the appropriate authorities
within the time limited by law all income Tax, group
Tax, sales Tax, land Tax and other returns for Taxes
which the law requires them to furnish.
(b) (Pay All Taxes): The Licensee and the Casino Manager
will duly and punctually pay all Taxes now or in the
future charged, chargeable or payable by them.
(c) (Returns and Receipts): The Licensee and the Casino
Manager will immediately on being required to do so
by the Authority, provide the Authority with a copy
of all the returns, assessments for Taxes and
receipts for the payment of Taxes which it lodges
with and receives from any government authority.
<PAGE>
56.
SCHEDULE 5
Covenants and Warranties by Licensee (General)
1. Corporate Structure
(a) (Disposal of Shares held by Close Associates): Where
so required by the Authority, the Licensee will, in
accordance with the procedures set out in its
articles of association, enforce the disposal of
shares in itself held by any person who, in the
opinion of the Authority, is a close associate of
the Licensee within the meaning of section 13 of the
Act and is not a suitable person to be concerned in
or associated with the operation or management of a
casino having regard to whether:
(i) the person is of good repute, having regard
to character, honesty and integrity; or
(ii) the person has any business association with
a person, body or association who, in the
opinion of the Authority, is not of good
repute having regard to character, honesty
and integrity; or
(iii) each director, partner, trustee, executive
officer and secretary and any other officer
or person determined by the Authority to be
associated or connected with the ownership,
administration or management of the
operations or business of the person is a
suitable person to act in that capacity.
(b) (Disposal of Shares): Where so required by the
Authority, the Licensee will, in accordance with the
procedures set out in its Articles of Association,
enforce the disposal of shares held in it by any
person other than SHC Holdings, where such person
acquired those shares without the prior written
consent of the Authority.
(c) (Amendment of Constituent Documents): The Licensee
will not amend its Memorandum and Articles of
Association without the prior written approval of
the Authority.
(d) (Issues and Transfers of Shares): Within 14 days of
the end of each month after the date of this Deed,
the Licensee will provide to the Authority details
of all shares issued by the Licensee or transfers of
shares registered by the Licensee during the
previous month.
(e) (Disclosure of Beneficial Interest): If so requested
by the Authority, the Licensee will procure and
supply to the Authority a statutory declaration by
any person registered as the holder of any shares in
the Licensee setting out the name and address of any
person entitled to the same and full particulars of
that entitlement;
(f) Not used
<PAGE>
57.
(g) (Subsidiaries): The Licensee will not, without the
prior written approval of the Authority, establish
or acquire a subsidiary (as that term is defined in
the Corporations Law) unless it relates to a
business incidental to or complementary with the
businesses contemplated by or authorised under this
Deed and the Licence.
(h) (Business): The Licensee will not, without the prior
written approval of the Authority, carry on or
conduct any business other than the businesses
contemplated by or authorised under this Deed and
the Licence or any business incidental to or
complementary with those businesses.
(i) (Reports to Members etc.): The Licensee will deliver
to the Authority, at the time of their issue, a copy
of all reports, accounts, notices and circulars
issued by the Licensee to any of its members, to the
Australian Stock Exchange Limited or any of its
subsidiaries, to any other stock exchange or to the
Australian Securities Commission.
(j) (Change of name): The Licensee will not change its
corporate or business name without the prior written
approval of the Authority.
(k) (Change of financial year): The Licensee will not
change the date of commencement of its financial
year without the prior written approval of the
Authority.
(l) Not used
(m) (Interpretation): For the purposes of paragraphs
(a)-(l) above:
(i) "share" or "shares" includes, as the context
requires, any other class of voting security
(as defined in section 92 of the Corporations
Law) issued by the Licensee;
(ii) a reference to a person being entitled to
shares has the same meaning as a reference in
Part 6.7 of the Corporations Law to a person
being entitled to voting shares in a company,
and that person's entitlement will be
calculated in the manner prescribed for
calculation of substantial shareholdings in
Part 6.7 of the Corporations Law as if that
Part applied;
(iii) no person shall be entitled to any shares by
reason solely of that person being a member
or a shareholder of a Founding Shareholder.
2. Not used
3. Employees
(a) The Licensee will ensure that the Casino Complex is
at all times adequately staffed by sufficient
numbers of employees licensed under the Act and,
insofar as an employer is able to control and
discipline staff, will ensure that such employees
comply with the Act, the regulations made thereunder
and any conditions upon which any employee's licence
is granted.
<PAGE>
58.
(b) Each of the Licensee and the Casino Manager covenant
and undertake that it will not execute any
employment contract or any contract for services
which is inconsistent with the Act, and in
particular, either of section 47(6) or section 61(3)
of the Act.
(c) Each of the Licensee and the Casino shall provide
certified copies of any employment contract or any
contract for services which is requested by the
Authority.
4. Intellectual Property
The Licensee will maintain and renew all its present and
future trade marks and other intellectual property.
<PAGE>
59.
SCHEDULE 6
Not used
<PAGE>
60.
SCHEDULE 7
Covenants and Warranties by SHC Holdings
1. (5% Cap): Except in the case of the Founding Shareholders,
SHC Holdings will not without the prior written consent of
the Authority knowingly permit a person, or, upon becoming
aware of a person being entitled, allow a person to
continue, to be entitled to a number of shares in SHC
Holdings which exceeds 5% of the total number of shares in
SHC Holdings on issue at any time.
2. (Institutional Investors Cap): SHC Holdings will not
without the prior written consent of the Authority
knowingly permit any Institutional Investor, or upon
becoming aware of an Institutional Investor being
entitled, allow that Institutional Investor to continue,
to be entitled to a number of shares in SHC Holdings which
exceeds 10% of the total number of shares in SHC Holdings
on issue at any time.
3. (Disposals by SHC Holdings): SHC Holdings will not dispose
of any of its interest in any shares in the Licensee or
any of its interest in any shares in SHC Properties
without the prior written consent of the Authority, or
except as permitted by the Continuity and Co-operation
Agreement.
4. (Disposal of Shares held by Close Associates): Where so
required by the Authority, SHC Holdings will, in
accordance with the procedures set out in its Articles of
Association, enforce the disposal of shares in itself held
by any person who, in the opinion of the Authority, is a
close associate of the Licensee within the meaning of
section 13 of the Act and is not a suitable person to be
concerned in or associated with the operation or
management of a casino having regard to whether:
(i) the person is of good repute, having regard to
character, honesty and integrity; or
(ii) the person has any business association with a
person, body or association who, in the opinion of
the Authority, is not of good repute having regard
to character, honesty and integrity; or
(iii) each director, partner, trustee, executive officer
and secretary and any other officer or person
determined by the Authority to be associated or
connected with the ownership, administration or
management of the operations or business of the
person is a suitable person to act in that capacity;
5. (Disposal of Excess Shares): Where so required by the
Authority, SHC Holdings will, in accordance with the
procedures set out in its Articles of Association, enforce
the disposal of shares in itself held by any person which
exceed the number of shares which that person is permitted
to be entitled to under paragraphs 1 and 2 above.
<PAGE>
61.
6. (Authority to approve Directors): SHC Holdings will obtain
the prior written approval of the Authority to any
appointment of a director or alternate director of SHC
Holdings.
7. (Authority can remove Directors): SHC Holdings will
procure the vacation from office of any director or
alternate director of SHC Holdings in accordance with any
direction to that effect by the Authority.
8. (Amendment of Constituent Documents): SHC Holdings will
not amend its Memorandum and Articles of Association
without the prior written approval of the Authority.
9. (Authority to approve of Auditor): No person will be
appointed as auditor of SHC Holdings unless that person's
appointment as auditor has first been approved in writing
by the Authority.
10. (Issues and Transfers of Shares): SHC Holdings will
provide to the Authority within 14 days of the end of each
month details of all shares issued by SHC Holdings or
share transfers registered by SHC Holdings during the
previous month.
11. (Disclosure of Beneficial Interests): If so requested by
the Authority, SHC Holdings will procure and supply to the
Authority a statutory declaration by any person registered
as the holder of any shares in SHC Holdings setting out
the name and address of any person entitled to same and
full particulars of that entitlement.
12. Not used
13. (Subsidiaries): SHC Holdings will not, without the prior
written approval of the Authority, establish or acquire a
subsidiary (as that term is defined in the Corporations
Law) (other than the Licensee and SHC Properties) unless
it relates to a business incidental to or complementary
with the businesses contemplated by or authorised under
this Deed.
14. (Business): SHC Holdings will not, without the prior
written approval of the Authority, carry on or conduct any
business other than the businesses contemplated by or
authorised under this Deed or any business incidental to
or complementary with those businesses.
15. (Reports to Members etc.): SHC Holdings will deliver to
the Authority, at the time of their issue, a copy of all
reports, accounts, notices and circulars issued by SHC
Holdings to any of its members, to the Australian Stock
Exchange Limited or any of its subsidiaries, to any other
stock exchange or to the Australian Securities Commission.
16. (Change of name): SHC Holdings will not change its
corporate or business name without the prior written
approval of the Authority.
<PAGE>
62.
17. (Change of financial year): SHC Holdings will not change
the date of commencement of its financial year without the
prior written approval of the Authority.
18. (financial ratios) : At all times during the term of the
Facility Agreement (as that term is defined in the
Compliance Deed) (facility Agreement.) and for the
duration of any other secured external indebtedness of SHC
Holdings, SHC Holdings shall ensure that the ratios
referred to in clause 14.5(c) and 14.5(d) of the Facility
Agreement are maintained in compliance with the levels set
out in those clauses.
19. (Founding Shareholders' Shareholdings): The total number
of shares and other classes of voting securities as
defined in section 92 of the Corporations Law (.Shares.)
held by the Founding Shareholders at any time until the
completion of the Casino Complex at the Permanent Site
will be:
(a) in the case of LPPL, 25,000,000 ordinary shares of
$1.00 each and options over unissued ordinary shares
equivalent to 7% of the fully diluted total issued
capital of SHC Holdings; and
(b) in the case of SBA, 135,000,000 ordinary shares of
$1.00 each and options over unissued ordinary shares
equivalent to 7% of the fully diluted total issued
capital of SHC Holdings.
20. (Issues of New Shares): Except for:
(i) Shares or options in SHC Holdings issued to
employees of SHC Holdings or any of its permitted
subsidiaries (not exceeding 5 % of the fully diluted
total issued capital of SHC Holdings or any of its
permitted subsidiaries);
(ii) Options to be issued to the Founding Shareholders
under the Founding Shareholders Subscription
Agreement and not exceeding 14% of the fully diluted
total issued capital of SHC Holdings;
(iii) Unsecured debt securities issued in the ordinary
course of business of SHC Holdings which do not
materially increase the total indebtedness of SHC
Holdings;
(iv) Options issued to Commonwealth Bank of Australia
over that number of unissued ordinary shares in the
capital of the Company as is equivalent to 5% of
that number of preferred ordinary shares in the
capital of SHC Holdings to be issued to
Institutional Investors; and
(v) Options over unissued preferred ordinary shares
equivalent in total to 3% of the total issued
capital of SHC Holdings together with options over
unissued ordinary shares equivalent to 1% of the
total issued capital of SHC Holdings such options
having been issued to the said Nicholson Holdings
Limited and Marth Enterprises Limited. SHC Holdings
will not issue any Shares of a class other than the
Shares issued as at the date of this Deed without
the prior written approval of the Authority.
21. (Maximum Issues of Shares): Except for issues to holders
of Shares pro-rata to their
<PAGE>
63.
existing holding and issues of Shares to the Founding
Shareholders, SHC Holdings will not in any given 12 month
period issue, or announce the issue of, Shares totalling
more than 10% of the total number of Shares on issue at
the commencement of that 12 month period without the
prior written approval of the Authority.
22. (Interpretation): For the purpose of clauses 1-21 of this
Schedule 7 above:
(a) "share" or "shares" includes, as the context
requires, any other class of voting security (as
defined in section 92 of the Corporations Law)
issued by SHC Holdings;
(b) (i) a reference to a person being entitled
to shares has the same meaning as a reference
in Part 6.7 of the Corporations Law to a
person being entitled to voting shares in a
company, and that person's entitlement will
be calculated in the manner prescribed for
calculation of substantial shareholdings in
Part 6.7 of the Corporations Law as if that
Part applied;
(ii) no person shall be entitled to any shares by
reason solely of that person being a member
or shareholder of a Founding Shareholder;
(c) "dispose of" includes sell, transfer, assign,
alienate, surrender, dispose of, deposit, part with
possession of and enter into any agreement or
arrangement to do or allow any of these things.
<PAGE>
64.
SCHEDULE 8
Covenants and Warranties by SHC Properties
1. (Disposal of Shares held by Close Associates): Where so
required by the Authority, SHC Properties will, in
accordance with the procedures set out in its Articles of
Association, enforce the disposal of shares in itself held
by any person who, in the opinion of the Authority, is a
close associate of the Licensee within the meaning of
section 13 of the Act and is not a suitable person to be
concerned in or associated with the operation or
management of a casino having regard to whether:
(i) the person is of good repute, having regard to
character, honesty and integrity; or
(ii) the person has any business association with a
person, body or association who, in the opinion of
the Authority, is not of good repute having regard
to character, honesty and integrity; or
(iii) each director, partner, trustee, executive officer
and secretary and any other officer or person
determined by the Authority to be associated or
connected with the ownership, administration or
management of the operations or business of the
person is a suitable person to act in that capacity.
2. (Disposal of Excess Shares): Where so required by the
Authority, SHC Properties will, in accordance with the
procedures set out in its Articles of Association, enforce
the disposal of shares held in it by any person other than
SHC Holdings, where such person acquired those shares
without the prior written consent of the Authority.
3. (Authority to approve Directors): SHC Properties will
obtain the prior written approval of the Authority to any
appointment of a director or alternate director of that
SHC Properties.
4. (Authority can remove Directors): SHC Properties will
procure the vacation from office of any director or
alternate director of SHC Properties in accordance with
any direction to that effect by the Authority.
5. (Amendment of Constituent Documents): SHC Properties will
not amend its Memorandum and Articles of Association
without the prior written approval of the Authority.
6. (Authority to approve auditor): No person will be
appointed as auditor of SHC Properties unless that
person's appointment as auditor has first been approved in
writing by the Authority.
7. (Issues and Transfers of Shares): SHC Properties will
provide to the Authority within
<PAGE>
65.
14 days of the end of each month details of all shares
issued by SHC Properties or share transfers registered
by SHC Properties during the previous month.
8. (Disclosure of Beneficial Interests): If so requested by
the Authority, SHC Properties will procure and supply to
the Authority from a member of SHC Properties a statutory
declaration by any person registered as the holder of any
shares in SHC Properties setting out the name and address
of any person entitled to the same and full particulars of
that entitlement.
9. Not used
10. (Subsidiaries): SHC Properties will not, without the prior
written approval of the Authority, establish or acquire a
subsidiary (as that term is defined in the Corporations
Law) unless it relates to a business incidental to or
complementary with the businesses contemplated by or
authorised under this Deed.
11. (Business): SHC Properties will not, without the prior
written approval of the Authority, carry on or conduct any
business other than the businesses contemplated by or
authorised under this Deed or any business incidental to
or complementary with those businesses.
12. (Reports to Members etc.): SHC Properties will deliver to
the Authority, at the time of their issue, a copy of all
reports, accounts, notices and circulars issued by the
Licensee to any of its members, to the Australian Stock
Exchange Limited or any of its subsidiaries, to any other
stock exchange, to the Australian Securities Commission.
13. (Change of name): SHC Properties will not change its
corporate or business name without the prior written
approval of the Authority.
14. (Change of financial year): SHC Properties will not change
the date of commencement of its financial year without the
prior written approval of the Authority.
15. Not used
16. (Interpretation): For the purposes of clause 1-15 of this
Schedule 8 above:
(a) "share" or "shares" includes, as the context
requires, any other class of voting security (as
defined in section 92 of the Corporations Law)
issued by an SHC Properties; and
(b) (i) a reference to a person being entitled
to shares has the same meaning as a
reference in Part 6.7 of the Corporations Law
to a person being entitled to voting shares
in a company, and that person's entitlement
will be calculated in the manner prescribed
for calculation of substantial shareholdings
in Part 6.7 of the Corporations Law as if
that Part applied;
<PAGE>
66.
(ii) no person shall be entitled to any shares by
reason solely of that person being a member
or shareholder of a Founding Shareholder;
(c) "dispose of" includes sell, transfer, assign,
alienate, surrender, dispose of, deposit, part with
possession of and enter into any agreement or
arrangement to do or allow any of these things.
<PAGE>
67.
SCHEDULE 9
Covenants and Warranties by the Casino Manager
1. (5% Cap): Except in the case of the Founding Shareholders,
the Casino Manager will not without the prior written
consent of the Authority knowingly permit a person, or,
upon becoming aware of a person being entitled, allow a
person to continue, to be entitled to a number of shares
in the Casino Manager which exceeds 5 % of the total
number of shares in the Casino Manager on issue at any
time.
2. (Disposal of Shares held by Close Associates): Where so
required by the Authority, the Casino Manager will, in
accordance with the procedures set out in its Articles of
Association, enforce the disposal of shares in itself held
by any person who, in the opinion of the Authority, is a
close associate of the Licensee within the meaning of
section 13 of the Act and is not a suitable person to be
concerned in or associated with the operation or
management of a casino having regard to whether:
(i) the person is of good repute, having regard to
character, honesty and integrity; or
(ii) the person has any business association with a
person, body or association who, in the opinion of
the Authority, is not of good repute having regard
to character, honesty and integrity; or
(iii) each director, partner, trustee, executive officer
and secretary and any other officer or person
determined by the Authority to be associated or
connected with the ownership, administration or
management of the operations or business of the
person is a suitable person to act in that capacity;
3. (Disposal of Excess Shares): Where so required by the
Authority, the Casino Manager will, in accordance with
the procedures set out in its Articles of Association,
enforce the disposal of shares in itself held by any
person which exceed the number of shares which that person
is permitted to be entitled to under paragraph I above.
4. (Amendment of Constituent Documents): The Casino Manager
will not amend its Memorandum and Articles of Association
without the prior written approval of the Authority.
5. (Issues and Transfers of Shares): The Casino Manager will
provide to the Authority within 14 days of the end of
each month details of all shares issued by the Casino
Manager or share transfers registered by the Casino
Manager during the previous month.
<PAGE>
68.
6. (Disclosure of Beneficial Interests): If so requested by
the Authority, the Casino Manager will procure and supply
to the Authority a statutory declaration by any person
registered as the holder of any shares in the Casino
Manager setting out the name and address of any person
entitled to same and full particulars of that entitlement.
7. Not used
8. (Subsidiaries): The Casino Manager will not, without the
prior written approval of the Authority, establish or
acquire a subsidiary (as that term is defined in the
Corporations Law) unless it relates to a business
incidental to or complementary with the businesses
contemplated by or authorised under this Deed.
9. (Business): The Casino Manager will not, without the prior
written approval of the Authority, carry on or conduct any
business other than the businesses contemplated by or
authorised under this Deed or any business incidental to
or complementary with those businesses.
10. (Reports to Members etc.): The Casino Manager will deliver
to the Authority, at the time of their issue, a copy of
all reports, accounts, notices and circulars issued by the
Casino Manager to any of its members, to the Australian
Stock Exchange Limited or any of its subsidiaries, to any
other stock exchange or to the Australian Securities
Commission.
11. (Change of name): The Casino Manager will not change its
corporate or business name without the prior written
approval of the Authority.
12. (Change of financial year): The Casino Manager will not
change the date of commencement of its financial year
without the prior written approval of the Authority.
13. (Interpretation): For the purpose of clauses 1-12 of this
Schedule 9 above:
(a) "share" or "shares" includes, as the context
requires, any other class of voting security (as
defined in section 92 of the Corporations Law)
issued by the Casino Manager;
(b) (i) a reference to a person being entitled
to shares has the same meaning as a reference
in Part 6.7 of the Corporations Law to a
person being entitled to voting shares in a
company, and that person's entitlement will
be calculated in the manner prescribed for
calculation of substantial shareholdings in
Part 6.7 of the Corporations Law as if that
Part applied;
(ii) no person shall be entitled to any shares by
reason solely of that person being a member
or shareholder of
<PAGE>
69.
a Founding Shareholder;
(c) "dispose of" includes sell, transfer, assign,
alienate, surrender, dispose of, deposit, part with
possession of and enter into any agreement or
arrangement to do or allow any of these things.
<PAGE>
70.
SCHEDULE 10
No Competition Restraint
(Clause 11.1)
PART A
1. Be entitled to any shares (which includes any other class
of voting security as defined in section 92 of the
Corporations Law) in any person who is, or has an interest
in (including by way of any agreement, arrangement or
understanding), a licensee, operator, or manager of a
casino in any state or territory of the Commonwealth of
Australia other than the State of New South Wales. For the
purposes of this clause, a reference to a person being
entitled to shares has the same meaning as a reference in
Part 6.7 of the Corporations Law to being entitled to
voting shares in a company, and an entitlement will be
calculated in the manner prescribed for calculation of
substantial shareholdings in Part 6.7 of the Corporations
Law as if that Part applied.
2. Have any financial or economic interest in any person who
is, or has an interest in (including by way of any
agreement, arrangement or understanding), a licensee,
operator or manager of a casino in any state or territory
of the Commonwealth of Australia other than the State of
New South Wales.
3. Undertake, participate or be involved in (including by way
of any agreement arrangement or understanding) the
management or operation of a casino in any state or
territory of the Commonwealth of Australia other than the
State of New South Wales.
PART B
For the duration of the Exclusivity Period (as that term is
defined in the Casino Exclusivity Agreement, being the
agreement so entitled between the Authority and the
Licensee entered into on or around the date of this Deed).
<PAGE>
71.
SCHEDULE 11
Objective Standards
(Clause 12.1(b)(ii))
Satisfactory scoring from an appropriately designed and
implemented consumer service audit conducted at least 12 monthly
at the expense of the Licensee.
It is envisaged that the service audit shall embrace every
element of the operations including but not limited to gaming,
cashiering, security, visitor and player relations. Further the
service audit should be designed jointly by the Licensee and the
Casino Manager and a recognised and agreed casino operations
expert from a major consulting, market research or accounting
firm (whichever is the most appropriate in the circumstances) and
the audit should provide a numeric scoring system such that the
report by the expert can identify to the Authority that the
operations meet or fail to meet the standards and that the areas
of failure can be identified for appropriate and timely remedy by
the Licensee and the Casino Manager.
<PAGE>
72.
EXECUTED as a deed.
THE COMMON SEAL of )
NEW SOUTH WALES CASINO ) .........................
CONTROL AUTHORITY was duly affixed ) Lindsay le Compte
hereto in accordance with section ) Chief Executive,
152 of the Casino Control Act ) New South Wales Casino
1992 (NSW) by and in the ) Control Authority
presence of the Chief Executive: )
SIGNED SEALED AND DELIVERED for )
and on behalf of ) .........................
SYDNEY HARBOUR CASINO PTY. ) (Signature)
LIMITED, ACN 060 510 410 by )
its Attorney under a Power of )
Attorney dated and registered Book )
No. and who declares that he )
has not received any notice of the )
revocation of such Power of )
Attorney in the presence of: )
....................................
(Signature of Witness)
....................................
(Name of Witness in Full)
<PAGE>
73.
SIGNED SEALED AND DELIVERED for )
and on behalf of )..........................
SYDNEY HARBOUR CASINO ) (Signature)
PROPERTIES PTY. LIMITED, ACN 050 )
045 120 by its Attorney )
under a Power of Attorney dated )
and registered Book No. and )
who declares that he has not )
received any notice of the )
revocation of such Power of )
Attorney in the presence of: )
..................................
(Signature of Witness)
..................................
(Name of Witness in Full)
SIGNED SEALED AND DELIVERED for )
and on behalf of ) ........................
SYDNEY HARBOUR CASINO ) (Signature)
HOLDINGS LIMITED, ACN 064 054 431)
by its Attorney under a )
Power of Attorney dated and )
registered Book No. and who )
declares that he has not )
received any notice of the )
revocation of such Power of )
Attorney in the presence of: )
.................................
(Signature of Witness)
.................................
(Name of Witness in Full)
<PAGE>
74.
SIGNED SEALED AND DELIVERED for )
and on behalf of )....................
SHOWBOAT AUSTRALIA PTY. ) (Signature)
LIMITED, ACN 061 299 625 by )
its Attorney under a Power of )
Attorney dated and registered )
Book No. and who declares )
that he has not received any )
notice of the revocation of )
such Power of Attorney in the )
presence of: )
.................................
(Signature of Witness)
.................................
(Name of Witness in Full)
SIGNED SEALED AND DELIVERED for )
and on behalf of ).....................
SYDNEY CASINO MANAGEMENT PTY. ) (Signature)
LIMITED, ACN 060 462 053 by )
its Attorney under a Power of )
Attorney dated and registered )
Book No. and who declares that )
he has not received any notice )
of the revocation of such Power )
of Attorney in the presence of: )
.................................
(Signature of Witness)
.................................
(Name of Witness in Full)
<PAGE>
75.
SIGNED SEALED AND DELIVERED for )
and on behalf of )...........................
LEIGHTON PROPERTIES PTY. ) (Signature)
LIMITED, ACN 001 046 395 by )
its Attorney under a Power of )
Attorney dated and registered )
Book No. and who declares that )
he has not received any notice )
of the revocation of such Power )
of Attorney in the presence of: )
.................................
(Signature of Witness)
.................................
(Name of Witness in Full)
SIGNED SEALED AND DELIVERED for )
and on behalf of )..........................
SHOWBOAT OPERATING COMPANY by ) (Signature)
its Attorney under a Power )
of Attorney dated and registered)
Book No. and who declares )
that he has not received any )
notice of the revocation of )
such Power of Attorney in the )
presence of: )
.....................................................
(Signature of Witness)
.....................................................
(Name of Witness in Full)
<PAGE>
76.
LIST OF EXHIBITS
EXHIBIT 1 Administrative Services Agreement
EXHIBIT 2 Assignment Deed
EXHIBIT 3 Casino Complex Management Agreement
EXHIBIT 4 COA Lease Terms
EXHIBIT 5 Development and Licensibility Agreement
EXHIBIT 6 Not used
EXHIBIT 7 Management Support Agreement
EXHIBIT 8 Not used
EXHIBIT 9 Occupation Licence Agreement (Temporary)
EXHIBIT 10 Partnership Agreement
<PAGE>
SYDNEY HARBOUR CASINO PROPERTIES PTY LIMITED
(ACN 050 045 120)
AND
SYDNEY HARBOUR CASINO PTY LIMITED
(ACN 060 510 410)
("Owner")
SHOWBOAT AUSTRALIA PTY LIMITED (ACN 061 299 625) and
LEIGHTON PROPERTIES PTY LIMITED (ACN 001 046 395)
("THE SHOWBOAT LEIGHTON PARTNERSHIP")
SYDNEY CASINO MANAGEMENT PTY LIMITED
(ACN060 462 053)
("Casino Manager")
CASINO COMPLEX MANAGEMENT AGREEMENT
NORTON SMITH & CO
Solicitors
20 Martin Place
SYDNEY NSW 2000
DX 119 SYDNEY
Ph.: 930 7500
Ref: PMD/940477
<PAGE>
Table of Contents
No. Title Page
1 Definitions and Interpretation 2
2 Construction of Complex and Installations by Owner 12
3 Pre-Opening Services by Casino Manager 12
4 Opening Dates 14
5 Operating Term of Agreement 15
6 Management of the Complex during Operating Term 15
7 Casino Manager to Act Solely as Agent of Owner 18
8 Owner to bear all Operating Expenses 19
9 Marketing 20
10 Working Capital and Bank Accounts 20
11 Books, Records and Statements 21
12 Casino Manager's Management Fee 23
13 Reserve for Replacements, Substitutions and Additions
to Furniture and Equipment and Non-Structural
Improvements 24
14 Repairs and Maintenance and Capital Improvements 25
15 Casino 26
16 Insurance 27
17 Owner to pay Real and Personal Property Taxes 30
18 Name 31
19 Damage or Destruction - Condemnation 31
20 Title to Complex 33
21 Termination 34
<PAGE>
22 Notices 36
23 Governing Law 38
24 Consent 38
25 Owner's Right of Sale 38
26 Assignment 40
27 Liability of Owner and Casino Manager 41
28 Partial Invalidity 42
29 Special Conditions 42
30 Currency 43
31 Owner's Sole Business 45
32 Miscellaneous 45
33 Entire Agreement 47
34 Dispute Resolution 47
<PAGE>
THIS CASINO COMPLEX MANAGEMENT AGREEMENT is dated 21/4/1994.
BETWEEN SYDNEY HARBOUR CASINO PROPERTIES PTY LIMITED (ACN 050
045 120) a company incorporated in the State of New
South Wales and having its registered office at Level
3, 472 Pacific Highway, St Leonards New South Wales
("SHCP"); and SYDNEY HARBOUR CASINO PTY LIMITED (ACN
060 510 410) a company incorporated in the State of
New South Wales and having its registered office at
Level 3, 472 Pacific Highway, St Leonards, New South
Wales ("SHC")
(SHCP AND SHC COLLECTIVELY REFERRED TO AS "OWNER")
AND: SHOWBOAT AUSTRALIA PTY LIMITED (ACN 061 299 625)
a company incorporated in the State of New South Wales
and having its registered office at Level 3, 472
Pacific Highway, St Leonards, New South Wales ("SAL");
and LEIGHTON PROPERTIES PTY LIMITED (ACN 001 046 395)
a company incorporated in the State of New South
Wales, and having its registered office at Level 3,
472 Pacific Highway, St. Leonards, New South Wales
("Leighton")
(THE SHOWBOAT LEIGHTON PARTNERSHIP)
AND SYDNEY CASINO MANAGEMENT PTY LIMITED (ACN 060 462
053) a company incorporated in the State of New
South Wales, having its registered office at Level 3,
472 Pacific Highway, St Leonards, New South Wales,
Sydney ("Casino Manager")
RECITALS:
A. SHCP is or will be entitled on the First Opening Date to
be the sub-lessee of the site of the Temporary Casino and
on the Second Opening Date to be the lessee of the
Permanent Site on which SHCP is constructing an
international standard casino complex in accordance with
the plans and specifications forming part of the
Transaction Documents, which complex is to be known as
Sydney Harbour Casino.
B. SHC is or will be entitled on the dates referred to in
Recital A to be the licensee of the sites of the Temporary
Casino and the Permanent Casino pursuant to license
agreements with SHCP and on those same dates will be the
licensee under the License.
C. SHCP and SHC are both wholly owned subsidiaries of Sydney
Harbour Casino Holdings Limited ACN 064 054 431 ("SHC
Holdings").
D. SAL is a subsidiary of Showboat Inc. which is experienced
in the planning, decorating, furnishing, equipping and
promoting, as well as the ownership, management and
operation, through subsidiary companies, of casinos and
associated hotels and resorts in the United States of
America.
E. Leighton is a wholly owned subsidiary of Leighton Holdings
Limited ACN 004 482 982("Leighton Holdings").
<PAGE>
-2-
F. SAL has entered into a partnership agreement with Leighton
("the Showboat Leighton Partnership") whereunder SAL and
Leighton are to provide services to Owner in relation to
the Casino Complex through the nominee company of the
Showboat Leighton Partnership.
G. The Casino Manager is the nominee company of the Showboat
Leighton Partnership.
H. Owner wants the Showboat Leighton Partnership through the
Casino Manager to provide and the Showboat Leighton
Partnership wants to provide services in relation to
planning, decorating, furnishing, managing and equipping
of the Casino Complex through the Casino Manager
I. Owner wishes to obtain the benefits of Showboat's and
Leighton's expertise in the foregoing areas by turning
over to the Showboat Leighton Partnership through their
nominee, the Casino Manager, control and discretion in the
operation, direction, management and supervision of the
Casino Complex on terms that will reserve to Owner such
powers and rights as shall enable it to fully comply with
its obligations under the Act and on terms that Owner will
have the obligations and powers with respect to such
operation, direction management and supervision, as herein
provided, and the Showboat Leighton Partnership through
the Casino Manager for a fee, agrees to assume such
control and discretion.
OPERATIVE PROVISIONS:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement including the Recitals and any Schedules
unless the subject or context otherwise indicates the
following terms shall have the meanings respectively
assigned to them:
"ACCOUNTING PERIOD" means a month or period of not less
than two nor more than seven full weeks as determined by
Casino Manager in order to comply with the terms of the
Licence and all Transaction Documents.
"ACT" means the Casino Control Act 1992 (New South Wales).
"AGENCY ACCOUNTS" means the Casino Agency Accounts in the
name of SHC.
"AGREEMENT" means this Casino Complex Management Agreement
of even date entered into by the Owner, the Showboat
Leighton Partnership and Casino Manager.
"ASSOCIATE" has the meaning given in Division 2 of Part
1.2 of the Australian Corporations Law.
"AUTHORITY" means the New South Wales Casino Control
Authority.
<PAGE>
-3-
"BUILDING AND APPURTENANCES" means in relation to:
(a) the Temporary Casino, the casino and other facilities
on the Temporary Premises; and
(b) in relation to the Casino Complex, the Casino, food and
beverage outlets, entertainment facilities and hotel on
the Permanent Site;
together with, in each instance, all installations
including, without limitation, heating, lighting, sanitary
equipment, air-conditioning, laundry, refrigerating,
built-in kitchen equipment and elevators and escalators
where relevant.
"BUSINESS DAY" means any day other than Saturday, Sunday
or public holiday recognised in Sydney and generally
throughout the State of New South Wales.
"CASINO" has the meaning given to that term in the Act.
"CASINO AGENCY ACCOUNTS" means the accounts opened in the
name of the Owner by the bank selected by Owner and
approved by Casino Manager referred to in Clause 10.
"CASINO BANKROLL" shall mean an amount reasonably
determined by Casino Manager as funding required to
bankroll Casino Gaming Activities with such amount being
established by the Casino Manager in consultation with the
Owner and adjusted periodically as necessary. In no event
shall such Casino Bankroll include amounts necessary to
cover Operating Expenses or Working Capital. Casino
Bankroll shall include the funds located on the casino
tables, in the gaming devices, cages, vault, counting
rooms, or in any other location in the Casino where funds
may be found and funds in a bank account identified by
Owner for any additional amount required by the Act or
such other amount as is reasonably determined by Casino
Manager.
"CASINO COMPLEX" means the Casino and all facilities
ancillary to or connected with the Casino including a
hotel, restaurants, retail facilities, entertainment
facilities, carparks, residential and office
accommodation, staff facilities, staff car parking, coach
storage facilities, open space areas erected on the
Permanent Site and unless otherwise stated includes the
Temporary Casino erected on the Temporary Site and for the
purposes of this Agreement comprises the Permanent Site
(and whilst relevant, the Temporary Site ) the Building
and Appurtenances, all Furniture and Equipment and all
Operating Equipment and Operating Supplies.
"CASINO COMPLEX GROSS OPERATING PROFIT" means the excess
of Total Revenue over Operating Expenses after deducting
Casino Operating Expenses from Operating Expenses.
"CASINO GAMING ACTIVITIES" shall include but not be
limited to table games, slot machines, video machines,
Keno and other forms of gaming managed by Casino Manager
in the Casino.
<PAGE>
-4-
"CASINO GROSS OPERATING PROFIT" means the excess of Casino
Revenue over Casino Operating Expenses.
"CASINO MANAGER" means Sydney Casino Management Pty
Limited ACN 060 462 053 in the capacity of nominee of the
Showboat Leighton Partnership.
"CASINO OPERATING EXPENSES" means:
(a) All Operating Expenses directly attributable to
maintaining conducting and supervising the operation
of the Casino including the community benefits levy,
state casino duties, such direct expenses for Casinos
as are included in the Uniform System, the management
fee provided for in Clause 12.1(a) but excluding the
management fee provided for in Clause 12.1(b).
Wherever possible and practical, all services and
utilities for the Casino shall be separately metered
or invoiced and the charges for such services and
utilities shall be paid separately. When such
services and utilities are so inter-related that
separation in this way is not possible, the costs
shall be accumulated and apportioned in accordance
with the following paragraph.
(b) Such proportion of those Operating Expenses which are
so inter-related that specific allocation between the
Casino and the remainder of the Complex is
impracticable including without limitation those
costs specified in the Uniform System described as
Administrative and General, Property Operation and
Maintenance, Marketing (including complimentaries and
other charges to the Casino from the Casino Complex)
and Energy as shall be apportioned between Operating
Expenses and Casino Operating Expenses which in the
case of marketing expenses shall be in the proportion
which Total Revenue bears to Casino Revenue and which
in the case of all other expenses referred to in this
paragraph (b) shall be the fraction in which the
numerator shall be the square metres of the area
where Casino Gaming Activities are carried on
together with such further areas as Casino Manager
and Owner agree and the denominator shall be the
square metres of the Casino Complex.
"CASINO REVENUE" means the pretax total of all sums
including cheques and other negotiable instruments,
whether collected or not, received from the conduct or
playing of games within the Casino, less the total of all
sums paid out as winnings in respect of such conduct or
playing of games.
"CHIPS" means any tokens used or capable of being used in
the Casino in the conduct of gaming in the place of money
and approved for the purpose under the Act.
"CLAUSE" means a clause of this Agreement.
"COA" means the Casino Operations Agreement of even date
between the Authority, SHC, SHCP, SHC Holdings, SAL,
Leighton, Casino Manager and Showboat Operating Company.
<PAGE>
-5-
"COMPLIANCE DEED" means the Deed of even date between the
Authority, SHC, SHCP, SHC Holdings, SAL, Leighton,
Leighton Holdings, SCM and Showboat Operating Company.
"CPI" means the annual percentage increase to the end of
the March quarter of the Fiscal Year at the end of which
the calculation is being made from the end of the March
quarter for the previous Fiscal Year determined by the All
Groups Consumer Price Index applicable to the city of
Sydney as published by the Australian Bureau of Statistics
and in the event of such Index being discontinued or
abolished then such index as the Australian Bureau of
Statistics or its successors shall substitute therefor and
if no index shall be substituted therefor then any index
kept by the Commonwealth or New South Wales State
Governments as the Casino Manager and Owner shall agree.
"FIRST OPENING DATE" has the meaning given to it in Clause
4.
"FISCAL YEAR" means the financial year beginning on 1 July
in any year and ending on the next occurring 30 June
except that the first Fiscal Year shall be that period
commencing on the First Opening Date and ending the next
occurring 30 June and the last Fiscal Year shall be that
period beginning on 1 July of the Fiscal Year in which
this Agreement is terminated and ending on the date on
which this Agreement is terminated. The words "Full Fiscal
Year" as used in this Agreement refer to any Fiscal Year
containing not less than 365 days.
"FURNITURE AND EQUIPMENT" means all necessary furniture,
furnishings, wall coverings, gaming tables, gaming
machines, surveillance equipment, computer equipment,
electronic display boards and signage and all ancillary
gaming and electronic equipment and all other Casino
Complex equipment which shall include all equipment
required for the operation of the casino surveillance and
security, kitchens, baths, laundries and dry cleaning
facilities, office equipment, dining room wagons, material
handling equipment, cleaning and engineering equipment and
vehicles.
"INDEPENDENT CHARTERED ACCOUNTANT" means the firm of
Arthur Andersen or such other qualified accounting firm as
approved by Owner and Casino Manager.
"INTEREST" means the rate which is 2% above the indicator
lending rate on corporate overdrafts exceeding $100,000
from time to time charged by the Commonwealth Bank of
Australia.
"LEASES" means the lease granted or to be granted to SHCP
over the Permanent Site and whilst relevant the sub-lease
over the Temporary Site.
"LICENCE" means the licence granted by the Authority to
SHC to operate the Casino pursuant to Section 18(1) of the
Act.
"MANAGEMENT FEE" has the meaning given to it in Clause 12.
<PAGE>
-6-
"NON-STRUCTURAL IMPROVEMENTS" means minor repairs
replacements and improvements to the Building and
Appurtenances which are not of a structural nature.
"OPENING DATE" means either or both of the First Opening
Date and the Second Opening Date as the context requires.
"OPERATING EQUIPMENT" means all necessary gaming
consumables, gaming cloths, chips, dice, chinaware,
glassware, linens, silverware, uniforms, utensils and
other items of a similar nature including such items
bearing such name or identifying characteristics as Casino
Manager shall consider appropriate.
"OPERATING EXPENSES" means all costs and expenses of
maintaining, conducting and supervising the operation of
the Casino Complex incurred by Casino Manager directly or
at its request pursuant to this Agreement or as otherwise
specifically provided herein, which are properly
attributable to the period under consideration under
Casino Manager's system of accounting, including without
limitation:
(a) The cost of all food and beverages sold or consumed
and of all Operating Equipment and Operating Supplies
placed in use including rental of telephone
equipment, telex equipment and hire of like
communications equipment where such equipment is not
available to Owner for purchase and its installation
has been approved by Casino Manager. For purposes of
this provision, Operating Equipment and Operating
Supplies shall be considered to have been placed in
use when they are transferred from the storerooms of
the Casino Complex to the appropriate operating
departments.
(b) Salaries and wages of Casino Complex personnel,
including costs of payroll taxes and direct
reasonable employee benefits (which benefits may
include, without limitation, a pension plan, medical
insurance, life insurance, an executive bonus program
and home leave transportation expenses), any amount
accrued or paid for severance termination pay, long
service leave or superannuation payments related to
the period of employment at the Casino Complex, and
the reasonable costs of moving executive level Casino
Complex personnel (being those personnel who report
directly to the Managing Director and those personnel
in turn directly reporting to them), their families
and their belongings to the area in which the Casino
Complex is located at the commencement of their
employment at the Casino Complex and returning them
to their point of origin or next assignment to the
extent that such costs are not paid by another
employer (with costs limited to the cost of return to
point of origin) upon the conclusion of their
employment at the Casino Complex and all other
expenses not otherwise specifically referred to
herein which are referred to as Administrative and
General Expenses in the Uniform System. If the
General Casino Manager of the Casino Complex and
other Casino Complex executive personnel are on the
payroll of Casino Manager or any affiliated company,
the cost of their salaries, payroll taxes and
employee benefits shall be billed by such company to
and be reimbursed by Casino Manager monthly and such
reimbursement shall be an Operating Expense.
<PAGE>
-7-
Subject to Clause 7.2 the salaries or wages of other
employees or executives of Casino Manager, Showboat,
Leighton or any of their affiliated companies shall
in no event be an Operating Expense, but traveling
expenses incurred by them in connection with the
management of the Casino Complex shall be Operating
Expenses and such persons shall be entitled to free
room and board and the free use of all Casino Complex
facilities at such times as they visit the Casino
Complex in connection with the management thereof.
Notwithstanding the foregoing, if it becomes
necessary for a Showboat or Leighton employee or an
employee or executive of a company affiliated with
Showboat or Leighton to temporarily perform services
at the Casino Complex of a nature normally performed
by Casino Complex personnel, his salary (including
payroll taxes and employee benefits) as well his
traveling expenses will be Operating Expenses and he
will be entitled to free room, board and use of
Casino Complex facilities, while performing such
services.
(c) The cost of non-structural repairs to and maintenance
of the Casino Complex referred to in Clause 14.
(d) The cost of all other goods and services obtained by
Casino Manager in connection with its operation of
the Casino Complex including. without limitation,
heat and utilities office supplies and all services
performed by third parties.
(e) Insurance premiums for public or third party
liability insurance, and Workers' Compensation
Insurance or insurance required by similar employee
benefits acts (as opposed to premiums for property
damage insurance, business interruption insurance and
boiler and machinery insurance which are not to be
Operating Expenses) being the insurances referred to
in Clause 16.7(a) to (c).
(f) Casino licences including employee licence fees,
state or local fees and taxes, community benefit levy
and liquor licence fees (as provided for under the
COA and subject to section 89 of the Act), if any,
(as opposed to all duties assessments and any other
charges levied against the Casino Complex on its
contents which are not to be Operating Expenses).
(g) Legal fees and fees of any Independent Chartered
Accountant for services directly related to the
operation of the Casino Complex and its facilities
and fees for the audit of the accounts relating to
the Casino Complex.
(h) The costs and expenses of technical consultants and
specialised operational experts for specialised
services in connection with non-recurring work on
operational, functional, decorating, design or
construction problems and activities, including the
reasonable fees of Showboat or Leighton or any
Showboat or Leighton subsidiary or division.
(i) All expenses for advertising and marketing the Casino
Complex specified as Operating Expenses in Clause 9
and all expenses of sales promotion and public
relations activities.
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(j) All out-of-pocket expenses and disbursements
determined by the Independent Chartered Accountant to
have been reasonably, properly and specifically
incurred by Casino Manager, Showboat or any of their
affiliated or subsidiary companies pursuant to, in
the course of and directly related to, the management
and operation of the Casino Complex under this
Agreement. Without limiting the generality of the
foregoing, such charges may include all reasonable
travel, telephone telegram, radiogram, cablegram, air
express and other incidental expenses, but except as
herein otherwise expressly provided, shall not
include any of the regular expenses of the offices
maintained by Casino Manager, Showboat or any of
their affiliated or subsidiary companies other than
offices maintained at the Casino Complex for the
management of the Casino Complex.
(k) The management fee provided for in Clauses 12.1(a)
and (c) hereof
(l) Any other expenses expressly provided in this
agreement as being an Operating Expense.
Excluding except as otherwise provided in this Agreement:
(m) depreciation and amortization;
(n) interest on Owner's indebtedness and any rent payable
by Owner either in respect of the Temporary Premises
or the Permanent Site, the Building and
Appurtenances, the Furniture and Equipment, the
Operating Equipment, the Operating Supplies or any
part of any of the foregoing;
(o) taxes and insurance premiums which are stated to be
borne by the Owner under this Agreement; and
(p) the costs of any other things specified herein to be
done or provided at Owner's expense;
(q) the management fee provided for in Clauses 12.1(b)
and (d) hereof.
"OPERATING SUPPLIES" means playing cards, dice, chips, the
inventories of paper supplies, cleaning materials,
maintenance supplies, uniforms and similar consumable
items.
"OPERATING TERM" shall mean the operating term as provided
for in Clause 5.1 .
"PERMANENT SITE" has the same meaning as defined in the
Compliance Deed.
"PRE-OPENING EXPENSES" means all expenses incurred by SHC,
SAL, Casino Manager or by Showboat or Leighton or any
affiliated or subsidiary companies thereof in performing
Pre-Opening Services in connection with the opening of the
Casino Complex by Owner including without limitation
reasonable travel expenses (including the costs of moving
executive-level hotel personnel, their families and their
belongings and expenses of business entertainment, salary
(including pay roll taxes and costs of employee benefits)
of specialist and non-specialist executives
<PAGE>
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for time actually spent in the performance of Pre-Opening
Services (including travel time), the cost of pre-opening
advertising, promotion and publicity, the cost of suitable
ceremonies, the cost of obtaining all necessary licences
and permits which are the responsibility of Casino
Manager, including the fees of solicitors and other
consultants incident thereto, software licenses, small
capital items, office fitout costs, interim office
expenses including rent, outgoings, administration etc.,
the cost of training of staff and the fees payable for
participation in any third party reservation system as
indicated and agreed upon in the budget to be submitted by
the Casino Casino Manager to the Owner.
"PRE-OPENING SERVICES" means those services referred to in
Clauses3.1(a)-(g) inclusive and any other matters which
Clause 3 provides may be included within such description.
"PROJECT DOCUMENTS" means Project Documents as defined in
the Compliance Deed.
"RESERVE ACCOUNT" means the account in the name of SHC
additional to the Agency Account established for the
reserve of replacements, substitutions and additions to
Furniture and Equipment and Non-Structural Improvements
provided for in Clause 13.
"RESERVE FUND" means a cash fund created for the purpose
of making replacements, substitutions and additions to
Furniture and Equipment and Non-Structural Improvements
pursuant to the Clause 13.2.
"SECOND OPENING DATE" has the meaning given to it in
Clause 4.
"SHOWBOAT" means Showboat Inc a foreign corporation
incorporated in the state of Nevada in the United States
of America and having its principal office at 2800 Fremont
Street, Las Vegas, Nevada.
"STANDARDS" means such standards as are described in
Clause 12.1 of the COA.
"TEMPORARY CASINO" means the temporary Casino and other
facilities including car park constructed in accordance
with the requirements of the Authority and other relevant
agreements for use preceding completion of the Casino
Complex.
"TEMPORARY SITE" means the Temporary Site as defined in
the Compliance Deed.
"TOTAL REVENUE" means all income and proceeds of sales of
every kind (whether in cash or on credit) resulting from
the operation of the Casino Complex and all of the
facilities therein including without limitation,
(a) all income received from tenants, transient guests,
lessees, licensees and concessionaires (but not
including the gross receipts of such lessees,
licensees or concessionaires) and other persons
occupying space at the Casino Complex and/or
rendering services to Casino Complex guests (but
exclusive of all consideration received at the Casino
Complex for hotel
<PAGE>
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accommodation, goods and services to be provided at
other hotels, although arranged by, for, or on behalf
of, Casino Manager),
(b) all income from catering operations conducted outside
of the Casino Complex unless such operations are
licenced to a party other than the Casino Manager in
which case the licence fee received shall be
included,
(c) all revenues resulting from the operations of any car
park connected with the Casino Complex unless such
operations are licenced to a party other than the
Casino Manager in which case the licence fee received
shall be included,
(d) all subsidy payments, governmental allowances and
awards,
(e) any other form of incentive payments or awards from
any source whatsoever which are attributable to the
operation of the Casino Complex and
(f) the proceeds of use and occupancy insurance actually
received by Casino Manager or Owner with respect to
the operation of the Casino Complex (after deduction
from such insurance proceeds of all necessary
expenses incurred in the adjustment or collection
thereof),
after deducting any value added tax or betterment levy, or
bed tax payable to any government or statutory authority
but does not include Casino Revenue.
"TRANSACTION DOCUMENTS" has the same meaning as in the
Compliance Deed.
"UNIFORM SYSTEM" means the "Uniform System of Accounts for
Hotels" currently 8th Revised Edition 1985) as adopted by
the American Hotel and Motel Association of the United
States and Canada from time to time.
"WORKING CAPITAL" shall mean such amount in the Agency
Accounts and the Casino Bankroll as will be reasonably
sufficient to assure the timely payment of all current
liabilities of the Casino Complex, including the
operations of the Casino, during the term of this
Agreement, and to permit Casino Manager to perform its
management responsibilities and obligations hereunder,
with reasonable reserves for unanticipated contingencies
and for short term business fluctuations resulting from
monthly variations from the budget.
1.2 Interpretation
(a) In this agreement, unless the context otherwise
requires:
(1) headings and underlinings are for convenience
only and do not affect the interpretation of
this agreement;
(2) words importing the singular include the plural
and vice versa;
(3) words importing a gender include any gender;
<PAGE>
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(4) an expression importing a natural person
includes any company, partnership, joint
venture, association, corporation or other body
corporate and any governmental agency;
(5) a reference to any thing includes a part of that
thing;
(6) references to Clauses, parties, annexures,
exhibits and schedules are references to Clauses
of, and parties, annexures, exhibits and
schedules to, this agreement;
(7) a reference to any statute, regulation,
proclamation, ordinance or by-law includes all
statutes, regulations, proclamations, ordinances
or by-laws varying, consolidating or replacing
them, and a reference to a statute includes all
regulations, proclamations, ordinances and
by-laws issued under that statute;
(8) a reference to an agreement includes any
encumbrance, guarantee, undertaking, deed,
agreement or legally enforceable arrangement or
understanding whether or not in writing;
(9) a reference to an asset includes all property,
of any nature, as well and all rights, revenues
and benefits;
(10) a reference to a document includes any agreement
in writing, or notice, instrument or other
document of any kind;
(11) a reference to a document includes any permitted
amendment or supplement to or replacement or
novation of, that document;
(12) a reference to a party to any document includes
that party's successors and permitted assigns;
(13) where the day on or by which any thing is to be
done is not a Business Day, that thing must be
done on or by the preceding Business Day;
(14) a reference to the Owner shall mean and include
a reference to SHCP or SHC as the case may be
where to do otherwise would conflict with the
provisions of the Act, the Licence or the COA
but otherwise such reference shall mean and
include a reference to SHCP and SHC jointly and
severally.
(15) where there is a reference herein to a liability
of the Showboat Leighton Partnership through its
nominee the Casino Manager, such liability is a
several liability in accordance with the 85%
interest in such partnership of SAL and the 15%
interest therein of Leighton.
(b) To the extent of any inconsistency or conflict
between the terms of this Agreement and the Act or
the COA.
(1) The Act and the COA shall prevail over this
Agreement.
<PAGE>
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(2) In the event of any inconsistency between the
Act and the COA, the Act shall prevail over the
COA.
2. CONSTRUCTION OF COMPLEX AND INSTALLATIONS BY OWNER
2.1 Owner engages Casino Manager to be Owner's consultant to
advise on the configuration, layout, interior design and
construction of the Casino Complex. Additionally, Casino
Manager shall recommend to Owner and advise Owner as to
the suggested placement of all gaming equipment and
ancillary furnishings and the configuration of ancillary
areas within the Casino Complex.
2.2 Owner, at its sole and separate expense, shall prepare
preliminary design plans, working drawings, and
specifications of the Casino Complex. Casino Manager shall
evaluate the preliminary design plans, working drawings
and assist owner in designing the Casino Complex. Owner
shall have the sole and exclusive right to manage, direct,
control, co-ordinate and prosecute the construction of the
Casino Complex and the installation of the Furniture and
Equipment.
2.3 Owner shall, strictly in accordance with the relevant
provisions of the COA and in conformity with all
applicable laws, ordinances and governmental regulations,
at its own expense, construct furnish and equip on the
Temporary Premises, a Temporary Casino and on the
Permanent Site an international standard casino, food and
beverage and entertainment and hotel complex each
complying with the Standards including Casino Manager's
requirements for life safety specifications.
2.4 The Casino Complex shall consist of the facilities
described and defined as the Casino Complex in the COA.
2.5 If there is a delay in the construction of the Casino
Complex both Owner and Casino Manager shall take all
reasonable steps to mitigate any damages which may arise
from such delay.
3. PRE-OPENING SERVICES BY CASINO MANAGER
3.1 Prior to each the First Opening Date and the Second
Opening Date, Casino Manager, as agent and for the account
of Owner, shall have the exclusive right in relation to
the Casino Complex to engage in the following Pre-Opening
Services, provided that funds are advanced therefor as
hereafter required:
(a) Recruit, train, direct and employ on behalf of SHC an
initial staff for the Casino Complex.
(b) Initiate and prosecute promotion publicity and other
like programs designed to attract guests to the
Casino Complex on and after the Opening Date
<PAGE>
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including without limiting the generality of the
foregoing, public relations and other marketing
activities.
(c) Negotiate leases licences and concession agreements
for stores office space and lobby space at the Casino
Complex, subject to SHCP's approval. All leases,
licences or concessions shall be in SHCP's name and
executed by officers of SHCP on its behalf.
(d) Apply for, process and take all necessary steps to
procure so far as is possible in SHC's name (or or
both as may be required by the issuing authority) all
licences and permits required for the operation of
the Casino Complex and its related facilities by SHC,
provided that it will be SHC's obligation to obtain
the Licence and any liquor licences for the sale of
alcoholic beverages at all restaurants and bars in
the Casino Complex and to all guest rooms, but Casino
Manager agrees to render SHC all reasonable
assistance in connection with its efforts to obtain
such licences.
(e) Purchase all initial Operating Supplies, food and
beverages. Such initial inventories shall be paid for
out of the working capital furnished by SHC under
Clause 10 of this Agreement.
(f) Prepare and submit to SHC organisational plans with
respect to the staffing structure for the Casino
Complex 90 days prior to each Opening Date.
(g) Do all other things necessary for the proper opening
of the Casino Complex including, but not limited to,
arranging for suitable inaugural ceremonies and
arranging for interim office space being such office
space as is necessary for the Casino Manager to
fulfill its functions under this Clause.
3.2 All reasonable budgeted Pre-Opening Expenses incurred by
Casino Manager, Showboat, Leighton or any of Casino
Manager's, Showboat's or Leighton's affiliated or
subsidiary companies shall be paid for by Owner provided
that Casino Manager shall be reimbursed by Owner for
overruns to budgeted Pre-Opening Expenses where Casino
Manager has complied with the terms of this Agreement or
has not recklessly incurred additional expense provided
that Casino Manager has obtained Owner's consent to any
material overruns.
3.3 Owner shall deposit from time to time with Casino Manager
such amounts as are notified by Casino Manager as are
necessary and in accordance with Clause 3.2 hereof to meet
Pre-Opening Expenses.
3.4 Within ninety (90) days after each Opening Date, Casino
Manager shall account to Owner for all expenditures made
under this Clause which shall be independently reviewed by
the Independent Chartered Accountant.
3.5 If any balance remains of the funds deposited by Owner
with Casino Manager hereunder, they shall be placed in the
Agency Accounts provided for in Clause 10
<PAGE>
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to the extent that there are insufficient funds therein,
and any surplus shall be repaid to Owner forthwith.
3.6 If Casino Manager at any time expends funds in excess of
the amount deposited with it under this Clause, with the
consent of Owner, or by reason of Owner's not depositing
additional funds with Casino Manager in the event of
anticipated or actual delay, such excess shall be refunded
to Casino Manager forthwith upon demand with Interest
calculated on a daily basis.
3.7 At Casino Manager's request, Owner will from time to time
deposit with Casino Manager the estimated costs in
connection with obtaining any applicable licences and
permits to be obtained by Casino Manager. Any portion of
the deposits not expended will be refunded to Owner.
4. OPENING DATES
4.1 (a) Subject to Clause 4.3, the First Opening Date is the
date of the completion of the Temporary Casino to a
state of operational readiness which complies with
the Completion Standards (as defined in the
Development Agreement between SHC and Leighton
("Development Agreement"))
(b) The Second Opening Date is the date of the Completion
(as defined in the Development Agreement) of the
Casino Complex (other than the Temporary Casino).
4.2 Notwithstanding the Opening Date, Owner and Casino Manager
shall proceed diligently thereafter to fulfill all of its
obligations provided for in Clause 2 regarding the
construction furnishing and equipping of the Casino
Complex and Owner shall diligently proceed to cure all
material defects or deficiencies as to which Casino
Manager notifies it.
4.3 Notwithstanding Clause 4.1, both parties agree that the
First Opening Date and the Second Opening Date shall each
be a date which is no earlier than 10 days after the
satisfaction of all the following conditions:
(a) all operating permits for the Casino Complex and its
operations (including, without limitation, a
certificate of occupancy or local equivalent, gaming,
liquor and restaurant licences) have been obtained,
(b) the Working Capital and the Casino Bankroll for the
Casino have been furnished by Owner,
(c) Casino Manager shall have given written notice to
Owner that all operational systems have been tested
on a "dry-run" basis to the satisfaction of Casino
Manager and, to the extent required by applicable law
and the Authority provided that no further testing
shall be required of operational
<PAGE>
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systems which have been satisfactority tested under
the Development Agreement, and
(d) all other state and federal governmental requirements
necessary to open, occupy and operate the Casino
Complex have been satisfied.
5. OPERATING TERM OF AGREEMENT
5.1 Subject to the COA the Operating Term of this Agreement
shall be a period commencing on the date this Agreement is
signed and terminating on the expiration of the Licence
unless otherwise canceled or extended in accordance with
this Agreement or any other Transaction Document or by the
Authority under the Act.
6. MANAGEMENT OF THE CASINO COMPLEX DURING OPERATING TERM
6.1 Owner hereby engages Casino Manager as the exclusive
casino manager of the Casino Complex during the Operating
Term. Casino Manager shall manage the Casino Complex and
all of its facilities and activities in accordance with
the Standards and provide or contract for entertainment in
keeping with the requests of patrons, financial viability
and constraints of the Casino Complex and the requirements
of the Authority under the Act.
6.2 Except as in this Agreement otherwise provided and subject
to the Act the COA and all other applicable laws, Casino
Manager shall have exclusive control and discretion in
the operation, direction, management and supervision of
the Casino Complex. Such control and discretion shall
include, without limitation:
(a) determination of labour policies (including the
hiring and discharge of all employees and entering
into a contract or contracts with an applicable union
or unions in Owner's name);
(b) credit policies (including entering into agreements
with credit card organisations);
(c) terms of admittance;
(d) charges for rooms;
(e) entertainment and amusement policies;
(f) food and beverage policies (including the right to
conduct catering operations outside of the Casino
Complex);
(g) leasing, licensing and granting of concessions for
commercial space at the Casino Complex;
<PAGE>
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(h) the institution of such legal proceedings in the name
of Owner or Casino Manager as Casino Manager shall
deem appropriate in connection with the operation of
the Casino Complex; and
(i) all phases of promotion and publicity relating to the
Casino Complex.
In exercising its said control and discretion, Casino
Manager may negotiate such contracts, leases, concession
agreements and other undertakings on behalf of Owner as it
shall from time to time consider appropriate subject to
Division 2 of Part 3 of the Act with respect to controlled
contracts and the budget, and officers of Owner will
execute any or all of same at Casino Manager's request.
6.3 After due consideration to the impact of undertaking any
legal proceedings upon the Owner, Casino Manager may
institute such legal proceedings in the name of Owner as
Casino Manager shall deem appropriate in connection with
the operation of the Casino Complex; and
(a) Owner shall co-operate with Casino Manager in the
institution of such legal proceedings.
(b) In the event that Owner shall refuse to institute
such legal proceedings within two (2) months of
Casino Manager on the advice of Casino Manager's
solicitors requiring the institution of such
proceedings then where the recommended proceedings
are for recovery of a debt the amount thereof
specified by Casino Manager in its recommendation to
Owner shall be deemed to be added to Total Revenue.
(c) In any other case such amount as may be determined by
the Independent Chartered Accountant (who may make
such determination on the advice of Queen's Counsel
or Senior Counsel of the New South Wales Bar) shall
be deemed to be added to Total Revenue.
(d) Such addition to Total Revenue shall be with effect
in the accounting year in which the cause of action
arose but shall only be made if it has not already
been included in Total Revenue.
(e) In any such proceeding Owner shall be represented by
legal advisers of its choice.
6.4 Notwithstanding the foregoing no Casino Complex employee
shall receive compensation (including salary and benefits
greater than at the rate of $750,000 per year exclusive of
the value of food and lodging and the use of Casino
Complex facilities (increased at the end of each Fiscal
Year by the CPI) without prior consent of Owner of the pay
rate. This amount may be redetermined by agreement from
time to time to reflect other increases in the cost of
living or industry pay rates, such maximum rate to be
determined conclusively by the Independent Chartered
Accountant at the request of either party made at any time
in the event the parties fail to agree to any suggested
increase.
<PAGE>
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6.5 In its management of the Casino Complex hereunder, Owner
acknowledges that Casino Manager is to implement and carry
out methods procedures and policies suggested by Showboat
and other recommendations made by Showboat when such
recommendations are consistent with the business plan and
budget approved by the Owner.
6.6 If equipment is installed and maintained at the Casino
Complex in connection with any services referred to in
Clause 6.5, all costs of such installation and maintenance
will be paid by Owner and charged to the operation of the
Casino Complex as an Operating Expense either as current
expenses or over a period of years as determined by the
Independent Chartered Accountant.
6.7 Casino Manager may in accordance with agreed budgets:
(a) purchase goods, supplies and services from or through
Showboat, Leighton or any of their affiliated or
subsidiary companies so long as the prices and terms
thereof are demonstrably competitive with the prices
and terms of goods and services of equal quality
available from others;
(b) pay to any of same a fee for the negotiation of
contracts for the direct purchase by Casino Manager
from independent suppliers of goods, supplies and
services so long as the prices and terms thereof when
added to the said fee are demonstrably competitive
with the prices and terms of goods and services of
equal quality available from others, such fee to be
charged to the operation of the Casino Complex on the
same basis as it is charged to the operation of
hotels owned by Showboat subsidiaries; and
(c) retain a Showboat or Leighton subsidiary, affiliate
or division as a consultant to perform technical
services in connection with any substantial
remodelling, repairs, construction or other capital
improvements to the Casino Complex and said
subsidiary, affiliate or division shall be reasonably
compensated for its services.
6.8 Casino Manager, in its discretion may provide reasonable
short term food and lodging for Casino Complex employees
and allow them the use of Casino Complex facilities and
may allow the general manager of the Casino Complex
suitable living quarters within the Casino Complex and the
reasonable use of all Casino Complex facilities including
food, without charge to the said Casino Complex employees
and General Casino Manager or to Casino Manager.
6.9 Casino Manager, in its discretion may enroll the Casino
Complex employees in superannuation (in addition to any
superannuation required by law), medical and health, life
insurance and similar employee benefit plans. The said
plans may be joint plans for the benefit of employees at
more than one casino or hotel owned, leased or managed by
Showboat or any of its subsidiaries. Employer
contributions to such plans and reasonable administrative
fees which Casino Manager may expend in connection
therewith will be Operating Expenses.
<PAGE>
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6.10 From time to time, at the request of Owner, senior
executive staff of Casino Manager having knowledge of the
operation of the Casino Complex, shall attend a meeting at
a time and place reasonably determined by Owner and shall
report to Owner as to the operation of the Casino Complex
and shall discuss matters of policy and procedure
affecting all phases of the conduct of business at the
Casino Complex. To the extent possible such consultation
and advice shall take place prior to effectuating any
major policies and procedures.
6.11 Not later than sixty (60) days prior to the commencement
of each Fiscal Year Casino Manager shall submit to Owner a
draft annual budget for the operation of the Casino
Complex in accordance with the Uniform Systems accompanied
by full supporting data and assumptions and a business
plan, and shall at Owner's request, consult with Owner in
good faith concerning such budget and will give
consideration to suggestions made by Owner. The final
decision on the budget shall be that of Casino Manager.
The final annual budget shall be submitted to Owner no
later than 10 days prior to the commencement of each
Fiscal Year.
6.12 Subject to the non competition provisions of the COA,
nothing contained in this Agreement shall be construed to
restrict or prevent, in any manner, Casino Manager,
Showboat, Leighton or any of their affiliates or
subsidiaries from engaging in any other businesses or
investments during the term of this Agreement or any
renewal thereof, including, without limitation, any
similar or competitive gaming operation. Owner
acknowledges that Showboat and/or their affiliates operate
other casinos and may in the future operate additional
casinos in different areas of the world, and that
marketing efforts may cross over in the same markets and
with respect to the same potential customer base. Casino
Manager, in the course of managing the Casino, may refer
customers of the Casino Complex and other parties to other
facilities operated by affiliates of Casino Manager to
utilize gaming, entertainment and other amenities, without
payment of any fees to Owner. Owner consents to such
activities and agrees that such activities will not
constitute a conflict of interest. Owner acknowledges and
agrees that Casino Manager may distribute promotional
materials for Casino Manager's affiliates and facilities,
including casinos, at the Casino Complex.
7. CASINO MANAGER TO ACT SOLELY AS AGENT OF OWNER
7.1 In the performance of its duties as Casino Manager of the
Casino Complex Casino Manager shall act solely as agent of
Owner. Nothing herein shall constitute or be construed to
be or create a partnership or joint venture between Owner
and Casino Manager. All debts and liabilities to third
persons incurred by Casino Manager in the course of its
operation and management of the Casino Complex shall be
the debts and liabilities of Owner only and Casino Manager
shall not be liable for any such debts and liabilities by
reason of its management, supervision, direction and
operation of the Casino Complex for Owner. Casino Manager
may so inform third parties with whom it deals on behalf
of Owner and may take any other reasonable steps to carry
out the intent of this paragraph.
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7.2 (a) Casino Complex employees shall be the employees of
SHC and not of Casino Manager and every person
performing services in connection with this Agreement,
including any agent or employee of Casino Manager,
Showboat, Leighton or their affiliates shall be acting
as the agent of SHC.
(b) Nonetheless, the Casino Complex employees including
manager and other executive personnel may be on the
payroll of SAL or Leighton or any of their affiliates
and their salaries and other related expenses
(including, but not limited to, payroll taxes and the
cost of employee benefits and any amount accrued or
paid for severance termination pay long service leave
or superannuation payments related to the period of
employment at the Casino Complex) shall be invoiced
to Owner as a supplemental management fee and
included in Operating Expenses provided such
employees receive compensation based on a rate no
greater than provided for in Clause 6.4 hereof
(provided always that where an employee receives
compensation in excess of such rate, the rate to be
applied shall be the maximum allowed under Clause
6.4) unless Owner agrees.
(c) Additionally, the Casino Manager may utilise the
services of executives of Showboat or any of its
subsidiaries or affiliates and their salaries and any
other related expenses including but not limited to,
payroll taxes and the cost of employee benefits and
any amount accrued or paid for severance termination
pay, long service leave or superannuation pay hereby
related to the period of employment at the Casino
Complex shall be invoiced to Owner as a supplemental
management fee and included in Operating Expenses
provided such executives receive compensation based
on a rate no greater than provided for in Clause 6.4
hereof (provided always that where an employee
receives compensation in excess of such rate the rate
to be applied shall be the maximum allowed under
Clause 6.4) unless Owner agrees.
(d) To the extent that Casino Manager deems advisable and
in Owner's best interest, Casino Manager may delegate
to one or more persons in its employ or to the Casino
Complex general manager the responsibility of
employing, paying, supervising and discharging SHC
employees. Each person to whom any such duty is
delegated shall be the agent of the licensee under
the Licence and not of Casino Manager for such
purposes.
8. OWNER TO BEAR ALL OPERATING EXPENSES
8.1 In performing its duties hereunder during the Operating
Term, Casino Manager shall act solely for the account of
Owner. All reasonable Operating Expenses incurred by
Casino Manager in performing its duties shall be borne
solely by Owner. To the extent the funds necessary
therefor are not generated by the operation of the Casino
Complex, they shall be supplied by Owner to Casino Manager
in the manner provided in Clause 10. If Casino Manager
recommends to Owner that the funds in the Capital
Expenditure Reserve Account (provided for in Clause 13) be
used to defray Operating Expenses of the Casino Complex
other than the expenses for which the reserve was created
and Owner agrees then such
<PAGE>
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fund in the Capital Expenditure Reserve as may be necessary
to meet such need may be so utilised and Owner shall
replace all such funds on demand.
8.2 Casino Manager shall not in any event be required to
advance any of its own funds for the operation of the
Casino Complex, nor to incur any liability in connection
therewith unless Owner shall have furnished Casino Manager
with funds necessary for the discharge thereof. However,
if Casino Manager shall at any time advance any funds in
payment of Operating Expenses, which Casino Manager shall
have the right but not the obligation to do, Owner shall
repay Casino Manager on demand all or any part thereof,
plus Interest calculated on a daily basis except that if
such advances were made by converting foreign currency
into Australian dollars, then repayment shall be made in
the foreign currency so converted and to the extent such
advances result from Casino Manager refraining from
receiving any part of its fees on the dates they are
payable hereunder they shall be deemed to have been made
in the currency of Australia.
9. MARKETING
9.1 Casino Manager shall arrange and contract for all
marketing including but not limited to advertising,
selling and public relations activities which Casino
Manager may deem necessary for the operation of the Casino
Complex. Casino Manager shall analyse the market, identify
market segments that would generate revenue and profit for
the Casino Complex and then develop a combination of
marketing (including but not limited to advertising and
promotions) and sales (including but not limited to player
representatives, agreements with tour wholesalers)
programmes designed to generate revenue and profit. The
business plan submitted by Casino Manager with the annual
budget shall contain detailed marketing plans designed to
generate the projected revenues. The Casino Complex may
participate in Showboat's sales centres and advertising
programmes (if any) and any other such programmer as
determined by Casino Manager for such amount as Casino
Manager determines is the Casino Complex's proper share of
such participation from time to time and such amount shall
be an Operating Expense.
10. WORKING CAPITAL AND BANK ACCOUNTS
10.1 (a) Owner will provide Casino Manager with initial working
capital in the amounts agreed in the budget prepared
by Casino Manager and approved by Owner thirty (30)
days prior to the Estimated First Opening Date and
thirty (30) days prior to the Estimated Second Opening
Date.
(b) Thereafter from time to time throughout the Operating
Term, if and as requested by Casino Manager, Owner
shall furnish to Casino Manager funds sufficient in
amount to constitute normal working capital for the
uninterrupted and efficient operation of the Casino
Complex.
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(c) Any dispute as to the amount of working capital
required for the operation of the Casino Complex
shall be resolved by the Independent Chartered
Accountant who shall take into account in each
instance all reasonably foreseeable future financial
needs of the Casino Complex.
10.2 (a) All funds received by Casino Manager in the
operation of the Casino Complex, including working
capital for the Casino Complex referred to in the
preceding paragraph, shall be deposited in the
relevant Agency Account in compliance with the Act.
Such funds shall be Owner's property subject to the
terms of this Agreement and shall not be mingled with
Casino Manager's or Owner's other funds.
(b) Out of the Agency Accounts, Casino Manager shall pay
all Operating Expenses as well as the fees payable to
Casino Manager under Clause 12.
10.3 Owner may require that amounts standing to the credit of
the Agency Accounts may be placed on short term deposit at
interest such interest for the account of Owner and not
form part of Total Revenue. Any expenses of Casino Manager
in connection therewith shall be reimbursed by Owner to
Casino Manager.
10.4 In addition to the Agency Accounts, a Reserve Account
shall be established for the purposes of Clause 13.
10.5 (a) The accounts referred to in Clause 10.4 shall be
opened in the name of SHC and maintained at all
times solely by Casino Manager. Cheques or other
documents of withdrawal shall bear an appropriate
legend indicating that the Casino Complex is managed
by Casino Manager as agent of SHC. Such cheques or
other documents of withdrawal shall be signed only by
representatives of Casino Manager. Owner's sole right
to the funds in the foregoing accounts shall be to
receive therefrom the payments to be made by Casino
Manager to Owner or at its direction under the
provisions of this Agreement.
(b) Owner will bear all losses occasioned by the failure
or insolvency of the bank or financial institution
with which an Agency Account or the Reserve Account
is maintained or deposited.
(c) Upon the expiration or termination of this Agreement
and the payment to Casino Manager of all amounts due
to Casino Manager hereunder upon such expiration or
termination, all remaining amounts in the foregoing
accounts shall be transferred forthwith to Owner.
11. BOOKS RECORDS AND STATEMENTS
11.1 (a) Casino Manager shall comply with the requirements of
Part 9 of the Act and shall, for the account of Owner
and with Owner's approval establish and maintain full
and adequate books of account and other records
reflecting the
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results of operation of the Casino Complex on an
accrual basis, all in accordance with applicable
Australian Accounting Standards, generally accepted
accounting principles and with the Uniform System with
such exceptions as may be required by the provisions
of this Agreement, provided, however, that Casino
Manager may make such modifications in such accounts
as are consistent with Showboat's standard practice in
accounting for its operations under management
contracts generally, so long as such modifications do
not affect the determination of Casino Complex Gross
Operating Profit and Casino Gross Operating Profit
under the Uniform System, as modified by the
aforementioned exceptions.
(b) Books of account and records relating to or
reflecting on of the Casino Complex and its
management shall be the property of the Owner and
shall be kept at the Casino Complex or such other
place as may be agreed by Owner provided that unless
the Authority grants an exemption pursuant to Section
129(2) of the Act and Owner approves, all books,
records and documents relating to the operations of
the Casino shall be kept at the Casino and shall be
available to Owner and its representatives at all
reasonable times for examination audit inspection and
transcription.
(c) Upon any termination of this agreement, all of such
books and records forthwith shall be turned over to
Owner so as to ensure the orderly continuance of the
operation of the Casino Complex, but such books and
records shall thereafter be available to Casino
Manager at all reasonable times for inspection,
audit, examination and transcription for a period of
seven (7) years.
(d) Owner and Casino Manager shall comply with the
requirements of Part 9 of the Act and all directions
of the Authority in relation to books, records and
statements.
11.2 Casino Manager shall endeavour to deliver to Owner at or
prior to the end of each accounting period used by Casino
Manager in accounting for the operations of the Casino
Complex a profit and loss statement showing the results of
the operation of the Casino Complex for the immediate
preceding accounting period and for the Fiscal Year to
date. Such statement:
(a) shall be in the form acceptable to the Owner;
(b) shall be taken from the books and records maintained
by Casino Manager in the manner hereinabove
specified;
(c) shall follow the general form set forth in the
Uniform System, adjusted if necessary to Australian
accounting standards but shall not contain any items
excluded from the definition of Casino Complex Gross
Operating Profit and Casino Gross Operating Profit.
11.3 (a) Within ninety (90) days after the end of each
Fiscal Year, Casino Manager shall deliver to Owner a
profit and loss statement, audited by the
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Independent Chartered Accountant, showing the
results of operations of the Casino Complex during
such Fiscal Year, and the Casino Complex Gross
Operating Profit, and Casino Gross Operating Profit,
if any, for such Fiscal Year.
(b) Owner shall be deemed to have waived any objections
to said audited statement not specified to Casino
Manager in writing within forty-five (45) days of
receipt thereof.
(c) Any disputes as to the contents of any such statement
or any accounting matter hereunder shall be
determined by the Independent Chartered Accountant,
whose decisions shall be final and conclusive on
Casino Manager and Owner.
12. CASINO MANAGER'S MANAGEMENT FEE
12.1 During each Fiscal Year of the Operating Term (and
proportionately for a fraction of a Fiscal Year)
commencing from the First Opening Date, Owner shall pay to
Casino Manager for services rendered under this Agreement
a Management Fee being:
(a) one and one half per cent (1 1/2%) of Casino Revenue
for such Fiscal Year;
(b) six per cent (6%) of Casino Gross Operating Profit
for such Fiscal Year;
(c) three and one half per cent (3 1/2%) of Total Revenue
for such Fiscal Year; and
(d) ten per cent (10%) of Casino Complex Gross Operating
Profit for such Fiscal Year.
provided that for the purposes of calculating Casino
Complex Gross Operating Profit under this Clause 12.1,
Operating Expenses shall not include the charge against
revenue for the Capital Expenditure Reserve Account.
12.2 On or before the last day of each Accounting Period Casino
Manager shall be paid out of the Agency Accounts its fees
based on the percentages applied to that portion of the
current Fiscal Year which ended on the last day of the
preceding Accounting Period, all as determined from the
books of account referred to in Section 11. To the extent
that there may be insufficient funds in the Agency
Accounts for such payments, Owner shall pay to Casino
Manager forthwith on demand the said fee.
12.3 On or before the last day of each Accounting Period or
more frequently if Owner and Casino Manager agree during
the Operating Term, Casino Manager shall, after payment of
Casino Manager's fees for the immediately preceding
Accounting Period and retention of Working Capital
sufficient to assure the uninterrupted and
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efficient operation of the Casino Complex for the
foreseeable future, remit to Owner all remaining funds in
the Agency Accounts.
12.4 At the end of each Fiscal Year and following receipt by
Owner of the annual audit, an adjustment will be made
based on said audit, if necessary, so that Casino Manager
shall have received its proper fees as hereinabove
specified for the said Fiscal Year. Within thirty (30)
days of receipt by Owner of such audit Casino Manager
shall either:
(a) place in an Agency Account or remit to Owner, as
appropriate, any excess amounts it may have received
as fees during such Fiscal Year; or
(b) be paid out of an Agency Account or by Owner, as
appropriate, any deficiency in the amounts it shall
have received as such fees;
whichever the case may be.
12.5 In the event there is an operating loss in any Fiscal
Year, it will be borne exclusively by Owner and the amount
thereof will not be applied against the Casino Gross
Operating Profit or the Casino Complex Gross Operating
Profit of any other Fiscal Year for the purpose of
determining Casino Manager's fees.
13. RESERVE FOR REPLACEMENTS, SUBSTITUTIONS AND ADDITIONS TO
FURNITURE AND EQUIPMENT AND NON-STRUCTURAL IMPROVEMENTS
13.1 Commencing from the First Opening Date during the
operating of the Temporary Casino, there shall be deducted
in monthly instalments from Total Revenue and Casino
Revenue an amount up to:
(a) Three per cent (3%) of Casino Revenue; and
(b) One and Three quarter per cent (1 3/4%) of Total
Revenue,
and commencing from the Second Opening Date during the
Operating Term, there shall be deducted in monthly
instalments from Total Revenue and Casino Revenue an
amount up to:
(a) six percent (6%) of Casino Revenue; and
(b) three and one half percent (3 1/2%) of Total Revenue,
(with the precise amount being determined by the Casino
Manager in consultation with the Owner) respectively
provided that at the end of each Fiscal Year so much of
the amount deducted that has not been spent pursuant to
this Clause shall be remitted to the Owner provided there
is no intended or allocated use of such funds for the
purposes of this Clause.
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13.2 A cash Reserve Fund shall be created as a sinking fund and
the moneys deducted pursuant to Clause 13.1 shall be
deposited into this account. Such fund shall be recorded
on the books of account maintained for the Casino Complex
as "Capital Expenditure Reserve Account" and shall be
accounted for as a sinking fund.
13.3 Subject to Clause 14.5 and except as otherwise specified
in this Agreement, the Reserve Fund shall be used solely
for the purposes specified in this Clause 13. Any
expenditure for replacement or substitution of or
additions to Furniture and Equipment or Non-Structural
Improvements during each Fiscal Year may be made by Casino
Manager without Owner's consent up to the amount of such
Reserve Fund including the unused accumulations thereof
from earlier Fiscal Years, and any such expenditures shall
be paid from the Reserve Fund.
13.4 All proceeds from the sale of Furniture and Equipment no
longer needed for the operation of the Casino Complex
shall be credited to the Reserve Fund.
13.5 All amounts remaining in the Reserve Fund at the close of
each Fiscal Year not remitted to Owner in accordance with
the Provisions of Clause 13.1, shall be carried forward
and retained until fully used as herein provided.
13.6 Any expenditure for the purposes specified in this Clause
in excess of the Reserve Fund shall be subject to Owner's
approval.
13.7 The Reserve Fund will be invested by Casino Manager with a
financial institution or society approved by Owner in the
name of the Owner. Such fund, including all interest
earned thereon, shall be and remain at all times during
the Operating Term under the exclusive and absolute
control of Casino Manager. Interest shall not form part of
Total Revenue or Casino Revenue and shall be credited to
the Reserve Fund.
13.8 In the event that the amount standing to the credit of the
Reserve Fund is at any time insufficient to meet
expenditure required Owner will provide to Casino Manager
any shortfall in accordance with budget provisions or any
amendment to the budget approved by the Owner.
13.9 Upon any termination of this Agreement Casino Manager's
right to any unused portion of the Reserve Fund shall
terminate and the same shall be paid over forthwith to
Owner.
14. REPAIRS AND MAINTENANCE AND CAPITAL IMPROVEMENTS
14.1 Subject to compliance by Owner with the provisions of the
COA, the Leases and Clause 10 hereof, Casino Manager shall
from time to time make such expenditure for repairs and
maintenance as it deems necessary to keep the Casino
Complex in
<PAGE>
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good repair and operating condition (excluding
structural repairs and changes and extraordinary repairs
to or replacement of equipment included in the definition
of Building and Appurtenances ). If any such repairs or
maintenance shall be made necessary by any condition
against the occurrence of which Owner has received the
guarantee or warranty of a supplier of labour or materials
then Casino Manager may invoke such guarantees or
warranties in Owner's or Casino Manager's name and Owner
will cooperate fully with Casino Manager in the
enforcement thereof.
14.2 Subject to compliance by the Owner with the provisions of
the COA, the Leases and Clause 10 hereof, Owner may from
time to time at its sole expense make such further
alterations, additions, or improvements in or to the
Casino Complex as Casino Manager shall propose or Owner
shall recommend and Casino Manager shall approve, all of
which will be made with as little hindrance to the
operation of the Casino Complex as possible. No
alterations, additions or improvements shall be made
without Casino Manager's approval. Any and all such
alterations, additions or improvements shall, upon
completion, become part of the Casino Complex.
14.3 (a) If structural repairs or changes in the Casino
Complex or extraordinary repairs to or replacement of
any equipment included in the definition of Building
and Appurtenances shall be required at any time
during the term of this Agreement to maintain the
Casino Complex in good operating condition or by
reason of any laws, ordinances, rules or regulations
now or hereafter in force, or by order of any
governmental or municipal power, department, agency,
authority or officer, or otherwise, or because Casino
Manager and Owner jointly agree upon the desirability
thereof, then in such event all such repairs, changes
or replacements shall be made by Owner at Owner's
sole expense, and shall be made with as little
hindrance to the operation of the Casino Complex as
possible.
(b) Notwithstanding the foregoing, Owner shall have the
right to contest the need for any such repairs,
changes or replacements required by any law,
ordinance, regulation or order of governmental
authority and may postpone compliance therewith, if
so permitted by law, but in each such event Owner
shall protect Casino Manager from any loss, cost,
damage or expense which may result therefrom, such
protection to be in a form satisfactory to Casino
Manager.
14.4 The provisions of this Clause 14 are without prejudice to
any of Casino Manager's rights or remedies arising out of
any breach by Owner of its obligations under Clause 2.
14.5 If the Casino Manager or Owner recommends to Owner or the
Casino Manager as the case may be that payment for
repairs, maintenance and capital improvements provided for
under this Clause 14 be made from the Reserve Fund created
pursuant to Clause 13 and Owner and Casino Manager agrees
then such funds in the Reserve Fund as may be necessary to
meet such need may be so utilised.
<PAGE>
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15. CASINO
15.1 Each of Owner and Casino Manager shall at all times comply
with the provisions of the Act applicable to SHC as
licensee and the Licence and will not do or omit any act
which would constitute a ground for cancellation or
suspension of the Licence. Each of Owner and Casino
Manager shall at all times comply with their obligations
under each of the Transaction Documents and will not do or
omit any act which would constitute default under any such
Transaction Document.
15.2 Each of Casino Manager and Owner agrees with the other
that:
(a) it will keep the other informed in respect to any
matter or thing which in its opinion (such opinion to
be reasonably formed having regard to the nature of
the matter or thing and all other relevant
circumstances) would or could result in a breach of
the Act;
(b) it will provide copies of all reports returns forms
submissions or any other information of any kind
provided by either to the Authority or received from
the Authority;
(c) it will not take any decision in respect to any
matter or thing which in its opinion (such opinion to
be reasonably formed having regard to the nature of
the matter or thing and all other relevant
circumstances) would or could result in the
suspension or cancellation of the Licence or would or
could result in a breach of the Act without the prior
approval of the other;
(d) it will keep the other informed of any proposed
visits or meetings between representatives of it and
the Director of Casino Surveillance under the Act of
which it has prior notice where the purpose of such
visit relates to the matters or things described in
paragraphs (a), (b) or (c) hereof and shall permit
the other to have a representative present at such
visits or meetings if so requested.
16. INSURANCE
16.1 The provisions of this Clause 16 are subject to the
provisions of the Project Documents.
16.2 Owner shall provide and maintain at Owner's sole expense,
at all times during the period of construction, furnishing
and equipping the Casino Complex, adequate builder's risk
property insurance (covering all usual risks) and all
risks required to be covered by the Authority. In
addition, during such period Owner shall provide and
maintain general liability insurance with the coverage and
limits as more specifically set forth in Clause 16.7,
fully protecting Owner, Casino Manager, and their
respective subsidiaries and affiliates, against loss or
damage arising in connection with the construction,
furnishing, equipping and preparation for the opening of
the Casino Complex.
<PAGE>
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16.3 Throughout the Operating Term, Owner, at its sole expense,
shall procure and maintain insurance policies which insure
the Casino Complex and each of the component parts against
damage from risks of all nature (excluding at Owner's
discretion only damage resulting from war, nuclear energy,
wear, tear and inherent vice) for the full 100%
replacement costs of the Casino Complex and each of its
component parts and in no event less than the minimum
amount necessary to avoid the effect of co-insurance
provisions in such policies, and Owner shall carry such
other or additional insurance in such amounts and against
such risks as Casino Manager shall reasonably require with
respect to the buildings, facilities and contents of the
Casino Complex, it being reasonable for Casino Manager to
require insurance of the types and in the amounts
generally carried on casinos and hotels owned and operated
by Showboat or its affiliates.
16.4 The property damage insurance policies shall provide that
the loss, if any, payable thereunder shall be adjusted
with and payable to Owner. In addition, throughout the
Operating Term, Owner shall also provide and maintain
business interruption insurance covering loss of income to
both Owner and Casino Manager for a minimum period of one
year for not less than an amount equal to the government
tax payable resulting from interruption of business caused
by the occurrence of any of the risks insured against
under the property damage insurance as previously set
forth in this paragraph. The business interruption
insurance policy shall provide that the loss, if any,
payable thereunder shall be adjusted with and payable to
Owner for the amount of the government tax and any
additional amounts payable to Owner and Casino Manager as
their interests may appear.
16.5 Boiler and Machinery insurance (including use and
occupancy/loss of income) shall be effected for all direct
loss or damage to property caused by an accident as
defined under a standard Boiler and Machinery policy
including boilers, pressure vessels and mechanical or
electrical equipment. Said coverage shall be in limits of
not less than replacement value.
16.6 Owner shall endeavour to obtain a waiver of right of
subrogation from each insurer providing a property damage
insurance policy or policies affecting the coverage
specified in Clauses 16.2-16.5 which waiver of right of
subrogation shall be for the benefit of Casino Manager,
Showboat, Leighton and their respective subsidiaries and
affiliates.
16.7 Casino Manager, as agent of Owner shall throughout the
Operating Term procure and maintain the following
insurance coverage to the extent such coverage is
available for the Casino Complex either through
participation in an insurance program developed for
managed Showboat hotels and casinos, or in the local
insurance market provided always that Owner shall be
entitled to effect its own insurance beyond that procured
by Casino Manager. The cost of the premiums for the
insurance set forth in the following subparagraph 16.7(a)
- (c) shall be paid from an Agency Account and shall be an
Operating Expense.
(a) general liability insurance having a minimum per
occurrence limit of $150,000,000 or its local
currency equivalent (exclusive of defence costs for
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which there shall be no limit) against all claims
which may be brought anywhere in the world for bodily
injury, death or damage to property of third parties
which insurance shall include coverage in the same
amount against all claims brought anywhere in the
world arising out of alleged:
(1) false arrest, detention;
(2) libel, slander, defamation or violation of the
right of privacy or;
(3) wrongful entry or eviction.
If the coverage is not available through either a
Showboat insurance program for managed hotels or in
the local insurance market, then Casino Manager shall
procure and maintain such coverage as may be
available and most closely approximates the aforesaid
coverage. All general liability insurance policies
required pursuant to this Clause 16.7(a) shall name
Owner, Casino Manager, Showboat, Leighton and their
respective subsidiaries and affiliates as the
insured. Employees of the foregoing engaged in work
at or on behalf of the Casino Complex shall also be
named as additional insured.
(b) Motor vehicle liability insurance, including coverage
arising out of the ownership or operation of motor
vehicles for limits which are usual and customary for
hotel motor vehicles in the area where the Casino
Complex is located but, in any event, not less than
limits that are required by law and covering the
parties specified in Clause 16.7(a). If available and
customary insurance of not less than $20,000,000 any
one occurrence, or its local currency equivalent
shall be maintained (exclusive of defence costs for
which there shall be no limit) against all claims
which may be brought anywhere in the world for bodily
injury, death or damage to property of third parties.
(c) Worker's compensation insurance as required from time
to time. Casino Manager as agent for Owner shall
prepare and lodge all employee wages and other
returns and proposals as may be required from time to
time to effect and maintain such insurance.
16.8 Owner or Casino Manager may each reasonably require an
increase in the above limits of insurance coverage and may
reasonably require the procuring and maintaining of other
or additional insurance, provided such insurance is
available. Owner and Casino Manager each acknowledge that
it is reasonable for the other to require insurance of the
types and in the amounts generally carried at casinos and
hotels owned or operated by Showboat or its affiliates.
16.9 All insurance shall be in such form and with such
companies as approved by Casino Manager and Owner, such
approval not to be unreasonably withheld. All insurance
shall be in compliance with the relevant terms of the
Project Documents.
16.10 (a) Certificates of all policies shall be delivered to
Owner and/or Casino Manager:
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(1) not less than thirty (30) days prior to the
First Opening Date in the case of all insurance
required to be maintained during the Operating
Term; and
(2) not less than thirty (30) days prior to the
expiration date of all policies of insurance
that must be maintained subsequent to such
expiration dates under the terms of this
Agreement.
All such certificates shall specify that the policies
to which they relate cannot be cancelled on less than
thirty (30) days prior written notice to Casino
Manager.
(b) Should Owner fail to supply Casino Manager with any
such certificates, the placement of which is the
responsibility of Owner, within the foregoing time
limits, Casino Manager may provide such insurance as
to which such certificates are not supplied or enrol
Owner in any self-insurance program maintained by
Casino Manager, Showboat or any of their affiliated
or subsidiary companies, the expenses of such
provision of insurance or the losses under such
self-insurance program to be treated as an Owner's
expense and not an Operating Expense. Any advances
for such insurance made by Casino Manager shall be
reimbursed by Owner on demand.
16.11 Any deductible payable with respect to any insurance claim
shall be the responsibility of the party which would
otherwise be liable if there had been no insurance
covering the claim.
16.12 In the event that either party shall at any time fail,
neglect, or refuse to maintain any of the insurance
required under the provisions of Clause 16, then the other
party may procure or renew such insurance, and any amounts
paid therefor by that party shall be a debt due from the
failing party on the first day of the month following such
payment, together with Interest calculated on daily rests
from the date of payment for such insurance until
repayment thereof to the non-failing party by the failing
party.
16.13 Owner shall co-operate with Casino Manager to the extent
Casino Manager may reasonably require and Casino Manager
shall co-operate with Owner to the extent Owner may
reasonably require in connection with the prosecution or
defence of any action or proceedings arising out of, or
for the collection of any insurance proceeds and will
execute and deliver to Owner or Casino Manager, as the
case may be, such instruments as may be properly required
to facilitate the recovery of any insurance proceeds.
17. OWNER TO PAY REAL AND PERSONAL PROPERTY TAXES
17.1 Owner shall pay, on or before the final dates on which the
same may be payable without the assessment of interest or
penalties, with the right to pay the same in
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instalments to the extent permitted by law, all real estate
taxes, all personal property taxes and all betterment
assessments levied against the Casino Complex or any of its
component parts.
17.2 Owner shall furnish Casino Manager, on or before the
foregoing deadlines, proof of payment thereof in form
satisfactory to Casino Manager, in default whereof, Casino
Manager may pay any such taxes or assessment on Owner's
behalf in which event Casino Manager shall be reimbursed
forthwith by Owner for all sums so expended plus Interest,
and may withdraw same from the Agency Account or the
Reserve Account at any time.
17.3 Notwithstanding the foregoing, Owner may, at its sole
expense, contest the validity or the amount of any such
tax or assessment, provided that such contest in no way
jeopardises Casino Manager's rights under this Agreement.
Casino Manager agrees to cooperate with Owner and execute
any documents or pleadings required for such purpose,
provided that Casino Manager is satisfied that the facts
set forth in such documents or pleadings are accurate and
that such execution or cooperation does not impose any
obligations or expenses on Casino Manager, and Owner
agrees to reimburse Casino Manager for all increased
expenses occasioned to Casino Manager by any such contest.
18. NAME
18.1 During the term of this Agreement, the Casino Complex
shall at all times be known and designated as the "Sydney
Harbour Casino" or such other name as from time to time
may be selected by Casino Manager, subject to the prior
written approval of the Authority and the approval of
Owner.
18.2 SAL and its Associates shall be entitled to use the name
of the Casino Complex and any logo or trade marks
associated therewith in any advertising or promotional
activities associated either with the Casino Complex or
Showboat and its Associates without charge.
19. DAMAGE OR DESTRUCTION - CONDEMNATION
19.1 (a) Subject to the provisions of the Leases, if the Casino
Complex or any portion thereof shall be damaged or
destroyed at any time or times during the Operating
Term by fire, casualty or any other cause, Owner will,
at its own cost and expense and with due diligence,
repair, rebuild or replace the same so that after
such repairing, rebuilding, or replacing the Casino
Complex shall be substantially the same as prior to
such damage or destruction. If Owner fails to commence
such work within one hundred and eighty (180) days
after the fire or other casualty, or shall fail to
complete the same diligently, Casino Manager may, at
its option, either:
(1) terminate this Agreement by written notice to
Owner; or
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(2) commence or complete such work for the account
of Owner, in which event Casino Manager shall be
entitled to be repaid therefor as provided in
Clause 20.4 and the proceeds of insurance shall
be made available to Casino Manager. Casino
Manager shall further have the right to require
that any proceeds from insurance be applied to
such repairing, rebuilding or replacing.
(b) Notwithstanding the foregoing, if the Casino Complex
is damaged or destroyed to such an extent that the
cost of repairs or restoration as reasonably
estimated by Casino Manager exceeds one-third of the
replacement cost of the Casino Complex, Casino
Manager may terminate this Agreement by written
notice to Owner or Owner may if it determines not to
repair or rebuild or replace the Casino Complex as
aforesaid terminate this Agreement by such notice to
Casino Manager. Subject to the Act and the provisions
of Part 3, Division 2 of the Act, if thereafter at
any time during the Operating Term hereof but within
three (3) years of such damage or destruction Owner
commences to repair, rebuild or replace the Casino
Complex so that Casino Operations continue it shall
give written notice thereof to Casino Manager and
Casino Manager may within sixty (60) days of written
notice from Owner of its intention to repair rebuild
or replace the Casino Complex reinstate this
Agreement by written notice to Owner.
19.2 If the whole of the Casino Complex shall be resumed or
condemned under any, condemnation, compulsory resumption
or like proceeding by any competent authority or if such a
portion thereof shall be taken or condemned as to make it
imprudent or unreasonable, in Casino Manager's reasonable
opinion, to use the remaining portion as a hotel and
casino complex of the type and class of the Casino Complex
immediately preceding such taking or condemnation, then
the Operating Term shall terminate as of the date of such
taking or condemnation, but any award for such taking or
condemnation shall be fairly and equitably apportioned
between Owner and Casino Manager with priority to
recoupment by Owner of its investment in the Casino
Complex.
19.3 If only a part of the Casino Complex shall be taken or
condemned and the taking or condemnation of such part does
not make it unreasonable or imprudent, in Casino Manager's
reasonable opinion, to operate the remainder as a hotel of
the type and class of the Casino Complex immediately
preceding such taking or condemnation, this Agreement
shall not terminate, and so much of any award to Owner
shall be made available as shall be reasonably necessary
for making alterations or modifications of the Casino
Complex, or any part thereof, so as to make it a
satisfactory architectural unit as a hotel of similar type
and class as prior to the taking or condemnation. The
balance of the award, after deduction of the sum necessary
for such alterations or modifications, shall be fairly and
equitably apportioned between Owner and Casino Manager so
as to compensate Casino Manager for any loss of income
resulting from the taking or condemnation.
19.4 The provisions of this Clause 19 are subject to the
provisions of the Project Documents.
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20. TITLE TO COMPLEX
20.1 Owner covenants and agrees that:
(a) It will throughout the Operating Term of this
Agreement maintain full ownership of the Temporary
Premises and Permanent Site as relevant and the
Building and Appurtenances, as lessee in the case of
SHCP under the Leases granted for the Temporary
Casino and for the Permanent Site respectively, free
and clear of all liens and encumbrances save those as
referred to in Schedule 1 to this Agreement and as
licensee in the case of SHC under the licences
granted to it by SHCP.
(b) It will throughout the term of this Agreement
maintain full ownership of the Furniture and
Equipment, Operating Equipment and Operating Supplies
free and clear of all liens and encumbrances save
those referred to in Schedule 1 to this Agreement
(c) During the currency of the relevant Lease or Leases
or licence, Owner will carry out and perform its
obligations as lessee or licensee as the case may be.
20.2 Owner covenants that Casino Manager upon fulfilling its
obligations hereunder, shall have undisturbed occupation,
management and operation of the Casino Complex during the
Operating Term in accordance with this Agreement, and
Owner will at its own expense undertake and prosecute any
appropriate action, judicial or otherwise, to assure such
peaceful and quiet possession by Casino Manager.
20.3 Owner further agrees that throughout the term of this
Agreement it will pay, keep, observe and perform all
payments, terms, covenants, conditions and obligations
required under any lease, mortgage, or other agreement
creating a lien on the Temporary Premises or Permanent
Site as relevant, the Building and Appurtenances or the
Furniture and Equipment, Operating Equipment or Operating
Supplies and under the COA and any other agreements
required to maintain the Licence and the relevant Lease in
full force and effect.
20.4 Should Casino Manager elect at any time to do so or should
Owner default in the performance of any of the foregoing
obligations or any other obligations hereunder, Casino
Manager, or any of its affiliates may, on Owner's behalf,
fulfill said obligations, using their own funds or funds
from time to time in an Agency Account or the Reserve
Account, and shall be reimbursed forthwith by Owner for
all sums so expended out of their own funds with Interest
and may withdraw same from an Agency Account or the
Reserve Account in whole or in part at any time. Any
Agency Account or Reserve Account funds used for the
foregoing purposes will be promptly replenished by Owner.
20.5 This Clause 20 is subject to the provisions of the Project
Documents.
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21. TERMINATION
21.1 The following shall constitute events of default:
(a) The failure of Casino Manager to pay any amount to
Owner provided for herein when the same is payable,
or the failure of Owner to pay or furnish to Casino
Manager any amount Owner is required to pay or
furnish to Casino Manager in accordance with the
terms hereof (including, without limitation, fees and
working capital) when the same is payable or required
to be furnished or the failure of Owner to pay any
amount payable to Showboat or any of its affiliated
or subsidiary companies for a period of thirty (30)
days after such amount becomes payable.
(b) The filing of a voluntary petition for winding up or
a petition for reorganisation under any applicable
law of either Owner or Casino Manager without the
consent in writing of the other of them.
(c) If a petition is presented for the winding up of
either Owner or Casino Manager and such party cannot
within ninety (90) days thereafter reasonably satisfy
the other that the petition is frivolous or
vexatious.
(d) If any order is made for the winding up of Owner or
Casino Manager.
(e) The appointment of an administrator, a receiver, or
receiver and casino manager of all or a substantial
part of the assets or undertaking of either Owner or
Casino Manager.
(f) The execution for an amount in excess of one million
($1,000,000) upon any property of Owner or Casino
Manager which is not stayed or satisfied within sixty
days .
(g) The failure of either Owner, Casino Manager, Showboat
or Leighton to perform, keep or fulfill any of the
covenants, undertakings, operations or conditions set
forth in the Licence where such failure has a
material adverse effect on either the Licence, the
Transaction Documents, Owner, Casino Manager or the
operations of the Casino Complex.
(h) The failure of Owner to maintain at all times
throughout the Operating Term hereof all of the
insurance required to be maintained by Owner under
this Agreement.
(i) The failure of either Owner or Casino Manager to
perform, keep or fulfill any of the other covenants,
undertakings, obligations or conditions set forth in
this Agreement where such failure has a material
adverse effect on the other party provided that in
the case of any alleged default by Casino Manager
pursuant to the provisions of Clauses 6 or 9 of this
Agreement Casino Manager has failed within sixty days
of receiving notice of the alledged default from
Owner (which notice shall include sufficient
particulars of the default to enable Casino Manager
to properly comprehend the nature
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and extent of the default alledged) to rectify the
default or otherwise reasonably satisfy Owner.
(j) The Authority in its absolute discretion at any time
deems the Casino Manager unsuitable to perform its
role.
21.2 In any of such events of default and subject to the
termination and novation provisions of the COA, the
non-defaulting party may give to the defaulting party
notice of its intention to terminate the Operating Term
after the expiration of a period of fifteen (15) days from
the date such notice is served and, upon the expiration of
such period, the Operating Term shall expire. If, however,
with respect to the events of default referred to in
Clause 21.1 (a) and (g) - (i) above and unless a specific
right of termination is specified elsewhere in this
Agreement for the breach in question:
(a) upon receipt of such notice the defaulting party
shall promptly and with all due diligence remedy the
default within the said fifteen (15) day period; or
(b) if such default is not capable of remedy within said
fifteen (15) day period, take and continue action to
remedy such default with all due diligence until the
same is cured, but for not more than ninety (90) days
from such notice;
then such notice shall be of no force and effect.
21.3 Notwithstanding the foregoing, neither Owner nor Casino
Manager shall be deemed to be in default under this
Agreement if a bona fide dispute with respect to any of
the foregoing events of default has arisen between them
and such dispute has been or is submitted to arbitration
prior to the expiration of the foregoing fifteen (15) day
notice period for the termination of this Agreement,
provided that the provisions of this paragraph will not
apply to any dispute over a determination by the
Independent Chartered Accountant on any matter to be
determined by him under the provisions of this Agreement,
and further provided that Casino Manager may terminate
this Agreement notwithstanding the existence of this
paragraph if Owner fails at any time during the pendency
of the arbitration proceedings to comply with its
obligations under Clause 10 in respect of the furnishing
of working capital for the operation of the Casino
Complex.
21.4 The rights granted above shall not be in substitution for,
but shall be, except as otherwise provided in this
Agreement, in addition to any and all rights and remedies
for breach of contract (other than the right to terminate
this Agreement)granted by applicable provisions of law.
21.5 In addition to the rights of termination specified above,
Owner or Casino Manager may terminate the Operating Term
where:
(a) the Licence or any licence necessary for the
operation of the Casino Complex, is suspended and as
a result of such suspension the Casino
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Complex ceases to trade for a period in excess of one
hundred and twenty (120) days;
(b) any event as specified in the COA entitling the State
of New South Wales or the Authority, as the case may
be, to terminate the COA has occurred consequent upon
a default or failure of the other party and the
Authority has given notice of its intention to
terminate unless the alleged failure or default is
remedied, and such failure or default is not remedied
within the time specified.
21.6 Subject to the provisions of the Continuity and
Co-Operation Agreement (as defined in the Compliance Deed)
and in accordance with the provisions of Clause 7 of the
COA, Owner acknowledges and agrees that in the event of
default that Casino Manager may enter into or novate and
continue the operation of this agreement with the
Authority if so requested or required by the Authority.
21.7 Associates of Casino Manager own and/or operate or will
own and/or operate casino gaming facilities in the states
of Nevada, New Jersey and Louisiana, United States of
America, which are subject to extensive state and local
regulation. If the Authority determines that a member of
Owner is unsuitable to be a member or has taken or
threatened to take disciplinary action or other action
that could result in loss or suspension of the Licence as
a consequence of the status or any action of Owner, a
member of Owner, any Associate of Owner or a member
thereof and if, in the sole judgment and discretion of
Casino Manager, such determination, disciplinary action or
other action may result in a disciplinary action or the
loss of or inability to reinstate any registration,
application or licence or any rights or entitlements held
by Casino Manager or any Associate of Casino Manager under
the applicable laws of any other jurisdiction, then Casino
Manager may terminate the Operating Term provided that
Casino Manager will consult with Owner to ensure the
continuance of Casino Operations.
22. NOTICES
22.1 Requirements for Notices
Every notice or other communication to be given or made
under or arising from this Agreement:
(a) must be in writing;
(b) must be signed by an authorised officer of the
sender;
(c) will be deemed to have been duly given or made to a
person if delivered or posted by prepaid post to the
address, or sent by fax to the fax number of that
person set out in Clause 22.2 (or to any other
address or fax number as is notified in writing by
that person to the other parties from time to time);
and
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(d) will be deemed to be given or made (unless a later
time is specified in the notice or communication);
(1) (in the case of prepaid post being sent and
received within Australia) on the third day
after the date of posting as indicated by the
postmark on the notice or communication;
(2) (in the case of prepaid post being sent or
received outside Australia) on the fifth day
after the date of posting as indicated by the
postmark on the notice or communication;
(3) (in the case of delivery by hand) on delivery,
provided that where delivery is made:
(A) after 5:00 pm on any Business Day in the
city of the recipient of the notice or
communication, then in such case at 9:00 am
on the next following Business Day;
(B) on a day which is not a Business Day in the
city of the recipient of the notice or
communication, then in such case at 9:00 am
on the next following Business Day;
(4) (in the case of fax) on receipt of a
transmission report which indicates that the
facsimile was sent in its entirety to the
facsimile number of the addressee.
22.2 Addresses
Until otherwise notified, the addresses, telex numbers and
facsimile transmission numbers of the parties are as
follows:
Owner: Sydney Harbour Casino Pty Limited and
Sydney Harbour Casino Properties Pty
Limited
Fax: 925 6003
Attention: Mr Gregg Nasky
Casino Manager: Sydney Casino Management Company Limited
Fax: 925 6003
Attention: Mr Gregg Nasky
With a copy to each of:
SAL:
Fax: 925 6003
Attention: Mr Gregg Nasky
and:
Leighton
Fax: 925 6003
Attention: Mr Vyril Vella
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23. GOVERNING LAW AND JURISDICTION
23.1 Governing Law
This Agreement is governed by and construed in accordance
with the laws of the State of New South Wales.
23.2 Jurisdiction
(a) Each party irrevocably submits to and accepts,
generally and unconditionally, the non-exclusive
jurisdiction of the courts and appellate courts of
the State of New South Wales with respect to any
action or proceedings which may be brought at any
time relating in any way to this Agreement.
(b) Each party irrevocably waives any objection it may
now or in the future have to the venue of any action
or proceeding, and any claim it may now or in the
future have that any action or proceeding has been
brought in an inconvenient forum.
(c) Each party irrevocably waives immunity in respect of
objections under this Agreement that it may acquire
from the jurisdiction of any court or any legal or
arbitration process for any reason including without
limitation, the service of notice, attachment prior
to judgment, attachment in aid of execution or
execution.
24. CONSENT
24.1 Except as herein otherwise provided, whenever in this
Agreement the consent or approval of Casino Manager or Owner
is required, such consent or approval shall not be
unreasonably withheld. Such consent shall also be in writing
only and shall be duly executed by an authorised officer or
agent of the party granting such consent or approval.
25. OWNER'S RIGHT OF SALE
25.1 Except as otherwise provided for by and in accordance with
the provisions of the Continuity and Co-operation Agreement,
Owner agrees that it will not sell, assign or transfer, or
otherwise deal in any way with its interest in the Casino
Complex except with the benefit of this Agreement and
provided that Owner obtains the prior written approval of
Casino Manager which approval shall not be unreasonably
withheld.
25.2 Casino Manager may withhold its approval in its absolute
discretion if the proposed sale, assignment, transfer or
dealing is proposed:
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(a) to a person, company or company related to such a
company, ("related" having the meaning used in the
Corporations Law) which carries on as one of its
activities casino or hotel management;
(b) to a person or company which does not have the
financial capacity to carry out and perform its
obligations as the Owner under the terms of this
Agreement, the Project Documents or the Licence
unless Casino Manager has the benefit of a guarantee
from a person or company which has such financial
capacity;
(c) during the first twelve years of the Operating Term;
(d) without the prior approval of the Authority;
(e) to any person where such sale, assignment, transfer
or dealing would result in Casino Manager having the
right to terminate this Agreement under the
provisions of Clause 21.8 hereof.
25.3 (a) In the event of the Owner wishing to sell, transfer,
assign or deal with its interest in the Casino
Complex, the Owner will notify the Casino Manager
and provide to it financial particulars and details
and such other information as the Casino Manager
may reasonably request relating to the company
or person to which Owner proposes to sell, assign,
transfer or deal with its interest (the "Purchaser").
(b) Owner will afford to the Casino Manager a reasonable
time to review such particulars and to advise the
Owner as to whether or not it approves, having regard
to the limitations contained in this Clause, the
Purchaser.
(c) If there is any dispute between the Casino Manager
and Owner as to whether:
(1) a Purchaser has the requisite financial capacity
as referred to in Clause 25.2(b) above to carry
out and perform its obligations as Owner under
the Casino Complex Management Agreement;
(2) the guarantor has the requisite financial
capacity as referred to in Clause 25.2(b) above;
(3) the Purchaser is a person or company within the
criteria of Clause 25.2(a) above,
the matter shall be referred to the Independent
Chartered Accountant whose decision shall be final
and binding.
(d) If, in accordance with the provisions of this Clause:
(1) Casino Manager approves of the Purchaser; or
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(2) the financial capacity as referred to in Clause
25.2(b) above or acceptable criteria as referred
to in 25.2(a) above of the Purchaser (or
guarantor) has been referred to the Independent
Chartered Accountant who determines that the
purchaser (or guarantor) does have the requisite
financial capacity as referred to in Clause
25.2(b) above;
and in either case acceptable criteria as referred to in
Clause 25.2(a) above are established then Owner shall, in
the event of the sale proceeding, assign its interest in
this Agreement to the Purchaser by a deed to which Owner,
Purchaser, Casino Manager, SAL and Leighton are parties
and the Purchaser assumes all obligations of Owner.
(e) The deed shall release the Owner of its obligations
under the Casino Complex Management Agreement with
effect from the date of assignment to the Purchaser
but without prejudice to any antecedent right, claim,
demand or action Casino Manager may have against
Owner or any guarantor under this Agreement and any
of the Transaction Documents to which it is a party.
Except for any mortgage or charge referred to in Schedule
1 Owner shall not enter into any mortgage affecting or
relating to the Casino Complex or grant any charge over
its assets or undertaking relating to the Casino Complex
except with the prior written approval of Casino Manager
which approval shall not be unreasonably withheld.
25.4 In the event that the Authority in its absolute discretion
at any time deems the Owner to be unsuitable to perform
its role hereunder or the Owner fails to meet its
financial covenants in any finance documents relating to
the Sydney Harbour Casino and as a consequence a financier
in exercise of any rights it may have under its security
documents with Owner wishes to sell, assign, transfer or
otherwise deal in any way with Owner's interest in the
Casino Complex and the benefit of this Agreement, then
Casino Manager shall have the pre-emptive right to acquire
such interest on the same terms and conditions as are
offered by any bona fide third party within 90 days of
being given written notice of such terms and conditions.
25.5 The provisions of this Clause are subject to the Act and
the Project Documents.
26. ASSIGNMENT
26.1 Subject to the Act, the Project Documents all Transaction
Documents and the consent of the Authority,
(a) Casino Manager shall have the right to assign all its
rights, title and interest under this Agreement to a
subsidiary company of it or Showboat, provided that
Casino Manager, Showboat or a subsidiary of Showboat
shall at all times own at least fifty-one percent
(51%) of all classes of capital stock of said
subsidiary, and provided further that said subsidiary
enjoys the benefits of the Showboat organisation to
the same degree as Casino Manager and
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that Leighton has the right to acquire 15% of all
classes of capital stock of such subsidiary.
(b) Casino Manager shall have the right to assign this
Agreement to any successor or assignee of Casino
Manager or Showboat which may result from any merger,
consolidation or reorganisation, or to another
corporation which acquires all or substantially all
of the business and assets of Showboat provided
Leighton has the right to acquire 15% of all classes
of capital stock of such successor or assignee.
(c) With Owner's consent Casino Manager shall also have
the right to assign all right, title and interest
under this Agreement to any Assignee.
26.2 Any assignment permitted by this Clause and upon
assumption of this Agreement by the assignee the assignor
shall be relieved of any obligation or liability under
this Agreement.
27. LIABILITY OF OWNER AND CASINO MANAGER
27.1 Notwithstanding any other provisions of this Agreement,
Casino Manager, Showboat, Leighton or any of its
affiliates or subsidiaries who perform services on behalf
of Casino Manager hereunder ("the Service Provider") shall
not, in the performance of this Agreement, be liable to
Owner for any damages, loss, cost, or expense unless that
loss or damage resulted in whole or in part from the
recklessness or wilful misconduct of the Service Provider
or its directors, officers or employees PROVIDED HOWEVER
that if the Service Provider has implemented procedures
and systems in respect of training and safety including
employment systems which directors, officers and employees
are required to comply with which they recklessly or by
wilful misconduct do not comply with thereby causing loss
or damage then the Service Provider shall not be liable
for such loss or damage PROVIDED HOWEVER that if any
financier of the Owner has exercised its rights under any
securities given over the Casino Complex such that it
thereby has a contractual relationship with the Service
Provider and the Service Provider has failed to provide
services hereunder in accordance with the Standards and as
a direct consequence of such failure the Licence is
suspended or terminated then the Service Provider shall be
liable for any damages, loss, cost or expense caused
thereby.
27.2 The Owner hereby indemnifies the Service Provider from and
against all costs and expenses of whatsoever nature which
arise from the performance by the Service Provider of its
responsibilities hereunder except where the Casino Manager
is liable for costs or damage under Clause 27.1.
27.3 Casino Manager agrees that, in its operation of the Casino
Complex pursuant to this Agreement, it will perform its
duties in accordance with industry standards for the
operation of similar international standard casinos and
hotels by an experienced Casino Manager. Casino Manager
shall be liable for claims of third parties for
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personal injury and property damage not covered by the
insurance required under Clause 16.7 hereof which result
from the recklessness or wilful misconduct of Casino
Manager, or its subsidiaries or affiliates respectively
having due regard to the standards set out in Clause 27.3.
27.4 Defence counsel engaged by Casino Manager or Owner, as
indemnifier under Clause 27, shall be reasonably
acceptable to the other party. Without limiting the
generality of the foregoing, indemnifier shall promptly
provide the other party with copies of all claims and
pleadings (as well as correspondence, memos, documents and
discovery with respect thereto, unless within the scope of
any applicable privilege) relating to any such matters.
The indemnifier shall give prior written notice to the
other party of all meetings, conferences and judicial
proceedings and shall be afforded an opportunity to attend
and participate in same. The indemnifier shall afford the
other party the right to engage independent counsel, at
its sole expense, to represent indemnitee as additional
and/or co-counsel in all such proceedings, trials, appeals
and meetings with respect thereto.
28. PARTIAL INVALIDITY
28.1 In the event that any one or more of the phrases,
sentences, Clauses or paragraphs contained in this
Agreement shall be declared invalid by the final and
unappealable order, decree or judgment of any court, this
Agreement shall be construed as if such phrases,
sentences, Clauses or paragraphs had not been inserted;
provided that if any portion of Clauses 7, 8, 12 or 27 be
so declared invalid, Casino Manager shall have the option
to terminate this Agreement within thirty (30) days
thereafter on written notice to Owner.
29. SPECIAL CONDITIONS
29.1 This Agreement and the provisions contained herein are
subject to and conditional upon the satisfaction of each
of the following conditions:
(a) The approval of the Foreign Investment Review Board
to Casino Manager becoming the casino manager of the
Casino Complex, if required.
(b) Approval of the Authority to the appointment of
Casino Manager.
29.2 Any of the conditions precedent referred to in Clause 29.1
may be waived in writing by both parties whereupon
satisfaction of such condition shall no longer be a
condition to the operation of this Agreement.
29.3 Either party may also request in writing the other party
to waive any of the conditions.
29.4 In the event that any of the conditions precedent have not
been satisfied by 31 March 1995 or subsequently waived
following a request to waive made by the
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other party either party may terminate this Agreement on
notice to the other and the consequence of such
termination shall be that neither party shall have any
claim against the other for damages or otherwise by
reason merely of such termination but if such termination
occurs after Casino Manager has become entitled to fees
hereunder, Casino Manager shall be entitled to such fees.
29.5 Casino Manager, through its agents and attorneys, will
arrange for the filing of the necessary applications for
the approvals referred to in Clause 29.1 (a) and (b)
above. Owner will fully cooperate with Casino Manager in
connection with the said approvals, will execute any
required application forms or other documents required for
obtaining same and will bear all costs incurred by Casino
Manager in connection with obtaining such approvals,
including legal fees. All costs incurred by Casino Manager
will be considered as Pre-Opening Expenses.
30. CURRENCY
30.1 It is understood that Casino Manager:
(a) will receive its fee in Australian dollars and be
reimbursed for any moneys outlayed by it unless such
payments are reimbursements for funds expended in
another currency when Casino Manager will be repaid
in Australian dollars such amount as will fully
discharge the expense incurred;
(b) intends to compensate its United States and other
expatriate personnel (referred to in Clause 7),
consultants and experts (including Showboat and any
Showboat subsidiary) that may perform services for
the Casino Complex in currency of the country of
which they are nationals, a country in which they
maintain a residence or in currency of the United
States of America, whichever of such currencies
Casino Manager shall elect, and for said personnel,
consultants and experts to be able to repatriate said
compensation; and
(c) to the extent necessary in its judgment, will make
payments in currency other than Australian dollars in
order to properly perform the Pre-Opening Services
referred to in Clause 3 hereof and to operate the
Casino Complex in a manner which will successfully
cater to the international tourist and business
trade, including, without limitation:
(1) expenditures to cover reasonable travelling
expenses and reasonable living expenses included
in the budget while engaged in travel in
connection with the management of the Casino
Complex of nominated Casino Complex personnel
and of nominated employees and nominated
executives of Casino Manager, Showboat and any
of their affiliated companies who visit the
Casino Complex in connection with the operation
thereof or the performance of technical services
hereunder;
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(2) reasonable travelling and moving expenses of
expatriate Casino Complex personnel and their
families to the Casino Complex at the
commencement of their employment and back to the
place from which they were hired or the location
of their next employment (limited to the higher
of the cost of return to the former place or to
a country of which they are nationals or legal
residents) at the termination of their
employment at the Casino Complex, to the extent
these expenditures cannot conveniently be made
in the currency of the country in which the
Casino Complex is located;
(3) reasonable expenditures to reimburse Showboat
and its affiliated companies for communications
sent to the Casino Complex by mail, cable,
telex, telephone or otherwise;
(4) expenditures for the importation of food,
beverages, Operating Supplies and replacements
of and additions to Furniture and Equipment and
Operating Equipment (including payments to
Showboat or any Showboat subsidiary for same);
(5) payments to travel agents; and
(6) other payments for selling of the services of
the Casino Complex, for consultant and technical
services (including payments to any Showboat
subsidiary for same) and for marketing the
Casino Complex outside of the country in which
it is located;
provided, however, that Casino Manager will not be
obliged to make any such expenditures unless currency
control authorities or other governmental authorities
as may have jurisdiction make the appropriate foreign
currency available therefor.
30.2 (a) For the purposes of determining the amounts of local
currency to be deducted from Total Revenue with
respect to Operating Expenses which have been paid
for in currency other than the currency of the
country in which the Casino Complex is located, such
deductions shall be calculated at the exchange rate
in effect on the date such foreign currency payments
are made.
(b) Notwithstanding the foregoing to the extent the
Casino Complex receives foreign currency or local
currency is converted into foreign currency, all
future payments of Operating Expenses with such
foreign currency shall be calculated at the exchange
rate in effect on the date of said receipt or
conversion.
(c) Currency conversion in respect of all payments to be
made hereunder in currency other than Australian
dollars shall be calculated at the prevailing
exchange rate for payments of a similar nature in
Australia on the date such payment is made provided
that amounts unsettled at the end of each Fiscal
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Year shall be calculated at the prevailing exchange
rate on the last Business Day of the Fiscal Year.
31. OWNER'S SOLE BUSINESS
31.1 Owner hereby warrants that the ownership of the Casino
Complex and Owner's activities in compliance with this
Agreement are the sole business and activities of Owner,
and Owner hereby agrees not to engage in any other
activity of business during the Operating Term without the
approval of Casino Manager. This Clause is not intended in
any way to limit the activities of any of Owner's
stockholders or affiliates.
32. MISCELLANEOUS
32.1 If during the term of this Agreement the designated
Independent Chartered Accountants shall no longer be in
existence and has no successor or if Casino Manager shall
desire to substitute another firm of independent chartered
accountants, the name of any reputable international firm
of independent chartered accountants having casino and
hotel experience, selected by Casino Manager and approved
by Owner, shall be deemed substituted in its place.
32.2 Owner and Casino Manager shall execute and deliver all
other appropriate supplemental agreements and other
instruments, and take any other action necessary to make
this Agreement fully legally effective, binding and
enforceable as between them and as against third parties,
including Owner's filing in appropriate governmental
offices pursuant to any statute, ordinance, rule or
regulation requiring such filing by persons or entities
doing business in a name other than their own, of a
certificate or similar document indicating that Owner is
engaging in the hotel business at the Casino Complex under
the name of the Casino Complex. Any fees or expenses
incurred in connection therewith shall be borne by Owner
and shall not be Operating Expenses.
32.3 The headings of the titles to the several articles of this
Agreement are inserted for convenience only and are not
intended to affect the meaning of any of the provisions
hereof.
32.4 The waiver of any of the terms and conditions of this
Agreement on any occasion or occasions shall not be deemed
a waiver of such terms or conditions on any future
occasion.
32.5 This Agreement shall be binding upon and inure to the
benefit of Owner and Casino Manager and their respective
successors and/or permitted assigns.
32.6 Unless expressly stated to the contrary, all references to
amounts of money are expressed in currency of Australia.
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32.7 Until Owner shall advise Casino Manager to the contrary in
writing, Casino Manager may rely on any Director or
Secretary or other officer of Owner as being authorised to
take any action required or permitted to be taken by
Owner, including, without limitation, the giving of all
approvals hereunder.
32.8 Owner shall use its best efforts to cause its officers,
directors, employees and stockholders to provide the
Nevada gaming authorities, the Louisiana gaming
authorities, and the New Jersey gaming authorities and any
other authority to which Showboat or its affiliates will
report to with such documents and information necessary
for Casino Manager's affiliates to maintain or obtain
Casino Manager's Affiliates' gaming licenses in other
jurisdictions.
32.9 All information furnished by either party under or
pursuant to this Agreement, including financial
information, to the other party shall be held by the other
party in strict confidence and shall not be revealed or
made accessible in whole or in part, in any manner
whatsoever to any other persons unless required by law or
unless each party consents to such disclosure or unless
such information already is part of the public domain. All
such confidential information, including all copies of
such information shall be returned to the party furnishing
the information when requested by such party, without
making or retaining copies or excerpts of such
information.
32.10 All of the provisions of this Agreement shall be deemed
and construed to be conditions as well as covenants as
though in words specifically expressing or importing
covenants and conditions for use in each separate
provision hereof The language in all parts of this
Agreement shall be in all cases construed simply according
to its fair meaning, and not strictly for or against
either party. This Agreement shall be construed without
regard to any presumption or other rule requiring
construction against the party causing the same to be
drafted.
32.11 This Agreement may be executed in two or more counterparts
and shall be deemed to have become effective when and only
when all parties hereto have executed this Agreement,
although it shall not be necessary that any single
counterpart be signed by or on behalf of each of the
parties hereto, and all such counterparts shall be deemed
to constitute but one and the same instrument.
32.12 Whenever this Agreement requires an act to be performed
within a specified time period or to be completed
diligently, such periods are subject to "unavoidable
delays". Unavoidable delays include delays caused by acts
of God, acts of war, civil commotions, riots, strikes,
lockouts, acts of government in either its sovereign or
contractual capacity, perturbation in telecommunications
transmissions, inability to obtain suitable labor or
materials, accident, fire, water damages, flood,
earthquake, or other natural catastrophes.
32.13 Casino Manager shall use its best efforts to render the
services contemplated by this Agreement in good faith to
Owner, but hereby explicitly disclaims any and all
warranties, express or implied, including but not limited
to the success or
<PAGE>
-47-
profitability of the Casino Complex. In the performance of
the services contemplated by this Agreement, Casino
Manager shall not be liable to Owner for any acts or
omissions in connection therewith other than fraud or
willful misconduct.
33. ENTIRE AGREEMENT
33.1 This Agreement in conjunction with relevant provisions of
the Act and the Project Documents constitutes the entire
Agreement between the parties relating to the subject
matter hereof, superseding all prior agreements or
undertakings, oral or written. Owner hereby represents
that in entering into this Agreement Owner has not relied
on any projection of earnings, statements as to the
possibility of future success or other similar matter
which may have been prepared by Casino Manager, Showboat,
or any of their respective affiliates or subsidiaries, and
understands that no guarantee is made or implied by Casino
Manager, Showboat or any of their affiliated or subsidiary
companies as to the cost or the future financial success
of the Casino Complex.
34. DISPUTE RESOLUTION
34.1 A party must not commence or maintain any action or court
proceedings (except proceedings seeking interlocutory
relief) in respect of a dispute or difference as to any
matter relating to or arising under this Agreement
("Dispute") unless it has complied with this Clause 34.
34.2 A party claiming that a Dispute has arisen must notify the
other parties giving details of the Dispute.
34.3 Within 3 business days after a notice is given under
clause 34.2 each party must nominate in writing a
representative authorised to settle the Dispute on its
behalf ("Representative").
34.4 During the period of 10 business days after a notice is
given under clause 34.2 (or any longer period agreed
between the parties), each party must ensure that is
Representative uses his or her best endeavours, with the
other Representatives to:
(a) resolve the Dispute; or
(b) agree on a process to resolve the Dispute without
court proceedings (e.g. mediation, conciliation,
executive appraisal or independent expert
determination) including:
(1) the involvement of any dispute resolution
organisation;
(2) the selection and payment of a third party to be
engaged by the parties to assist in negotiating
a resolution of the Dispute without making a
<PAGE>
-48-
decision that is binding on a party unless that
party's Representative has so agreed in writing;
(3) any procedural rules;
(4) the timetable, including any exchange of
relevant information and documents; and
(5) the place where meetings will be held.
34.5 If within the period specified in Clause 34.4, the
Representatives have not resolved the Dispute or agreed
upon a process to resolve the Dispute, the parties may,
within 5 business days after expiry of that period, agree
to appoint a person, who is of good repute and is an
expert in the area relevant to the Dispute, to perform the
following functions, which the parties authorise the
person to do:
(a) act as an independent consultant for the purpose of
resolving the Dispute, as an expert and not as an
arbitrator;
(b) establish the procedures for identifying the issues
relating to the Dispute and the contentions of the
parties, in accordance with considerations of
procedural fairness;
(c) make a written, reasoned decision to resolve the
Dispute; and
(d) decide how the independent consultant's fees should
be paid by the parties.
If the parties cannot agree, within the 5 business day
period referred in this sub-clause, on the appointment of
an independent consultant, the parties must request the
Secretary General of the Australian Commercial Disputes
Centre Limited to appoint that person.
34.6 A decision by the independent consultant under Clause 34.5
shall be final and binding on the parties. However, a
party is entitled to take court proceedings to appeal that
decision on a question of law.
34.7 If, by the expiry of the period of 5 business days
specified in Clause 34.5:
(a) the Dispute has not been resolved;
(b) no process has been agreed under Clause 34.4; and
(c) no request has been made under Clause 34.5,
then a party that has complied with Clauses 34.2 to 34.4
may terminate the dispute resolution process by giving
notice to the other parties, whereupon Clause 34.1 shall
no longer operate in relation to the Dispute.
34.8 Each party:
<PAGE>
-49-
(a) must keep confidential all confidential information
and confidential communications made by a
Representative under this clause; and
(b) must not use or disclose that confidential
information or those confidential communications
except to attempt to resolve the Dispute,
but nothing in this sub-clause shall affect the
admissibility into evidence in any court or arbitral
proceedings of extrinsic evidence of facts which, but for
this sub-clause, would be admissible in evidence.
34.9 Each party must bear its own costs of resolving a Dispute
under this Clause 34.
34.10 If a party does not comply with any provision of Clauses
34.2 to 34.4 or, if applicable, clause 34.5 and any
procedural requirements established under Clause 34.5(b)
then the other parties will not be bound by those
sub-clauses in relation to the Dispute.
SCHEDULE 1
LIENS AND ENCUMBRANCES
CLAUSE 20.1
Encumbrances in favour of the Commonwealth Bank of Australia ACN
123 123 124 and the Authority granted to support the Application
as that term is defined in the Compliance Deed between the
Authority, SHC, SHCP, SHC Holdings, SAL, Leighton, Leighton
Holdings, Casino Manager and Showboat Operating Company.
IN WITNESS WHEREOF the parties have duly executed this Agreement
the day and year first above written.
SIGNED for and on behalf of )
SYDNEY HARBOUR CASINO )
PROPERTIES PTY LIMITED )
)
by: H.G. Nasky its )
Attorney under a Power of Attorney )
)
dated: 21/4/94 )
)
and who declares that he has not )
received any notice of the revocation )
of such Power of Attorney )
in the presence of: ) /s/ H. Gregory Nasky
Signature
/s/ A. Tsekouras
Signature of Witness
A. Tsekouras
Name of Witness in full
<PAGE>
-50-
SIGNED for and on behalf of )
SYDNEY HARBOUR CASINO )
PTY LIMITED by H. G. Nasky its )
Attorney under a Power of Attorney )
dated: 21/4/94 )
and who declares that he has not )
received any notice of the revocation )
of such Power of Attorney )
in the presence of: ) /s/ H. Gregory Nasky
Signature
/s/ A. Tsekouras
Signature of Witness
A. Tsekouras
Name of Witness in full
SIGNED for and on behalf of )
SHOWBOAT AUSTRALIA )
PTY LIMITED by H. G. Nasky its )
Attorney under a Power of Attorney )
dated: 21/4/94 )
and who declares that he has not )
received any notice of the revocation )
of such Power of Attorney )
in the presence of: ) /s/ H. Gregory Nasky
Signature
/s/ A. Tsekouras
Signature of Witness
A. Tsekouras
Name of Witness in full
SIGNED for and on behalf of )
LEIGHTON PROPERTIES )
PTY LIMITED by Vyril Vella its )
Attorney under a Power of Attorney )
dated: 21/4/94 )
and who declares that he has not )
received any notice of the revocation )
of such Power of Attorney )
in the presence of: ) /s/ Vyril Vella
Signature
/s/ Ian George Johnston
Signature of Witness
Ian George Johnston
Name of Witness in full
<PAGE>
-51-
SIGNED for and on behalf of )
SYDNEY CASINO MANAGEMENT )
COMPANY PTY LIMITED by )
H. G. Nasky its )
Attorney under a Power of Attorney )
dated: 21/4/94 )
and who declares that he has not )
received any notice of the revocation )
of such Power of Attorney )
in the presence of: ) /s/ H. Gregory Nasky
Signature
/s/ A. Tsekouras
Signature of Witness
A. Tsekouras
Name of Witness in full
<PAGE>
SHC
FIRST AMENDING DEED
DATE: 6 OCTOBER 1994
NEW SOUTH WALES CASINO CONTROL AUTHORITY
AUTHORITY
SYDNEY HARBOUR CASINO PTY. LIMITED
SHC
SYDNEY HARBOUR CASINO PROPERTIES PTY. LIMITED
SHC PROPERTIES
SYDNEY HARBOUR CASINO HOLDINGS LIMITED
SHC HOLDINGS
SHOWBOAT AUSTRALIA PTY. LIMITED
SBA
LEIGHTON PROPERTIES PTY. LIMITED
LPPL
LEIGHTON CONTRACTORS PTY. LIMITED
LCPL
LEIGHTON HOLDINGS LIMITED
LHL
SYDNEY CASINO MANAGEMENT PTY. LIMITED
SCM
SHOWBOAT OPERATING COMPANY
SOC
SHOWBOAT DEVELOPMENT CORPORATION
SDC
SHOWBOAT INC
SBI
COMMONWEALTH BANK OF AUSTRALIA
CBA
CLAYTON UTZ
SOLICITORS AND ATTORNEYS
NO. 1 O'CONNELL STREET
SYDNEY NSW 2000
TEL: (02) 353 4000
FAX: (02) 251 7832
COPYRIGHT RESERVED
<PAGE>
SHC
FIRST AMENDING DEED
Date: 6 October 1994
New South Wales Casino Control Authority
Authority
Sydney Harbour Casino Pty. Limited
SHC
Sydney Harbour Casino Properties Pty. Limited
SHC Properties
Sydney Harbour Casino Holdings Limited
SHC Holdings
Showboat Australia Pty. Limited
SBA
Leighton Properties Pty. Limited
LPPL
Leighton Contractors Pty. Limited
LCPL
Leighton Holdings Limited
LHL
Sydney Casino Management Pty. Limited
SCM
Showboat Operating Company
SOC
Showboat Development Corporation
SDC
Showboat Inc
SBI
Commonwealth Bank of Australia
CBA
Clayton Utz
Solicitors and Attorneys
No. 1 O'Connell Street
SYDNEY NSW 2000
Tel: (02) 353 4000
Fax: (02) 251 7832
Copyright Reserved
<PAGE>
TABLE OF CONTENTS
Clause Page
1. DEFINITIONS AND INTERPRETATION 2
2. CONSIDERATION 4
3. ASSOCIATED DOCUMENTS 4
4. WARRANTIES AND DISCLAIMER 5
5. AMENDMENTS TO COMPLIANCE DEED 6
6. AMENDMENTS TO OTHER EXECUTED PROJECT DOCUMENTS 27
7. GUARANTORS' CONSENT AND RATIFICATION 28
8. AMENDING PARTIES' CONSENT AND RATIFICATION 28
9. GENERAL 28
10. MISCELLANEOUS 28
SCHEDULE TO FAD 30
<PAGE>
LIST OF EXHIBITS
EXHIBIT 1 Preliminary Site Works Agreement
EXHIBIT 2 Nominee Trust Deeds
EXHIBIT 3 Supplementary Legal Opinion
EXHIBIT 4 First Supplementary Minister's Approval and
Consent Acknowledgement
<PAGE>
THIS DEED is made the 6 day of October 1994
BETWEEN NEW SOUTH WALES CASINO CONTROL AUTHORITY, a statutory
corporation constituted by the Casino Control Act,
1992, on behalf of the State of New South Wales,
pursuant to section 142 of the Casino Control Act 1992,
of Level 17, 309 Kent Street, Sydney, NSW, Australia,
2000 ("Authority")
AND SYDNEY HARBOUR CASINO PTY. LIMITED, ACN 060 510 410, a
company duly incorporated in New South Wales, Australia
of Level 3, 472 Pacific Highway, St Leonards, NSW,
Australia ("SHC")
AND SYDNEY HARBOUR CASINO PROPERTIES PTY. LIMITED, ACN 050
045 120, a company duly incorporated in New South
Wales, Australia of Level 3, 472 Pacific Highway, St
Leonards, NSW, Australia ("SHC Properties")
AND SYDNEY HARBOUR CASINO HOLDINGS LIMITED, ACN 064 054
431, a company duly incorporated in New South Wales,
Australia of Level 3, 472 Pacific Highway, St Leonards,
NSW, Australia ("SHC Holdings")
AND SHOWBOAT AUSTRALIA PTY. LIMITED, ACN 061 299 625, a
company duly incorporated in New South Wales, Australia
of Level 3, 472 Pacific Highway, St Leonards, NSW,
Australia ("SBA")
AND LEIGHTON PROPERTIES PTY. LIMITED, ACN 001 046 395, a
company duly incorporated in New South Wales, Australia
of Level 3, 472 Pacific Highway, St Leonards, NSW,
Australia ("LPPL")
AND LEIGHTON CONTRACTORS PTY. LIMITED, ACN 000 893 667, a
company duly incorporated in New South Wales, Australia
of Level 3, 472 Pacific Highway, St Leonards, NSW,
Australia ("LCPL")
AND LEIGHTON HOLDINGS LIMITED, ACN 004 482 982, a company
duly incorporated in New South Wales, Australia of
Level 3, 472 Pacific Highway, St Leonards, NSW,
Australia ("LHL")
AND SYDNEY CASINO MANAGEMENT PTY. LIMITED, ACN 060 462 053,
a company duly incorporated in New South Wales,
Australia of Level 3, 472 Pacific Highway, St Leonards,
NSW, Australia ("SCM")
AND SHOWBOAT OPERATING COMPANY, a company duly organised
under the laws of the State of Nevada, USA of 2800
Fremont Street, Las Vegas, Nevada 89104 USA ("SOC")
AND SHOWBOAT DEVELOPMENT CORPORATION, a company duly
organised under the laws of the State of Nevada, USA of
2800 Fremont Street, Las Vegas, Nevada, 89104, USA
("SDC")
<PAGE>
2
AND SHOWBOAT INC, a company duly organised under the laws
of the State of Nevada, USA of 2800 Fremont Street, Las
Vegas, Nevada, 89104, USA ("SBI")
AND COMMONWEALTH BANK OF AUSTRALIA, ACN 123 123 124,
incorporated in the ACT and having an of office at
Level 1, 48 Martin Place, Sydney ("CBA")
RECITALS
A. On 22 April 1994 the Authority and certain of the Amending
Parties entered into the Executed Project Documents.
B. This Deed is an amending deed and is supplemental to
certain of the Executed Project Documents.
THIS DEED WITNESSES
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Deed, unless the context otherwise requires:
"ACT" means the Casino Control Act, 1992.
"AMENDING PARTIES" means all the parties to this Deed
other than the Authority.
"COMPLIANCE DEED" means the deed so entitled dated 22
April 1994 made between the Authority and the Application
Parties.
"EXECUTED PROJECT DOCUMENTS" means all of the following:
(a) Compliance Deed;
(b) CD Bank Guarantee (First);
(c) CCA Charge;
(d) CCA Cross Guarantee;
(e) Parent Guarantees;
(f) Confidentiality and Disclaimer Deed;
(g) Deed of Restraint; and
<PAGE>
3
(h) Development Agreement Side Deed.
"EXISTING SHARES" means the existing ordinary shares
issued in SHC Holdings and held by LPPL.
"FIRST SUPPLEMENTARY MINISTER'S APPROVAL AND CONSENT
ACKNOWLEDGEMENT" means the acknowledgement of the Minister
dated -- October 1994, in the form and on the terms set
out in Exhibit 4.
"NEW SHARES" means each fully paid-up ordinary share in
SHC Holdings to be issued to a Nominee as referred to in
clause 3(c).
"NOMINEE" means a person nominated by SBA to take up a New
Share to be held on trust in favour of SBA pursuant to the
relevant Nominee Trust Deed.
"NOMINEE TRUST DEEDS" means the trust deeds entered into
by the Nominees as referred to in clause 3(c), in the form
and on the terms set out in Exhibit 2, each a "Nominee
Trust Deed".
"PRELIMINARY SITE WORKS AGREEMENTS" means the agreement of
even date herewith entitled Preliminary Site Preparation
Excavation and Remediation Works Contract between the
Authority and SHC Properties, in the form and on the terms
set out in Exhibit 1.
"SUPPLEMENTARY LEGAL OPINION" means the US legal opinion
to be given by Messrs Kummer Kaempfer Bonner & Renshaw of
Nevada, USA in the form and on the terms of Exhibit 3
regarding, inter alia, the enforceability of this Deed.
1.2 UNDEFINED WORDS AND PHRASES
Capitalised words and phrases used in this Deed which are
not defined in this Deed shall have the same meaning as in
the Compliance Deed, except that references to Application
Parties" in the definitions of "Event of Default" and
"Event of Force Majeure" shall be read as references to
"Amending Parties". Likewise, capitalised words and
phrases which are referred to in any such definition in
the Compliance Deed shall have the same meaning as in the
Compliance Deed.
1.3 INTERPRETATION
Clause 1.2 of the Compliance Deed is hereby incorporated
in this Deed as if it were expressly set out herein
subject only to insertion of the words "the Compliance
Deed" after "this Deed" in line 1 of clause 1.2(a).
1.4 To the extent of any inconsistency or conflict between the
terms of this Deed, the Compliance Deed and the Act,
Licence, any other Executed Project Document, any other
Transaction Document, Invitation Document or the
Application:
<PAGE>
4
(a) the Act shall prevail over the Licence, this Deed,
the Compliance Deed, all other Executed Project
Documents, all other Transaction Documents, all
Invitation Documents and the Application;
(b) a Licence (if and when granted to SHC) will prevail
over this Deed, the Compliance Deed, all other
Executed Project Documents, all other Transaction
Documents, all Invitation Documents and the
Application;
(c) the Compliance Deed as amended by this Deed will
prevail over all other Executed Project Documents,
all other Transaction Documents, all Invitation
Documents and the Application.
1.5 The rights and obligations of the Amending Parties under
this Deed are in addition and without prejudice to their
respective rights and obligations under the Act.
1.6 Nothing in this Deed whether express or implied
prejudices, fetters or otherwise affects or is intended in
any way to impose any obligation or restriction on the
Authority which in any way conflicts with the obligations,
powers, duties, restrictions and discretions of the
Authority under the Act.
1.7 Each party acknowledges and agrees that CBA is a party to
this Deed solely for the purpose of acknowledging and
consenting to the amendment of the Continuity and Co-
operation Agreement pursuant to clause 5.2(el) and
acknowledging and consenting to the amendment of the
Development Agreement Side Deed pursuant to clause 6.2, it
being a party to each of those Executed Project Documents,
and CBA shall not be deemed a party to, or bound by the
terms and conditions of, any other Executed Project
Document to which it is not a party as a consequence of
CBA joining as an Amending Party under this Deed.
2. CONSIDERATION
Each party acknowledges to the other party that it enters
into this Deed and incurs obligations and gives rights
under it for valuable consideration received from the
other Parties to this Deed.
3. ASSOCIATED DOCUMENTS
On or before execution of this Deed:
(a) the Amending Parties other than CBA shall deliver to
the Authority an unconditional written consent of
BCML pursuant to the terms of the Equity
Underwriting Agreement to the SHC Holdings, LPPL and
SBA entering this Deed;
(b) the Amending Parties other than CBA shall deliver to
the Authority an unconditional written consent of
CBA pursuant to the terms of the Facility Agreement
to SHC, SHC Holdings and SHC Properties entering
this Deed;
<PAGE>
5
(c) (i) LPPL (as the sole shareholder in SHC
Holdings) and SHC Holdings shall cause the
issue and allotment of 5 New Shares in SHC
Holdings at par value as follows:
(A) 2 New Shares to SBA; and
(B) one New Share to each of the 3
Nominees;
(ii) (A) each such issue shall be in
accordance with the provisions of the
Corporations Law; and
(B) the New Shares shall rank equally
with each Existing Share and be
subject to all the same benefits and
entitlements as attach to each
Existing Share;
(iii) SBA shall cause each of its Nominees to
subscribe and pay for and take up each of the
New Shares whereupon SBA shall cause each
Nominee to duly enter into and deliver the
relevant Nominee Trust Deed;
(iv) each Nominee shall hold its New Shares on
trust for SBA pursuant to the relevant
Nominee Trust Deed;
(d) SHC shall cause the delivery to the Authority of the
duly executed Supplementary Legal Opinion; and
(e) SHC Properties shall duly execute and deliver to the
Authority the Preliminary Site Works Agreement.
4. WARRANTIES AND DISCLAIMER
4.1 The Authority warrants that, pursuant to sections 142(1)
and 142(2) of the Act, the Minister has approved of both
the Authority entering into this Deed and its terms as
evidenced by the First Supplementary Minister's Approval
and Consent Acknowledgement.
4.2 Pursuant to the CCA Charge, the Authority hereby consents
to SHC, SHC Holdings and SHC Properties entering into this
Deed.
4.3 Nothing in this Deed shall be taken as, nor is capable of,
constituting an obligation on the Authority to grant a
Licence to any person (including without limitation SHC)
or affecting the Authority's power to determine the
Application by not granting a Licence to SHC pursuant to
section 18(1) of the Act.
4.4 Notwithstanding anything to the contrary expressed in or
which would, but for this clause 4.4, be implied in this
Deed, neither the Authority nor the State of New South
Wales nor its members, employees, delegates, agents,
consultants or advisers shall have any liability
whatsoever to any party in respect of any failure or
breach by the Authority under or in respect of this Deed
or any other matter contemplated hereby.
<PAGE>
6
4.5 (a) The covenants, undertaking, warranties and
representations set out in clauses 1 to 6 inclusive
of Schedule 1 to the Compliance Deed are hereby
incorporated in this Deed as if expressly set out
herein subject to the following:
(i) delete the words "Application Parties"
wherever they appear; and
(ii) in lieu insert the words "Amending Parties"
and each Amending Party other than CBA represents
and warrants to and with the Authority in those
terms.
(b) The representations and warranties included above
are made as at the date of this Deed and are deemed
repeated at all times during the currency of this
Deed with reference to the facts and circumstances
then subsisting as if made at each such time,
unless otherwise expressly stated and shall be
construed separately and the meaning of each shall
in no way be limited by reference to any other
clause contained in this Deed.
5. AMENDMENTS TO COMPLIANCE DEED
5.1 AMENDMENTS TO THE BODY AND SCHEDULES OF THE COMPLIANCE
DEED
The Compliance Deed is amended as follows:
(a) in the definitions "Casino Exclusivity
Agreement", "Casino Duty and Community Benefit Levy
Agreement", "Casino Operations Agreement", "Casino
Taxes Agreements" "CCA Charge", "CD Bank Guarantee
(Second)", "COA Lease Terms", "Deed of Covenant",
"Development Agreement Side Deed", "Permanent Site
Construction Lease", "Continuity and Co-operation
Agreements", "Permanent Site Freehold Lease",
"Temporary Site Construction Sub-Lease", and
"Temporary Site Sub-Lease" insert "as amended by the
First Amending Deed" at the end of each definition;
(b) in the definition of "Application":
(i) delete the words in line 3 "as at the date of
this Deed"; and
(ii) insert after the numeral "3" in line 4 and
before the words "as the same may be and
following the words "and includes without
limitation, the following:
(i) letter from the Authority to Sydney Harbour
Casino Pty. Limited dated 6 April 1994
entitled "re: Sydney Harbour Casino Pty.
Limited Response to the 28 March 1994
Submission";
(ii) letter from the Authority to Sydney Harbour
Casino Pty. Limited
<PAGE>
7
dated 6 April 1994 entitled "re: Sydney
Harbour Casino: Amendments & Further
Particulars relating to the Casino Component;
(iii) letter from the Authority to Sydney Harbour
Casino Pty. Limited dated 26 April 1994
entitled "re: Sydney Harbour Casino:
Amendments & Further Particulars relating to
the Casino Component;
(iv) letter from Sydney Harbour Casino Pty.
Limited to the Authority dated 26 April 1994;
(v) letter from Sydney Harbour Casino Pty.
Limited to the Authority dated 28 April 1994;
(vi) letter from Sydney Harbour Casino Pty.
Limited to the Authority dated 3 May 1994;
(vii) letter from Sydney Harbour Casino Pty.
Limited to the Authority dated 4 May 1994;
(viii) letter from the Authority to Sydney Harbour
Casino Pty. Limited dated 5 May 1994;
(ix) second letter from Sydney Harbour Casino Pty.
Limited to the Authority dated 5 May 1994;
and
(x) letter from the Authority to Sydney Harbour
Casino Pty. Limited dated 9 May 1994
entitled: "re: Sydney Harbour Casino Pty.
Limited Meeting with Authority
Representatives".";
(c) in the definition of "Copyright Assignment Deed",
delete the phrase "SHC" in line 1;
(d) in the definition of "Equity Documents":
(i) delete the words "and the" in line 5 and
insert in lieu thereof "," and
(ii) insert "and" the Nominee Trust Deeds" at the
end of line 6;
(e) insert the following definition after the definition
of "Finance and Security Documents":
"FIRST AMENDING DEED" means the deed to be
entered into on 6 October 1994 between the
Authority, the Application Parties, LCPL, SDC,
SBI and CBA.;
<PAGE>
8
(f) insert the following definition after the definition
of "Nicolson/Marth Undertaking"
"NOMINEE TRUST DEEDS" has the meaning given
in the First Amending Deed.;
(g) in the definition of "Occupation Licence Agreement
(Permanent)", delete the words "Annexure A" in line
2 and in lieu thereof insert "Exhibit 1";
(h) insert the following definition after the definition
of "Preferred Applicant Nomination Date":
"PRELIMINARY SITE WORKS AGREEMENT" has the
meaning given in the First Amending Deed.;
(i) in the definition of "Project Documents":
(i) delete the word "and" at the end of
subparagraph (z);
(ii) delete ".," at the end of subparagraph (aa)
and in lieu thereof insert ";"; and
(iii) insert the following subparagraphs after
subparagraph (aa):
"(bb) the Preliminary Site Works Agreement;
and
(cc) the First Amending Deed";
(j) in the definition of "SCM Memorandum and Articles",
insert "and as further amended on 5 May 1994" after
the brackets in line 3;
(k) in the definition of "SHC Holdings Memorandum and
Articles", insert "and as further amended on 6 May
1994" after the brackets in line 4;
(1) in the definition of "SHC Memorandum and Articles",
insert "and as further amended on 6 May 1994" after
the brackets in line 3;
(m) in the definition of "SHC Properties Memorandum and
Articles", insert "and as further amended on 6 May
1994" after the brackets in line 4;
(n) intentionally not used;
(o) in clause 13.1(b)(i), insert "1.6 million" in the
space provided in line 3;
(p) in clause 17.2 delete "18" in line 1 and in lieu
thereof insert "17";
(q) in clause 7(j) of Schedule 1, after the word
"granted" in line 5, insert "and as set out in the
second paragraph to this clause 7(j)";
(r) after the existing paragraph of clause 7(j) of
Schedule 1, insert
<PAGE>
9
the following:
"Completion of blanks will also include,
without limitation:
(i) annexure of the agreed and approved
plans and specifications forming part
of the D.A. for Permanent Site, shall
become Exhibit 4 to the Permanent
Site Construction Lease and those
forming part of the D.A. for
Temporary Site shall become Exhibit 4
to the Temporary Site Construction
Sub-Lease;
(ii) the relevant details shall be
inserted in the Schedule to the
Copyright Assignment Deed;
(iii) upon registration of the relevant
plans, appropriate title details will
be inserted in the Permanent Site
Construction Lease and the Temporary
Site Construction Sub-Lease; and
(iv) the relevant details will be inserted
in the blanks in clause 12.1 of the
Permanent Site Construction Lease.";
(s) in clause 7(j) of Schedule 1, delete the numerals
"15" in line 9 and in lieu thereof insert the
numerals "16";
(t) in clause 10(g) of Schedule 1, insert at the end "in
the case of clause 10(g)(ii)(A) of this Schedule 1
or, in the case of clause 10(g)(ii)(B) of Schedule
1, the date which is 5 Business Days prior to the
Final D.A. Approval Date".
5.2 AMENDMENTS TO EXHIBITS TO THE COMPLIANCE DEED
(a) Exhibit 6 (Casino Duty and Community Benefit Levy
Agreement) is amended as follows:
(i) In Recital D delete:
(A) "payable in instalments" in line 1 of
sub-clause (a); and
(B) "an annual casino duty and" in line 1
of sub-clause (b);
(ii) in clause 1.1, delete the definition of
"Casino Duty - Base Amount";
(iii) delete the definition of "CD Bank Guarantee
(Second)" and in lieu thereof insert:
<PAGE>
10
""CD BANK GUARANTEE (SECOND)" has the
same meaning as in the Casino Taxes
Agreement, being a guarantee to
secure amongst other things to the
Authority payment of the Specified
Payment Amount referred to in clause
4.2.";
(iv) delete the definition of "First Financial
Year" and in lieu thereof insert:
"First Financial Year" means the period l
July 1994 to 30 June 1995 being the period
during which the Licence was granted to the
Licensee.";
(v) in the definition of "Specified Payment
Amount", delete "[ ]" in line 2 and insert in
lieu thereof "$256,000,000";
(vi) delete clause 4.2 and in lieu thereof insert:
"4.2 The Specified Payment Amount
is due and payable in full on
or before 12 noon
(Sydney time) on the date
which is 21 days after the
Licence Issue Date.";
(vii) delete clause 5 and in lieu thereof insert
the following:
"5. NOT USED. ";
(viii) in clause 6.6, delete "Casino Duty-Base
Amount";
(ix) in Schedule 1 paragraph (c):
(A) delete "first instalment of the" in
line 3; and
(B) delete "and the first instalment of
the Casino Duty-Base Amount only" in
lines 4 and 5; and
(x) delete Schedule 3 and in lieu thereof insert:
"SCHEDULE 3 - NOT USED";
(b) Exhibit 7 (Casino Exclusivity Agreement) is amended
as follows:
(i) in clause 1.1, after the definition of "Act"
insert:
"APPROVED AMUSEMENT DEVICE" has the
meaning given in the Liquor Act 1982
(NSW)."
<PAGE>
11
(ii) in the definition of "Casino" in clause 1.1,
delete the word "Section" and in lieu thereof
insert "section";
(iii) in clause 1.1, delete the definition of
"Operations" and in lieu thereof insert:
""OPERATIONS" has the meaning given
in paragraph (a) of the definition of
"operations" in section 3 of the
Act.";
(iv) in each of paragraphs (i), (iii), (iv) and
(v) of the definition of "Table Game" in
clause 1.1, add to the end "from time to
time.";
(v) in paragraph (ii) of the definition of "Table
Game" in clause 1.1, add to the end "or an
Approved Amusement Device.";
(vi) in paragraph (iv) of the definition of "Table
Game" in clause 1.1, delete the words "a
Poker Machine" in line 1 and in lieu thereof
insert "an Approved Amusement Device"; and
(vii) in paragraph (vi) of the definition of "Table
Game" in clause 1.1, add to the end the
following sentence:
"For the avoidance of doubt nothing in
this paragraph (vi) shall be taken as
limiting or restricting the operation
of paragraphs (i) to (v) above
inclusive and, in particular, the
operation of clause 1.2(h) in respect
of those paragraphs".
(c) Exhibit 8 (Casino Operations Agreement) is amended
as follows:
(i) in the definition of "Occupation Licence
Agreement (Permanent)", delete the words
"Annexure A" and in lieu thereof insert
"Exhibit 1";
(ii) in clause 6.l(a), delete the words "clause
1.2" in the last sentence and in lieu thereof
insert "clause 1.1";
(iii) in Schedule 3, after clause 10, insert the
following:
"11. MINIMUM HOTEL MODULES
In addition and without
prejudice to any other
obligations under the Project
Documents the Contracting
Parties shall ensure that at
all times during the currency
of the Permanent Site Freehold
Lease, at
<PAGE>
12
least the equivalent of 600
hotel modules (each of an area
not less than 35m2) are
available at all times
for tourist/public use either
at the Permanent Site, or
partly at the Permanent Site
and partly as the serviced
apartments forming part of
the hotel accommodation within
the Applications"; and
(iv) in Exhibit 4 to Casino Operations Agreement
(COA Lease Terms):
(A) In clause 2.1(b) delete in line 3 and
following:
"if the Lessor shall have made an
election pursuant to Schedule 1 of the
Permanent Site Construction Lease to
have the rent payable during the
Primary Rental Period prepaid and
the Lessee shall have done so then for
the period of [ ] from the Lease
Commencement Date (being the balance
of the Primary Rental Period as that
expression is defined in Schedule 1
to the Permanent Site Construction
Lease) no further rental shall be
payable";
and insert in lieu thereof the
following:
"if the Lessee has paid to the Lessor
the payment referred to in clause
2 of Schedule 1 to the Permanent
Site Construction Lease then for the
period of [ ] from the Lease
Commencement Date (being the balance
of the Primary Rental Period as that
expression is defined in Schedule 1
to the Permanent Site Construction
Lease), no further rental shall be
payable in respect of that period
and rental payable pursuant to clause
3 of Schedule 1 to this Lease shall
be payable on the date being the day
immediately following the last day of
the Primary Rental Period and
thereafter on each anniversary of that
date."
(B) after Part 3, insert:
"PART 3A INDEMNITY FOR ENVIRONMENTAL
MATTERS
3A.1 The Lessor acknowledges that
clause 4.10 of the Permanent Site
Construction Lease contains warranties
and an indemnity in favour of the
Lessee thereunder. The Lessor
acknowledges and agrees that it gives
<PAGE>
13
to the Lessee the warranties and
indemnity in the same terms as
contained in the aforementioned clause
4.10 with the exception that the
twenty-five (25) year period referred
to in clause 4.10(b) and (c) shall
expire on the twenty-fifth anniversary
of the Lease Commencement Date of the
Permanent Site Construction Lease."
(C) in clause 6.2(d), delete "(g)" in line 1
and in lieu thereof insert "(c)";
(D) In Schedule 1:
(AA) delete clause 1 and insert in lieu
thereof the following:
"The rental payable will be at the
rate of $15,000,000 per annum for
the period of [ ] being the
balance of the Primary Rental
Period."
(BB) delete clause 2 and insert in lieu
thereof the following:
"Notwithstanding clause 1, provided
that the payment referred to in
clause 2 of Schedule 1 to the
Permanent Site Construction Lease
has been made, no further rental
shall be payable in respect of the
Primary Rental Period or any part
thereof"; and
(CC) in clause 3 delete "[ ]" in and
insert in lieu thereof "250,000.
(d) Exhibit 9 (The Casino Taxes Agreement) is amended as
follows:
(i) delete the definition of "Casino Duty - Base
Amount";
(ii) in the definition of "CD Bank Guarantee
(Second)", delete all words after the word
of" where first appearing in line 2 and in
lieu thereof insert "amongst other things,
payment of the First Specified Amount
referred to in clause 4.2 of the Casino Duty
and Community Benefit Levy Agreement."; and
(iii) in clause 6:
<PAGE>
14
(A) after the word "secure" in line 2,
insert "amongst other things";
(B) delete the words "the first
instalment of" in line 4;
(C) delete "(a)" in line 5; and
(D) delete all words after the word
"Agreement" in line 5;
(e) Exhibit 15 (CD Bank Guarantee (Second)) is amended
as follows:
(i) in clause 2 delete all words after the word
"exceeding" in line 7 and insert in lieu
thereof the following:
"$376,000,000 representing $256,000,000 in
respect of the Specified Payment Amount under
and as defined in the Casino Duty and
Community Benefit Levy Agreement of even date
herewith between the Treasurer of the State
of New South Wales and the Licensee and
$120,000,000 in respect of the total amount
under clause 3 of Schedule 1 of the Permanent
Site Construction Lease of even date herewith
between Sydney Harbour Casino Properties Pty
Limited and the Beneficiary ("GUARANTEED
AMOUNT")."
(el) Exhibit 18 (Continuity and Co-Operation Agreement)
is amended as follows:
(i) in clause 16.2, line 1 delete "If the Project
Company fails to remedy the Obligation
Default:" and insert in lieu thereof:
"If for any reason an Obligation Default is
not remedied:";
(f) Exhibit 33 (Permanent Site Construction Lease) is
amended as follows:
(i) in clause 1.1:
(A) in the definition of Compliance Deed,
delete "[ ]" and insert in lieu
thereof "22 April 1994";
(B) delete the definition of "Light Rail
Works Plans and Specifications" and
in lieu thereof insert:
"LIGHT RAIL WORKS PLANS AND
SPECIFICATIONS" means the plans and
specifications for the Light Rail
Works to be prepared by the Lessee
and approved by the Lessor, which
plans and specifications must be of
no lesser standard than as specified
in the annexure to the Light Rail
Warranty Deed"";
<PAGE>
15
(C) in the definition of
"Pre-requisites", delete sub-clause
(g) and insert: "(g) Not Used";
(D) insert the following definition after
the definition of "Pre-requisites":
"PRELIMINARY SITE WORKS AGREEMENT"
means an agreement dated 6 October
1994 between the Casino Control
Authority and the Lessee entitled
Preliminary Site Preparation
Excavation and Remediation Works
Contract.";
(ii) intentionally not used;
(iii) in clause 4.10(a), delete the definition of
"Environmental Laws" and in lieu thereof
insert:
"ENVIRONMENTAL LAWS" means laws
current from time to time for
protection of the Environment against
contamination or pollution of air or
water, soil or ground water, the
ozone layer or public health by
chemicals, pesticides, hazardous
substances, hazardous wastes,
dangerous goods, environmental
hazards or noxious trades and
enforcement or administration of any
of those laws (whether they arise
under statute or pursuant to any
notice, decree, order or directive of
any government entity.);
(iv) in clause 4.10(b), after the word "that in
line 1 insert "immediately";
(v) delete clause 4.11 and in lieu thereof
insert:
"4.11 "Completion of certain
excavation
If at Lease Commencement
excavation of the Land to the
levels and dimensions
identified in Exhibit 17 to
this Lease shall not have
been completed, then:
(a) the Lessee shall with
all due expedition
cause the excavation to
be completed to the
levels and dimensions
identified in Exhibit
17.
(b) the following
provisions of the
<PAGE>
16
Preliminary Site Works
Agreement shall apply
mutatis mutandis to the
completion of those
works:
1.2, 1.3, 1.4, 1.5,
1.6, 2.1(a) and the
last sentence, 2.4,
3.1, 3.2, 3.3, 4.1,
4.2, 4.3, 5.1, 5.2,
5.3, 5.4, 6.1, 6.2,
6.3, 6.4, 6.5, 7.1,
7.2, 7.3, 7.4, 7.5,
7.6, 7.7, 7.8, 8.6,
13.1, 14.5, 14.7,
Schedules 1, 2, 3,
4, 5, 6 and 7.
(c) the Lessee shall bear
the cost of completing
the Works subject to
the other provisions of
this Lease, but the
Casino Control
Authority shall be
liable to pay all
money which would have
been payable under the
Preliminary Site Works
Agreement, had it been
performed to
completion, plus
$40,480 (being fees
payable to Dames &
Moore), less
$4,750,000. To the
extent that the Lessee
has been paid money
under the Preliminary
Site Works Agreement,
the Lessee shall credit
to the Lessor the
amount so received,
and if that amount
exceeds the money
payable pursuant to
this clause, shall
re-pay to the Lessor
that excess.";
(vi) after clause 4.15, insert the following:
"4.16 The parties agree that for the
purposes of clause 4.10(c), the
expense to the Lessee of it causing
contaminated material to be handled,
stockpiled, removed from site and
disposed of (including selection of
disposal site and arranging for
disposal) shall until the Works have
been completed be:
The following unit "extra over"
rates per cubic metre, loose
measured in the truck, measured at
the gate shall apply, to include
<PAGE>
17
all handling, stockpiling, removal
from the Site and disposal costs
including selection of disposal site
and arranging for disposal.
(i) Materials which can be disposed
of without stabilization:
$90/m3
(ii) Asbestos Contaminated Soils:
Cost plus 25% for overheads and
profit
(iii) Other material:
Cost plus 25% for overheads and
profit.";
(vii) in clause 5.1(a), insert at the end:
"and, in respect of the Light Rail
Works, must be of no lesser standard
than as specified in the annexure to
the Light Rail Warranty Deed";
(viii) in clause 5.1(c):
(A) delete in the second sentence the
words "to do so" appearing in line 8;
and
(B) insert at the end of the fourth
sentence:
"and shall conduct the appeal in
accordance with any directions
(including as to counsel or other
representative) from time to time
issued by the Lessor";
(ix) intentionally not used;
(x) in clause 6.5(e)(iii), delete "or";
(xi) in clause 6.5(e)(iv), insert "or" at the end;
(xii) after clause 6.5(e)(iv), insert the
following:
"(v) by reason of the application of
clause 6.5(i)";
<PAGE>
18
(xiii) after clause 6.5(h), insert the following:
"6.5(i) The parties acknowledge that
the Estimated Construction
Period was predicated on the
site, having been handed over
to the Lessee, excavated to
the levels and dimensions
identified in Exhibit 17.
Except to the extent that
delay arises because the
Lessee shall have failed to
dutifully comply with its
obligations under the
Preliminary Site Works
Agreement as to the rate at
which it carried out the Works
thereunder, then if on Lease
Commencement Date excavation
shall not have been completed
to the levels and dimensions
identified in Exhibit 17, then
the Lessee shall be entitled
to an extension of time
subject to the provisions of
this clause 6.5.";
(xiv) after the existing paragraph of clause 6.10,
insert the following paragraph:
"Whenever the Lessee shall seek the
consent or approval of the Lessor in
respect of the work contemplated by
clause 4.11 and the Lessor seek the
advice of a consultant in respect
thereof, the Lessor shall be entitled
to the cost thereof pursuant to this
clause.";
(xv) in clause 6.14(a), after the word "Deed" in
line 2 insert:
"but must nevertheless cause the Light
Rail Works Plans and Specifications to
be of no lesser standard than as
specified in the annexure to the Light
Rail Warranty Deed.";
(xvi) in clause 16.2, after subparagraph (g)
insert:
"(h) If so directed by the Lessor the
New Lease shall include as part
of the Premises defined therein
the stratum referred to in Part
20.";
(xvii) in Part 20, after the word "guarantee" in
line 7, insert:
"As an alternative, the Lessor may
require that the stratum form part of
the Premises comprising the Permanent
Site Freehold Lease and the COA Lease
<PAGE>
19
Terms."; and
(xviii)In Schedule 1:
(A) delete in line 4 of clause 1 "[ ] ["
and insert in lieu thereof
"l5,000,000";
(B) delete clause 2 and insert in lieu
thereof the following:
"Notwithstanding clause 1, the Parties
have agreed that the rental payable
during the Primary Rental Period shall
be prepaid as set out in clause 3."
(C) delete clause 3 and insert in lieu
thereof the following:
"On or before 12 noon (Sydney time) on
the date which is 21 days after Lease
Commencement Date, the Lessee shall
pay to the Lessor an amount of
$120,000,000 in immediately available
and cleared funds in prepayment of the
rental payable during the Primary
Rental Period."
(xvix) in Exhibit 19- to Permanent Site Construction
Lease (Permanent Site Freehold Lease):
(A) In clause 2.1(b) delete in line 3 and
following:
"if the Lessor shall have made an
election pursuant to Schedule 1 of the
Permanent Site Construction Lease to
have the rent payable during the
Primary Rental Period prepaid and the
Lessee shall have done so then for the
period of [ ] from the Lease
Commencement Date (being the balance
of the Primary Rental Period) no
further rental shall be payable";
and insert in lieu thereof the
following:
"if the Lessee has paid to the Lessor
the payment referred to in clause 2 of
Schedule 1 to the Permanent Site Lease
(Construction Lease) then for the
period of [ ] from the Lease
Commencement Date (being the balance
of the Primary Rental Period), no
further rental shall be payable in
respect of that period and rental
payable pursuant to clause 3 of
Schedule 1 to this Lease shall be
payable on the date being the day
immediately following the last day of
the Primary Rental Period and
thereafter on each anniversary of
<PAGE>
20
that date."
(B) after Part 3, insert a new Part 3A as
follows:
"PART 3A INDEMNITY FOR ENVIRONMENTAL
MATTERS
3A.1 The Lessor acknowledges that
clause 4.10 of the Permanent
Site Lease (Construction Lease)
contains warranties and an
indemnity in favour of the
Lessee thereunder. The Lessor
acknowledges and agrees that it
gives to the Lessee the
warranties and indemnity in the
same terms as contained in the
aforementioned clause 4.10 with
the exception that the
twenty-five (25) year period
referred to in clause 4.10(b)
and (c) shall expire on the
twenty-fifth anniversary of the
Lease Commencement Date of the
Permanent Site Lease
(Construction Lease).";
(C) Not Used.
(D) In Schedule 1:
(AA) in clause 1, line 1 and 2,
delete the following:
"In the event that the Lessor
did not make an election as
contemplated by clause 2 of
Schedule 1 to the Permanent
Site Lease (Construction Lease)
then the"
and insert in lieu thereof
"The";
(BB) in clause 1, delete "[ ]" where
first appearing and insert in
lieu thereof "15,000,000";
(CC) in clause 1, insert "Rental" in
line 4 after "Primary";
(DD) insert as a new clause 2 the
following:
"2. Notwithstanding clause 1,
<PAGE>
21
provided that the payment
referred to in clause 2 of
Schedule 1 to the
Permanent Site Lease
(Construction Lease) has
been made, no further
rental shall be payable
in respect of the Primary
Rental Period or any part
thereof"; and
(EE) renumber clause 2 as clause 3
and delete "[ ]" and insert in
lieu thereof "250,000."
(g) Exhibit 42 (Temporary Site Construction Sub-Lease)
is amended as follows:
(i) in the definition of "Building Approval",
delete the words "a buildings * in line 2 and
in lieu thereof insert "the Works";
(ii) in the definition of "Deed of Covenant",
delete the word "Lease" in line 3 and in lieu
thereof insert "Sub-Tense";
(iii) in the definition of "Minister", after the
word "the" where last appearing in line 1,
insert "Casino Control";
(iv) in clause 4.9, delete the word "land" in line
5 and in lieu thereof insert "Land";
(v) in paragraph (a) of clause 4.14, delete the
words "and utilities within";
(vi) in clause 4.14, insert after sub-clause (c),
the following:
"(d) For the purposes of paragraph
(a) of this clause the Lessee
acknowledges and agrees that
the phrase "loading
requirements of the Project"
in relation to water,
sewerage, drainage and
electricity services means as
follows:
(i) Water-peak domestic
demand of 14.4 litres
per second and peak fire
demand of 22 litres per
second;
(ii) Sewerage - total fixture
units of 1285FU;
<PAGE>
22
(iii) Drainage - no
additional drainage is
required for the
improvements erected
upon the land at or
prior to the Lease
Commencement Date.
(iv) Stormwater Drainage -
both from the
improvements erected on
the Land at any time
(including at or prior
to the lease
Commencement Date) and
from the external car
park shall be the sole
responsibility of the
Lessee who shall be
required to meet the
appropriate discharge
requirements of the
Maritime Services Board
and Environmental
Protection Authority and
to ensure that the
existing pipes and
drains installed in the
external car park and
other external areas of
the Premises are
adequate and sufficient
to meet the Lessee's
needs;
(v) Electricity - maximum
demand load of 3MVA.";
"(e) The Lessee agrees that the
obligations of the Lessor pursuant to
this clause 4.14 shall be limited to
the undertaking of the following
works in relation to the services to
be made available to the Premises at
or prior to the Lease Commencement
Date: -
(i) Electricity - the installation
of a new pit and conduit in
Foreshore Road and the ducts
necessary to enable the maximum
demand load to be made
available by Sydney Electricity
upon application by the Lessee
for the installation of cabling
and the undertaking of any
other necessary works; and
(ii) Gas - the installation of the
reticulation mains to connect
the
<PAGE>
23
Premises to the existing gas
lines in Foreshore Road."
(vii) After clause 4.14, insert the following:
"4.15 LIMITATION TO SERVICES WARRANTY AND
INDEMNITY
The Lessee agrees that
notwithstanding the provisions of
clause 4.14 the Lessor shall not be
liable or responsible for any failure
of the water, sewerage, drainage, gas
and electrical services connected to
the Premises as at 1 June 1994 ("the
Existing Services") which occurs
after the Lease Commencement Date.
The Lessee acknowledges that except
as specifically provided in clause
4.14 the Lessor makes no
representation as to the capacity,
suitability, adequacy or state of
repair of the Existing Services and,
except as specifically provided in
clause 4.14 the Lessee further
acknowledges and agrees that it shall
not be entitled to commence any
action or make any claim (whether on
an indemnity or any other basis)
against the Lessor in relation to any
failure, inadequacy or unsuitability
in respect of any of the Existing
Services.
4.16 OBLIGATION TO MAINTAIN SERVICES
The Lessee further agrees that it
shall be responsible for maintaining
the Existing Services on the Premises
during the term of the Lease and
agrees to indemnify the Lessor in
respect of any cost, claim, demand,
proceeding or action which may be
brought against the Lessor by any
relevant authority or other person in
respect of any failure by the Lessee
to maintain the Existing Services
during the term of the Lease as
provided herein."
(viii) in clause 5.14, delete the word "Lease" in
line 1 and in lieu thereof insert
"Sub-Lease";
(ix) in clause 6.5(e)(ii), delete the word "Lease"
in line 3 and in lieu thereof insert
"Sub-Lease";
(x) intentionally not used;
(xi) in clause 8.8(a), delete the word "Board" in
line 3 and in lieu thereof insert "Brigade";
<PAGE>
24
(xii) in clause 9.1(a),
(A) delete the word "The" in line 1 and
in lieu thereof insert "the";
(B) after the word "law" in line 1 insert
"the Head Lessor,"; and
(C) replace the full stop at the end with
a semi-colon;
(xiii) in clause 9.1(b),
(A) delete the word "The" in line 1 and
in lieu thereof insert "the"; and
(B) after the word "indemnifies" in line
1 and "which" in line 4 insert "the
Head Lessor,";
(xiv) in clause 9.1, insert at the end of the
penultimate paragraph:
"nor to release or indemnify the Head
Lessor where the act in question
amounts to a negligent act or omission
on the part of the Head Lessor.";
(xv) in clause 9.2(a)(ii)(c), delete the last
sentence;
(xvi) in clause 9.2(d), delete the word "Lease" in
line 1 and in lieu thereof insert
"Sub-Lease";
(xvii) in clause 9.5, delete the word "improvements"
in line 1 and in lieu thereof insert
Improvements";
(xviii)in clause 12.1, delete the word "Lessor" in
line 1 and in lieu thereof insert "Lessee";
(xix) in clause 12.1(a), delete the word "rent" in
line 1 and in lieu thereof insert "Rent";
(xx) in clause 15.11, delete the numerals "11" in
the penultimate line and in lieu thereof
insert "llA";
(xxi) in clause 15.14, delete the word "Lease"
wherever appearing and in lieu thereof insert
"Sub-Lease";
(xxii) in Exhibit 4A (Deed of Covenant):
(A) in clause 3.2(b), delete the words
"6.l(d) of the Sub-
<PAGE>
25
Lease" in line 2 and in lieu thereof
insert "9.1 of the Temporary Site
Construction Sub-Lease";
(B) in clause 3.2(c), delete the words
"sub-clause (a)" in line 3 and in
lieu thereof insert "sub-clauses (a)
and (b)"; and
(C) after clause 10.8, insert:
"10.9 NO REPRESENTATION OR WARRANTY
BY CWDC
SHCP acknowledges that no
representation or warranty is
or has been given by CWDC in
relation to the completeness
or accuracy of any drawings,
plans or specifications
provided to SHCP, Sydney
Harbour Casino Pty. Limited,
Leighton Properties Pty.
Limited or Leighton
Contractors Pty. Limited or
their respective contractors
or any other person or
corporation whether or not
related to or associated with
the above named parties, in
respect of wharves 12 and 13
at Pyrmont.";
(xxiii)in Exhibit 11 (Temporary Site Sub-Lease):
(A) insert the following definition after
the definition of "Authority":
"BUILDING" means the
improvements now or hereafter
erected upon the Land and
where the context so permits
any part thereof.";
(B) in clause 2.7, line 1, delete the
word "the" where last appearing in
line 1 and in lieu thereof insert
"this";
(C) in clause 2.7, delete the handwritten
words and in lieu thereof insert:
"Where the Rent is paid beyond the
date of expiration of this Sub-Lease
or the date the Premises are resumed
then the Lessee shall be entitled to
a refund of any excess Rent paid by
it. Such refund shall be calculated
on the basis that Rent accrues on a
daily basis.";
(D) in clause 5.1, delete the words "when
first constructed or erected or
brought upon the Premises" in lines 5
<PAGE>
26
and 6 and in lieu thereof insert "at
Lease Commencement Date";
(E) in clause 5.10(a), delete the word
"Lease" in line 6 and in lieu thereof
insert "Sub-Lease";
(F) in clause 5.10(c), delete the word
"Lease" in line 2 and in lieu thereof
insert "Sub-Lease";
(G) in clause 5.11(b), delete the words
"the Lease" in line 2 and in lieu
thereof insert "this Sub-Lease";
(H) in clause 5.15, delete the word
"Lease" in line 3 and in lieu thereof
insert "Sub-Lease";
(I) in clause 6.2(h), after the word
"Lessor" in lines 2 and 3 insert "and
the Head Lessor";
(J) in clause 6.5(c):
(AA) after the word "Lessor" in line
2 insert "or the Head Lessor";
(BB) in line 6, insert "that
neither" before the word "the";
and
(CC) in line 7, insert "nor the Head
Lessor" before the word
"elects".
(K) in clause 9.1, delete the word
"Lease" in line 1 and in lieu thereof
insert "Sub-Lease";
(L) in clause 9.1A(b), after the word
"Lessor" in line 1 insert "and the
Head Lessor";
(M) in clause 10.7(b), delete the word
"the" in line 2 and in lieu thereof
insert "this";
(N) in clause 10.13, delete the words
"the Lease" in the 4th last line, and
in lieu thereof insert "this Sub-
lease";
(O) in clause 14.1.1, delete "[deletion
made subject to CWDC confirmation]";
(P) in paragraph 6 of Schedule 1, delete
the words "be refunded" in the last
line and in lieu thereof insert
<PAGE>
27
"shall, unless as otherwise provided
in this Sub-Lease, be such moneys
paid";
(Q) in Part A of Schedule 2 insert the
following at the end as new
paragraphs:
" - the removal and making good of
the proposed roundabout and third
laneway of Darling Island Drive, to
the north of the community park as
detailed in the final CWDC Design
dated [to be advised].; and
- the removal and making good of the
proposed roundabout at the
intersection of Jones Bay Road and
Foreshore Road as detailed in the
final CWDC Design dated [to be
advised].";
(R) in Part A of Schedule 2, after the
words "Loose landscaping - ie. potted
plants etc." where first appearing
insert as a new paragraph the words
and figures set out in the Schedule
hereto; delete the words "Make good
to be undertaken by the Lessee upon
the expiration or sooner
determination of this Sub-Lease"
where first appearing; and delete the
words "Loose landscaping - ie. potted
plants etc. " where second appearing.
5.3 RATIFICATION AND CONFIRMATION OF COMPLIANCE DEED
In all other respects the parties to the Compliance Deed
ratify and confirm their respective obligations under the
Compliance Deed.
6. AMENDMENTS TO OTHER EXECUTE PROJECT DOCUMENTS
6.1 CCA CHARGE
(a) The CCA Charge is amended by deleting from paragraph
(b) of the definition of "Obligations Licence
Condition" the words "in paragraph (a) of that
definition".
(b) In all other respects the parties to the CCA Charge
ratify and confirm their respective obligations
under the CCA Charge.
6.2 DEVELOPMENT AGREEMENT SIDE DEED
(a) The Development Agreement Side Deed is amended as
follows:
(i) in clause 4.6B, delete the word "Agent" in
line 7 and in lieu
<PAGE>
28
thereof insert "Authority";
(ii) in clause 20.4, after the word "Authority" in
line 1 of the final paragraph insert "or the
Agent (as the case may be)";
(iii) delete clause 25.5 and in lieu thereof insert
"25.5 - Not Used";
(iv) in the heading to clause 28.2, delete "and
the Authority";
(v) in clause 33.4, delete the words "a valid
operation to the fullest extents in lines 8
and 9 and in lieu thereof insert "as full and
as valid an operation as possible; and
(vi) in clause 36.1, delete the word "Construct"
in line 5 and in lieu thereof insert the word
"Construction".
(b) In all other respects the parties to the Development
Agreement Side Deed ratify and confirm their
respective obligations under the Development
Agreement Side Deed.
7. GUARANTORS' CONSENT AND RATIFICATION
Each of LHL, SDC and SBI consents to the amendments to the
Executed Project Documents in the manner set forth in
clauses 5 and 6 and ratifies and confirms its respective
obligations under the Leighton Guarantee and Showboat
Guarantee respectively, in respect of each of such
Executed Project Document as so amended.
8. AMENDING PARTIES' CONSENT AND RATIFICATION
To the extent that the consent of or approval by any
Amending Party is required to the amendments to the
Executed Project Documents in the manner set forth in
clauses 5 and 6, under the terms of any Executed Project
Document and/or any executed Application Documents to
which it is a party, that consent is hereby given and each
such Amending Party ratifies and confirms its obligations
under each such Executed Project Document and/or executed
Application Document, in respect of each of such deeds as
so amended.
9. GENERAL
Any reference in any Transaction Document to any document
amended by this Deed shall be read and construed and have
force and effect as including the amendments thereto
effected by this Deed.
10. MISCELLANEOUS
Clauses 7 and 8, 10 to 12, 13.2 and 14 to 32 inclusive of
the Compliance Deed are hereby incorporated in this Deed
as if expressly set out herein subject to the following:
<PAGE>
29
(a) each reference to the words Application Parties" in
clauses 8, 10, 11, 12, 13.2, 16, 17, 27, 28 and 30
of the Compliance Deed shall be read and construed
as a reference to "Amending Parties";
(b) references to clauses within clause 8.2 and clause
1l.5(b) shall be read as references to clauses of
the Compliance Deed;
(c) a reference to the Minister's Approval and Consent
Acknowledgement includes a reference to the First
Supplementary Minister's Approval and Consent
Acknowledgement;
(d) insert the words "SDC and SBI" after "SOC" in line 1
of clause 17.3; and
(e) delete the words "as set out in clause 9" from line
3 of clause 18.
<PAGE>
30
SCHEDULE TO FAD
(Clause 5.2(g)(xxiii)(R))
"The expression "loose and limited fixed kitchen equipment" shall
mean the following items:
Coolroom
Dry Store Shelving
Pallet Truck
High Pressure Watercleaners
Flat Bed Trolley
Shelving
Vegetable Processor
Vegetable Peeler
Planetary Mixer 40 Litre
Vertical Cutter/Mixer
Shelving
Utensil Rack
Trolley (General Purpose)
Ice Machine
Slicer
Chopping Block
Shelving
Utensil Rack
Trolley (General Purpose)
Spiral Mixer
Planetary Mixer 80 litre
Planetary Mixer 20 litre
Dough Divider Rounder
Dough Sheeter
Vertical Cutter Mixer
Chocolate Temperer
Chocolate Enrober
2 door Retarder Prover
2 door Upright Refrigerator
45 litre Kettle
Rotary Multideck Oven
Shelving
Utensil Rack
Trolley (Bake)
Combi Oven 10 tray
Combi Oven 20 tray
Mixer Kettle 150 litre
Kettle 150 litre
Kettle 45 litre
Bram Plan
<PAGE>
31
Frying Suite
Vertical Cutter Mixer 60 litre
Blast Chiller
Chilling Trolley
Utensil Rack
Pot Wash Machine
High Pressure Water Cleaner
Dishwasher
Tray Lowerators
Soak Sinks
Silver Burnisher
Shelving
Utensil Racking
Shelving
Bain Marie Hot Display
Cold Well Display
Salad Bar
2 door Upright Refrigerator - Pass thru
Microwave Oven
Milk Dispenser
Soup Kettle
Water Chiller
Ice Dispenser
Pie Oven
Plater Lowerator (Unheated)
Plater Lowerator (Heated)
Holding Cabinets
2 door Upright Refrigerator
2 door Upright Freezer
Shelving
45 litre Kettle
Re-heat Ovens
Utensil Racks
Ice Flaker
Ice Cream Dispenser
Pasta Cookers
Sauce Kettles
Fryer
Rice Cooker
Milk Dispenser
Carvery Unit
Cook'n Hold Oven
Rice Cooker
Fryer
2 door Upright Refrigerator
2 door Upright Freezer
Shelving
<PAGE>
32
Utensil Rack
Dishwasher
2 door Upright Refrigerator
Towel Warmer
Food Processor
Boiling Water Unit
Microwave
10 tray Combi Oven
Fryer
Kettle 45 litre
2 door Upright Freezer
Utensil Rack
Shelving
Dishwasher
2 door Upright Refrigerator
Food Processor
Boiling Water Unit
Microwave Oven
Shelving
Utensil Rack
2 door Upright Refrigerator
Ice Maker
Clam Shell Griddle
Frying Suite
Pressure Fryer
20 tray Combi Oven
Toaster
Soft Serve Machine
Shelving
Holding Cabinets
Boiling Water Unit
Microwave
2 door Upright Refrigerator
6 tray Combi Oven
Fryer
Shelving
2 door Upright Refrigerator
2 door Upright Freezer
Utensil Rack
Dishwasher
2 door Upright Refrigerator
Microwave
Mixer - 20 litre
Food Processor
Boiling Water Unit
Wine Racking
Towel Warmer
<PAGE>
33
Juicer
2 door Upright Refrigerator
Shelving
Ice Maker
Blender
Glass Washer
2 door Upright Refrigerator
Shelving
Ice Maker
Blender
Glass Washer
2 door Upright Refrigerator
Shelving
Ice Maker
Blender
2 door Upright Refrigerator
Shelving
Ice Maker
Blender
Ice Maker
Shelving
Blenders
Ice Maker
Shelving
Blenders
Ice Maker
Shelving
Blenders
2 door Upright Refrigerator
2 door Upright Refrigerator
Ice Maker
2 door Upright Refrigerator
Shelving
Glass Washer
Blenders
2 Door Upright Refrigerator
Ice Maker
Blenders
Linen Shelving
Linen Bins
Linen Trolleys
Operating Supply Store Shelving
General Store Shelving
Lost and Found Store Shelving
Head Cleaners Store Shelving
Chemical Store Shelving
Conveyor Racking System
<PAGE>
34
Shelving
Mobile Hanging Racks
Dirty Uniform Bins
Sewing Machine
Overlocker
Iron
Ironing Board
Compactor - Three Chamber (Recycling)
<PAGE>
35
EXECUTED as a deed.
THE COMMON SEAL of )
NEW SOUTH WALES CASINO )
CONTROL AUTHORITY was hereunto )
affixed in the presence of the Chief )
Executive: )
/s/ Peter Shaw /s/
(Signature of Witness) (Signature of
Chief Executive)
Peter John Shaw (Name of Chief
(Name of Witness) Executive)
SIGNED SEALED AND DELIVERED for )
and on behalf of ) /s/ H. Gregory
SYDNEY HARBOUR CASINO PTY. ) Nasky
LIMITED, ACN 060 510 410 by ) (Signature)
Harold Gregory Nasky )
its Attorney under a Power of Attorney )
dated 21 April 1994 and registered Book )
4055 No. 578 and who declares that he has )
not received any notice of the revocation of )
such Power of Attorney in the presence of: )
/s/ Ian Johnston
(Signature of Witness)
Ian George Johnston
(Name of Witness in Full)
<PAGE>
36
SIGNED SEALED AND DELIVERED for )
and on behalf of ) /s/ H. Gregory
SYDNEY HARBOUR CASINO ) Nasky
PROPERTIES PTY. LIMITED, ACN 050 ) (Signature)
045 120 by Harold Gregory Nasky its )
Attorney under a Power of Attorney dated )
21 April 1994 and registered Book 4055 )
No. 579 and who declares that he has not )
received any notice of the revocation of )
such Power of Attorney in the presence of: )
/s/ Ian Johnston
(Signature of Witness)
Ian George Johnston
(Name of Witness in Full)
SIGNED SEALED AND DELIVERED for ) /s/ H. Gregory
and on behalf of ) Nasky
SYDNEY HARBOUR CASINO ) (Signature)
HOLDINGS LIMITED, ACN 064 054 431 )
by Harold Gregory Nasky its Attorney under a )
Power of Attorney dated 21 April 1994 and )
registered Book 4055 No. 577 and who )
declares that he has not received any notice )
of the revocation of such Power of Attorney )
in the presence of: )
/s/ Ian Johnston
(Signature of Witness)
Ian George Johnston
(Name of Witness in Full)
<PAGE>
37
SIGNED SEALED AND DELIVERED for ) /S/ H. Gregory
and on behalf of ) Nasky
SHOWBOAT AUSTRALIA PTY. ) (Signature)
LIMITED, ACN 061 299 625 by Harold )
Gregory Nasky its Attorney under a Power )
of Attorney dated 21 April 1994 and )
registered Book 4055 No. 576 and )
who declares that he has not received any )
notice of the revocation of such Power of )
Attorney in the presence of: )
/s/ Ian Johnston
(Signature of Witness)
Ian George Johnston
(Name of Witness in Full)
SIGNED SEALED AND DELIVERED for )
and on behalf of ) /s/ B. Clark
LEIGHTON PROPERTIES PTY. ) (Signature)
LIMITED, ACN 001 046 395 by Barry William )
Clark its Attorney under a Power of )
Attorney dated 21 April 1994 and registered )
Book 4055 No. 591 and who declares that )
he has not received any notice of the )
revocation of such Power of Attorney in the )
presence of: )
/s/ Lyril Leich
(Signature of Witness)
Lyril Anthony Leich
(Name of Witness in Full)
<PAGE>
38
SIGNED SEALED AND DELIVERED for )
and on behalf of ) /s/ R. Turchini
LEIGHTON CONTRACTORS PTY. ) (Signature)
LIMITED, ACN 000 893 667 by Richard Peter )
Turchini its Attorney under a Power of )
Attorney dated 21 April 1994 and registered )
Book 4055 No. 570 and who declares that )
he has not received any notice of the )
revocation of such Power of Attorney in the )
presence of: )
/s/ T. Cooper
(Signature of Witness)
Terrence Cooper
(Name of Witness in Full)
SIGNED SEALED AND DELIVERED for )
and on behalf of ) /s/ B. Clark
LEIGHTON HOLDINGS LIMITED ) (Signature)
ACN 004 482 982 by Barry William Clark its )
Attorney under a Power of Attorney dated )
21 April 1994 and registered Book 4055 )
No. 581 and who declares that he has not )
received any notice of the revocation of )
such Power of Attorney in the presence of: )
/s/ Lyril Leich
(Signature of Witness)
Lyril Anthony Leich
(Name of Witness in Full)
<PAGE>
39
SIGNED SEALED AND DELIVERED for ) /s/ H. Gregory
and on behalf of ) Nasky
SYDNEY CASINO MANAGEMENT PTY. ) (Signature)
LIMITED, ACN 060 462 053 by Harold Gregory )
Nasky its Attorney under a Power of )
Attorney dated 21 April 1994 and registered )
Book 4055 No. 578 and who declares that )
he has not received any notice of the )
revocation of such Power of Attorney in the )
presence of: )
/s/ Ian Johnston
(Signature of Witness)
Ian George Johnston
(Name of Witness in Full)
SIGNED SEALED AND DELIVERED for ) /s/ H. Gregory
and on behalf of ) Nasky
SHOWBOAT OPERATING COMPANY by ) (Signature)
Harold Gregory Nasky its Attorney under a )
Power of Attorney dated 29 September 1994 )
and registered Book No. and who )
declares that he has not received any )
notice of the revocation of such Power of )
Attorney in the presence of: )
/s/ Ian Johnston
(Signature of Witness)
Ian George Johnston
(Name of Witness in Full)
<PAGE>
40
SIGNED SEALED AND DELIVERED for ) /s/ H. Gregory
and on behalf of ) Nasky
SHOWBOAT DEVELOPMENT ) (Signature)
CORPORATION by Harold Gregory Nasky its )
Attorney under a Power of Attorney dated )
29/9/94 and registered Book No. )
and who declares that he has not received )
any notice of the revocation of such Power )
of Attorney in the presence of: )
/s/ Ian Johnston
(Signature of Witness)
Ian George Johnston
(Name of Witness in Full)
SIGNED SEALED AND DELIVERED for ) /s/ H. Gregory
and on behalf of ) Nasky
SHOWBOAT INC. by Harold Gregory Nasky its ) (Signature)
Attorney under a Power of Attorney dated )
29 September 1994 and registered Book )
No. and who declares that he has not )
received any notice of the revocation of )
such Power of Attorney in the presence of: )
/s/ Ian Johnston
(Signature of Witness)
Ian George Johnston
(Name of Witness in Full)
<PAGE>
41
SIGNED SEALED AND DELIVERED for )
and on behalf of ) /s/ R. C.
COMMONWEALTH BANK OF ) Fernandez
AUSTRALIA, ACN 123 123 124 by ) (Signature)
Richard Fernandez its Attorney under a Power )
of Attorney dated 16 March 1994 and )
registered Book 4050 No. 804 and who )
declares that he has not received any notice )
of the revocation of such Power of Attorney )
in the presence of: )
/s/
(Signature of Witness)
______________________________________________
(Name of Witness in Full)
<PAGE>
SHC
EXHIBIT 1 TO
FIRST AMENDING DEED
(PRELIMINARY SITE WORKS AGREEMENT)
- SYDNEY CASINO PROJECT -
<PAGE>
SHC
PRELIMINARY SITE PREPARATION, EXCAVATION
AND REMEDIATION WORKS CONTRACT
DATE:
NEW SOUTH WALES CASINO CONTROL AUTHORITY
PRINCIPAL
SYDNEY HARBOUR CASINO PROPERTIES PTY LIMITED
SHCP
CLAYTON UTZ
SOLICITORS AND ATTORNEYS
NO. 1 O'CONNELL STREET
SYDNEY NSW 2000
TEL: (02) 353 4000
FAX: (02) 251 7832
COPYRIGHT RESERVED
<PAGE>
TABLE OF CONTENTS
CLAUSE PAGE
1. DEFINITIONS AND INTERPRETATION 1
1.1 DEFINITIONS 1
1.2 INTERPRETATION 2
1.3 BUSINESS DAYS 4
1.4 UNDEFINED TERMS 4
1.5 INCONSISTENCY 4
1.6 ADDITIONAL RIGHTS TO ACT 4
2. PRIMARY OBLIGATIONS 4
2.1 SHCP 4
2.2 PRINCIPAL 5
2.3 WARRANTIES 5
2.4 SHCP TO BEAR ALL RISKS 5
3. REPRESENTATIVES 6
3.1 PRINCIPAL'S REPRESENTATIVE 6
3.2 SHCP REPRESENTATIVE 6
3.3 COMMUNICATIONS 6
4. INDEMNITIES AND INSURANCE 6
4.1 INDEMNITY BY SHCP 6
4.2 INDEMNITY BY PRINCIPAL 7
4.3 INSURANCE 7
5. DESIGN AND DOCK 8
5.1 DESIGN 8
5.2 SHCP WARRANTIES 8
5.3 INTELLECTUAL PRY RIGHTS 8
5.4 AUTHORITY REQUIREMENTS 8
6. SITE AND CONTAMINANTS 9
6.1 ACCESS TO SHCP 9
6.2 ACCESS TO PRINCIPAL 9
6.3 NOTIFICATION OF CONTAMINANTS 9
6.4 EXTENSION OF TIME 10
6.5 VALUATION OF REMOVAL OF CONTAMINANTS 10
7. WORKS 10
<PAGE>
TABLE OF CONTENTS
CLAUSE PAGE
7.1 DESCRIPTION 10
7.2 CODE OF PRACTICE 10
7.3 SUBCONTRACTING 11
7.4 SAFETY 11
7.5 QUALITY 11
7.6 TESTING 12
7.7 VARIATIONS 12
7.8 SURVEYOR'S REPORT 12
7.9 WATER TABLE 12
8 TIME 13
8.1 TIME FOR COMPLETION 13
8.2 PROGRAM 13
8.3 NOTICE OF DELAYS 14
8.4 CLAIM FOR EXTENSION OF TIME 14
8.5 EXTENSION OF TIME 14
8.6 DELAY COSTS 14
9. PAYMENT CERTIFICATES 15
9.1 CLAIMS 15
9.2 CERTIFICATES 15
9.3 PAYMENT 15
9.4 RISE AND FALL 15
9.5 POST LIOCNOE 16
10. COMPLETION 16
10.1 COMPLETION CERTIFICATE 16
10.2 EFFECT OF COMPLETION CERTIFICATE 16
10.3 LIQUIDATED DAMAGES 16
11. TERMINATION 17
11.1 FAILURE TO GRANT LICENCE 17
11.2 CONSEQUENCES OF TERMINATION 17
12. DISPUTE DETERMINATION 17
12.1 DISPUTE DETERMINATION 17
<PAGE>
TABLE OF CONTENTS
CLAUSE PAGE
12.2 NOTICE OF DISPUTE 18
12.3 NOMINATION OF REPRESENTATIVE 18
12.4 REPRESENTATIVES TO RESOLVE DISPUTE 18
12.5 APPOINTMENT OF INDEPENDENT CONSULTANT 18
12 6 DECISION FINAL AND BINDING 19
12 7 TERMINATION OF DISPUTE RESOLUTION PROCESS 19
12.8 CONFIDENTIALITY 19
12.9 COSTS 20
12.10 FAILURE TO COMPLY 20
13. EXPENSES AND STAMP DUTY 20
13.1 EXPENSES 20
13.2 TAXES 20
14. GENERAL 20
14.1 RIGHT OF SET-OFF 20
14.2 GOVERNING LAW AND JURISDICTION 21
14.3 WAIVER 21
14.4 VARIATION OF CONTRACT 21
14.5 THE PRINCIPAL MAY ACT 21
14.6 NOTICES 21
14.7 INDEMNITY UNAFFECTED 22
14.8 ASSIGNMENT 22
14.9 SEVERABILITY 23
SCHEDULE 1 23
SCHEDULE 2 29
SCHEDULE 3 29
SCHEDULE 4 34
SCHEDULE 5 35
SCHEDULE 6 36
SCHEDULE 7 37
<PAGE>
FORMAL AGREEMENT
THIS AGREEMENT is made on 1994
BETWEEN CASINO CONTROL AUTHORITY, a statutory corporation
constituted by the Casino Control Act 1992 (NSW)
("ACT") on behalf of the State of New South Wales
under section 142 of the Act, of Level 17, 309
Kent Street, Sydney, NSW 2000 ("PRINCIPAL")
AND SYDNEY HARBOUR CASINO PROPERTIES PTY. LIMITED
(ACN 050 045 120) of Level 3, 472 Pacific Highway,
St. Leonards ("SHCP")
RECITALS
A. Sydney Harbour Casino Pty. Ltd. ("SHC") has been granted
preferred applicant status by the Principal for the issue
of a licence to operate a casino on the Site ("CASINO").
B. SHCP is a company associated with SHC and is the proposed
lessee under a document titled Permanent Site Construction
Lease as part of the bid of SHC pursuant to which SHC has
been granted preferred applicant status.
C. SHCP has entered into a Development Agreement with
Leighton Properties Pty. Limited ("LPPL") for the
planning, design and construction of the Casino.
D. SHCP has procured LPPL to enter into a Design and
Construction Agreement with Leighton Contractors Pty.
Limited ("LCPL") for the design and construction of the
Casino.
E. Prior to the commencement of the construction of the
Casino the Principal desires to have excavation works
designed and constructed or caused to be designed and
constructed by SHCP. A description of the excavation works
is set out in Schedule 2 ("WORKS").
F. SHCP has prepared the preliminary design ("DESIGN
DOCUMENTS") as necessary in sufficient detail to enable
SHCP to provide a lump sum price being the Contract Price.
The Design Documents are listed in Schedule 4.
G. SHCP agrees to undertake, or cause to be undertaken,
further design work in sufficient detail so as to assist
the Principal obtain the Development Consent necessary to
carry out the Works in accordance with this Contract, for
which SHCP has caused LPPL to enter into a contract with
LCPL for the design and construction of the Works.
H. SHCP has procured LCPL to engage Dames and Moore of 41
McLaren Street, North Sydney, NSW, 2060 (the
"ENVIRONMENTAL ENGINEER") to provide consultancy services
in relation to the identification of Contaminants which
may be encountered during the execution of the Works,
their removal and disposal and complying with the
applicable requirements.
<PAGE>
I. SHCP warrants that the carrying out of the Works (in
accordance with the Contract) will reasonably meet the
requirements of the Principal as set out in the Design
Documents.
OPERATIVE
1. The Principal and SHCP promise to perform their respective
obligations under the Contract.
2. The "Contract" means:
(a) this Formal Agreement;
(b) the Conditions of Contract annexed to this Formal
Agreement;
(c) all Schedules and other documents annexed to this
Formal Agreement; and
(d) the Design Documents.
SIGNED as an agreement.
THE COMMON SEAL of )
CASINO CONTROL AUTHORITY was )
duly affixed in accordance with section 152 )
of the Act by the Chief Executive: )
_____________________________________________
Lindsay Le Compte
Chief Executive
Casino Control Authority
<PAGE>
THE COMMON SEAL of )
SYDNEY HARBOUR CASINO )
PROPERTIES PTY LIMITED was )
affixed by the authority of the Board of )
Directors in the presence of: )
_________________________________ __________________________
(Signature of Secretary/Director) (Signature of Director)
___________________________________ __________________________
Name of Secretary/Director in Full) (Name of Director in Full)
<PAGE>
CONDITIONS OF CONTRACT
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In the Contract unless the Contract otherwise requires:
"ACT" means Casino Control Act 1992 (NSW);
"ACTIVITIES" means all things or tasks which are necessary
for SHCP to do, or cause to be done, to comply with its
Contract obligations;
"AWARD DATE" means the date the Formal Agreement, to which
these Conditions of Contract are attached, has been signed
by the Principal and SHCP;
"BUSINESS DAY" means any day, other than a Saturday,
Sunday or public holiday recognised in Sydney and
generally throughout the State of New South Wales;
"COMPLETION" means the stage when:
(a) the Works are complete except for minor omissions or
defects; and
(b) SHCP has done, or caused to be done, everything the
Contract requires it to do before Completion;
"COMPLIANCE DEED" means the deed so entitled dated on or
about 22 April 1994 made between the Principal, SHC and
others;
"CONTAMINANTS" means any substance or material defined as
"CONTAMINATED MATERIAL" in the Work Plan;
"CONTRACT PARTICULARS" means the particulars in Schedule
1;
"CONTRACT PRICE" means the amount specified in the
Contract Particulars as adjusted under clauses 7.7, 7.9
and 9.4;
"DATE FOR COMPLETION" means the period specified in the
Contract Particulars as adjusted under these Conditions of
Contract;
"DESIGN DOCUMENTS" means the documents listed in Schedule
4;
"DEVELOPMENT CONSENT" means the consent required for the
Works and for which the Principal has lodged an
application with the relevant authority;
"ENVIRONMENT" includes all aspects of the surroundings of
human beings including, without limitation:
(i) the physical characteristics of those surroundings
such as the land, the
<PAGE>
2
waters and the atmosphere;
(ii) the biological characteristics of those surroundings
such as the animals, plants and other forms of life;
and
(iii) the aesthetic characteristics of those surroundings
such as their appearance, sounds, smells, tastes and
textures;
"ENVIRONMENTAL LAWS" means laws current from time to time
for protection of the Environment against contamination or
pollution of air or water, soil or ground water, the ozone
layer or public health by chemicals, pesticides, hazardous
substances, hazardous wastes, dangerous goods,
environmental hazards, or noxious trades and enforcement
or administration of any of those laws (whether that law
arises under statute or pursuant to any notice, decree,
order or directive of any governmental entity);
"FIRST SUPPLEMENTARY MINISTER'S APPROVAL AND CONSENT
ACKNOWLEDGEMENT" has the same meaning as in the Compliance
Deed;
"LICENCE" means the licence to operate a casino pursuant
to section 18(1) of the Act;
"MINISTER" means the Minister responsible for
administering the Act;
"PERMANENT SITE CONSTRUCTION LEASE" means the lease
between the Principal and SHCP which forms Exhibit 33 to
the Compliance Deed, as amended by agreement between the
parties to that lease;
"PRINCIPAL'S REPRESENTATIVE" means the person nominated in
the Contract Particulars;
"SITE" means the Site defined in the Contract Particulars;
"TAXES" has the same meaning as in the Compliance Deed;
"VARIATION" means any change, including omissions, to the
Works, excluding however any work performed by SHCP to
deal with Contaminants in accordance with the Work Plan;
"WORK PLAN" means the document in Schedule 3; and
"WORKS" means works described in Schedule 2, including any
Variations.
1.2 INTERPRETATION
In this Contract unless the contrary intention appears:
(a) a reference to this Contract, or to any other deed,
agreement, document or instrument includes this
Contract or that other deed, agreement, document or
instrument as amended, supplemented, novated,
replaced or varied from time to time;
<PAGE>
3
(b) a reference to a person includes a reference to an
individual, firm, company, corporation, body
corporate, statutory body, body politic, trust,
partnership, joint venture, association whether
incorporated or unincorporated or an authority as
the case may be;
(c) a reference to a person or to any party to this
Contract includes a reference to that person's or
party's executors, administrators, successors,
permitted substitutes and permitted assigns
(including any person taking by way of novation);
(d) a reference to a clause or Schedule is a reference
to a clause or Schedule of this Contract and
Schedules form part of this Contract as if expressly
set out in the body of this Contract;
(e) a reference to the singular includes a reference to
the plural and vice versa and words denoting a given
gender shall include all other genders;
(f) headings are for convenience only and shall not
affect interpretation;
(g) where any word or phrase is given a defined meaning
any other part of speech or other grammatical form
in respect of such word or part of speech has a
corresponding meaning;
(h) a reference to any legislation, statute, ordinance,
code or other law or to any section or provision
thereof includes all ordinances, by-laws,
regulations, rules, rulings and directions and other
statutory instruments issued thereunder and any
modifications, consolidations, re-enactments,
replacements and substitutions of any of them;
(i) a reference to any monetary amount or payment to be
made hereunder is a reference to an Australian
dollar amount or payment in Australian dollars as
the case may require;
(j) where a reference is made to any body or authority
which has ceased to exist, such reference shall be
deemed a reference to the body or authority as then
serves substantially the same objects as that body
or authority and any reference to the president or
secretary-general of such body or authority shall in
the absence of a president or secretary-general be
read as a reference to the senior officer for the
time being of the body or authority and/or such
other person fulfilling the relevant duties of
president or secretary-general;
(k) unless otherwise specified, all payments by SHCP to
the Principal must be made in immediately available
and cleared funds before 2 pm on the due date for
payment; and
(1) the contra proferentem rule will not apply to the
interpretation of the
<PAGE>
4
Contract.
1.3 BUSINESS DAYS
Where an act, matter or thing required to be done by this
Contract falls to be done on a day which is not a Business
Day that act, matter or thing must be done on the
preceding day which is a Business Day except in the case
of payments due on demand, which may be made on the next
following Business Day.
1.4 UNDEFINED TERMS
A word or phrase used in this Contract which is not
defined in this Contract shall have the same meaning as in
the Act.
1.5 INCONSISTENCY
To the extent of any inconsistency or conflict between the
terms of this Contract and the Act or the Compliance Deed:
(a) the Act shall prevail over this Contract and the
Compliance Deed; and
(b) the Compliance Deed shall prevail over this
Contract.
1.6 ADDITIONAL RIGHTS TO ACT
The rights and obligations of the parties under this
Contract are in addition and without prejudice to their
respective rights and obligations under the Act.
2. PRIMARY OBLIGATIONS
2.1 SHCP
SHCP must:
(a) subject to paragraph (b), immediately commence to
perform, or cause to be performed, the Activities in
accordance with the Work Plan;
(b) commence, or cause to be commenced, the Works on
Site by no later than the date set out in the
Contract Particulars.
SHCP may perform any of its obligations under this
Contract including (without limitation) obligations to
give notices to the Principal, provide information or
documentary evidence or seek extensions of time by causing
LPPL or LCPL to do so on its behalf. This will not release
SHCP from its obligation to comply with the Contract.
<PAGE>
5
2.2 PRINCIPAL
Subject to clauses 9.5 and 14.1, the Principal must pay
SHCP the Contract Price and any amounts due under clauses
6.5 and 7.6.
2.3 WARRANTIES
(a) The Principal warrants that it has full power and
authority to enter into, execute and comply with
this Contract on behalf of the State of New South
Wales and that, pursuant to sections 142(1) and
142(2) of the Act, the Minister has approved of both
the Principal entering into this Contract and its
terms as evidenced by the First Supplementary
Minister's Approval and Consent Acknowledgement.
(b) SHCP represents and warrants to and with the
Principal in the terms set out in Schedule 7.
2.4 SHCP TO BEAR ALL RISKS
SHCP acknowledges that other than where it encounters
Contaminants it will bear the entire risk of the scope of
work involved in discharging its Contract obligations
being greater than anticipated.
This will include (without limitation):
(a) complying with all conditions of the Development
Consent;
(b) complying with the requirements of all authorities
in respect of the Activities;
(c) site demobilisation if the Contract is terminated
under clause 11.1;
(d) transportation haulage distances to the Nominated
Fill Sites (as defined in the Work Plan) being
greater than anticipated;
(e) the depth of the concrete foundations being greater
than anticipated;
(f) the reinforcement content of the footings being
greater than anticipated;
(g) removing all structural steel items found to be
embedded in concrete footings;
(h) rock being found to be harder than anticipated;
(i) rock faults being found to be more severe than
anticipated;
(j) stabilising the existing boundary retaining walls if
this proves necessary; and
<PAGE>
6
(k) underpinning or repairing adjacent buildings where
these are found to be vulnerable to vibration
induced damage arising from or in connection with
the Works.
3. REPRESENTATIVES
3.1 PRINCIPAL'S REPRESENTATIVE
SHCP must comply with any directions which the Principal's
Representative is empowered to give under the Contract.
3.2 SHCP REPRESENTATIVE
SHCP must give notice in writing to the Principal's
Representative nominating a person as its representative.
A direction will be deemed to be given to SHCP if it is
given to this person.
3.3 COMMUNICATIONS
All communications between the Principal and SHCP must be
in writing, or if oral, must be confirmed in writing
within 10 days.
4. INDEMNITIES AND INSURANCE
4.1 INDEMNITY BY SHCP
Subject to clause 4.2, SHCP must indemnify the Principal
against:
(a) loss of or damage to property of the Principal,
including the existing property described in the
Contract Particulars but excluding property to be
demolished under the Contract, arising out of or in
connection with the carrying out of the Activities;
(b) claims by or liability to any person in respect of
personal injury or death or loss of or damage to any
property arising out of or in connection with the
carrying out of the Activities; and
(c) all damages, suits, claims, penalties, losses,
liabilities and expenses (including, without
limitation, all engineering, accounting, legal and
other expenses) which may be imposed upon or
incurred by or asserted against the Principal by any
other person (including, without limitation, any
governmental entity, land owner, employee,
independent contract, invitee or any other person)
arising out of or in connection with any negligence
by SHCP, LPPL or LCPL in the carrying out of the
Activities or the Works or any breach of the
Contract by SHCP.
<PAGE>
7
SHCP's liability under this indemnity is limited to
$50,000,000 for each and every event which gives rise
to a liability under this indemnity.
4.2 INDEMNITY BY PRINCIPAL
Subject to the next paragraph the Principal will indemnify
and keep indemnified SHCP harmless from and in respect of
any and all damages, suits, claims, penalties, losses,
liabilities and expenses (including, without limitation,
all engineering, accounting, legal and other expenses)
which may be imposed upon or incurred by or asserted
against SHCP within the period of twenty-five (25) years
from the date of the Contract by any other person
(including, without limitation, any governmental entity,
land owner, employee, independent contractor, invitee or
any other person) arising out of or in connection with any
contamination, pollution, material degradation or material
harm to the Environment or any breach of Environmental
Laws arising from the carrying out of the Activities or
the Works.
The indemnity in the previous paragraph will not apply to
the extent that such damages, suits, claims, penalties,
losses, liabilities and expenses arise out of any
negligence by SHCP, LPPL or LCPL in the carrying out of
the Activities or the Works or from a breach of the
Contract by SHCP.
4.3 INSURANCE
SHCP must:
(a) prior to commencing any Activities on Site effect,
or cause to be effected, the insurance referred to
in the Contract Particulars for the events and in
the amounts referred to in the Contract Particulars
from insurers and on terms satisfactory to the
Principal;
(b) prior to commencing any Activities on Site provide
the Principal with such evidence of the required
insurance as the Principal may require; and
(c) maintain, or cause to be maintained, this insurance
until:
(i) in the case of professional indemnity, six
years from the earlier of:
(A) the date of Completion; or
(B) termination of the Contract under
clause 11; and
(ii) in the case of insurance other than
professional indemnity, the earlier of:
(A) the issue of a Completion
certificate; or
<PAGE>
8
(B) 6 months after the termination of the
Contract under clause 11.
5. DESIGN AND DOCK
5.1 DESIGN
SHCP must design, or cause to be designed, such parts of
the Works as may be required to enable it to perform, or
cause to be performed, its Contract obligations.
5.2 SHCP WARRANTIES
SHCP warrants that:
(a) the Design Documents are fit for their intended
purpose; and
(b) any further design required to enable it to perform,
or cause to be performed, its Contract obligations
will be fit for its purpose.
5.3 INTELLECTUAL PROPERTY RIGHTS
SHCP:
(a) assigns to the Principal the entire copyright and
all other rights of a similar nature in the Design
Documents and any other designs prepared, or caused
to be prepared, by it under clause 5.1; and
(b) indemnifies the Principal against any claim or
liability in respect of any infringement of any
patent, registered design, copyright or similar
protected right by any of the Design Documents or
other designs prepared, or caused to be prepared, by
it under clause 5.1.
5.4 AUTHORITY REQUIREMENTS
SHCP must:
(a) unless otherwise specified, comply with, or cause to
be complied with, the requirements of all
authorities and applicable laws, statutes and
regulations and requirements made under them, give
all notices and pay all fees necessary to perform
its Contract obligations;
(b) assist the Principal obtain. the Development Consent
and apply for, and use its best endeavours to obtain
and once obtained, give the Principal copies of, all
other licences, permits, consents, approvals,
determinations and permissions required to perform
the Activities; and
(c) subject to clause 6.5, at its cost comply with the
Development Consent and
<PAGE>
9
all licences, permits, consents, approvals,
determinations and permissions obtained from
authorities in respect of the Activities.
The parties acknowledge that:
(d) subject to paragraph (e), SHCP's obligations under
this clause will be the same as they would have been
if the Principal was a private individual and not an
instrumentality, statutory corporation or agent of
the State of New South Wales; and
(e) SHCP need not obtain a building approval pursuant to
the Local Government Act 1993 in respect of the
Works.
The Principal will indemnify SHCP against the reasonable
legal costs incurred by SHCP, LPPL or LCPL arising out of
any challenges to or proceedings in respect of the
Development Consent.
6. SITE AND CONTAMINANTS
6.1 ACCESS TO SHCP
Subject to clause 6.2, the Principal will provide SHCP
with immediate access to the Site.
6.2 ACCESS TO PRINCIPAL
SHCP must provide, or cause to be provided, the Principal
and the Principal's Representative with:
(a) unrestricted access to the Site and to all areas
where Activities are being undertaken; and
(b) such facilities, (including, without limitation
reasonable site accommodation) as the Principal and
the Principal's Representatives may require to
supervise, examine and test the work or materials.
6.3 Notification of Contaminants
If during the execution of the Activities SHCP, LPPL or
LCPL discover a Contaminant, SHCP must:
(a) give, or cause to be given, written notice to the
Principal's Representative; and
(b) proceed to deal with the Contaminant in accordance
with the Work Plan.
If required by the Principal's Representative, SHCP must
provide to the Principal's
<PAGE>
10
Representative a statement in writing specifying:
(c) the nature and type of Contaminants encountered;
(d) the time it is anticipated will be required to deal
with the Contaminants and the expected delay in
achieving Completion;
(e) the measures it proposes to take to dispose of the
Contaminants, SHCP's estimate of the quantity of
Contaminants and of the cost of the measures it
proposes to take to dispose of the Contaminants; and
(f) other details reasonably required by the Principal's
Representative.
6.4 EXTENSION OF TIME
Delay caused by a Contaminant may justify an extension of
time under clause 8.5.
6.5 VALUATION OF REMOVAL OF CONTAMINANTS
The Principal must pay SHCP the extra costs incurred by it
as a result of discovery and disposing of Contaminants.
Such extra costs will be calculated using the rates or
prices in Schedule 5 and the quantities measured in
accordance with the Work Plan.
7. WORKS
7.1 DESCRIPTION
SHCP must perform, or cause to be performed, the Works in
accordance with:
(a) the Design Documents;
(b) the Work Plan;
(c) any further designs prepared by it under clause 5.1;
(d) the requirements of all authorities, applicable
laws, statutes and regulations (and requirements
made under them) and all licences, permits,
consents, approvals, determinations and permissions
obtained in respect of the Activities, including
(without limitation) the Development Consent; and
(e) any directions the Principal's Representative may be
empowered to give under the Contract.
7.2 CODE OF PRACTICE
SHCP must comply with and must ensure that LPPL, LCPL and
all subcontractors, suppliers and consultants engaged by
LCPL comply with the provisions of the New
<PAGE>
11
South Wales Government Code of Practice for the
Construction Industry.
7.3 SUBCONTRACTING
SHCP may subcontract any part of the Activities. SHCP will
remain fully responsible for the Activities despite
subcontracting any part of the Activities.
7.4 SAFETY
SHCP must:
(a) prior to commencing, or causing the commencement of,
any Activities on Site provide the Principal's
Representative with an Occupational Health and
Safety Plan in accordance with the Occupational
Health and Safety Act 1983;
(b) perform the Activities safely and so as to protect
persons and property; and
(c) upon Completion or the sooner termination of this
Contract leave the Site and the Works in a clean
and safe condition.
If SHCP fails to comply with its Contract obligations and
due to such failure the Principal's Representative
reasonably considers there is a risk of injury to people
or damage to property arising from the Activities, he or
she may direct SHCP to appropriately change, or cause to
be appropriately changed, the manner of working or to
cease working.
If the Principal's Representative directs SHCP to cease
working, SHCP may recommence working when it is in a
position to comply with its Contract obligations.
7.5 QUALITY
SHCP must use, or cause to be used, good quality plant and
materials and ensure all workmanship is of a proper
standard.
SHCP must implement, or cause to be implemented, the
quality assurance system specified in the Work Plan.
SHCP will not be relieved from any of its Contract
obligations arising from compliance with the quality
assurance requirements of the Contract.
7.6 TESTING
SHCP must carry out, or cause to be carried out, all tests
described in Schedule 2 or directed by the Principal's
Representative. The cost of carrying out the tests
described in Schedule 2 is deemed to be included in the
Contract Price.
<PAGE>
12
The reasonable costs of carrying out all other tests
directed by the Principal's Representative will be
assessed, subject to clause 12, by the Principal's
Representative and be paid by the Principal to SHCP.
7.7 VARIATIONS
The Principal's Representative may direct SHCP to carry
out a Variation by a written document titled "Variation
Order" and:
(a) no Variation will vitiate the Contract, and
(b) SHCP must carry out all Variations so directed.
The Contract Price will be adjusted for the value of all
Variations by:
(c) where clause 7.9 applies, the amount determined
under that clause;
(d) any rates or prices in the Contract which may be
applicable to the Variation; or
(e) a reasonable amount to be agreed between the parties
or, in default of such agreement, determined,
subject to clause 12, by the Principal's
Representative.
If without receiving a "Variation Order" directing a
Variation from the Principal's Representative, SHCP
carries out more work than required by this Contract
including (without limitation) excavating the works to a
lower depth than required by the Design Documents, this
will be performed by it at its risk and will not
constitute a Variation nor otherwise entitle SHCP to an
adjustment of the Contract Price or payment on any other
basis.
7.8 SURVEYOR'S REPORT
The parties acknowledge that the certificate in Schedule 6
accurately sets out the levels on Site at the date of this
Contract.
Prior to Completion SHCP must provide, or cause to be
provided, the Principal's Representative with a
Certificate from a licensed surveyor stating that the
Works have been completed to the levels required by the
Contract.
7.9 WATER TABLE
If the natural water table level is found at a higher
level than the finished excavation levels shown by the
Design Documents either the Principal or SHCP may by
notice in writing to the other elect to terminate the
excavation at the natural water table level.
If either party elects to terminate the excavation at the
natural water table level in
<PAGE>
13
accordance with the preceding paragraph then:
(a) this will be deemed to be a Variation which omits
all work contemplated by the Contract below such
level; and
(b) the Contract Price will be reduced by deducting an
amount determined as follows:
X
$4,806,610.00 x _
Y
Where:
X = the quantities of excavated material between the
natural water table level and the finished
excavation levels shown by the Design Documents; and
Y = the quantities of excavated material between the
existing natural surface level and the finished
excavation levels shown by the Design Documents.
8. TIME
8.1 TIME FOR COMPLETION
SHCP must achieve, or cause the achievement of, Completion
by the Date for Completion.
8.2 PROGRAM
SHCP must within 14 days of the Award Date submit a
program of the Activities to the Principal's
Representative.
This program must set out:
(a) the proposed method of working;
(b) a project calendar containing the working days;
(c) the interrelationship between Activities; and
(d) the sequencing of Activities which constitute the
critical path or paths.
<PAGE>
14
8.3 NOTICE OF DELAYS
Upon it becoming evident to SHCP that Completion of the
Works is likely to be delayed beyond the Date for
Completion SHCP shall forthwith notify, or cause to be
notified, the Principal.
8.4 CLAIM FOR EXTENSION OF TIME
SHCP may claim an extension of time if SHCP:
(a) is or will be delayed in achieving, or causing the
achievement of, Completion of the Works by an event
described in the Contract Particulars not arising
from or due to or substantially contributed to by
any neglect, default or misconduct by SHCP, LPPL or
LCPL; and
(b) has taken all proper and reasonable steps both to
preclude the occurrence of the cause of the delay
and to avoid or minimise the effects or consequences
of the cause of the delay.
To claim an extension of time SHCP must submit a claim to
the Principal's Representative for an extension to the
Date for Completion within 21 days of the commencement of
the delay setting out the cause of delay and stating the
period by which it requires the Date for Completion to be
extended.
8.5 EXTENSION OF TIME
The Date for Completion will be extended:
(a) where SHCP has made a claim in accordance with
clause 8.4 and SHCP will be delayed in achieving, or
causing the achievement of, Completion, by a
reasonable period determined by the Principal's
Representative and notified to the parties within 14
days after the later of SHCP's notice under clause
8.4 or the end of the effects of the delay; and
(b) by any period specified in a notice to SHCP by the
Principal's Representative who may by such a notice
for any reason whatsoever unilaterally extend the
Date for Completion.
8.6 DELAY COSTS
The rates and prices set out in Schedule 5 are deemed to
include and the Principal will not otherwise be liable for
any costs, losses and damages suffered or incurred by SHCP
in performing or procuring performance of the Activities,
including (without limitation) those arising out of or in
connection with delays to the Activities, arising from:
(a) the discovery of Contaminants or potential
Contaminants in material
<PAGE>
15
excavated or to be excavated as part of the Works; or
(b) the requirement to comply with this Contract and the
Work Plan in dealing with Contaminants or potential
Contaminants in material excavated or to be
excavated as part of the Works.
9. PAYMENT CERTIFICATES
9.1 CLAIMS
Prior to the issue of the Licence to SHC, SHCP must give
the Principal's Representative claims for payment:
(a) at the times stated in the Contract Particulars and
upon the issue of the Licence to SHC;
(b) in the format required by the Principal's
Representative; and
(c) which provides the evidence reasonably required by
the Principal's Representative of the amount
claimed, including (without limitation) all relevant
details and particulars relating to the amount (if
any) claimed under clauses 6.5 and 7.6.
9.2 CERTIFICATES
The Principal's Representative must within the time period
stated in the Contract Particulars of receipt of a payment
claim under clause 9.1 give SHCP and the Principal a
payment certificate from the Principal's Representative
which:
(a) certifies the value of work completed in accordance
with the Contract; and
(b) states the reasons for any difference in the amount
certified as then payable from the amount SHCP
claimed.
9.3 PAYMENT
Subject to clauses 9.5, 12 and 14.1, the Principal must
pay SHCP the amount certified in each payment certificate
within the time stated in the Contract Particulars. The
Principal will, unless otherwise instructed in writing by
SHCP, make payments due under this clause direct to LCPL.
Payments made to LCPL under this clause will be a good and
valid discharge of the Principal's obligation to pay SHCP
the amount due under this clause.
9.4 RISE AND FALL
If Development Consent for the works has not issued by 31
August 1994 the Contract Price will be adjusted in the
same relation as the Contract Price bears to the Consumer
<PAGE>
16
Price Index at 30 June 1994 as it bears to that index for
the quarter immediately preceding the date when Completion
has occurred. For the purposes of this clause "Consumer
Price Index" means the all groups Consumer Price Index for
the City of Sydney compiled by the Australian Bureau of
Statistics for the weighted average of the eight capital
cities of Australia or any index which is substituted for
that Index.
9.5 POST LICENCE
After the grant of the Licence to SHC, this Contract will
automatically terminate and subject to clause 14.7:
(a) the Principal will not be liable for and SHCP will
no longer have an entitlement to payment of the
balance of the Contract Price or any amounts
payable under clauses 6.5 or 7.6; and
(b) SHCP releases the Principal from any claim which it
otherwise would have against the Principal under
this Contract to payment of the balance of the
Contract Price or any amounts payable under clauses
6.5 or 7.6.
10. COMPLETION
10.1 COMPLETION CERTIFICATE
SHCP must notify the Principal's Representative in writing
7 days prior to when it expects to achieve Completion. The
Principal's Representative must promptly and in any event
no later than 7 days after receipt of SHCP's written
notice inspect the Works and, if satisfied that Completion
has been achieved, issue a Completion certificate stating
the date Completion was reached.
If any minor omissions or defects exist in the Works upon
Completion SHCP must, within a reasonable time of
Completion, remedy, or cause to be remedied, these
omissions or defects.
10.2 EFFECT OF COMPLETION CERTIFICATE
A Completion certificate is not approval by the Principal
of SHCP's performance of its Contract obligations.
10.3 LIQUIDATED DAMAGES
If SHCP does not reach, or cause to be reached, Completion
by the Date for Completion, it must pay liquidated damages
at the rate in the Contract Particulars for every day
after the Date for Completion until it reaches Completion
or the Contract is terminated, whichever is first. This
amount is an agreed genuine pre-estimate of the
Principal's damages if Completion occurs after the Date
for Completion.
The Principal may deduct liquidated damages from any
payment claim SHCP makes
<PAGE>
17
or from any security it holds.
11. TERMINATION
11.1 FAILURE TO GRANT LICENCE
If the Compliance Deed terminates for any reason other
than because SHC has been granted the Licence, this
Contract will automatically terminate.
11.2 CONSEQUENCES OF TERMINATION
If the Contract is terminated under clause 11.1 the
Principal's liability to SHCP will be limited to paying
SHCP within 30 days of the date of termination the
following amounts, less payments already made to SHCP
under clause 9.3:
(a) any amount payable under clause 6.5 and clause 7.6;
(b) in respect of Variations, the value of work
undertaken as at the date of termination in
accordance with the Contract and the cost of
services, goods or materials properly ordered for
Variations for which SHCP has paid or for which SHCP
is legally bound to pay and on such payment by the
Principal such goods or materials will become the
property of the Principal;
(c) the amount determined by the following formula:
X
Contract Price x _
Y
Where:
X = the quantities of excavated
material between the existing
natural surface level and the level
at which the Site is at upon the
date of termination; and
Y = the quantities of excavated
material between the existing
natural surface level and the
finished excavation levels shown
by the Design Documents; and
(d) any other amounts payable under the provisions of
this Contract.
12. DISPUTE DETERMINATION
12.1 DISPUTE DETERMINATION
A party must not commence or maintain any action or court
proceedings (except proceedings seeking interlocutory
relief) in respect of a dispute or difference as to any
<PAGE>
18
matter relating to or arising under or in connection with
this Contract or the Activities ("Dispute") unless it has
complied with this clause.
12.2 NOTICE OF DISPUTE
A party claiming that a Dispute has arisen must notify the
other party in writing giving details of the Dispute.
12.3 NOMINATION OF REPRESENTATIVE
Within 5 days after a notice is given under clause 12.2,
each party must nominate in writing a representative
authorised to settle the Dispute on its behalf
("Representative").
12.4 REPRESENTATIVES TO RESOLVE DISPUTE
During the period of 14 days after a notice is given under
clause 12.2 (or any longer period agreed between the
parties), each party must ensure that its Representative
uses his or her best endeavours, with the other
Representative, to:
(a) resolve the Dispute; or
(b) agree on a process to resolve the Dispute without
court proceedings (including without limitation
mediation, conciliation, executive appraisal or
independent expert determination) including:
(i) the involvement of any dispute resolution
organisation;
(ii) the selection and payment of a third party to
be engaged by the parties to assist in
negotiating a resolution of the Dispute without
making a decision that is binding on a party
unless that party's Representative has so
agreed in writing;
(iii) any procedural rules;
(iv) the timetable, including any exchange of
relevant information and documents; and
(v) the place where meetings will be held.
12.5 APPOINTMENT OF INDEPENDENT CONSULTANT
If, within the period specified in clause 12.4, the
Representatives have not resolved the Dispute or agreed
upon a process to resolve the Dispute, the parties may,
within 10 days after expiry of that period, agree to
appoint a person, who is of good repute and is an expert
in the area relevant to the Dispute, to perform the
following functions, which the parties authorise the
person to do:
(a) act as an independent consultant for the purpose of
resolving the Dispute, as an expert and not as an
arbitrator;
<PAGE>
19
(b) establish the procedures for identifying the issues
relating to the Dispute and the contentions of the
parties, in accordance with considerations of
procedural fairness;
(c) make a written, reasoned decision to resolve the
Dispute; and
(d) decide how the independent consultant's fees should
be paid by the parties.
If the parties cannot agree, within that 10 day period, on
the appointment of an independent consultant, the parties
must request the Secretary General of the Australian
Commercial Disputes Centre Limited to appoint that person.
12.6 DECISION FINAL AND BINDING
A decision by the independent consultant under clause 12.5
will be final and binding on the parties. However, a party
is entitled to take court proceedings to appeal that
decision on a question of law.
12.7 TERMINATION OF DISPUTE RESOLUTION PROCESS
If, by the expiry of the period specified in clause 12.5:
(a) the Dispute has not been resolved;
(b) no process has been agreed under clause 12.4; and
(c) no request has been made under clause 12.5,
then a party that has complied with clauses 12.2 to 12.4
may terminate the dispute resolution process by giving
notice to the other party, and then clause 12.1 will no
longer operate in relation to the Dispute.
12.8 CONFIDENTIALITY
Each party must:
(a) keep confidential all confidential information and
confidential communications made by a Representative
under this clause; and
(b) not use or disclose that confidential information or
those confidential communications except to attempt
to resolve the Dispute.
Nothing in this sub-clause will affect the admissibility
into evidence in any court or arbitral proceedings of
extrinsic evidence of facts which, but for this
sub-clause, would be admissible in evidence.
<PAGE>
20
12.9 COSTS
Each party must bear its own costs of resolving a Dispute
under this clause.
12.10 FAILURE TO COMPLY
If a party does not comply with any provision of clauses
12.2 to 12.4 or, if applicable, clause 12.5 and any
procedural requirements established under clause 12.5,
then the other party will not be bound by those
sub-clauses in relation to the Dispute.
13. EXPENSES AND STAMP DUTY
13.1 EXPENSES
SHCP must on demand reimburse the Principal for and keep
the Principal indemnified against all expenses, including
all legal fees, costs and disbursements on a solicitor/own
client basis and without the need for taxation, incurred
by the Principal in connection with the enforcement or
attempted enforcement of any rights under this Contract
which it may have by reason of a default by SHCP,
including without limitation any expenses incurred in the
evaluation of any matter of material concern to the
Principal.
13.2 TAXES
SHCP must:
(a) pay all stamp duties, registration and similar
Taxes, including fines and penalties, financial
institutions duty and federal debits tax in
connection with the execution, delivery,
performance, enforcement or attempted enforcement of
this Contract or any payment or other transaction
under or contemplated in this Contract; and
(b) indemnify and keep indemnified the Principal against
any loss or liability incurred or suffered by it as
a result of the delay or failure by SHCP to pay
Taxes.
14. GENERAL
14.1 RIGHT OF SET-OFF
The Principal may deduct from moneys otherwise due to SHCP
any debt due from SHCP to the Principal under the
Contract.
14.2 GOVERNING LAW AND JURISDICTION
This Contract is governed by and construed in accordance
with the laws of the State of New South Wales.
<PAGE>
21
Each party irrevocably submits to and accepts, generally
and unconditionally, the non-exclusive jurisdiction of the
courts and appellate courts and mediation and arbitration
processes of New South Wales with respect to any legal
action or proceedings which may be brought at any time
relating in any way to this Contract.
14.3 WAIVER
The Principal can only waive its rights under this
Contract by expressly doing so in writing.
14.4 VARIATION OF CONTRACT
An amendment to or variation of a term of this Contract
will have no force or effect and will be deemed not to
have been entered into by the Principal unless and until
the Principal has received the approvals of the Minister
thereto required under section 142 of the Act.
14.5 THE PRINCIPAL MAY ACT
The Principal may, either itself or by a third party,
perform a Contract obligation which SHCP was obliged to
perform but which it failed to perform if:
(a) the Principal gives notice in writing to SHCP
specifying the Contract obligation which SHCP has
failed to perform; and
(b) SHCP fails to perform or to commence to perform the
Contract obligation within 10 days of this notice.
The costs, expenses and damages suffered or incurred by
the Principal in performing such a Contract obligation
will be a debt due from SHCP to the Principal.
14.6 NOTICES
A notice to be given under or arising out of the Contract
must be in writing and addressed and forwarded to the
relevant party at the address or facsimile number stated
in the Contract Particulars or otherwise as notified in
writing from time to time.
A notice sent by post is taken to have been given at the
time when, in due course of the post, it would have been
delivered at the address to which it is sent.
A notice sent by facsimile transmission is taken to have
been given on the date and time on the transmission slip
showing the facsimile number of the party to whom it is
addressed in accordance with this clause.
14.7 INDEMNITY UNAFFECTED
The parties acknowledge that neither this Contract nor the
performance of the
<PAGE>
22
Activities by SHCP or LPPL or LCPL nor the termination of
this Contract pursuant to clause 9.5, will in any way
affect the rights and liabilities of the parties under the
Permanent Site Construction Lease, including (without
limitation) the warranties in clause 4.10(b) or the
indemnity in clause 4.10(c) of that Lease.
14.8 ASSIGNMENT
Each party's ability to assign, encumber or otherwise
dispose of their rights and obligations under this
Contract is subject to section 142(4) of the Act.
14.9 SEVERABILITY
All provisions and each and every part thereof contained
in this Contract shall be severable and shall be so
construed as not to infringe the law of Australia or the
law of any Australian state or territory or any other
relevant jurisdiction. If any such provision on its true
interpretation is found to infringe any such law, that
provision shall be read down to such extent as may be
necessary to ensure that it does not so infringe any such
law and as may be reasonable in all the circumstances so
as to give as full and as valid an operation as possible.
In the event that the infringing provision cannot be so
read down, it shall be deemed void and severable and shall
be deemed deleted from this Contract to the same extent
and effect as if never incorporated herein and the parties
shall negotiate with each other for the purpose of
substituting an appropriate clause so far as is
practicable in lieu of such deleted provision. It is the
intention of the parties that if any provision of this
Contract is logically and reasonably susceptible of two or
more constructions, one of which would render the
provision enforceable and the other or others of which
would render the provision unenforceable, then the
provision shall have the meaning which renders it
enforceable.
<PAGE>
23
SCHEDULE 1
CONTRACT PARTICULARS
CONTRACT PRICE: $4,806,610
(Clause 1.1)
DATE FOR COMPLETION: 17 weeks after the later of
(Clause 1.1) the:
(a) Award Date; or
(b) the issue of the
Development Consent.
PRINCIPAL'S REPRESENTATIVE: Tony Collins, Regional Manager
(Clause 1.1) Operations Division, New
South Wales Public Works
SITE: Lot 122 on DP828957, Lots 92
(Clause 1.1) and 93 on DP838113 and Lots 11
and 12 on DP830887
COMMENCEMENT OF WORKS ON The later of the Award Date or
SITE: the date upon which the
(Clause 2.1(b)) Development Consent issues.
EXISTING PROPERTY: Heritage Building
(Clause 4.1(a)) Perimeter Retaining Walls
INSURANCE:
(Clause 4.3)
TYPE EVENT AMOUNT AND INSURED
Public Loss of or damage Minimum of $50,000,000
Liability to any physical in the name of the
property or Principal, SHCP, LPPL
injury to or death and LCPL with cross
to any person liability so that the
(other than insurance applies to
employees) Principal, SHCP, LPPL
and LCPL as separate
insured
Workers' Liability for SHCP shall:
Compensation injury to or
death of employees (a) comply with
whether arising at applicable Workers'
common law or under Compensation
statute legislation with
respect to its
employees; and
<PAGE>
24
(b) ensure LPCL and LCPL
comply with
applicable Workers'
Compensation
legislation with
respect to their
employees.
Professional Professional $10,000,000 in the name of
Indemnity negligence for SHCP.
breach of
professional duty
(whether in contract
or otherwise) by SHCP,
LPPL, LCPL or any of
their employees,
agents or
consultants.
Motor Vehicle Loss of or damage Minimum of $5,000,000 in
Third Party to any physical the joint names of SHCP
Liability property and the Principal with
cross liability so that
the insurance applies to
each as separate insured.
EVENTS OF DELAY: (a) By reason of the
(Clause 8.4) discovery of
Contaminants; and
(b) by reason of any
other matter, cause
or thing beyond the
control of SHCP,
LPPL and LCPL,
PROVIDED HOWEVER that SHCP
will not be entitled to an
extension of time in
respect of any combination
of workmen, strikes or
industrial difficulties
which relate specifically
to the Site, the Works,
the construction of the
Casino, SHCP, LPPL or LCPL
other than those which are
due to:
(a) attempts by
industrial unions to
have SHCP, LPPL or
LCPL act contrary to
the New South Wales
Government Code of
Practice for the
Construction
Industry; or
(b) industrial
disputation arising
from a breach by
industrial unions
of an enterprise
agreement relating
to the Site, the
Works or the
construction of the
Casino provided that
such enterprise
agreement complies
with
<PAGE>
25
the New South Wales
Government Code
of Practice for the
Construction
Industry.
TIME FOR PAYMENT CLAIM: 25th day of each month.
(Clause 9.1)
TIME FOR PAYMENT 7 days.
CERTIFICATE:
(Clause 9.2)
TIME FOR PAYMENT OF 21 days from the issue of
PAYMENT the payment certificate.
CERTIFICATE:
(Clause 9.3)
LIQUIDATED DAMAGES: $1.00 per day
(Clause 10.3)
ADDRESSES AND FACSIMILE Principal:
NUMBERS FOR NOTICES
(Clause 14.6) Level 17
309 Kent Street
SYDNEY
Fax: 299 7427
Attention: Lindsay
Le Compte
Principal's Representative:
66-72 Rickard Road
BANKSTOWN NSW 2200
Fax: 795 0888
Attention: Tony Collins
SHCP:
Level 3, 472
Pacific Highway
ST. LEONARDS NSW 2065
Fax: 925 6152
Attention: Mr Chris Ryan
<PAGE>
26
SCHEDULE 2
DESCRIPTION OF THE WORKS
The Description of the Works is subdivided into two subsections:
PART A - EXCAVATION WORKS
PART B - ENVIRONMENTAL ENGINEERING SERVICES
PART A - EXCAVATION WORKS
The following sets out the scope and description of the Works:
- - Ensure the Environmental Engineer provides surveillance
and specialist engineering services in respect to Site
remediation during the period of the excavation,
transportation and depositing at the disposal fill sites.
The scope of work to be undertaken is set out in SCHEDULE
2 - PART B.
- - Carry out geotechnical investigation to determine the
location of the sandstone bedrock and the intersection
with RL100 across the excavation Site and to determine
ground water levels and flows through the bedrock and fill
material.
- - Carry out additional sampling of the fill across the site
to augment the test data currently available. Up to 10
test holes are to be excavated using a backhoe to depths
of 2-3 metros. Samples are to be analysed for contaminants
and the Environmental Engineer shall compile a report with
recommendations on the findings.
- - Engage a suitably qualified Archaeological consultant to
provide surveillance of the Site during the initial
excavation of the surface layers and provide all necessary
reports to the satisfaction of the relevant authorities.
- - Obtain the excavation permit from the Heritage Branch of
the Department of Planning.
- - Prepare an environmental management plan in a form and
containing such details as may be reasonably required by
the Principal's Representative and any relevant
authorities, setting out the roles and responsibilities to
minimise the effects on the Environment during the course
of the Works including (without limitation) the procedures
for noise control, dewatering, erosion protection, dust
control and the method for transporting material from the
Site. SHCP must obtain the approval of the Environment
Protection Authority of New South Wales to this Plan.
- - Prepare a dilapidation report on the adjacent buildings,
considered to be affected by the Works such as the Sydney
Electricity Switching Station and Sydney Electricity
Lighting Station Heritage Building.
- - Prepare a quality assurance plan for the work in a form
and containing such details as
<PAGE>
27
may be reasonably required by the Principal's
Representative including (without limitation) the quality
assurance system to be adopted by the Environmental
Engineer.
- - Excavate the entire site to RL100 and remove all concrete
footings, conduits, tanks, Clockwork fence, and remaining
structures above this level (excluding the Sydney
Electricity Lighting Station Heritage Building) and in
accordance with the Design Documents referred to in
Schedule 4.
- - Further excavate sandstone rock and remove all concrete
foundations west of the RL100 rock contour line to RL96
and RL97 approximately in accordance with the Design
Documents referred to in Schedule 4.
- - Transport and deposit excavated material at the fill
disposal sites in accordance with the Work Plan.
- - Provide for any dewatering that may be required to allow
excavation of the fill material and excavation of the
sandstone rock west of the 'natural' rock dam at rock
contour RL100.
- - Install suitable shoring, underpinning of remaining
structures within the site and on the site boundary, or
provide a batter to the excavated face, where the
excavated surface is considered to be unstable in its
unsupported condition by a qualified geotechnical engineer
approved by the Principal.
- - In accordance with the Work Plan excavate, handle on Site
and dispose of, any material identified as potentially
being Contaminated Material (as defined in the Work Plan).
- - Provide all necessary barriers and warning lights.
- - Provide one 4m x 2.4m shed on site with desk, chair,
telephone and power for use by the Principal's
Representative.
- - Progressively and on completion of the excavation, SHCP
shall provide a report scheduling the fill disposal sites
in accordance with the Work Plan.
- - Comply with the conditions of the Development Consent.
- - Provide to the Principal's Representative, copies of all
reports, plans etc. including those prepared or provided
by the Environmental Engineer.
PART B - ENVIRONMENTAL ENGINEERING SERVICES
The following sets out the scope and description of services
which SHCP must ensure that the Environmental Engineer provides
under the Contract:
<PAGE>
28
- - Establish presence on Site.
- - Liaise with the Principal's Representative on a regular
basis.
- - Undertake additional sampling across the Site for analysis
for Contaminants and compile a report on the findings as
set out in PART A of this Schedule.
- - Undertake Site inspection of the Works, providing services
equivalent to 6 weeks full time followed by 1.5 days per
week for the remaining period of the Contract.
- - Undertake all necessary testing for Contaminants,
reporting and liaison with the EPA including obtaining
necessary approval in accordance with the Work Plan.
- - Provide a daily report, detailing the classification of
materials excavated and leaving the Site and their
ultimate destination.
- - Prepare Progress Reports on a 2 week basis, a copy of
which is to be made available to the Principal's
Representative.
- - Undertake regular liaison with EPA in accordance with the
Work Plan.
- - On Completion of the Works, prepare a report in accordance
with the Work Plan.
<PAGE>
29
SCHEDULE 3
WORK PLAN
The Work Plan sets out the methodology for excavation of the
Site, demolition of structures and transport to disposal fill
sites.
The Work Plan is subdivided into four subsections:
PART A - DEFINITIONS
PART B - GENERAL
PART C - SANDSTONE, CONCRETE AND FILL MATERIAL
PART D - CONTAMINATED MATERIAL
PART A - DEFINITIONS
"CONTAMINATED MATERIAL" means material classified by the
Environmental Engineer as not suitable for disposal at a
Nominated Fill Site and requiring disposal at a Licensed Landfill
Site.
"EPA" means Environment Protection Authority of New South Wales.
"FILL MATERIAL" means material classified by the Environmental
Engineer as suitable for disposal at a Nominated Fill Site.
"LICENSED LANDFILL SITE" means landfill site approved by the EPA.
"NOMINATED FILL SITE" means a site which has as its intended land
use, either:
(a) an industrial purpose; or
(b) any other use approved by the Principal's
Representative under Part C of this Work Plan.
"SANDSTONE MATERIAL" means sandstone material classified by the
Environmental Engineer as suitable for unrestricted disposal, at
the discretion of SHCP.
PART B - GENERAL
This section sets out the general work plan under which the work
is to be performed and the material tested, transported and
deposited at the selected fill sites and the demolition of
concrete structures.
- - Excavation and loading shall be carried out using
construction plant normally used in the excavation of
sandstone, excavation of fill and removal of concrete
structures, including dozers, loaders and hydraulic rock
breakers.
<PAGE>
30
- - Broken up concrete structures may either be removed from
the Site or alternatively a crushing plant may be
established on Site for crushing concrete, bricks and
sandstone prior to removal from the Site.
- - Excavation work will be carried out between the hours
nominated in the Development Consent.
- - Transportation access to the Site by truck must be via one
of the following routes:
- Broadway/Wattle Street/Pyrmont Bridge Road/Edward
Street;
- Glebe Island Arterial (from City)/Pyrmont Bridge
Road/Edward Street;
- Glebe Island Bridge/Bank Street/Miller Street/Union
Street/Pyrmont Bridge Road/Edward Street;
- Pier Street/Darling Drive/Pyrmont Bridge Road/Edward
Street.
- - Transportation egress from the Site by truck for disposal
of excavated material must be via one of the following
routes:
- Edward Street/Union Street/Darling Drive/Ultimo
Street/Harris Street/Broadway;
- Edward Street/Union Street/Darling Drive/Pier Street;
- Edward Street/Union Street/Pyrmont Bridge Road/Bank
Street/Glebe Island Bridge;
- Edward Street/Union Street/Pyrmont Bridge Road/Pyrmont
Street and hence via duct north to Harbour Bridge.
- - SHCP will take steps to minimise the spread of dust and
debris on the surrounding road system.
- - Edward Street and Union Street shall be cleaned on a
regular basis to minimise the generation of dust.
- - Excavation and loading procedures shall be such that all
materials shall be available for inspection and testing by
the Environmental Engineer either in machinery bucket or
stockpile prior to loading into trucks. Material
identified as potentially being Contaminated Material
shall be dealt with under PART D - CONTAMINATED MATERIAL.
Otherwise the material shall be dealt with under PART C
SANDSTONE, CONCRETE & FILL MATERIAL.
- - On completion of the excavation and transport to the
disposal site, the Environmental Engineer shall prepare a
report documenting the surveillance work undertaken, test
results and recommendations to SHCP and the Principal's
Representative. The report shall also document the results
of the final inspection at Completion of the Works.
<PAGE>
31
PART C - SANDSTONE, CONCRETE & FILL MATERIAL
This section deals with the disposal of material designated as
Sandstone Material, Fill Material or concrete by the
Environmental Engineer.
- - Disposal of excavated Fill Material from the Site shall be
to a Nominated Fill Site.
- - SHCP shall seek the Principal's Representative's approval
to the location of all proposed Nominated Fill Sites where
Fill Material is to be deposited and for this purpose will
provide evidence such as correspondence from the
landowners stating:
- Property identification and owner;
- Quantity and type of fill to be deposited;
- Proposed ultimate destination on the site where of the
fill is to be deposited;
- Intended land use for the site; and
- Advice that the land owner accepts fill material of the
type described.
- - The Principal's Representative is only obliged to approve
a site as a Nominated Fill Site if the fill material to be
deposited at that site does not pose a human health risk
or risk to the Environment given the intended use of that
site.
- - Disposal of Sandstone Material from the Site shall be at
the unrestricted discretion of SHCP.
- - Disposal of concrete, bricks and steel material from the
Site shall be at the unrestricted discretion of SHCP.
- - SHCP shall advise the Principal's Representative of the
quantity of the Sandstone Material, concrete, bricks and
like material removed from the Site.
PART D - CONTAMINATED MATERIAL
This section deals with the excavation and disposal of material
identified as potentially being Contaminated Material by the
Environmental Engineer.
- - Regular liaison meetings with the EPA shall be undertaken
during the period of excavation. Liaison meetings shall
involve SHCP, the Environmental Engineer and the
Principal's Representative.
- - Visual inspection and volatile gas screening (with a
photoionisation detector "PID") shall also be conducted.
Materials which are suspect shall be placed in a stockpile
on the Site. Suspect materials may include (without
limitation):
<PAGE>
32
- stained or oily soils;
- soils giving above background volatile emissions on the
PID;
- soils containing fibrous materials suspected of being
asbestos; and
- soils with a high percentage of ash or slag.
- - Representative sampling shall be undertaken from the
suspect materials for analysis. The materials must not be
removed from the Site until results are received and
advice from the Environmental Engineer.
- - Excavate and stockpile material considered as being
potentially Contaminated Material at a location not to
interfere with the main work.
Materials confirmed as Contaminated Material shall be dealt with
in the following manner:
- - MATERIALS WHICH CAN BE DISPOSED OF WITHOUT STABILISATION
For materials found to be contaminated with metals or
organics, which pass the EPA requirement for unstabilised
materials (which may include TCLP testing {Toxicity
Characteristic Leaching Procedure}), application may be
made by SHCP to the EPA for disposal at a Nominated Fill
Site or alternatively a Licensed Landfill Site.
- - ASBESTOS CONTAINING SOILS
For materials found to be containing asbestos, application
shall be made by SHCP to the EPA for disposal of the soil
to a Licensed Landfill Site, with disposal undertaken by a
licensed contractor in accordance with the requirements of
the Workcover Authority of NSW.
- - OTHER MATERIAL
Materials within this category are:
- Soils containing prescribed chemical wastes under the
Environmentally Hazardous Chemicals Act (ea. PCBs)
which at certain concentrations and amounts cannot be
disposed of at a Nominated Fill Site;
- Soils containing hydrocarbons (ea. polycyclic aromatic
hydrocarbons PAHS) at concentrations above which they
can be disposed at a Nominated Fill Site;
- Soils containing leachable metals or organics at
concentrations which exceed the criteria for disposal
at a Nominated Fill Site.
The above materials shall be handled on an individual
basis. Options for disposal may
<PAGE>
33
include:
- Stabilisation and landfill disposal;
- Treatment to reduce concentrations to a level where
disposal is possible;
- Transportation to treatment plant;
- Offsite strategic storage pending assessment of
treatment options.
Application is required to be made to the EPA, for its
approval on the treatment and disposal of the above
materials.
- - SHCP shall advise the Principal's Representative of the
location of all Licensed Landfill Sites where Contaminated
Material is deposited, providing written evidence, such as
correspondence from the landowner, stating:
- Property identification and owner;
- Quantity and type of Contaminated Material deposited;
- EPA approval for disposal of the material at that site.
<PAGE>
34
SCHEDULE 4
DRAWINGS AND SPECIFICATIONS
AND OTHER RELEVANT DOCUMENTS (IF ANY)
Drawing JO78/CSS/9/DD/25500/02
<PAGE>
35
SCHEDULE 5
RATES AND PRICES
PART A - PAYMENT FOR CONTAMINATED MATERIAL
The following unit "extra over" rates per cubic metre, loose
measured in the truck, measured at the gate shall apply, to
include all handling, stockpiling, removal from the Site and
disposal costs including selection of disposal site and arranging
for disposal.
(i) Materials which can be $90/m3
disposed of without
stabilisation
(ii) Asbestos Contaminated Soils Cost plus 25% for
overheads and profit
(iii) Other material Cost plus 25% for
overheads and profit
PART B - PAYMENT FOR ENVIRONMENTAL ENGINEERING CONSULTANT AND
TESTING
Consultant in Charge $133/hr
Senior Level Staff $105/hr
Staff $65/hr
Support Staff $55/hr
Testing for Metals $95/hr
Testing for TCLP of Metals $145/test
Testing for Hydrocarbons $330/test
Testing for TCLP of Hydrocarbons $430/test
Testing for Asbestos in soils $40/test
Other Costs Cost plus 25% for
overheads and profit
<PAGE>
36
SCHEDULE 6
ENGINEERING SURVEYOR'S CERTIFICATE
Drawing No. 80980001/00
<PAGE>
37
SCHEDULE 7
WARRANTIES BY SHCP
(a) (LEGALLY BINDING OBLIGATION): this Contract constitutes a
valid and legally binding obligation of SHCP in accordance
with its terms notwithstanding:
(i) any statute of limitations;
(ii) any laws of bankruptcy, insolvency, liquidation,
reorganisation or other laws affecting creditors'
rights generally; and
(iii) any defences of set-off or counter claim;
(b) (EXECUTION, DELIVERY AND PERFORMANCE): the execution and
delivery of this Contract, and the performance of or
compliance with its obligations under this Contract by it
does not violate any law or regulation or official
directive or any document or agreement to which it is a
party or which is binding upon it or any of its assets;
(c) (INFORMATION): all information given at any time and every
statement made at any time, by it to the Principal or its
employees, agents or consultants in connection with this
Contract is and will be true in any material respect and
is and will not by omission or otherwise be misleading in
any material respect;
(d) (IMMUNITY): it is not and will not be immune from the
jurisdiction of a court or arbitration process or from any
legal process (whether through service of notice,
judgement, attachment in aid of execution or otherwise);
(e) (NO EVENT OF INSOLVENCY): no event has occurred which
constitutes an Event of Insolvency in relation to the
Principal.
(f) (DUE INCORPORATION): it is duly incorporated, is validly
existing under the laws of the jurisdiction of its
incorporation and has the corporate power to own its
property and to carry on its business as is now being
conducted;
(g) (CONSTITUENT DOCUMENTS): the execution, delivery and
performance of this Contract does not violate the
Memorandum and Articles of Association of it (or the
equivalent constituent documents in its jurisdiction of
incorporation), or cause a limitation on its powers, or
cause the powers of its directors or officers to be
exceeded, and if it is listed on the Australian Stock
Exchange Limited or its subsidiaries or on any other stock
exchange, does not violate the listing (or equivalent)
requirements thereof;
(h) (POWER): it has the power, and has taken all corporate and
other action required, to enter into this Contract and to
authorise the execution and delivery of this Contract and
the performance of its obligations hereunder;
<PAGE>
38
(i) (FILINGS): it has filed all corporate notices and effected
all registrations with the Australian Securities
Commission or similar office in its jurisdiction of
incorporation and in any other jurisdiction as required by
law and all such filings and registrations are current,
complete and accurate; and
(j) (Commercial Benefit): the execution of this Contract is
in its best commercial interests.
<PAGE>
SHC
EXHIBIT 2 TO
FIRST AMENDING DEED
(NOMINEE TRUST DEEDS)
- SYDNEY CASINO PROJECT -
<PAGE>
DATED: 23 JUNE 1994
BETWEEN
HAROLD GREGORY NASKY
(THE "TRUSTEE")
AND
SHOWBOAT AUSTRALIA PTY LIMITED
(ACN 061 299 625)
(THE "BENEFICIARY")
DEED OF TRUST
DUNHILL
MADDEN
BUTLER
SOLICITORS & NOTARIES
SYDNEY
16 BARRACK STREET, SYDNEY 2000
NEW SOUTH WALES, AUSTRALIA
GPO BOX 427, SYDNEY 2001
TELEPHONE: (02) 233 3622
INTERNATIONAL: 612 233 3622
DX 254 SYDNEY
FAX: (02) 235 3099
REF: ATT:DAM:775053
SYDNEY-MELBOURNE
<PAGE>
DEED OF TRUST
THIS DEED dated 23 JUNE 1994
BETWEEN: HAROLD GREGORY NASKY of 7408 Silver Palm Court, Las
Vegas, Nevada USA 89117 (the "Trustee")
AND SHOWBOAT AUSTRALIA PTY LIMITED (ACN 061 299 625) of
Level 3, 472 Pacific Highway, St. Leonards 2065 (the
"Beneficiary").
RECITALS:
A. The Beneficiary has requested the Trustee to acquire the
Share as a custodian trustee for the Beneficiary.
B. The Beneficiary has paid or provided the whole of the
subscription moneys for the share and the Trustee has
acquired the Share.
C. The Trustee agrees to hold the Share on the terms
specified in this Deed.
IT IS AGREED AS FOLLOWS:
1. DEFINITION AND INTERPRETATION.
1.1 DEFINITION
"COMPANY" means Sydney Harbour Casino Holdings Limited
(ACN 064 054 431).
"SHARE" means the share or shares which are described in
the Schedule.
1.2 INTERPRETATION
The following rules of interpretation apply unless the
context requires otherwise.
(a) the singular includes the plural and conversely.
(b) a gender includes any genders.
(c) a reference to a person includes a body corporate,
an unincorporated body or other entity and
conversely.
(d) a reference to a clause or schedule is to a clause
or of schedule of this Deed.
(e) a reference to a person includes a reference to the
persons executors, administrators, successors and
permitted assigns.
(f) "Share" includes, if more than one share is the
subject of this Deed, each of those shares
severally.
(g) headings are for convenience of reference only and
shall not affect the construction or interpretation
of this Deed.
<PAGE>
2
2. TRUST
The Trustee acknowledges and agrees that the Share and all
rights, benefits, income and capital from it is held in
trust for the Beneficiary absolutely.
3. DEALING WITH THE SHARE
The Trustee shall transfer, exercise and deal with the
Share, the certificate of title to it, and all rights,
benefits, income and capital from it in the manner that
the Beneficiary directs from time to time.
4. DOCUMENTS
4.1 The Trustee shall immediately give to the Beneficiary a
copy of every notice or other document received by the
Trustee in respect of the Share.
4.2 Clause 4.1 shall not apply to any notice or document if
the Beneficiary has received or is likely to receive a
similar notice or document in its capacity as the holder
of any other share of the same class in the Company.
5. INDEMNITY
The Beneficiary shall indemnify the Trustee against any
loss, cost, charge, expense, action, proceeding, judgment,
or liability incurred, suffered by or brought, made or
recovered against the Trustee in connection with the
holding of the Share by the Trustee, including all costs
and expenses incurred by the Trustee in connection with
this Deed and the execution of the trusts under this Deed.
6. REMOVAL OF TRUSTEE
6.1 The Beneficiary may remove the Trustee and appoint instead
any person or corporation as the Trustee in place of the
Trustee by deed, or any other means that may be acceptable
to the Trustee.
6.2 The Beneficiary shall be obliged to remove the Trustee in
the manner specified in clause 6.1 if the Trustee
requests this by written notice to the Beneficiary.
6.3 For the purposes of Clause 6.2, if the Trustee gives
written notice to the Beneficiary under that Clause, and
the Beneficiary fails to remove the Trustee within five
(5) business days after service of that notice, the
Trustee may transfer the Share to the Beneficiary. The
Beneficiary, for valuable consideration received,
irrevocably appoints the Trustee as the attorney of the
Beneficiary with power in the name of the Beneficiary to
accept any such transfer, to execute any instrument of
that transfer and take any other action on behalf of the
Beneficiary that the Trustee may in its discretion think
fit to perfect transfer of title of the Share to the
Beneficiary.
7. NOTICES
Any notice given under this Deed must be in writing and
signed by the party giving the notice (or if a corporation
by any director of that corporation) and may be served
personally or by registered mail addressed to the party to
whom the notice is given at the address specified in this
Deed (or such other address as notified by the other party
in writing) in which case, it shall be deemed to be served
forty-eight (48) hours after the time of posting of the
notice.
<PAGE>
3
8. GOVERNING LAW
8.1 This Deed is governed by the laws of the State of New
South Wales. The parties irrevocably agree to submit to
the non-exclusive jurisdiction of the courts of New South
Wales and the Courts of Appeal from them.
8.2 Each party waives the right to object to an action being
brought in those courts, to claim that the action has been
brought in an inconvenient forum or to claim that those
courts do not have jurisdiction.
THE SCHEDULE
NO. OF CLASS OF NOMINAL PAID UP NAME OF COMPANY
SHARES SHARES AMOUNT AMOUNT
OF SHARES
1 Ordinary $1.00 $1.00 Sydney Harbour
Casino Holdings
Limited
(ACN 064 054 431)
EXECUTED AS A DEED
SIGNED SEALED and DELIVERED )
by the said HAROLD GREGORY )
NASKY in the presence of: )
/s/ Thomas M. Green /s/ H. Gregory Nasky
Signature of Witness Harold Gregory Nasky
Thomas M. Green
Print Name of Witness
THE COMMON SEAL of )
SHOWBOAT AUSTRALIA PTY )
LIMITED (ACN 061 299 625) was )
affixed in accordance with its )
Memorandum and Articles of )
Association In the presence of:)
/s/ H. Gregory Nasky
Signature of Secretary/Director Signature of Director
Print Name of Secretary/Director Print Name of Director
<PAGE>
DATED: 23 JUNE 1994
BETWEEN
VYRIL ANTHONY VELLA
(THE "TRUSTEE")
AND
SHOWBOAT AUSTRALIA PTY LIMITED
(ACN 061 299 625)
(THE "BENEFICIARY")
DEED OF TRUST
DUNHILL
MADDEN
BUTLER
SOLICITORS & NOTARIES
SYDNEY
16 BARRACK STREET, SYDNEY 2000
NEW SOUTH WALES, AUSTRALIA
GPO BOX 427, SYDNEY 2001
TELEPHONE: (02) 233 3622
INTERNATIONAL: 612 233 3622
DX 254 SYDNEY
FAX: (02) 235 3099
REF: ATT:DAM:775053
SYDNEY-MELBOURNE
<PAGE>
DEED OF TRUST
THIS DEED dated 23 JUNE 1994
BETWEEN: VYRIL ANTHONY VELLA of 102A Lilli Pilli Point Road,
Lilli Pilli NSW 2229 (the "Trustee")
AND: SHOWBOAT AUSTRALIA PTY LIMITED (ACN 061 299 625) of
Level 3, 472 Pacific Highway, St. Leonards 2065 (the
"Beneficiary").
RECITALS:
A. The Beneficiary has requested the Trustee to acquire the
Share as a custodian trustee for the Beneficiary.
B. The Beneficiary has paid or provided the whole of the
subscription moneys for the share and the Trustee has
acquired the Share.
C. The Trustee agrees to hold the Share on the terms
specified in this Deed.
IT IS AGREED AS FOLLOWS:
1. DEFINITION AND INTERPRETATION.
1.1 DEFINITION
"COMPANY" means Sydney Harbour Casino Holdings Limited
(ACN 064 054 431).
"SHARE" means the share or shares which are described in
the Schedule.
1.2 INTERPRETATION
The following rules of interpretation apply unless the
context requires otherwise.
(a) the singular includes the plural and conversely.
(b) a gender includes any genders.
(c) a reference to a person includes a body corporate,
an unincorporated body or other entity and
conversely.
(d) a reference to a clause or schedule is to a clause
or of schedule of this Deed.
(e) a reference to a person includes a reference to the
persons executors, administrators, successors and
permitted assigns.
(f) "Share" includes, if more than one share is the
subject of this Deed, each of those shares
severally.
(g) headings are for convenience of reference only and
shall not affect the construction or interpretation
of this Deed.
<PAGE>
2
2. TRUST
The Trustee acknowledges and agrees that the Share and all
rights, benefits, income and capital from it is held in
trust for the Beneficiary absolutely.
3. DEALING WITH THE SHARE
The Trustee shall transfer, exercise and deal with the
Share, the certificate of title to it, and all rights,
benefits, income and capital from it in the manner that
the Beneficiary directs from time to time.
4. DOCUMENTS
4.1 The Trustee shall immediately give to the Beneficiary a
copy of every notice or other document received by the
Trustee in respect of the Share.
4.2 Clause 4.1 shall not apply to any notice or document if
the Beneficiary has received or is likely to receive a
similar notice or document in its capacity as the holder
of any other share of the same class in the Company.
5. INDEMNITY
The Beneficiary shall indemnify the Trustee against any
loss, cost, charge, expense, action, proceeding, judgment,
or liability incurred, suffered by or brought, made or
recovered against the Trustee in connection with the
holding of the Share by the Trustee, including all costs
and expenses incurred by the Trustee in connection with
this Deed and the execution of the trusts under this Deed.
6. REMOVAL OF TRUSTEE
6.1 The Beneficiary may remove the Trustee and appoint instead
any person or corporation as the Trustee in place of the
Trustee by deed, or any other means that may be acceptable
to the Trustee.
6.2 The Beneficiary shall be obliged to remove the Trustee in
the manner specified in clause 6.1 if the Trustee
requests this by written notice to the Beneficiary.
6.3 For the purposes of Clause 6.2, if the Trustee gives
written notice to the Beneficiary under that Clause, and
the Beneficiary fails to remove the Trustee within five
(5) business days after service of that notice, the
Trustee may transfer the Share to the Beneficiary. The
Beneficiary, for valuable consideration received,
irrevocably appoints the Trustee as the attorney of the
Beneficiary with power in the name of the Beneficiary to
accept any such transfer, to execute any instrument of
that transfer and take any other action on behalf of the
Beneficiary that the Trustee may in its discretion think
fit to perfect transfer of title of the Share to the
Beneficiary.
7. NOTICES
Any notice given under this Deed must be in writing and
signed by the party giving the notice (or if a corporation
by any director of that corporation) and may be served
personally or by registered mail addressed to the party to
whom the notice is given at the address specified in this
Deed (or such other address as notified by the other party
in writing) in which case, it shall be deemed to be served
forty-eight (48) hours after the time of posting of the
notice.
<PAGE>
3
8. GOVERNING LAW
8.1 This Deed is governed by the laws of the State of New
South Wales. The parties irrevocably agree to submit to
the non-exclusive jurisdiction of the courts of New South
Wales and the Courts of Appeal from them.
8.2 Each party waives the right to object to an action being
brought in those courts, to claim that the action has been
brought in an inconvenient forum or to claim that those
courts do not have jurisdiction.
THE SCHEDULE
NO. OF CLASS OF NOMINAL PAID UP NAME OF COMPANY
SHARES SHARES AMOUNT AMOUNT
OF SHARES
1 Ordinary $1.00 $1.00 Sydney Harbour
Casino Holdings
Limited
(ACN 064 054 431)
EXECUTED AS A DEED
SIGNED SEALED and DELIVERED )
by the said VYRIL ANTHONY )
VELLA in the presence of: )
/s/ Thomas M. Green /s/ Vyril Vella
Signature of Witness Vyril Anthony Vella
Thomas M. Green
Print Name of Witness
THE COMMON SEAL of )
SHOWBOAT AUSTRALIA PTY )
LIMITED (ACN 061 299 625) was )
affixed in accordance with its )
Memorandum and Articles of )
Association In the presence of:)
/s/ H. Gregory Nasky
Signature of Secretary/Director Signature of Director
Print Name of Secretary/Director Print Name of Director
<PAGE>
DATED: 23 JUNE 1994
BETWEEN
BARRY WILLIAM CLARK
(THE "TRUSTEE")
AND
SHOWBOAT AUSTRALIA PTY LIMITED
(ACN 061 299 625)
(THE "BENEFICIARY")
DEED OF TRUST
DUNHILL
MADDEN
BUTLER
SOLICITORS & NOTARIES
SYDNEY
16 BARRACK STREET, SYDNEY 2000
NEW SOUTH WALES, AUSTRALIA
GPO BOX 427, SYDNEY 2001
TELEPHONE: (02) 233 3622
INTERNATIONAL: 612 233 3622
DX 254 SYDNEY
FAX: (02) 235 3099
REF: ATT:DAM:775053
SYDNEY-MELBOURNE
<PAGE>
DEED OF TRUST
THIS DEED dated 23 JUNE 1994
BETWEEN: BARRY WILLIAM CLARK of 30 Miamba Avenue, Carlingford
NSW 2118 (the "Trustee")
AND: SHOWBOAT AUSTRALIA PTY LIMITED (ACN 061 299 625) of
Level 3, 472 Pacific Highway, St. Leonards 2065 (the
"Beneficiary").
RECITALS:
A. The Beneficiary has requested the Trustee to acquire the
Share as a custodian trustee for the Beneficiary.
B. The Beneficiary has paid or provided the whole of the
subscription moneys for the share and the Trustee has
acquired the Share.
C. The Trustee agrees to hold the Share on the terms
specified in this Deed.
IT IS AGREED AS FOLLOWS:
1. DEFINITION AND INTERPRETATION.
1.1 DEFINITION
"COMPANY" means Sydney Harbour Casino Holdings Limited
(ACN 064 054 431).
"SHARE" means the share or shares which are described in
the Schedule.
1.2 INTERPRETATION
The following rules of interpretation apply unless the
context requires otherwise.
(a) the singular includes the plural and conversely.
(b) a gender includes any genders.
(c) a reference to a person includes a body corporate,
an unincorporated body or other entity and
conversely.
(d) a reference to a clause or schedule is to a clause
or of schedule of this Deed.
(e) a reference to a person includes a reference to the
persons executors, administrators, successors and
permitted assigns.
(f) "Share" includes, if more than one share is the
subject of this Deed, each of those shares
severally.
(g) headings are for convenience of reference only and
shall not affect the construction or interpretation
of this Deed.
<PAGE>
2
2. TRUST
The Trustee acknowledges and agrees that the Share and all
rights, benefits, income and capital from it is held in
trust for the Beneficiary absolutely.
3. DEALING WITH THE SHARE
The Trustee shall transfer, exercise and deal with the
Share, the certificate of title to it, and all rights,
benefits, income and capital from it in the manner that
the Beneficiary directs from time to time.
4. DOCUMENTS
4.1 The Trustee shall immediately give to the Beneficiary a
copy of every notice or other document received by the
Trustee in respect of the Share.
4.2 Clause 4.1 shall not apply to any notice or document if
the Beneficiary has received or is likely to receive a
similar notice or document in its capacity as the holder
of any other share of the same class in the Company.
5. INDEMNITY
The Beneficiary shall indemnify the Trustee against any
loss, cost, charge, expense, action, proceeding, judgment,
or liability incurred, suffered by or brought, made or
recovered against the Trustee in connection with the
holding of the Share by the Trustee, including all costs
and expenses incurred by the Trustee in connection with
this Deed and the execution of the trusts under this Deed.
6. REMOVAL OF TRUSTEE
6.1 The Beneficiary may remove the Trustee and appoint instead
any person or corporation as the Trustee in place of the
Trustee by deed, or any other means that may be acceptable
to the Trustee.
6.2 The Beneficiary shall be obliged to remove the Trustee in
the manner specified in clause 6.1 if the Trustee
requests this by written notice to the Beneficiary.
6.3 For the purposes of Clause 6.2, if the Trustee gives
written notice to the Beneficiary under that Clause, and
the Beneficiary fails to remove the Trustee within five
(5) business days after service of that notice, the
Trustee may transfer the Share to the Beneficiary. The
Beneficiary, for valuable consideration received,
irrevocably appoints the Trustee as the attorney of the
Beneficiary with power in the name of the Beneficiary to
accept any such transfer, to execute any instrument of
that transfer and take any other action on behalf of the
Beneficiary that the Trustee may in its discretion think
fit to perfect transfer of title of the Share to the
Beneficiary.
7. NOTICES
Any notice given under this Deed must be in writing and
signed by the party giving the notice (or if a corporation
by any director of that corporation) and may be served
personally or by registered mail addressed to the party to
whom the notice is given at the address specified in this
Deed (or such other address as notified by the other party
in writing) in which case, it shall be deemed to be served
forty-eight (48) hours after the time of posting of the
notice.
<PAGE>
3
8. GOVERNING LAW
8.1 This Deed is governed by the laws of the State of New
South Wales. The parties irrevocably agree to submit to
the non-exclusive jurisdiction of the courts of New South
Wales and the Courts of Appeal from them.
8.2 Each party waives the right to object to an action being
brought in those courts, to claim that the action has been
brought in an inconvenient forum or to claim that those
courts do not have jurisdiction.
THE SCHEDULE
NO. OF CLASS OF NOMINAL PAID UP NAME OF COMPANY
SHARES SHARES AMOUNT AMOUNT
OF SHARES
1 Ordinary $1.00 $1.00 Sydney Harbour
Casino Holdings
Limited
(ACN 064 054 431)
EXECUTED AS A DEED
SIGNED SEALED and DELIVERED )
by the said BARRY WILLIAM )
CLARK in the presence of: )
/s/ Thomas M. Green /s/ B. Clark
Signature of Witness Barry William Clark
Thomas M. Green
Print Name of Witness
THE COMMON SEAL OF )
SHOWBOAT AUSTRALIA PTY )
LIMITED (ACN 061 299 625) was )
affixed in accordance with its )
Memorandum and Articles of )
Association In the presence of:)
/s/ H. Gregory Nasky
Signature of Secretary/Director Signature of Director
Print Name of Secretary/Director Print Name of Director
<PAGE>
SHC
EXHIBIT 3 TO
FIRST AMENDING DEED
(SUPPLEMENTARY LEGAL OPINION)
- SYDNEY CASINO PROJECT -
<PAGE>
SUPPLEMENTARY LEGAL OPINION
CIRCULATION SHC DRAFT 3: (14.9.94)
[LETTERHEAD OF US LAWYERS]
[ ] 1994
New South Wales Casino Control Authority
and the State of New South Wales
Level 17
309 Kent Street
Sydney, New South Wales 2000
Australia
SYDNEY CASINO PROJECT: SHOWBOAT, INC., SHOWBOAT DEVELOPMENT
COMPANY AND SHOWBOAT OPERATING COMPANY
**
We have acted as counsel to Showboat, Inc., a Nevada Corporation
("SBO"), Showboat Development Company, a Nevada Corporation
("SDC"), and Showboat Operating Company, a Nevada Corporation
("SOC"), (HEREINAFTER IN THIS LETTER THE "COMPANIES") in
connection with the SHC First Amending Deed executed by SBO, SOC,
SDC, the New South Wales Casino Control Authority (on behalf of
the State of New South Wales) ("AUTHORITY"), SHC, SHC Properties,
SHC Holdings, SBA, LPPL, LCPL, LHL, CBA and SCM, dated [ ]
1994 (Sydney time).
This Opinion is being issued and delivered to the Authority
pursuant to paragraph 3(d) of the SHC First Amending Deed. SBO,
SOC and SDC shall be collectively referred to herein as the
"Companies". The SHC First Amending Deed shall be referred to as
the "Relevant Document". Capitalised terms are used herein as
defined in the SHC First Amending Deed unless otherwise defined.
As counsel to the Companies, we have examined originals, if
available, or copies of the following documents and instruments:
(a) Draft First Amending Deed dated as of [ ], 1994 and marked
SHC: FIRST AD (FINAL [ ]) ("DRAFT FIRST AMENDING DEED");
[(b) Powers of Attorney made by SBO, SOC and SDC each dated
April 18, 1994 ("POWERS OF ATTORNEY") NB. ?NEED FOR NEW
POWERS.]
The Draft First Amending Deed, shall be referred to as the "DRAFT
RELEVANT DOCUMENT".
We have examined originals, where available, or copies of:
<PAGE>
2
(a) Resolutions certified by the Secretary of SBO, SOC and SDC
dated as of [ ], 1994; and
(b) Certificate of the Secretary of State of Nevada, dated as
of [ ], 1994, attesting to the good standing in Nevada of
SBO, SOC and SDC.
We have conducted such other reviews as are necessary to give the
opinions hereinafter stated.
In rendering the opinions expressed herein we have assumed the
Relevant Document will not reflect any substantial change from
the Draft Relevant Document which, if considered by us, would
affect our opinions expressed herein. We have also assumed that
the Relevant Document will be executed by SBO, SOC and SDC
pursuant to the [Powers of Attorney.]
In our examinations we have assumed the due completion of each
document (where blanks appear), and the due execution and due
delivery of each document by each party as of the date hereof;
the genuineness of all signatures other than the signatures of
SBO, SOC and SDC; and the legal capacity of natural persons who
signed or who will sign the documents. We further assume that the
Relevant Document accurately describes and contains your
understanding of the matters described therein and that there are
no oral or written statements or agreements by you, that modify,
amend, or vary, or purport to modify, amend or vary any of the
terms of the Relevant Document. In our examination we have also
assumed the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents
submitted to us as certified or photostatic documents. We further
assume the absence of fraud or duress in the inducement or
effectuation of the subject transactions and affirm that we have
no actual knowledge that would lead us to believe that there
exists any such fraud or duress.
We ** are admitted to the Bar of the State of Nevada, and in
rendering our opinions hereinafter stated, we have relied on the
applicable laws of the State of Nevada as these laws presently
exist and as they have been applied and interpreted by courts
having jurisdiction with the State of Nevada. We express no
opinion as to the laws of any other jurisdiction other than laws
of the United States of America.
Based upon the foregoing and in reliance thereon and subject to
the assumptions, exceptions, qualifications and limitations set
forth herein, we are of the opinion that:
1. (a) SBO is a corporation duly organised, validly
existing and in good standing under the laws of the
State of Nevada;
(b) SOC is a corporation duly organised, validly
existing, and in good standing under the laws of the
State of Nevada;
(c) SDC is a corporation duly organised, validly
existing and in good standing under the laws of the
State of Nevada;
(d) Each of the Companies is:
(i) in good standing and has all requisite power
and authority to own
<PAGE>
3
and operate and deal with its properties and
assets and to manage and to carry on its
business as presently conducted; and
(ii) duly qualified or registered to do business
in every jurisdiction where a failure to be
so qualified or registered would have a
material adverse effect on the condition
(financial or otherwise), operations or
income of the Companies and is in good
standing in each such jurisdiction in which
the Companies are qualified or registered to
do business.
2. The Relevant Document has been duly authorised, executed
and delivered to you by the Companies. The Relevant
Document ** constitutes legal, valid and binding
obligations of the Companies, enforceable against the
Companies in accordance with **its terms. The Powers of
Attorney are valid and binding appointments made by SBO,
SOC and SDC respectively, which authorise the execution
and delivery of the Relevant Document on behalf of the
Companies by any of the attorneys named therein.
3. The execution and delivery of the Relevant Document, the
performance and observance by the Companies of their
respective obligations thereunder, and the consummation of
the transactions contemplated thereby (including the grant
of security interests and liens thereunder) are within the
corporate authority of the Companies and have been duly
authorised by all necessary corporate proceedings and
actions on the part of the Companies.
4. The execution and delivery of the Relevant Document by the
Companies does not, and the performance and observance by
the Companies of their respective obligations thereunder,
the transactions contemplated thereunder, and the
provisions thereof, do not and will not contravene,
conflict with, or result in a breach, default or violation
of:
(a) any provisions of the Companies' respective Articles
of Incorporation, their respective Bylaws or any
other constituent document of the respective
Companies;
(b) any provision of the laws, statutes, rules or
regulations of the State of Nevada or of the Federal
law or regulations of the United States; or
(c) any decree, judgment, order, regulation or rule of
any federal, state or municipal court, board or
government or administrative authority or any
agreement, instrument or arrangement binding on any
of the Companies or any of their assets or
properties or to which any of the Companies is a
party, including ** the Relevant Document, nor will
the same result in the creation of any security
interest or mortgage under any such agreement,
arrangement or instrument other than as may be
expressly set out in the Relevant Document.
<PAGE>
4
5. No approval or consent or other action by, and no filing
with, any person, or state municipal or federal agency,
board, authority or other government or administrative
unit is required under any law, statute, rule or
regulation as a condition to the validity, effectiveness
or, enforceability of, or performance by the Companies of
their respective obligations under, the Relevant Document
or consummation of the transactions contemplated by the
Relevant Document.
6. There are no actions, proceedings, enquiries,
investigations or litigation of any nature pending, or, to
our knowledge, threatened at law or in equity by or before
any court, or government or administrative
instrumentality, board or agency having jurisdiction over
any of the Companies which has or may materially adversely
affect the condition (financial or otherwise), operation
or income of any of the Companies or which has or may
affect or place in question the authority of any of the
Companies to enter into or perform their respective
obligations under, or the validity or enforceability of,
the Relevant Document or the consummation of the
transactions contemplated by the Relevant Document.
7. Although we are not in a position to give an unqualified
opinion in this regard, we are of the opinion that there
is a reasonable basis on which to conclude that the courts
of the State of Nevada should give effect to the agreement
of the parties set forth in the Relevant Document which
will be governed by the laws of the State of New South
Wales. This opinion is based, in part, upon the
assumption, that the parties acted in good faith and not
for the purpose of evading the law of the real situs of
the contract and that the situs chosen by the parties has
a substantial relationship to the transaction. See, Angel
v. Ernst, 102 Nev. 390, 724 P.2d 215 (1986), Constanzo v.
Marine Midland Realty, 10I Nev. 277, 701 P.2d 747 (1985),
and Sievers v. Diversified Mortgage Investors, 95 Nev.
811, 603 P.2d 270 (1970).
8. The submission of the Companies to the jurisdiction of the
Courts of New South Wales and the appointment of SBA as
agent for service of process for any action or proceedings
commenced in New South Wales is valid and binding on each
of the Companies.
9. Any final and conclusive judgment obtained in the courts
of New South Wales or Australia will be recognised and
enforced by the courts of Nevada and the Federal Courts of
the United States without a further review on the merits.
10. Claims under the Relevant Document against any of the
Companies will rank at least pari pasu with the claims of
all other unsecured creditors of the Companies
respectively, other than those claims which are preferred
by law generally.
11. In any proceedings taken in the State of Nevada and in any
Federal Court of the United States, none of the Companies
will be entitled to claim for itself or any of its assets
immunity from suit, execution, attachment or other legal
process.
12. Our opinion in paragraph 2 above as to the enforceability
of the documents is subject to:
<PAGE>
5
(i) bankruptcy, insolvency, reorganisation, fraudulent
transfer, moratorium or other laws of general
application relating to or affecting the enforcement
of creditors' rights;
(ii) general principles of equity regardless of whether
such issues are considered in a proceeding in equity
or at law which provide, among other things, that
the remedies of specific performance and other forms
of equitable relief are subject to equitable
defences and to the discretion of the court before
which any proceeding therefor may be brought;
(iii) the fact that a court may view any provision of the
Relevant Document as unconscionable or subject to an
obligation that the parties to the Relevant Document
act reasonably or in a commercially reasonably
manner;
(iv) the fact that certain remedies contained in the
Relevant Document may be qualified under the laws of
the State of Nevada, none of which qualifications
will materially interfere with the practical
realisation of the benefits and the security provide
thereby.
Our opinion in paragraph 8 above as to the valid and binding
nature of the submission of the Companies to the jurisdiction of
the Courts of New South Wales or Australia is subject to the
equitable principle of forum non-conveniens. The Second Circuit
of the United States Court of Appeals addressed this issue in
Allstate Life Insurance Co. v. Linter Group Limited, 994 F.2d 996
(2d Cir. 1993). In Linter Group, the Second Circuit discussed the
legal principle of forum non-conveniens in dismissing an action
in the State of New York despite a forum selection clause in an
indenture selecting the Courts of the State of New York.
"Although there is still a strong presumption in favour of
a plaintiff's choice of forum, the Supreme Court has
recognised that dismissal nevertheless may be appropriate
where certain private and public interest factors point
towards trial in an alternative forum. Gulf Oil Corp. v.
Gilbert, 330 US 501, 508-09, 91 L.Ed. 1055, 67 S. Ct. 839
(1947) "remaining citations omitted].
The private and public interest factors recognised
by the Court in Gilbert include:
(1) the ease of access to sources of proof;
(2) the availability of compulsory process for
attendance of unwilling witnesses;
(3) the cost of obtaining attendance of unwilling
witnesses;
(4) practical problems involving the efficiency
and expense of a trial;
(5) enforceability of judgments;
<PAGE>
6
(6) administrative difficulties flowing from
court congestion;
(7) imposing jury duty on citizens of the forum;
(8) the local interest in having controversies
decided at home; and
(9) the avoidance of unnecessary problems in the
application of foreign law. Gilbert, supra
330 US at 508-09" Linter, 994 F.2 at 1001.
Therefore the opinion expressed in opinion paragraph
8 assumes that a court will carefully consider the
factors listed in Gulf Oil Corp v. Gilbert, 330 U.S.
91 L. Ed. 1055, 67 S. Ct. 839 (1947) in determining
the propriety of an alternative forum.
Our opinion in paragraph 9 above as to the enforceability of a
judgment in the State of Nevada and in a Federal Court of the
United States is subject to the constitutional principle of
comity.
"The U.S. Supreme Court defined comity as 'the recognition
which one nation allows within its territory to the
legislative, executive or judicial acts of another nation,
having due regard both to international duty and
convenience, and to the rights of its own citizens or of
other persons who are under the protection of its laws.'
Hilton v. Guyot, 159 U.S. 113, 164, 40 L. Ed. 95, 16 S.
Ct. 139 (1895). As a general rule, comity may be granted
where 'it is shown that the foreign court is a court of
competent jurisdiction, and that the laws and public
policy of the forum state and the rights of its residents
will not be violated.' Cunard S. S. Co. V. Salen Reefer
Serv. AB, 773 F.2d 452, 457 (2 Cir. 1985). Indeed, as long
as the foreign court abides by 'fundamental standards of
procedural fairness,' granting comity is appropriate. Id "
Allstate Life Insurance C. v. Linter Group Limited, 994
F.2d 996, 998 (2d Cir. 1993).
We therefore assume in rendering opinion paragraph 9 that the
laws of New South Wales or Australia are "procedurally fair" In
particular, we assume that (1) the laws of New South Wales and
Australia do not favour its citizens over those of other nations,
states and provinces; (2) the Companies are provided the
opportunity to provide evidence in their defence; (3) the
Companies will receive timely notice to permit them sufficient
time to defend the action; and (4) the judgment rendered by an
Australian or New South Wales court will not be against the
public policy of the **The State of Nevada._We also assume that
the courts of Australia and New South Wales recognise and enforce
judgments rendered by courts of any state of the United States or
federal courts of the United States of America.
The foregoing opinions are subject to the following additional
qualifications:
(a) We express no opinion as to the effectiveness of any
provision directly or indirectly requiring that any
consent, modification, amendment or waiver be in writing.
(b) We express no opinion as to the enforceability of any
provision which requires the party to indemnify another
party for losses or damages caused by the indemnified
<PAGE>
7
party's gross negligence, intentional acts or omissions.
Moreover, we advise you that a Court may not enforce an
indemnity agreement which shifts the financial
responsibility that the contract of indemnity expresses
such intention in clear and unequivocal terms.
(c) Since the opinions expressed in this letter are based upon
the law in effect on the date hereof, we assume no
obligation to revise or supplement this opinion letter
should such law be changed by legislative action, judicial
decision or otherwise.
We are qualified to practice and are experts in the laws of the
State of Nevada and the Federal law of the United States. We are
qualified to give this legal opinion. These opinions are
effective as of the date hereof. No extensions of our opinions
may be made by implication or otherwise. **We expressly consent
to and acknowledge your reliance on this opinion in executing the
Relevant Document. Our opinions are not to be otherwise quoted in
whole or in part without the express, written consent of this
firm.
Yours sincerely
[US LAWYER]
<PAGE>
SHC
EXHIBIT 4 TO
FIRST AMENDING DEED
(FIRST SUPPLEMENTAL MINISTER'S APPROVAL
AND CONSENT ACKNOWLEDGEMENT)
- SYDNEY CASINO PROJECT -
<PAGE>
FIRST SUPPLEMENTARY MINISTER'S APPROVAL
AND CONSENT ACKNOWLEDGEMENT
DATE: 1994
THE HONOURABLE ANNE MARGARET COHEN MP
("MINISTER")
CLAYTON UTZ
SOLICITORS AND ATTORNEYS
LEVELS 27-35
NO. 1 O'CONNELL STREET
SYDNEY NSW 2000
TEL: (02) 353 4000
FAX: (02) 251 7832
COPYRIGHT RESERVED
<PAGE>
FIRST SUPPLEMENTARY MINISTER'S APPROVAL AND CONSENT
ACKNOWLEDGEMENT
BY THE HONOURABLE ANNE MARGARET COHEN MP Chief Secretary and the
Minister of the Crown for the time being administering the Casino
Control Act 1992 (NSW) (facts) ("Act")
PURSUANT TO SECTION 142 OF THE ACT I HEREBY:
1. acknowledge having granted approval to the Authority for
and on behalf of the State, to conduct negotiations and to
enter into the agreements referred to in Schedule 1;
2. acknowledge that the agreements referred to in Schedule 1
are for or in connection with the establishment and
operation of a casino and any development of which a
casino or proposed casino forms part;
3. approve of the terms of the agreements referred to in
Schedule 1; and
4. consent to the assignment of rights and obligations under
or in respect of the agreements referred to in Schedule 1
and to the encumbering of the rights under or in respect
of the agreements referred to in Schedule 1 as specified
in the Item referable to the relevant agreement and on
condition that each such assignment and encumbrance (and
any later sale of such rights) is given or occurs in
accordance with the provisions of the relevant agreement
as specified.
For the avoidance of doubt the terms of the agreements referred
to in clauses 1 to 4 inclusive are those contained in the
documents marked for identification with the official stamp of
the Chief Secretary's Department and held and available during
business hours for inspection at the Department by any party to
them.
In giving these approvals I note that the Authority must, under
section 12 of the Casino Control Act, satisfy itself as to the
suitability of any applicant to which a licence is ultimately
granted under section 18 of the Act.
This Acknowledgement shall not be taken as, nor is capable of,
being an approval, consent or acknowledgement in respect of any
agreement to which the Authority is not a party whether or not
such agreement forms an annexure, exhibit or schedule to any of
the agreements referred to in Schedule 1.
This Acknowledgement is given solely for the purposes of section
142 of the Act and accordingly, any person entering into or
relying upon any of the agreements to which the Authority is a
party, referred to in Schedule 1, does so based solely upon the
person's own
<PAGE>
2
commercial judgment of, and professional advices in respect of,
the terms of such agreement and the matters, express or implied,
contemplated by such agreement.
Terms used but not defined in this Acknowledgement have the same
meaning as in the Act.
SIGNED by THE HONOURABLE ANNE MARGARET COHEN on [ ] 1994
_____________________________________
The Honourable Anne Margaret Cohen MP
_____________________________________
Witnessed by: R D McGregor J.P.
<PAGE>
3
SCHEDULE 1
ITEM 1
Parties and Agreement
SHC First Amending Deed made or to be made between the Authority,
Sydney Harbour Casino Pty. Limited, Sydney Harbour Casino
Properties Pty. Limited, Sydney Harbour Casino Holdings Limited,
Showboat Australia Pty. Limited, Leighton Properties Pty.
Limited, Leighton Contractors Pty. Limited, Leighton Holdings
Limited, Sydney Casino Management Pty. Limited, Showboat
Operating Company, Showboat Development Corporation, Showboat
Inc. and Commonwealth Bank of Australia.
ASSIGNMENT AND ENCUMBERING AND
CONDITIONS RELATING TO THE SAME
Clause 10: Miscellaneous
<PAGE>
4
ITEM 2
PARTIES AND AGREEMENT
Preliminary Site Preparation, Excavation and Remediation Works
Contract made or to be made between the Authority and Sydney
Harbour Casino Properties Pty. Limited.
ASSIGNMENT AND ENCUMBERING AND
CONDITIONS RELATING TO THE SAME
Clause 14.8: Assignment
<PAGE>
SHC
SECOND AMENDING DEED
DATE:
NEW SOUTH WALES CASINO CONTROL AUTHORITY
AUTHORITY
SYDNEY HARBOUR CASINO PTY. LIMITED
SHC
SYDNEY HARBOUR CASINO PROPERTIES PTY. LIMITED
SHC PROPERTIES
SYDNEY HARBOUR CASINO HOLDINGS LIMITED
SHC HOLDINGS
SHOWBOAT AUSTRALIA PTY. LIMITED
SBA
LEIGHTON PROPERTIES PTY. LIMITED
LPPL
LEIGHTON CONTRACTORS PTY. LIMITED
LCPL
LEIGHTON HOLDINGS LIMITED
LHL
SYDNEY CASINO MANAGEMENT PTY. LIMITED
SCM
SHOWBOAT OPERATING COMPANY
SOC
SHOWBOAT DEVELOPMENT CORPORATION
SDC
SHOWBOAT INC.
SBI
===========
CLAYTON UTZ
SOLICITORS AND ATTORNEYS
NO. 1 O'CONNELL STREET
SYDNEY NSW 2000
TEL: (02) 353 4000
FAX: (02) 251 7832
COPYRIGHT RESERVED
CONFIDENTIAL
<PAGE>
2
TABLE OF CONTENTS
CLAUSE PAGE
1. DEFINITIONS AND INTERPRETATION 3
2. CONSIDERATION 5
3. ASSOCIATED DOCUMENTS 5
4. WARRANTIES AND DISCLAIMER 6
5. AUTHORITY APPROVAL OF DA2 6
6. AMENDMENT OF APPLICATION 7
7. APPLICATION UNCONDITIONAL 7
8. AMENDMENTS TO COMPLIANCE DEED 7
9. AMENDMENTS TO OTHER EXECUTED PROJECT DOCUMENTS 9
10. GUARANTORS' CONSENT AND RATIFICATION 9
11. AMENDING PARTIES' CONSENT AND RATIFICATION 9
12. CONSENT TO VARIATIONS IN OTHER TRANSACTION DOCUMENTS 9
13. GENERAL 9
14. MISCELLANEOUS 10
LIST OF EXHIBITS 17
<PAGE>
THIS DEED is made the ________ day of ____________________, 1994.
<TABLE>
<S> <C>
BETWEEN NEW SOUTH WALES CASINO CONTROL AUTHORITY, a
statutory corporation constituted by the Casino
Control Act, 1992, on behalf of the State of New
South Wales, pursuant to Section 142 of the Casino
Control Act 1992, of Level 17, 309 Kent Street,
Sydney, NSW, Australia, 2000 ("AUTHORITY")
AND SYDNEY HARBOUR CASINO PTY. LIMITED, ACN 060 510
410, a company duly incorporated in New South
Wales, Australia of Level 3, 472 Pacific Highway,
St. Leonards, NSW, Australia ("SHC")
AND SYDNEY HARBOUR CASINO PROPERTIES PTY. LIMITED,
ACN 050 045 120, a company duly incorporated in New
South Wales, Australia of Level 3, 472 Pacific
Highway, St. Leonards, NSW, Australia ("SHC
PROPERTIES")
AND SYDNEY HARBOUR CASINO HOLDINGS LIMITED,
ACN 064 054 431, a company duly incorporated in New
South Wales, Australia of Level 3, 472 Pacific
Highway, St. Leonards, NSW, Australia ("SHC
HOLDINGS")
AND SHOWBOAT AUSTRALIA PTY. LIMITED, ACN 061 299 625,
a company duly incorporated in New South Wales,
Australia of Level 3, 472 Pacific Highway, St.
Leonards, NSW, Australia ("SBA")
AND LEIGHTON PROPERTIES PTY. LIMITED, ACN 001 046 395,
a company duly incorporated in New South Wales,
Australia of Level 3, 472 Pacific Highway, St.
Leonards, NSW, Australia ("LPPL")
AND LEIGHTON CONTRACTORS PTY. LIMITED, ACN 000 893 667,
a company duly incorporated in New South Wales,
Australia of Level 3, 472 Pacific Highway, St.
Leonards, NSW, Australia ("LCPL")
AND LEIGHTON HOLDINGS LIMITED, ACN 004 482 982, a
company duly incorporated in New South Wales,
Australia of Level 3, 472 Pacific Highway, St.
Leonards, NSW, Australia ("LHL")
AND SYDNEY CASINO MANAGEMENT PTY. LIMITED,
ACN 060 462 053, a company incorporated in New
South Wales, Australia of Level 3, 472 Pacific
Highway, St. Leonards, NSW, Australia ("SCM")
AND SHOWBOAT OPERATING COMPANY, a company duly
organized under the laws of the State of Nevada,
USA of 2800 Fremont Street, Las Vegas, Nevada 89104
USA ("SOC")
AND SHOWBOAT DEVELOPMENT CORPORATION, a company duly
organised under the laws of the State of Nevada USA
of 2800 Fremont Street, Las Vegas, Nevada 89104 USA
("SDC")
<PAGE>
2
AND SHOWBOAT INC., a company duly organised under the
laws of the State of Nevada USA of 2800 Fremont
Street, Las Vegas, Nevada 89104 USA ("SBI")
</TABLE>
<TABLE>
<CAPTION>
RECITALS
<S> <C>
A. On 22 April 1994 the Authority and certain of the Amending
Parties entered into the Executed Project Documents.
B. Certain of the Executed Project Documents were amended by
a First Amending Deed dated 6 October 1994.
C. This Deed is a further amending deed and is supplemental
to certain of the Executed Project Documents.
D. The Compliance Deed imposed an obligation on SHC to obtain
the D.A. for Permanent Site and pursuant to this
obligation, SHC lodged a development application (defined
herein as "DA1") with the Consent Authority on 6 June
1994.
E. Following receipt of public comment on DAI, SHC formulated
and submitted DA2 to the Consent Authority, with the
consent of the Authority as landowner.
F. Clause 7 of the Compliance Deed contemplates variation of
the Compliance Deed and paragraph B4.4.1.3 of the Brief to
Applications and Addendum 34 to that Brief contemplate
amendments to development applications.
G. DA2 involves increased construction costs and no reduction
in the terms of the [financial offer] forming part of the
Application.
H. The Consent Authority has given its consent to DA2 on
terms and conditions that are acceptable to SHC and to the
Authority.
I. The parties to the Compliance Deed have resolved by this
Second Amending Deed to vary the Compliance Deed to permit
DA2 to be substituted for DA1 insofar as they may be
inconsistent.
</TABLE>
<PAGE>
3
THIS DEED WITNESSES
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Deed, unless the context otherwise requires:
"ACT" means the Casino Control Act, 1992.
"AGREED DESIGN" means the design:
(a) which has been developed in conformity with the terms
of the Brief;
(b) which is to be further developed in conformity with the
terms of the Brief; and
(c) which is currently partially embodied in DA2,
which to the extent that it differs from the design embodied
in DA1 is agreed by the parties hereto to constitute a
variation pursuant to clause 7 of the Compliance Deed;
"AMENDING PARTIES" means all the parties to this Deed other
than the Authority.
"ANCILLARY AMENDING DEED" means the deed to be entered into
between [ ] to amend certain Transaction
Documents other than the Executed Project Documents, the
form and terms of which are set out in Exhibit 1. [IT IS
ENVISAGED THAT THIS DOCUMENT WILL DEAL WITH AMENDMENTS TO
TRANSACTION DOCUMENTS WHICH ARE NEITHER EXECUTED PROJECT
DOCUMENTS NOR EXHIBITS TO THE COMPLIANCE DEED.]
"CBA" means Commonwealth Bank of Australia, ACN 123 123 124.
"COMPLIANCE DEED" means the deed so entitled dated 22 April
1994 made between the Authority and the Application Parties
as amended by the First Amending Deed.
"DA1" means the development application for the Permanent
Site lodged with the Consent Authority by SHC Properties on
6 June 1994.
"DA2" means the development application for the Permanent
Site lodged with the Consent Authority by SHC Properties on
2 September 1994.
"EXECUTED PROJECT DOCUMENTS" means all of the following:
(a) Compliance Deed;
<PAGE>
4
(b) CD Bank Guarantee (First);
(c) CCA Charge;
(d) CCA Cross Guarantee;
(e) Parent Guarantees;
(f) Confidentiality and Disclaimer Deed;
(g) Deed of Restraint; and
(h) Development Agreement Side Deed.
"FIRST AMENDING DEED" means the deed of that name entered
into on 6 October 1994 between the Authority and the
Amending Parties.
"SECOND SUPPLEMENTARY LEGAL OPINION" means the US legal
opinion to be given by Messrs Kummer Kaempfer Bonner &
Renshaw of Nevada, USA in the form and on the terms of
Exhibit 2 regarding, inter alia, the enforceability of this
Deed.
"SECOND SUPPLEMENTARY MINISTER'S APPROVAL AND CONSENT
ACKNOWLEDGMENT" means the acknowledgment of the Minister
dated [ ] 1994, in the form and on the
terms set out in Exhibit 3.
1.2 UNDEFINED WORDS AND PHRASES
CapitaliSed words and phrases used in this Deed which are
not defined in this Deed shall have the same meaning as in
the Compliance Deed, except that references to "Application
Parties" in the definitions of "Event of Default" and "Event
of Force Majeure" shall be read as references to "Amending
Parties". Likewise, capitalized words and phrases which are
referred to in any such definition in the Compliance Deed
shall have the same meaning as in the Compliance Deed.
References to the Compliance Deed in this clause 1.2 are to
the Compliance Deed as it reads without being amended by
this Deed except where a contrary intention is expressed in
this Deed.
1.3 INTERPRETATION
Clause 1.2 of the Compliance Deed is hereby incorporated in
this Deed as if it were expressly set out herein subject
only to insertion of the words "the Compliance Deed" after
"this Deed" in line 1 of clause 1.2(a).
1.4 To the extent of any inconsistency or conflict between the
terms of this Deed, the Compliance Deed and the Act,
License, any other Executed Project Document, any other
Transaction Document, Invitation Document or the
Application;
<PAGE>
5
(a) the Act shall prevail over the License, this Deed, the
Compliance Deed, all other Executed Project Documents,
all other Transaction Documents, all Invitation
Documents and the Application;
(b) a License (if and when granted to SHC) will prevail
over this Deed, the Compliance Deed, all other Executed
Project Documents, all other Transaction Documents, all
Invitation Documents and the Application;
(c) the Compliance Deed as amended by this Deed will
prevail over all other Executed Project Documents, all
other Transaction Documents, all Invitation Documents
and the Application.
1.5 The rights and obligations of the Amending Parties under
this Deed are in addition and without prejudice to their
respective rights and obligations under the Act.
1.6 Nothing in this Deed whether express or implied prejudices,
fetters or otherwise affects or is intended in any way to
impose any obligation or restriction on the Authority which
in any way conflicts with the obligations, powers, duties,
restrictions and discretions of the Authority under the Act.
2. CONSIDERATION
Each party acknowledges to each other that it enters into
this Deed and incurs obligations and gives rights under it
for valuable consideration received from the other parties
to this Deed.
3. ASSOCIATED DOCUMENTS
On or before execution of this Deed:
(a) the Amending Parties other than CBA shall deliver to
the Authority an unconditional written consent of Bain
Capital Markets Limited pursuant to the terms of the
Equity Underwriting Agreement to SHC Holdings, LPPL and
SBA entering this Deed;
(b) the Amending Parties other than CBA shall deliver to
the Authority an unconditional written consent of CBA
pursuant to the terms of the Facility Agreement to SHC,
SHC Holdings and SHC Properties entering this Deed; and
(c) SHC shall cause the delivery to the Authority of the
duly executed Second Supplementary Legal Opinion.
<PAGE>
6
4. WARRANTIES AND DISCLAIMER
4.1 The Authority warrants that, pursuant to Sections 142(1) and
142(2) of the Act, the Minister has approved of both the
Authority entering into this Deed and its terms as evidenced
by the Second Supplementary Minister's Approval and Consent
Acknowledgment.
4.2 Pursuant to the CCA Charge, the Authority hereby consents to
SHC, SHC Holdings and SHC Properties entering into this
Deed.
4.3 Nothing in this Deed shall be taken as, nor is capable of,
constituting an obligation on the Authority to grant a
License to any person (including without limitation SHC) or
affecting the Authority's power to determine the Application
by not granting a License to SHC pursuant to Section 18(1)
of the Act.
4.4 Notwithstanding anything to the contrary expressed in or
which would, but for this clause 4.4, be implied in this
Deed, neither the Authority nor the State of New South Wales
nor its members, employees, delegates, agents, consultants
or advisers shall have any liability whatsoever to any party
in respect of any failure or breach by the Authority under
or in respect of this Deed or any other matter contemplated
hereby.
4.5 (a) The covenants, undertaking, warranties and
representations set out in clauses 1 to 6 inclusive of
Schedule 1 to the Compliance Deed are hereby
incorporated in this Deed as if expressly set out
herein subject to the following:
(i) delete the words "Application Parties" wherever
they appear; and
(ii) in lieu insert the words "Amending Parties"
and each Amending Party other than CBA represents and
warrants to and with the Authority in those terms.
(b) The representations and warranties included above are
made as at the date of this Deed and are deemed
repeated at all times during the currency of this Deed
with reference to the facts and circumstances then
subsisting as if made at each such time, unless
otherwise expressly stated and shall be construed
separately and the meaning of each shall in no way be
limited by reference to any other clause contained in
this Deed.
5. AUTHORITY APPROVAL OF DA2
The Authority and each Amending Party agrees that by
executing this Deed the Authority confirms its approval and
acceptance of the development consent issued by the Consent
Authority.
<PAGE>
7
6. AMENDMENT OF APPLICATION
Each of the parties to this Deed hereby agrees and
acknowledges that SHC's application for a License is the
Application as defined in the Compliance Deed as amended by
this Deed (as verified by the statutory declaration
herewith), which Application includes the Agreed Design.
7. APPLICATION UNCONDITIONAL
The Amending Parties agree that the Consent Authority having
given its consent to DA2 on terms and conditions that are
acceptable to SHC and the Authority, SHC's Application (as
defined in the Compliance Deed as amended by this Deed) has
become unconditional.
8. AMENDMENTS TO COMPLIANCE DEED
8.1 AMENDMENTS TO THE BODY AND SCHEDULES OF THE COMPLIANCE DEED
The Compliance Deed is amended as follows:
(a) by deleting the existing definition of "Application"
and replacing it with the following:
[WE WILL NEED TO DISCUSS WHAT EXACTLY WILL CONSTITUTE
"THE APPLICATION" IN THIS SITUATION IN COMPARISON TO
THE EXISTING DEFINITION, AND HOW IT SHOULD BE
DESCRIBED]
(b) where SHC agrees and acknowledges that:
(i) there are no D.A. Conditions or other conditions
attached to the Consent Authority's approval of
DA2 which are unacceptable to it;
(ii) there are no D.A. Appeal Events in relation to
DA2; and
(iv) there will be no D.A. Appeal in respect of DA2,
the following definitions are redundant and therefore
deleted:
"D.A. Affected Design Bid", "D.A. Affected Financial
Bid", "D.A. Appeal", "D.A. Appeal Event", "D.A.
Approval Date", "DA Condition", "D.A. Condition
Determination Date", "Final D.A. Approval Date", "Final
D.A. Lodgement Date", "Final Design Bid", "Final
Withdrawal Date" and "Initial Design Bid";
(c) in the definition of "D.A. for Permanent Site", by
deleting all the words after "means" and replacing them
with the following words:
<PAGE>
8
"the development application for the Permanent
Site lodged with the Consent Authority by SHC
Properties on 2 September 1994.";
(d) in the definition of "Event of Force Majeure", by
deleting all of paragraph (g) and replacing it with
"(g) Not Used";
(e) by inserting the following new definition:
"AGREED DESIGN" means the design:
(a) which has been developed in conformity with
the terms of the Brief;
(b) which is to be further developed in
conformity with the terms of the Brief; and
(c) which as at the date of the Second Amending
Deed is partially embodied in DA2.";
(f) in clause 3(j), by deleting the words "and the Final
Design Bid (if any)";
(g) in each of clause 5.3(a) and clause 5.3(b), by deleting
the words "or a D.A. Appeal";
(h) by deleting clauses 6(d), 6(e), 6(f) and 6(g);
(i) in clause 9.6(d), by deleting the words "or D.A.
Appeal", and replacing the comma before the word
"Event" with the word "or";
(j) in the Schedule to the Deed, by deleting clauses 10(a),
10(b), 10(c), 10(e), 10(f), 10(g), 10(h), 10(i), 10(j)
and 10(k).
8.2 AMENDMENTS TO EXHIBITS TO THE COMPLIANCE DEED
(a) Exhibit 2 (Apartment Management Leases) is amended as
follows:
(i) in clause 14.6, by inserting the word "affect"
before the word "either".
(b) Exhibit 8 (Casino Operations Agreement) is amended as
follows:
(i) by deleting the existing definition of
"Application" and replacing it with the following:
" "Application" has the meaning given to it in the
Compliance Deed."
<PAGE>
9
(c) All of the amendments which are effected by the
Ancillary Amending Deed to documents which are
comprised in the Exhibits are also made to those
documents as Exhibits.
8.3 RATIFICATION AND CONFIRMATION OF COMPLIANCE DEED
In all other respects the parties to the Compliance Deed
ratify and confirm their respective obligations under the
Compliance Deed.
9. AMENDMENTS TO OTHER EXECUTED PROJECT DOCUMENTS
[QUERY IN PARTICULAR WHETHER ANY AMENDMENTS ARE REQUIRED TO
THE DEVELOPMENT AGREEMENT SIDE DEED]
10. GUARANTORS' CONSENT AND RATIFICATION
Each of LHL, SDC and SBI consents to the amendments to the
Executed Project Documents in the manner set forth in clause
8 [and clause 9] and ratifies and confirms its respective
obligations under the Leighton Guarantee and Showboat
Guarantee respectively, in respect of each of such Executed
Project Document as so amended.
11. AMENDING PARTIES' CONSENT AND RATIFICATION
To the extent that the consent of or approval by any
Amending Party is required to the amendments to the Executed
Project Documents in the manner set forth in clause 8 [and
clause 9], under the terms of any Executed Project Document
and/or any executed Application Documents to which it is a
party, that consent is hereby given and each such Amending
Party ratifies and confirms its obligations under each such
Executed Project Document and/or executed Application
Document, in respect of each of such deed as so amended.
12. CONSENT TO VARIATIONS IN OTHER TRANSACTION DOCUMENTS
Each of the parties to this Deed acknowledges and agrees to
the making of those amendments to Transaction Documents
other than the Executed Project Documents which are
described in the Ancillary Amending Deed.
13. GENERAL
Any reference in any Transaction Document to any document
amended by this Deed shall be read and construed and have
force and effect as including the amendments thereto
effected by this Deed.
<PAGE>
10
14. MISCELLANEOUS
Clauses 7 and 8, 10 to 12, 13.2 and 14 to 32 inclusive of
the Compliance Deed are hereby incorporated in this Deed as
if expressly set out herein subject to the following:
(a) each reference to the words "Application Parties" in
clauses 8, 10, 11, 12, 13.2, 16, 17, 27, 28 and 30 of
the Compliance Deed shall be read and construed as a
reference to "Amending Parties";
(b) references to clauses within clause 8.2 and clause
11.5(b) shall be read as references to clauses of the
Compliance Deed;
(c) a reference to the Minister's Approval and Consent
Acknowledgement includes a reference to the Second
Supplementary Minister's Approval and Consent
Acknowledgement;
(d) insert the words "SDC and SBI" after "SOC" in line 1 of
clause 17.3; and
(e) delete the words "as set out in clause 9" from line 3
of clause 18.
EXECUTED as a deed.
THE COMMON SEAL OF NEW )
SOUTH WALES CASINO CONTROL )
AUTHORITY was hereunto affixed in )
the presence of the Chief Executive: )
___________________________ _______________________________
(Signature of Witness) (Signature of Chief Executive)
___________________________ _______________________________
(Name of Witness) (Name of Chief Executive)
<PAGE>
11
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _______________________________
SYDNEY HARBOUR CASINO PTY. ) (Signature)
LIMITED, ACN 060 510 410 by )
)
its Attorney under a Power of )
Attorney dated and )
registered Book No. and )
who declares that he has not )
received any notice of the )
revocation of such Power of )
Attorney in the presence of: )
_______________________________
(Signature of Witness)
_______________________________
(Name of Witness in Full)
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _______________________________
SYDNEY HARBOUR CASINO ) (Signature)
PROPERTIES PTY. LIMITED, )
ACN 050 045 120 by )
)
its Attorney under a Power of )
Attorney dated and )
registered Book No. and )
who declares that he has not )
received any notice of the )
revocation of such Power of )
Attorney in the presence of: )
_______________________________
(Signature of Witness)
_______________________________
(Name of Witness in Full)
<PAGE>
12
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _______________________________
SYDNEY HARBOUR CASINO ) (Signature)
HOLDINGS LIMITED, ACN 064 054 )
431 by )
its Attorney under a Power of )
Attorney dated and )
registered Book No. and )
who declares that he has not )
received any notice of the )
revocation of such Power of )
Attorney in the presence of: )
_______________________________
(Signature of Witness)
_______________________________
(Name of Witness in Full)
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _______________________________
SHOWBOAT AUSTRALIA PTY. ) (Signature)
LIMITED, ACN 061 299 625 by )
)
its Attorney under a Power of )
Attorney dated and )
registered Book No. and )
who declares that he has not )
received any notice of the )
revocation of such Power of )
Attorney in the presence of: )
_______________________________
(Signature of Witness)
_______________________________
(Name of Witness in Full)
<PAGE>
13
SIGNED SEALED AND DELIVERED )
for an on behalf of ) _______________________________
LEIGHTON PROPERTIES PTY. ) (Signature)
LIMITED, ACN 001 046 395 by )
)
its Attorney under a Power of )
Attorney dated and )
registered Book No. and )
who declares that he has not )
received any notice of the )
revocation of such Power of )
Attorney in the presence of: )
_______________________________
(Signature of Witness)
_______________________________
(Name of Witness in Full)
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _______________________________
LEIGHTON CONTRACTORS PTY. ) (Signature)
LIMITED, ACN 000 893 667 by )
)
its Attorney under a Power of )
Attorney dated and )
registered Book No. and )
who declares that he has not )
received any notice of the )
revocation of such Power of )
Attorney in the presence of: )
_______________________________
(Signature of Witness)
_______________________________
(Name of Witness in Full)
<PAGE>
14
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _______________________________
LEIGHTON HOLDINGS LIMITED, ) (Signature)
ACN 004 482 982 by )
its Attorney under a Power of )
Attorney dated and )
registered Book No. and )
who declares that he has not )
received any notice of the )
revocation of such Power of )
Attorney in the presence of: )
_______________________________
(Signature of Witness)
_______________________________
(Name of Witness in Full)
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _______________________________
SYDNEY CASINO MANAGEMENT PTY. ) (Signature)
LIMITED, ACN 060 462 053 by )
)
its Attorney under a Power of )
Attorney dated and )
registered Book No. and )
who declares that he has not )
received any notice of the )
revocation of such Power of )
Attorney in the presence of: )
_______________________________
(Signature of Witness)
_______________________________
(Name of Witness in Full)
<PAGE>
15
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _______________________________
SHOWBOAT OPERATING ) (Signature)
COMPANY by )
its Attorney under a Power of )
Attorney dated and )
registered Book No. and )
who declares that he has not )
received any notice of the )
revocation of such Power of )
Attorney in the presence of: )
_______________________________
(Signature of Witness)
_______________________________
(Name of Witness in Full)
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _______________________________
SHOWBOAT DEVELOPMENT ) (Signature)
CORPORATION by )
its Attorney under a Power of )
Attorney dated and )
registered Book No. and )
who declares that he has not )
received any notice of the )
revocation of such Power of )
Attorney in the presence of: )
_______________________________
(Signature of Witness)
_______________________________
(Name of Witness in Full)
<PAGE>
16
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _______________________________
SHOWBOAT INC. by ) (Signature)
its Attorney under a Power of )
Attorney dated and )
registered Book No. and )
who declares that he has not )
received any notice of the )
revocation of such Power of )
Attorney in the presence of: )
_______________________________
(Signature of Witness)
_______________________________
(Name of Witness in Full)
<PAGE>
LIST OF EXHIBITS
EXHIBIT 1 Ancillary Amending Deed
EXHIBIT 2 Second Supplementary Legal Opinion
EXHIBIT 3 Second Supplementary Minister's Approval and
Consent Acknowledgment
<PAGE>
SHC
EXHIBIT 1 TO
SECOND AMENDING DEED
(ANCILLARY AMENDING DEED)
- SYDNEY CASINO PROJECT -
<PAGE>
SHC
EXHIBIT 2 TO
SECOND AMENDING DEED
(SECOND SUPPLEMENTARY LEGAL OPINION)
- SYDNEY CASINO PROJECT -
<PAGE>
SECOND SUPPLEMENTARY LEGAL OPINION
[LETTERHEAD OF U.S. LAWYERS]
[____________], 1994
New South Wales Casino Control Authority
and the State of New South Wales
Level 17
309 Kent Street
Sydney, New South Wales 2000
Australia
SYDNEY CASINO PROJECT: SHOWBOAT, INC., SHOWBOAT DEVELOPMENT
COMPANY AND SHOWBOAT OPERATING COMPANY
We have acted as counsel to Showboat, Inc., a Nevada Corporation
("SBO"), Showboat Development Company, a Nevada Corporation
("SDC"), and Showboat Operating Company, a Nevada Corporation
("SOC"), (hereinafter in this letter the "COMPANIES") in
connection with the SHC Second Amending Deed executed by SBO,
SOC, SDC, the New South Wales Casino Control Authority (on behalf
of the State of New South Wales) ("AUTHORITY"), SHC, SHC
Properties, SHC Holdings, SBA, LPPL, LCPL, LHL and SCM, dated
[__________], 1994 (Sydney time).
This Opinion is being issued and delivered to the Authority
pursuant to paragraph 3(c) of the SHC Second Amending Deed. SBO,
SOC and SDC shall be collectively referred to herein as the
"Companies". The SHC Second Amending Deed shall be referred to
as the "Relevant Document". Capitalised terms are used herein as
defined in the SHC Second Amending Deed unless otherwise defined.
As counsel to the Companies, we have examined originals, if
available, or copies of the following documents and instruments:
(a) Draft Second Amending Deed dated as of [_______________],
1994 and marked SHC: 2ND AD (FINAL [ ]) ("DRAFT FIRST
AMENDING DEED");
(b) Powers of Attorney made by SBO, SOC and SDC each dated
[ ] ("POWERS OF ATTORNEY").
The Draft Second Amending Deed, shall be referred to as the
"Draft Relevant Document".
We have examined originals, where available, or copies of:
(a) Resolutions certified by the Secretary of SBO, SOC and SDC
dated as of [ ], 1994; and
<PAGE>
2
(b) Certificate of the Secretary of State of Nevada, dated as of
[ ], 1994, attesting to the good standing in
Nevada of SBO, SOC and SDC.
We have conducted such other reviews as are necessary to give the
opinions hereinafter stated.
In rendering the opinions expressed herein we have assumed the
Relevant Document will not reflect any substantial change from
the Draft Relevant Document which, if considered by us, would
affect our opinions expressed herein. We have also assumed that
the Relevant Document will be executed by SBO, SOC and SDC
pursuant to the Powers of Attorney.
In our examinations we have assumed the due completion of each
document (where blanks appear), and the due execution and due
delivery of each document by each party as of the date hereof;
the genuineness of all signatures other than the signatures of
SBO, SOC and SDC; and the legal capacity of natural persons who
signed or who will sign the documents. We further assume that
the Relevant Document accurately describes and contains your
understanding of the matters described therein and that there are
no oral or written statements or agreements by you, that modify,
amend, or vary, or purport to modify, amend or vary any of the
terms of the Relevant Document. In our examination we have also
assumed the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents
submitted to us as certified or photostatic documents. We
further assume the absence of fraud or duress in the inducement
or effectuation of the subject transactions and affirm that we
have no actual knowledge that would lead us to believe that there
exists any such fraud or duress.
We are admitted to the Bar of the State of Nevada, and in
rendering our opinions hereinafter stated, we have relied on the
applicable laws of the State of Nevada as these laws presently
exist and as they have been applied and interpreted by courts
having jurisdiction with the State of Nevada. We express no
opinion as to the laws of any other jurisdiction other than laws
of the United States of America.
Based upon the foregoing and in reliance thereon and subject to
the assumptions, exceptions, qualifications and limitations set
forth herein, we are of the opinion that:
1. (a) SBO is a corporation duly organised, validly existing
and in good standing under the laws of the State of
Nevada;
(b) SOC is a corporation duly organised, validly existing,
and in good standing under the laws of the State of
Nevada;
(c) SDC is a corporation duly organised, validly existing,
and in good standing under the laws of the State of
Nevada;
(d) Each of the Companies is:
(i) in good standing and has all requisite power and
authority to own and operate and deal with its
properties and assets and to manage and to carry
on its business as presently conducted; and
<PAGE>
3
(ii) duly qualified or registered to do business in
every jurisdiction where a failure to be so
qualified or registered would have a material
adverse effect on the condition (financial or
otherwise), operations or income of the Companies
and is in good standing in each such jurisdiction
in which the Companies are qualified or registered
to do business.
2. The Relevant Document has been duly authorised, executed and
delivered to you by the Companies. The Relevant Document
constitutes legal, valid and binding obligations of the
Companies, enforceable against the Companies in accordance
with its terms. The Powers of Attorney are valid and
binding appointments made by SBO, SOC and SDC respectively,
which authorise the execution and delivery of the Relevant
Document on behalf of the Companies by any of the attorneys
named therein.
3. The execution and delivery of the Relevant Document, the
performance and observance by the Companies of their
respective obligations thereunder, and the consummation of
the transactions contemplated thereby (including the grant
of security interests and liens thereunder) are within the
corporate authority of the Companies and have been duly
authorised by all necessary corporate proceedings and
actions on the part of the Companies.
4. The execution and delivery of the Relevant Document by the
Companies does not, and the performance and observance by
the Companies of their respective obligations thereunder,
the transactions contemplated thereunder, and the provisions
thereof, do not and will not contravene, conflict with, or
result in a breach, default or violation of:
(a) any provisions of the Companies' respective Articles of
Incorporation, their respective Bylaws or any other
constituent document of the respective Companies;
(b) any provision of the laws, statutes, rules or
regulations of the State of Nevada or of the Federal
law or regulations of the United States; or
(c) any decree, judgment, order, regulation or rule of any
federal, state or municipal court, board or government
or administrative authority or any agreement,
instrument or arrangement binding on any of the
Companies or any of their assets or properties or to
which any of the Companies is a party, including the
Relevant Document, nor will the same result in the
creation of any security interest or mortgage under any
such agreement, arrangement or instrument other than as
may be expressly set out in the Relevant Document.
<PAGE>
4
5. No approval or consent or other action by, and no filing
with, any person, or state municipal or federal agency,
board, authority or other government or administrative unit
is required under any law, statute, rule or regulation as a
condition to the validity, effectiveness or, enforceability
of, or performance by the Companies of their respective
obligations under, the Relevant Document or consummation of
the transactions contemplated by the Relevant Document.
6. There are no actions, proceedings, enquiries, investigations
or litigation of any nature pending, or, to our knowledge,
threatened at law or in equity by or before any court, or
government or administrative instrumentality, board or
agency having jurisdiction over any of the Companies which
has or may materially adversely affect the condition
(financial or otherwise), operation or income of any of the
Companies or which has or may affect or place in question
the authority of any of the Companies to enter into or
perform their respective obligations under, or the validity
or enforceability of, the Relevant Document or the
consummation of the transactions contemplated by the
Relevant Document.
7. Although we are not in a position to give an unqualified
opinion in this regard, we are of the opinion that there is
a reasonable basis on which to conclude that the courts of
the State of Nevada should give effect to the agreement of
the parties set forth in the Relevant Document which will be
governed by the laws of the State of New South Wales. This
opinion is based, in part, upon the assumption, that the
parties acted in good faith and not for the purpose of
evading the law of the real situs of the contract and that
the situs chosen by the parties has a substantial
relationship to the transaction. SEE ENGEL V. ERNST, 102
Nev. 390, 724 P.2d 215 (1986), CONSTANZO V. MARINE MIDLAND
REALTY, 101 Nev. 277, 701 P.2d 747 (1985), and SIEVERS V.
DIVERSIFIED MORTGAGE INVESTORS, 95 Nev. 811, 603 P.2d 270
(1970).
8. The submission of the Companies to the jurisdiction of the
Courts of New South Wales and the appointment of SBA as
agent for service of process for any action or proceedings
commenced in New South Wales is valid and binding on each of
the Companies.
9. Any final and conclusive judgment obtained in the courts of
New South Wales or Australia will be recognized and enforced
by the courts of Nevada and the Federal Courts of the United
States without a further review on the merits.
10. Claims under the Relevant Document against any of the
Companies will rank at least pari pasu with the claims of
all other unsecured creditors of the Companies
respectively, other than those claims which are preferred by
law generally.
11. In any proceedings taken in the State of Nevada and in any
Federal Court of the United States, none of the Companies
will be entitled to claim for itself or any of its assets
immunity from suit, execution, attachment or other legal
process.
12. Our opinion in paragraph 2 above as to the enforceability of
the documents is subject to:
<PAGE>
5
(i) bankruptcy, insolvency, reorganisation, fraudulent
transfer, moratorium or other laws of general
application relating to or affecting the enforcement
of creditors' rights;
(ii) general principles of equity regardless of whether
such issues are considered in a proceeding in equity
or at law which provide, among other things, that the
remedies of specific performance and other forms of
equitable relief are subject to equitable defences
and to the discretion of the court before which any
proceeding therefor may be brought;
(iii) the fact that a court may view any provision of the
Relevant Document as unconscionable or subject to an
obligation that the parties to the Relevant Document
act reasonably or in a commercially reasonably manner;
(iv) the fact that certain remedies contained in the
Relevant Document may be qualified under the laws of
the State of Nevada, none of which qualifications will
materially interfere with the practical realisation of
the benefits and the security provide thereby.
Our opinion in paragraph 8 above as to the valid and binding
nature of the submission of the Companies to the jurisdiction of
the Courts of New South Wales or Australia is subject to the
equitable principle of forum non-conveniens. The Second Circuit
of the United States Court of Appeals addressed this issue in
ALLSTATE LIFE INSURANCE CO. V. LINTER GROUP LIMITED, 994 F.2d 996
(2d Cir. 1993). In LINTER GROUP, the Second Circuit discussed
the legal principle of forum non-conveniens in dismissing an
action in the State of New York despite a forum selection clause
in an indenture selecting the Courts of the State of New York.
"Although there is still a strong presumption in favour of a
plaintiff's choice of forum, the Supreme Court has
recognized that dismissal nevertheless may be appropriate
where certain private and public interest factors point
towards trial in an alternative forum. GULF OIL CORP. V.
GILBERT, 330 US 501, 508-09, 91 L.Ed. 1055, 67 S. Ct. 839
(1947) [remaining citations omitted].
The private and public interest factors recognised by the
Court in GILBERT include:
(1) the ease of access to sources of proof;
(2) the availability of compulsory process for attendance
of unwilling witnesses;
(3) the cost of obtaining attendance of unwilling
witnesses;
(4) practical problems involving the efficiency and expense
of a trial;
(5) enforceability of judgments;
<PAGE>
6
(6) administrative difficulties flowing from court
congestion;
(7) imposing jury duty on citizens of the forum;
(8) the local interest in having controversies decided at
home; and
(9) the avoidance of unnecessary problems in the
application of foreign law. GILBERT, supra 330 US at
508-09" LINTER, 994 F.2d at 1001.
Therefore the opinion expressed in opinion paragraph 8
assumes that a court will carefully consider the factors
listed in GULF OIL CORP. V. GILBERT, 330 U.S. 91 L. Ed.
1055, 67 S. Ct. 839 (1947) in determining the propriety of
an alternative forum.
Our opinion in paragraph 9 above as to the enforceability of a
judgment in the State of Nevada and in a Federal Court of the
United States is subject to the constitutional principle of
comity.
"The U.S. Supreme Court defined comity as 'the recognition
which one nation allows within its territory to the
legislative, executive or judicial acts of another nation,
having due regard both to international duty and
convenience, and to the rights of its own citizens or of
other persons who are under the protection of its laws.'
HILTON V. GUYOT, 159 U.S. 113, 164, 40 L. Ed. 95, 16 S. Ct.
139 (1895). As a general rule, comity may be granted where
'it is shown that the foreign court is a court of competent
jurisdiction, and that the laws and public policy of the
forum state and the rights of its residents will not be
violated.' CUNARD S. S. CO. V. SALEN REEFER SERV. AB, 773
F.2d 452, 457 (2 Cir. 1985). Indeed, as long as the foreign
court abides by 'fundamental standards of procedural
fairness,' granting comity is appropriate. ID." ALLSTATE
LIFE INSURANCE CO. V. LINTER GROUP LIMITED, 994 F.2d 996,
998 (2d Cir. 1993).
We therefore assume in rendering opinion paragraph 9 that the
laws of New South Wales or Australia are "procedurally fair." In
particular, we assume that (1) the laws of New South Wales and
Australia do not favor its citizens over those of other nations,
states and provinces; (2) the Companies are provided the
opportunity to provide evidence in their defense; (3) the
Companies will receive timely notice to permit them sufficient
time to defend the action; and (4) the judgment rendered by an
Australian or New South Wales court will not be against the
public policy of the State of Nevada. We also assume that the
courts of Australia and New South Wales recognise and enforce
judgments rendered by courts of any state of the United States or
federal courts of the United States of America.
The foregoing opinions are subject to the following additional
qualifications:
(a) We express no opinion as to the effectiveness of any
provision directly or indirectly requiring that any
consent, modification, amendment or waiver be in
writing.
(b) We express no opinion as to the enforceability of any
provision which requires the party to indemnify another
party for losses or damages caused by the indemnified
<PAGE>
7
party's gross negligence, intentional acts or
omissions. Moreover, we advise you that a Court may
not enforce an indemnity agreement which shifts the
financial responsibility that the contract of indemnity
expresses such intention in clear and unequivocal
terms.
(c) Since the opinions expressed in this letter are based
upon the law in effect on the date hereof, we assume no
obligation to revise or supplement this opinion letter
should such law be changed by legislative action,
judicial decision or otherwise.
We are qualified to practice and are experts in the laws of the
State of Nevada and the Federal law of the United States. We are
qualified to give this legal opinion. These opinions are
effective as of the date hereof. No extensions of our opinions
may be made by implication or otherwise. We expressly consent to
and acknowledge your reliance on this opinion in executing the
Relevant Document. Our opinions are not to be otherwise quoted
in whole or in part without the express, written consent of this
firm.
Yours sincerely
[US LAWYER]
<PAGE>
SHC
EXHIBIT 3 TO
SECOND AMENDING DEED
(SECOND SUPPLEMENTARY MINISTER'S APPROVAL
AND CONSENT ACKNOWLEDGMENT)
- SYDNEY CASINO PROJECT -
<PAGE>
SECOND SUPPLEMENTARY MINISTER'S APPROVAL
AND CONSENT ACKNOWLEDGMENT
DATE: ____________________, 1994
THE HONOURABLE ANNE MARGARET COHEN MP
("MINISTER")
CLAYTON UTZ
SOLICITORS AND ATTORNEYS
LEVELS 27-35
NO. 1 O'CONNELL STREET
SYDNEY NSW 2000
TEL: (02) 353 4000
FAX: (02) 251 7832
COPYRIGHT RESERVED
CONFIDENTIAL
<PAGE>
SECOND SUPPLEMENTARY MINISTER'S APPROVAL AND
CONSENT ACKNOWLEDGEMENT
BY THE HONOURABLE ANNE MARGARET COHEN MP Chief Secretary and the
Minister of the Crown for the time being administering the Casino
Control Act 1992 (NSW) ("ACT")
PURSUANT TO SECTION 142 OF THE ACT I HEREBY:
1. acknowledge having granted approval to the Authority for and
on behalf of the State, to conduct negotiations and to enter
into the agreement referred to in Schedule 1;
2. acknowledge that the agreement referred to in Schedule 1 is
for or in connection with the establishment and operation of
a casino and any development of which a casino or proposed
casino forms part;
3. approve of the terms of the agreement referred to in
Schedule 1; and
4. consent to the assignment of rights and obligations under or
in respect of the agreement referred to in Schedule 1 and to
the encumbering of the rights under or in respect of the
agreement referred in Schedule 1 as specified in the Item
referable to the relevant agreement and on condition that
each such assignment and encumbrance (and any later sale of
such rights) is given or occurs in accordance with the
provisions of the relevant agreement as specified.
For the avoidance of doubt the terms of the agreement referred to
in clauses 1 to 4 inclusive are those contained in the documents
marked for identification with the official stamp of the Chief
Secretary's Department and held and available during business
hours for inspection at the Department by any party to them.
In giving this approval I note that the Authority must, under
Section 12 of the Casino Control Act, satisfy itself as to the
suitability of any applicant to which a license is ultimately
granted under Section 18 of the Act.
This acknowledgment shall not be taken as, nor is capable of,
being an approval, consent or acknowledgment in respect of any
agreement to which the Authority is not a party whether or not
such agreement forms an annexure, exhibit or schedule to the
agreement referred to in Schedule 1.
This Acknowledgment is given solely for the purposes of Section
142 of the Act and accordingly, any person entering into or
relying upon the agreement to which the Authority is a party
referred to in Schedule 1 does so based solely upon the person's
own commercial judgment of, and professional advices in respect
of, the terms of such agreement and the matters, express or
implied, contemplated by such agreement.
<PAGE>
2
Terms used but not defined in this Acknowledgment have the same
meaning as in the Act.
SIGNED by THE HONOURABLE ANNE MARGARET COHEN MP on
[_________________], 1994.
__________________________________________
The Honourable Anne Margaret Cohen MP
__________________________________________
Witnessed by: R.D. McGregor J.P.
<PAGE>
3
SCHEDULE 1
ITEM 1
PARTIES AND AGREEMENT
SHC Second Amending Deed made or to be made between the
Authority, Sydney Harbour Casino Pty. Limited, Sydney Harbour
Casino Properties Pty. Limited, Sydney Harbour Casino Holdings
Limited, Showboat Australia Pty. Limited, Leighton Properties
Pty. Limited, Leighton Contractors Pty. Limited, Leighton
Holdings Limited, Sydney Casino Management Pty. Limited, Showboat
Operating Company, Showboat Development Corporation and Showboat
Inc.
ASSIGNMENT AND ENCUMBERING AND
CONDITIONS RELATING TO THE SAME
Clause 14: Miscellaneous
<PAGE>
SHC
THIRD AMENDING DEED
Date:
New South Wales Casino Control Authority
Authority
Sydney Harbour Casino Pty. Limited
SHC
Sydney Harbour Casino Properties Pty. Limited
SHC Properties
Sydney Harbour Casino Holdings Limited
SHC Holdings
Showboat Australia Pty. Limited
SBA
Leighton Properties Pty. Limited
LPPL
Leighton Contractors Pty. Limited
LCPL
Leighton Holdings Limited
LHL
Sydney Casino Management Pty. Limited
SCM
Showboat Operating Company
SOC
Showboat Development Corporation
SDC
Showboat Inc.
SBI
Natal Mutual Trustees Limited
Trustee
Clayton Utz
Solicitors and Attorneys
No. 1 O'Connell Street
SYDNEY NSW 2000
Tel: (02) 353 4000
Fax: (02) 251-7832
Copyright Reserved
CONFIDENTIAL
<PAGE>
TABLE OF CONTENTS
Clause Page
1. DEFINITIONS AND INTERPRETATION 3
2. CONSIDERATION 5
3. ASSOCIATED DOCUMENTS 5
4. WARRANTIES AND DISCLAIMER 5
5. TRUSTEE'S ACCESSION TO COMPLIANCE DEED 6
6. OTHER PARTIES TO COMPLIANCE DEED 6
7. AMENDMENTS TO COMPLIANCE DEED 7
8. GUARANTORS' CONSENT AND RATIFICATION 28
9. AMENDING PARTIES' CONSENT AND RATIFICATION 28
10. LIMITATION ON TRUSTEE'S LIABILITY 28
11. GENERAL 29
12. MISCELLANEOUS 29
<PAGE>
THIS DEED is made the day of 1994
BETWEEN NEW SOUTH WALES CASINO CONTROL AUTHORITY, a statutory
corporation constituted by the Casino Control Act,
1992, on behalf of the State of New South Wales,
pursuant to section 142 of the Casino Control Act 1992,
of level 17, 309 Kent Street, Sydney, NSW, Australia,
2000 ("Authority")
AND SYDNEY HARBOUR CASINO PTY. LIMITED, ACN 060 510 410, a
company duly incorporated in New South Wales, Australia
of Level 3, 472 Pacific Highway, St. Leonards, NSW,
Australia ("SHC")
AND SYDNEY HARBOUR CASINO PROPERTIES PTY. LIMITED, ACN 050
045 120, a company duly incorporated in New South
Wales, Australia of Level 3, 472 Pacific Highway, St.
Leonards, NSW, Australia ("SHC Properties")
AND SYDNEY HARBOUR CASINO HOLDINGS LIMITED, ACN 064 054
431, a company duly incorporated in New South Wales,
Australia of Level 3, 472 Pacific Highway, ST.
Leonards, NSW, Australia ("SHC Holdings")
AND SHOWBOAT AUSTRALIA PTY. LIMITED, ACN 061 299 625, a
company duly incorporated in New South Wales, Australia
of Level 3, 472 Pacific Highway, St. Leonards, NSW,
Australia ("SBA")
AND LEIGHTON PROPERTIES PTY. LIMITED, ACN 001 046 395, a
company duly incorporated in New South Wales, Australia
of level 3, 472 Pacific Highway, ST. Leonards, NSW,
Australia ("LPPL")
AND LEIGHTON CONTRACTORS PTY. LIMITED, ACN 000 893 667, a
company duly incorporated in New South Wales, Australia
of level 3, 472 Pacific Highway, St. Leonards, NSW,
Australia ("LCPL")
AND LEIGHTON HOLDINGS LIMITED, ACN 004 482 982, a company
duly incorporated in New South Wales, Australia of
level 3, 472 Pacific Highway, St. Leonards, NSW,
Australia ("LHL")
AND SYDNEY CASINO MANAGEMENT PTY. LIMITED, ACN 060 462 053,
a company duly incorporated in New South Wales,
Australia of level 3, 472 Pacific Highway, St.
Leonards, NSW, Australia ("SCM")
AND SHOWBOAT OPERATING COMPANY, a company duly organised
under the laws of the State of Nevada, USA of 2800
Fremont Street, Las Vegas, Nevada 89104 USA ("SOC")
AND SHOWBOAT DEVELOPMENT CORPORATION, a company duly
organized under the laws of the State of Nevada, USA of
2800 Fremont Street, Las Vegas, Nevada, 89104, USA
("SDC")
<PAGE>
-2-
AND SHOWBOAT INC, a company duly organized under the laws
of the State of Nevada, USA of 2800 Fremont Street, Las
Vegas, Nevada, 89104, USA ("SBI")
AND NATIONAL MUTUAL TRUSTEES LIMITED, ACN 004 029 841, a
company duly incorporated in the State of Victoria and
having its principal office in the State of New South
Wales at 11th Floor, 44 Market Street, Sydney (the
"Trustee")
RECITALS
A. On 22 April 1994 the Authority and certain of the Amending
Parties entered into the Executed Project Documents.
B. Certain of the Executed Project Documents were amended by
** the First Amending Deed ** and ** the Second Amending
Deed **.
C. This Deed is an amending deed and is supplemental to
certain of the Executed Project Documents.
D. SHC is an applicant for the issue of a casino licence by
the Authority under section 18 of the Act.
E. Section 12 of the Act provides that the Authority must not
grant an application for a casino licence unless satisfied
that the applicant, and each "close associate" (as defined
in section 13 of the Act) of the applicant is a suitable
person to be concerned in or associated with the
management and operation of a casino.
F. LPPL currently has certain connections with SHC which may
make LPPL a "close associate" of SHC.
G. A number of allegations which may impugn the reputation of
the Leighton Group companies have required the Authority
to consider the suitability of LPPL.
H. LPPL has therefore proposed that it be disassociated from
its possible "close associate" relationship with SHC until
the question of its suitability to be concerned in, or
associated with, the management and operation of a casino
has been resolved.
I. To implement LPPL's proposal, the Trust has been
established and the Trust Property has been assigned by
LPPL to the Trustee.
J. The Trustee wishes to become bound by the Compliance Deed
from the date hereof, as if it were a party to the
Compliance Deed, and to be included as a party to the
Casino Operations Agreement.
K. The parties hereto wish to amend certain Transaction
Documents to reflect the trust arrangements described
above.
<PAGE>
-3-
THIS DEED WITNESSES
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Deed, unless the context otherwise requires:
"ACT" means the Casino Control Act, 1992.
"AMENDING PARTIES" means all the parties to this Deed
other than the Authority.
"COMPLIANCE DEED" means the deed so entitled dated 22
April 1994 made between the Authority and the Application
Parties as amended by the First Amending Deed ** and the
Second Amending Deed **.
"EXECUTED PROJECT DOCUMENTS" means all of the following:
(a) Compliance Deed;
(b) CD Bank Guarantee (First);
(c) CCA Charge;
(d) CCA Cross Guarantee;
(e) Parent Guarantees;
(f) Confidentiality and Disclaimer Deed;
(g) Deed of Restraint; and
(h) Development Agreement Side Deed.
"FIRST AMENDING DEED" means the deed of that name entered
into on 6 October 1994 between the Authority, ** the
Amending Parties (other than the Trustee) and the
Commonwealth Bank of Australia.
** "SECOND AMENDING DEED" means the deed of that name
entered into on [ ] 1994, between the Authority and
the Amending Parties other than the Trustee.**
"THIRD SUPPLEMENTARY MINISTER'S APPROVAL AND CONSENT
ACKNOWLEDGMENT" means the acknowledgment of the Minister
dated [ ] 1994, in the form and on the terms set
out in Exhibit 1.
<PAGE>
-4-
"THIRD SUPPLEMENTARY LEGAL OPINION" means the US legal
opinion to be given by Messrs Kummer Kaempfer Bonner &
Renshaw of Nevada, USA in the forma and on the terms of
Exhibit 2 regarding, inter alia, the enforceability of the
Deed.
"TRUSTEE'S INDEMNITY" means:
(a) the Trustee's right of indemnity from the Trust
Property;
(b) any equitable liens and other encumbrances granted
to the Trustee in respect of the Trust, the Trust
Property or the beneficiaries under the Trust Deed;
and
(c) all moneys paid or payable under or in respect of
any such right, title or interest.
"TRUST DEED" means the deed dated[ ] between the Trustee
and [the Settlor].
"TRUST PROPERTY" has the meaning given to it in the Trust
Deed.
1.2 UNDEFINED WORDS AND PHRASES
Capitalised words and phrases used in this Deed which are
not defined in this Deed shall have the same meaning as in
the Compliance Deed. Likewise, capitalised words and
phrases which are referred to in any such definition in
the Compliance Deed shall have the same meaning as in the
Compliance Deed. References to the Compliance Deed in
this clause 1.2 are to the Compliance Deed as it reads
without being amended by this Deed, except where a
contrary intention is expressed in this Deed.
1.3 INTERPRETATION
Clause 1.2 of the Compliance Deed is hereby incorporated
in this Deed as if it were expressly set out herein
subject only to insertion of the words "the Compliance
Deed" after "the Deed" in line 1 of clause 1.2(a).
1.4 To the extent of any inconsistency or conflict between the
terms of this Deed, the Compliance Deed and the Act,
License, any other Executed Project Document, any other
Transaction Document, Invitation Document or the
Application.
(a) the Act shall prevail over the license, this Deed,
the Compliance Deed, all other Executed Project
Documents, all other Transaction Documents, all
Invitation Documents and the Application;
(b) a License (if and when granted to SHC) will prevail
over this Deed, the Compliance Deed, all other
Executed Project Documents, all other Transaction
Documents, all Invitation Documents and the
Application;
<PAGE>
-5-
(c) the Compliance Deed as amended by this Deed will
prevail over all other Executed Project Documents,
all other Transaction Documents, all Invitation
Documents and the Application.
1.5 The rights and obligations of the Amending Parties under
this Deed are in addition and without prejudice to their
respective rights and obligations under the Act.
1.6 Nothing in this Deed whether express or implied
prejudices, fetters or otherwise affects or is intended in
any way to impose any obligation or restriction on the
Authority which in any way conflicts with the obligations,
powers, duties, restrictions and discretions of the
Authority under the Act.
2. CONSIDERATION
Each party acknowledges to each other party that it enters
into this Deed and incurs obligations and gives rights
under it for valuable consideration received from the
other parties to this Deed.
3. ASSOCIATED DOCUMENTS
On or before execution of this Deed:
(a) the Amending Parties shall deliver to the Authority
an unconditional written consent of BCML pursuant to
the terms of the Equity Underwriting Agreement to
SHC Holdings, LPPL and SBA entering this Deed;
(b) the Amending Parties shall deliver to the Authority
an unconditional written consent of CBA pursuant to
the terms of the Facility Agreement to SHC, SHC
Holdings and SHC Properties entering the Deed;
(c) SHC shall cause the delivery to the Authority of the
duly executed Third Supplementary Legal Opinion,
in each case in form and substance acceptable to the
Authority.
4. WARRANTIES AND DISCLAIMER
4.1 The Authority warrants that, pursuant to sections 142(1)
and 142(2) of the Act, the Minister has approved of both
the Authority entering into this Deed and its terms as
evidenced by the Third Supplementary Minister's Approval
and Consent Acknowledgment.
4.2 Pursuant to the CCA Charge, the Authority hereby consents
to SHC, SHC Holdings and SHC Properties entering into this
Deed.
4.3 Nothing in this Deed shall be taken as, nor is capable of,
constituting an obligation on the Authority to grant a
Licence to any person (including without limitation SHC)
or
<PAGE>
-6-
affecting the Authority's Power to determine the
Application by not granting a Licence to SHC pursuant to
section 18(1) of the Act.
4.4 Notwithstanding anything to the contrary expressed in or
which would, but for this clause 4.4, be implied in this
Deed, neither the Authority nor the State of New South
Wales nor its members, employees, delegates, agents,
consultants or advisers shall have any liability
whatsoever to any party in respect of any failure or
breach by the Authority under or in respect of this Deed
or any other matter contemplated hereby.
4.5 (a) The covenants, undertaking, warranties and
representations set out in clauses 1 to 6A inclusive
of Schedule 1 to the Compliance Deed (as amended by
clause 7.1(e) of this Deed) are hereby incorporated
in this Deed as if expressly set out herein subject
to the following:
(i) delete the words "Application Parties"
wherever they appear; and
(ii) in lieu thereof insert the words "Amending
Parties,"
and each Amending Party represents and
warrants to and with the Authority in those
terms.
(b) The representations and warranties included above
are made as at the date of this Deed and are deemed
repeated at all times during the currency of this
Deed with reference to the facts and circumstances
then subsisting as if made at each such time, unless
otherwise expressly stated and shall be construed
separately and the meaning of each shall in no way
be limited by reference to any other clause
contained in this Deed.
5. TRUSTEE'S ACCESSION TO COMPLIANCE DEED
The Trustee agrees that it will be bound, with effect from
and including the date hereof by the Compliance Deed as if
it was named in and as a party to the Compliance Deed.
6. OTHER PARTIES TO COMPLIANCE DEED
The Authority, SHC, SHC Properties, SHC Holdings, SBA,
LPPL, LHL, SCM and SOC each agree with the Trustee that
each of the Authority, SHC. SHC Properties, SHC Holdings,
SBA, LPPL, LHL, SCM and SOC will observe other terms and
conditions of the Compliance Deed to enable the Trustee to
receiver the benefit of and to enjoy all the rights and to
be subject to all the obligations under the Compliance
Deed to the same extent as if the Trustee was, from the
date of this Deed, named in and as a party to the
Compliance Deed.
<PAGE>
-7-
7. AMENDMENTS TO COMPLIANCE DEED
7.1 Amendments to the Body and Schedules of the Compliance
Deed
With effect from the date of this Deed, the Compliance
Deed is amended as follows:
(a) in clause 1.1, in the definitions "Casino
Exclusivity Agreement", Casino Duty and Community
Benefit Levy Agreement", "Casino Operations
Agreement", Casino Taxes Agreement", CCA Charge", CD
Bank Guarantee (Second)", "COA Lease Terms", "Deed
of Covenant", Development Agreement Side Deed",
Permanent Site Freehold Lease", "Temporary Site
Construction Sub-Lease" and "Temporary Site Sub-
Lease" delete "as amended by the First Amending
Deed" at the end of each definition;
(b) in clause 1.1, insert the following new definitions
in such a way that all of the definitions in that
clause appear in alphabetical order:
"SBI" means Showboat Inc.
"SDC" means Showboat Development Corporation.
"THIRD AMENDING DEED" means the deed of that name
dated [ ] between the Authority, ** THE
APPLICATION PARTIES, LEIGHTON CONTRACTORS PTY
LIMITED, SHOWBOAT DEVELOPMENT CORPORATION, SHOWBOAT
INC. and the Trustee.
"TRUST" means the trust created by the Trust Deed.
"TRUST DEED" means the deed dated on or ** BEFORE
the date of the Third Amending Deed between the
Trustee and [the Settlor].
"TRUST DOCUMENTS" has the meaning given to it in the
Casino Operations Agreement as amended by the
Third Amending Deed.
"TRUSTEE" means National Mutual Trustees Limited.
"TRUST PROPERTY" has the meaning given to it in the
Trust Deed.
"TRUSTEE'S INDEMNITY" means:
(a) the Trustee's right of indemnity from the
Trust Property;
(b) any equitable liens and other encumbrances
granted to the Trustee in respect of the
Trust, the Trust Property or the
beneficiaries under the Trust Deed; and
<PAGE>
-8-
(c) all moneys paid or payable under or in
respect of any such right, title or interest.
(c) in clause 1, delete altogether the definition of
"Casino Complex Works Agreement";
(d) in clause 1.1, in the definition of "Q & M
Documents", delete the words "and the Casino Complex
Works Agreement" at the end;
(e) in clause 1.1, in the definition of "Project
Documents":
(i) delete the word "and" at the end of sub-
paragraph (cc);
(ii) ** replace the full stop at the end of sub-
paragraph (dd) with ":" and
(iii) insert the following sub-paragraphs after sub-
paragraph (dd):
"(ee) the Third Amending Deed; and
(ff) the Trust Documents.":
** (f) insert the following new clauses 8.3A, 8.3B,
8.3C, 8.3D, and 8.3E immediately after clause 8.3:
"8.3A With effect on and from the date of the Third
Amending Deed, LPPL indemnifies each of the
Authority and the State of New South Wales
and shall keep each of the Authority and the
State of New South Wales indemnified at all
times on and from that date against any and
all loss, damage, claims, penalties,
liabilities and expenses (including special,
indirect and consequential damages and legal
costs on the higher of a full indemnity basis
or a solicitor and own client basis and
without the need for taxation) whatsoever
directly or indirectly caused or contributes
to by a Trustee in respect of which the
Authority and/or the State if New South Wales
is entitled to make a demand or claim upon
the Trustee under clauses 8.1 or 8.2 of this
Deed (whether or not the Authority and/or the
State of New South Wales has made such a
demand or claim upon the Trustee).
8.3B The parties agree that the limitation on the
Trustee's liability provided for in clause 33
of this Deed shall in no way limit, prejudice
or otherwise affect the rights of the
Authority and the State of New South Wales to
exercise their respective rights under clause
8.3A and make a demand or claim upon LPPL
under clause 8.3A and recover moneys under
the clause.
8.3C The Authority and the State of New South
Wales are not required to make a demand or
claim upon, or commence proceedings or
enforce any other right against the Trustee
or any other person,
<PAGE>
-9-
before making any demand or claiming from LPPL
under the indemnity in clause 8.3A.
8.3D With effect on and from the date of the Third
Amending Deed, the Trustee indemnifies each
of the Authority and the State of New South
Wales and shall keep each of the Authority
and the State of New South Wales indemnified
at all times on and from that date against
any and all loss, damage, claims, penalties,
liabilities and expenses (including special,
indirect and consequential damages and legal
costs on the higher of a full indemnity basis
or a solicitor and own client basis and
without the need for taxation) whatsoever
directly or indirectly caused or contributed
by a breach of this Deed or of any
Transaction Document by LPPL in respect of
which the Authority and/or the State of New
South Wales is entitled to make a demand or
claim upon LPPL under clauses 8.1 or 8.2 of
this Deed (whether or not the Authority
and/or the State of New South Wales has made
such a demand or claim upon ** LPPL).
8.3E The Authority and the State of New South
Wales are not required to make a demand or
claim upon, or commence proceedings or
enforce any other right against LPPL or any
other person, before making any demand or
claiming from the Trustee under the indemnity
in clause 8.3D.";
(g) insert the following new clause 33 immediately after
clause 32:
"33. LIMITATION OF TRUSTEE'S LIABILITY
Notwithstanding any other clauses in this
Deed or in any other Transaction Document:
(a) the Trustee enters into this Deed as
trustee of the Trust and not in its
personal capacity;
(b) the Trustee has no personal liability
in relation to any of its obligations
under or arising out of any of the
Transaction Documents;
(c) in relation to each such obligation
the liability of the Trustee is
limited to and does not extend beyond
the Trust Property as it stands at
the time at which any such obligation
is not met or satisfied;
(d) the Trustee will not be liable to
meet or satisfy any such obligation
from its own assets (except the
Trustee's Indemnity);
<PAGE>
-10-
(e) the preceding paragraphs apply
notwithstanding the fact that the
liabilities of the Trustee in its
capacity as the trustee of the Trust
may from time to time and at any
time almost equal, equal or exceed
the value of the Trust Property at
the relevant time;
(f) paragraphs (a) - (e) do not apply to
the liability of the Trustee in
relation to any obligation which in
any Transaction Document the Trustee
expressly assumes in its personal
capacity;
(g) it is acknowledged by the Trustee
that the Trust Property at any time
will include the amount of any
compensation found by a Final
Judgment (or admitted by the Trustee)
to be payable by the Trustee to
restore the Trust Property because of
a failure by the Trustee to exercise
in relation to the Trust the degree
of care, diligence and prudence
required of a trustee or because of
some other neglect, default or breach
of duty by the Trustee having regard
to the powers and duties conferred on
the Trustee by the Trust Deed or
otherwise in either case occurring
before the time in question and
causing loss to the Trust quantified
before the time in question;
(h) for the purposes of this clause 33
"FINAL JUDGMENT" means a judgment of
a court of law in Australia against
which there can be no appeal or in
relation to which the time to appeal
has expired.":
(h) in clause (g) of Schedule 1, insert the following
after the words "impressed by any trust":
"(other than the Trust)":
(i) in Schedule 1, insert the following new clause 6A
immediately after clause 6:
"6A. With the effect from the date of the Third
Amending Deed, the Trustee covenants,
warrants, represents and undertakes to and
with the Authority as follows:
(a) (TRUSTEE): the Trustee has power to
enter into this Deed in its capacity
as trustee of the Trust;
<PAGE>
-11-
(b) (TRUST VALIDLY CREATED): the Trust
has been validly created and is in
existence at the date of the Third
Amending Deed;
(c) (TRUSTEE VALIDLY APPOINTED): the
Trustee has been validly appointed as
trustee of the Trust and is presently
the sole trustee of the Trust;
(d) (NO PROCEEDINGS): no proceedings of
any description have been or are
likely to be commenced or threatened
which could have a material adverse
effect on the assets, or financial
position or the Trustee's trusteeship
of the Trust;
(e) (NO ACQUISITION OF TRUST ASSETS):
the Trustee has not done, or failed
to do, any act whereby any of the
assets of the Trust have been
acquired by any other person, no
assets of the Trust are presently
registered in the name of any other
person, and no person other than the
beneficiaries previously notified to
the Authority has acquired any right
of any kind whether vested or
contingent in any asset of the Trust;
(f) (RIGHTS OF INDEMNITY AND EXONERATION
AGAINST TRUST ASSETS):
(i) the Trustee in its capacity as
trustee of the Trust has valid
rights of the indemnity and
exoneration against the assets
of the Trust, which rights are
available for satisfaction of
all liabilities and other
obligations incurred by the
Trustee under this Deed; and
(ii) there is no subsisting
circumstance or other thing
which has or could have the
effect of prejudicing or
diminishing the Trustee's right
of indemnity and exoneration
against the assets of the Trust
in any way and without limiting
the generality of the
foregoing, the Trust has not
released, disposed of or
charged
<PAGE>
-12-
such rights;
(g) the Trustee will:
(i) (NEW TRUSTEE): procure that
any new trustee executes any
documents which Authority
requires in its absolute
discretion;
(ii) (DETERMINATION OF TRUST ETC.):
notify the Authority forthwith
in writing if the Trust is
determined or for any reason
ceases to exist;
(h) the Trustee shall not:
(i) default in the performance of
its obligations as trustee of
the Trust;
(ii) release, dispose of or
otherwise prejudice:
A. Its rights of indemnity
against the Trust
Property;
B. Its rights of
exoneration; or
C. Its equitable lien over
the Trust Property."
7.2 Amendments to Exhibits to the Compliance Deed
(a) Exhibit 8 (Casino Operations Agreement) is amended
as follows:
(i) include National Mutual Trustees Limited as a
party, including by inserting the following
words at the end of the list of parties on
page 1:
"NATIONAL MUTUAL TRUSTEES LIMITED, ACN 004
029 841, a company duly incorporated in the
State of Victoria and having its principal
office in the State of New South Wales at
11th Floor, 44 Market Street, Sydney
(TRUSTEE");
(ii) add the following recitals immediately after
recital F:
"G. Pursuant to certain of the Trust
Documents, LPPL has assigned the
Trust Property to the Trustee to be
held on the terms of the Trust Deed.
<PAGE>
-13-
H. This Agreement contains provisions
introduced by the Third Amending Deed
to reflect that assignment.";
(iii) insert in clause 1.1 the following new
definitions in such a way that all of the
definitions in clause 1.1 appear in
alphabetical order:
"APPROVED TRUSTEE" means **:
(a) **any company which is named from
time to time in the First Part of the
Third Schedule of the Trustee
Companies Act 1964 of New South
Wales, or which is otherwise included
in the definition of "Trustee
Company" in that Act from time to
time; and
(b) such other person as the Authority
may determine,
unless the Authority determines from
time to time that any such company or
person is not included within this
definition.
"ASSIGNED DOCUMENTS SIDE DEED" means
the deed of that name between LPPL,
SBA, SHC Holdings, the Licensee, SHC
Properties, SOC, the Casino Manager
and the Trustee dated on or before
the date of this Agreement.
"BCM" means Bain Capital Markets Pty.
Limited, ACN 000 690 933.
"CALL OPTION" means the call options
dated on or before the date of this
Agreement relating to the Trust
Property (other than the Shares),
between the Trustee as grantor and
LPPL as grantee.
"DEED OF ASSIGNMENT - LEIGHTON
CONTRACTs" means the deed of that
name between LPPL and the Trustee on
or before the date of this Agreement,
"PUT OPTION" means the put option
dated on or about the date of this
Agreement relating to the Trust
Property between LPPL as grantor and
the Trustee as grantee.
"SHARE CALL OPTION" means the call
option dated on or before the date of
this Agreement relating to the
Shares, between the Trustee as
grantor and LPPL as grantee.
"SHARES" has the meaning given to it
in the Share Call Option.
<PAGE>
-14-
"SUBSCRIBERS" means those persons who
have agreed to subscribe for shares
in SHCH pursuant to agreements with
SHC Holdings, LPPL, SBA and BCM.
"SUBSCRIPTION AGREEMENT SIDE LETTERS"
means the letters between SHC
Holdings, LPPL, SBA, LPPL, SBA, BCM,
the Trustee and each of the
Subscribers dated on or before the
date of this Agreement.
"SUITABILITY CERTIFICATE" means a
notice from the Authority in the form
set out in Schedule 12 hereto.
"THIRD AMENDING DEED" means the deed
of that name dated [ ]
between the Authority, ** the
Contracting Parties, Leighton
Contractors Pty. Limited, Leighton
Holdings Limited, Showboat
Development Corporation, Showboat
Inc. and the Trustee.
"TRUST" means the trust created by
the Trust Deed.
"TRUST DEED" means the deed dated
[ ] between the Trustee and [the
Settlor].
"TRUST DOCUMENTS" means all of the
following:
(a) the Assigned Documents Side
Deed;
(b) the Call Option;
(c) the CBA Documents Side Deed;
(d) the Deed of Assignment -
Leighton Contracts;
(e) the Put Option;
(f) the Share Call Option;
(g) the Subscription Agreement Side
Letters;
(h) the Trust Deed;
(i) the Underwriting Agreement Side
Deed; and
(j) any other document, agreement
or other instrument pursuant to
which any of the Trust Property
is assigned to the Trustee.
"TRUST PROPERTY" has the meaning
given to it in the Trust Deed.
<PAGE>
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TRUSTEE'S INDEMNITY" means:
(a) the Trustee's right of
indemnity from Trust Property;
(b) any equitable liens and other
encumbrances granted to the
Trustee in respect of the
Trust, the Trust Property or
the beneficiaries under the
Trust Deed; and
(c) all moneys paid or payable
under or in respect of any such
right, title or interest.
"UNDERWRITING AGREEMENT SIDE DEED"
means the deed of that name between
SHCH, LPPL, SBA, BCM and the Trustee
dated on or before the date of this
Agreement,";
(iv) in clause 1.1, add the following new
sub-paragraph (i) to the definition
of "Event of Default" and renumber
sub-paragraph (i) as sub-paragraph
(j):
"(i) in relation to the Trustee
only:
(i) without the prior written
consent of the Authority,
there occurs:
(A) any resettlement of
the Trust;
(B) any variation of the
Trust Deed;
(C) any vesting or
distribution of any
assets of the Trust,
or
(D) any breach of trust
by the Trustee; or
(ii) the Trustee for any
reason loses or ceases to
be entitled to the
Trustee's Indemnity;
(v) in clause 1.1, in the definition of
"Founding Shareholders", delete the
words "has the same meaning given to
it in the Compliance Deed", and
replace them with the following:
"means SBA and LPPL and on and from
the date on which LPPL'S rights
created under the Founding
Shareholders Subscription Agreement
are transferred to the Trustee
pursuant to any Trust Document, means
SBA and the Trustee."
(vi) in clause 1.1, in the definition of
"Permitted Encumbrance":
(A) delete the word "and" at the
end of paragraph (c);
<PAGE>
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(B) replace the comma at the end of
paragraph (d) with: "; and";
(C) renumber the existing paragraph
(e) as paragraph (f); and
(D) insert the following new
paragraph (e) after paragraph
(d);
"(e) the Trust";
(vii) in clause 1.1, insert the following
in the definition of S&A Party"
immediately after LPPL,":
"the Trustee,";
(viii) in clause 4.6, insert the words "to
and" after "undertakes";
(ix) insert the following new clause 4.7
immediately after clause 4.6:
"4.7 COVENANTS AND WARRANTIES
BY TRUSTEE
The Trustee covenants,
warrants, represents and
undertakes to and with the
Authority in the terms set out
in Schedule 13."
(x) insert in clause 5 immediately before
the words "and LPPL":
", the Trustee':
(xi) insert in clause 7.1 immediately
before the words "and the Casino
Manager":
", the Trustee";
(xii) insert in clause 7.2 immediately
after "LPPL" whatever it appears:
"the Trustee,";
(xiii) insert in clause 7.3 and clause 7.4
immediately after "LPPL":
", the Trustee,";
(xiv) insert in clause 7.5 immediately
after "SBA":
", the Trustee";
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17
(xv) by inserting the following in clause
8.4 immediately after "SOC":
", the Trustee":
(xvi) insert the following new clause 10A
immediately after clause 10:
"10A. TRUST DOCUMENTS
10A.1 Each of the Contracting Parties
covenants with and warrants to
the Authority in respect of
each Trust Document that:
(a) the Trust Documents are
valid, in full force and
effect and enforceable in
accordance with their
terms, subject to:
(i) any statute of
limitations;
(ii) any laws of
bankruptcy
insolvency,
liquidation,
reorganisation or
other laws affecting
creditors' rights
generally; and
(iii) any defences of set-
off or counterclaim;
(b) each of them has
fulfilled or taken all
action necessary to
fulfill when due all of
its obligations under the
Trust Documents;
(c) there has not occurred
any material default or
breach or any event which
with the lapse of time or
election of it shall
become a material breach
of the Trust Document.
10A.2 Pursuant to section 38 of the
Act, the Authority directs that
section 37 of the Act is to
apply to the Trustee and the
Trustee acknowledges the same.
10A.3 Each of the Trustee and LPPL
undertakes, represents and
warrants to the Authority that:
(a) it will comply with all
of its obligations under
the Trust Deed, the Put
Option, the Call Option
and the Share Call
Option;
<PAGE>
-18-
(b) it will give written
notice to the Authority
as soon as it becomes
aware of any breach of
the Trust Deed, the Put
Option the Call Option or
the Share Call Option;
(c) it will promptly give to
the Authority details of
any disputes under or in
relation to the Trust
Deed, the Put Option the
Call Option or the Share
Call Option;
(d) it will not without the
Authority's prior written
consent Vary the Trust
Deed, the Put Option the
Call Option or the Share
Call Option;
(e) it will not without the
prior written consent of
the Authority give or
permit to be created any
Encumbrance over its
rights under the Trust
Deed, the Put Option the
Call Option or the Share
Call Option other than
any Permitted Encumbrance;
(f) it will not without the
prior written consent of
the Authority agree to do
any of the things
described in paragraphs
(a)-(e) inclusive."
(xvii) in clause 16, delete the words "NOT
USED" and insert the following new
clause 16:
"16. EXERCISE OF PUT OPTION, CALL
OPTION AND SHARE CALL OPTION
16.1 Options
The Trustee and LPPL
acknowledge and agree with the
Authority that:
(a) the Trustee must not
exercise the Put Option;
(b) LPPL must not exercise
the Call Option;
(c) LPPL must not exercise
the Share call Option,
<PAGE>
-19-
in each case unless the
following requirements
are first satisfied:
(d) full particulars of the
proposed purchaser under
the relevant option
(including for the
removal of doubt LPPL)
must have been furnished
to the Authority;
(e) either:
(i) the Authority in its
absolute discretion
has given notice in
writing to the
Trustee or LPPL
(whichever is
proposing to exercise
the relevant option)
that in the opinion
of the Authority the
proposed purchased
(including for the
removal of doubt
LPPL) is not, and
will not after
exercise and
completion of the
relevant option
become, a close
associate (as defined
in the Act) of the
Licensee; or
(ii) (A) the Authority in
its absolute
discretion has
given notice in
writing to the
Trustee or LPPL
(Whichever is
proposing to
exercise the
relevant option)
that in the
option of the
Authority the
proposed
purchases
(including for
the removal of
doubt LPPL) is,
or after exercise
of the relevant
option will
become, a close
associate (as
defined in the
Act) of the
Licensee; and
(B) the Authority has
issued to the
Trustee or LPPL
(whichever is
proposing to
exercise the
relevant option)
a
<PAGE>
-20-
Suitability
Certificate in
respect of the
proposed
purchaser; and
(f) The Trustee, LPPL and the
process purchaser
(including for the
removal of doubt LPPL)
must enter into such
documents or agreements
as the Authority may
require, each in form and
substance satisfactory to
the Authority.
16.2 Authority may carry out
Investigations
(a) The Authority may carry
out such investigations
and enquiries as it
considers necessary to
enable it to consider the
proposed sale to the
proposed purchaser, and
whether it is appropriate
to give a Suitability
Certificate in respect of
the proposed purchaser.
(b) Without limited the
generality of the
foregoing, the Authority:
(i) may require any
person it is
investigating in
relation to the
person's suitability
to be concerned in or
associated with the
management or
operation of a casino
to consent to having
his or her
photograph,
fingerprints and/or
palm prints taken;
and
(ii) may refer to the
Commissioner of
Police details of the
persons the Authority
is investigating,
copies of any
photographs, finger
prints and palm
prints taken, and any
supporting
information that the
Authority considers
appropriate for
referral to the
Commissioner.
(c) The Authority may decline
to issue a Suitability
Certificate while any
person from whom it
requires a photograph,
finger prints
<PAGE>
-21-
or palm prints under
this clause refuses to
allow his or her
photograph, finger prints
or palm prints to be
taken.
16.3 Authority may require further
information etc.
(a) The Authority may, by
notice in writing,
require the proposed
purchaser or a person
who, in the opinion of
the Authority, has some
association or connection
with the proposed
purchaser that is
relevant to the proposed
purchase, to do any one
or more of the following
things:
(i) to provide, in
accordance with
directions in the
notice, such
information,
verified by
statutory
declaration, as is
relevant to the
investigation of the
proposed purchase
and is specified in
the notice;
(ii) to produce, in
accordance with the
directions in the
notice, such records
relevant to
investigations of
the proposed
purchase as are
specified in the
notice and to permit
examination of the
records, the taking
of extracts from
them and the making
of copies of them;
(iii) to authorise a
person described in
the notice to comply
with a specified
requirement of the
kind referred to in
paragraph (a) or
(b);
(iv) to furnish to the
Authority such
authorities and
consents as the
Authority directs
for the purchase of
enabling the
Authority to obtain
information
(including financial
and other
confidential
information) from
other persons
concerning the
person and his or
her associates or
relations.
<PAGE>
-22-
(b) If a requirement made by
the Authority under
clause 16.3(a) is not
complied with, the
Authority may decline to
issue the Suitability
Certificate;
(xviii)Insert the following clause 18.4
immediately after the words "the
Casino Manager" wherever they appear:
", the Trustee";
(xix) Insert the following new clauses
18.6A, 18.6B, 18.6C, 18.6D and 18.6E
immediately after clause 18.6;
"18.6A LPPL hereby indemnified each of
the Authority and the State and
shall keep each of the
Authority and the State
indemnified at all times
against any and all loss,
damage, claims, penalties,
liabilities and expenses
(including special, indirect
and consequential damages and
legal costs on the higher of a
full indemnity basis or a
solicitor and own client basis
and without the need for
taxation) whatsoever directly
or indirectly cause or
contributed to by a breach of
this Agreement by Trustee or
brought or claimed by any third
party in each case in respect
of which the Authority and/or
the State is entitled to make a
demand or claim upon the
Trustee under clauses 18.5 or
18.6 of this Agreement (as the
case may be) (whether or not
the Authority and/or the State
has made such a demand or
claims upon the Trustee).
18.6B The parties agree that the
limitation of the Trustee's
liability provided for in
clause 21 of this Agreement
shall in no way limit,
prejudice or otherwise affect
the rights of the Authority and
the State to exercise their
respective rights under clause
18.6A and make a demand or
claim upon LPPL under clause
18.6A and recover moneys under
that clause.
18.6C The Authority and the State are
not required to make a demand
or claim upon, or commence
proceedings or enforce any
other right against the Trustee
or any other person, before
making any demand or claiming
from LPPL under the indemnity
in clause 18.6A.
<PAGE>
-23-
18.6D The Trustee hereby indemnified
each of the Authority and the
State and shall keep each of
the Authority and the State
indemnified at all times
against any and all loss,
damage, claims, penalties,
liabilities and expenses
(including special, indirect
and consequential damages and
legal costs on the higher of a
full indemnity basis or a
solicitor and own client basis
and without the need for
taxation) whatsoever directly
or indirectly caused or
contributed by a breach of this
Agreement by LPPL in respect of
which the Authority and/or the
State is entitled to make a
demand or claim upon LPPL under
clauses 18.5 or 18.6 of this
Agreement (whether or not the
Authority and/or the State has
made such a demand or claim
upon LPPL).
18.6E The Authority and the State are
not required to make a demand
or claim upon, or commence
proceedings or enforce any
other right against LPPL or any
other person, before making any
demand or claiming from the
Trustee under the indemnity in
clause 18.6D."
(xx) delete from clause 21 words "NOT
USED" and replace them with a new
clause 21 as follows:
"21. LIMITATION ON TRUSTEE'S
LIABILITY
Notwithstanding any other
clauses in this Agreement or in
any other Transaction Document;
(a) the Trustee enters into
this Agreement as trustee
of the Trust and not in
its personal capacity;
(b) the Trustee has no
personal liability in
relation to any of its
obligations under or
arising out of any of the
Transaction Documents;
(c) in relation to each such
obligation the liability
of the Trustee is limited
to and does not extend
beyond the Trust Property
as it stands at the time
at which any such
obligation is not met or
satisfied;
(d) the Trustee will not be
liable to meet or satisfy
any such obligation from
its own assets (except
the Trustee's Indemnity);
<PAGE>
-24-
(e) the preceding paragraphs
apply notwithstanding the
fact that the liabilities
of the Trustee in its
capacity as the trustee
of the Trust may from
time to time and at any
time almost equal, equal
or exceed the value of
the Trust Property at the
relevant time;
(f) paragraphs (a) - (e) do
not apply to the
liability of the Trustee
in relation to any
obligations which in any
Transaction document the
Trustee expressly assumes
in its personal capacity;
(g) it is acknowledged by the
Trustee that the Trust
Property at any time will
include the amount of any
compensation found by a
Final Judgment (or
admitted by the Trustee)
to be payable by the
trustee to restore the
Trust Property because of
a failure by the Trustee
to exercise in relation
to the Trust the degree
of care, diligence and
prudence required of a
trustee or because of
some other neglect,
default or breach of duty
by the Trustee having
regard to the powers and
duties conferred on the
Trustee by the Trust Deed
or otherwise in either
case occurring before the
time in question and
causing loss to the Trust
quantified before the
time in question;
(h) for the purposes in this
clause 21 "Final
Judgment" means a
judgment of a court of
law in Australia against
which there can be not
appeal or in relation to
which the time to appeal
has expired."
(xxi) insert the following new clause 21B
after clause 21A:
"21B. RETIREMENT AND REPLACEMENT OF
TRUSTEE
The Trustee, LPPL and the
Authority agree that the
Trustee will not retire or be
removed as trustee of the Trust
except where:
(a) a replacement trustee is
to be appointed in its
place;
<PAGE>
-25-
(b) the Authority has given
its prior written consent
to the appointment of the
new trustee, which
consent may be withheld
by the Authority in its
absolute discretion,
except where the proposed
new trustee is an
Approved trustee, in
which case the
Authority's consent shall
not be unreasonably
withheld; and
(c) the new trustee has
executed such documents
in form and substance
acceptable to the
Authority as the
Authority requires,
including an agreement in
which it agrees to be
bound by all of the terms
of this Agreement."
(xxii) insert the following at the end of
clause 29.2:
Trustee
Address: 11th Floor, 44 Market
Street
Sydney, Australia, 2000
Fax No.: **(02) 299-8793
Attention: **Mr N Brancatisano
(xxiii) insert a new Schedule 12 as follows:
"SCHEDULE 12
Suitability Certificate
To: [The Trustee/Leighton
Properties Pty Limited]
1. We refer to your letter dated
[ ] notifying us of
your intention to exercise the
[name of relevant option].
2. We confirm that the proposed
purchase pursuant to the [name
of relevant option] is
[ ].
3. We hereby certify that as at
the date of this Certificate
[ ] is a suitable person to
be concerned in or associated
with the management and
operation of a casino.
<PAGE>
-26-
4. Nothing in this Certificate,
whether express or implied,
prejudices, fetters or
otherwise affects, or is
intended in any way to impose
any obligation or restriction
on the Authority which in any
way conflicts with, the
obligations, powers, duties,
restrictions and discretions of
the Authority under the Act.**
Dated:
[Signature]"
(xxiii) insert a new Schedule 13 as follows:
"SCHEDULE 13
Covenants and Warranties by the Trustee
1. (TRUSTEE): The Trustee has power to
enter into this Agreement in its
capacity as trustee of the Trust.
2. (TRUST VALIDLY CREATED): The Trust
has been validly created and is in
existence at the date of this
Agreement.
3. (TRUSTEE VALIDLY APPOINTED): The
Trustee has been validly appointed as
trustee of the Trust and is presently
the sole trustee of the trust.
4. (NO PROCEEDINGS): No proceedings of
any description have been or are
likely to be commenced or threatened
which could have a material adverse
effect on the assets, or financial
position or the Trustee's trusteeship
of the Trust.
5. (NO ACQUISITION OF TRUST ASSETS):
The Trustee has not done, or failed
to do, any act whereby any of the
assets of the Trust have been
acquired by any other person, not
assets or the Trust are presently
registered in the name of any other
person, and not person other than the
beneficiaries previously notified to
the Authority has acquired any right
of any kind whether vested or
contingent in any asset of the Trust.
6. (Rights of Indemnity and Exoneration
against Trust assets):
(i) the Trustee in its capacity as
trustee of the Trust has valid
rights of indemnity and
exoneration against the assets
of the Trust, which rights are
available for satisfaction of
all liabilities and other
obligations incurred by the
Trustee under this Agreement;
and
<PAGE>
-27-
(ii) there is no subsisting
circumstance or other thing
which has or could have the
effect of prejudicing or
diminishing the Trustee's right
of indemnity and exoneration
against the assets of the
Trustee in any way and without
limiting the generality of the
foregoing, the Trust has not
released, disposed of or
charged such rights.
7. The Trustee will:
(a) (NEW TRUSTEE): procure that
any new trustee executes any
documents which the Authority
requires;
(b) (DETERMINATION OF TRUST ETC.):
notify the Authority forthwith
in writing if the Trust is
determined or for any reason
ceases to exist.
8. The Trustee shall not:
(a) default in the performance of
its obligations as trustee of
the Trust;
(b) release, dispose of or
otherwise prejudice:
(i) its rights of indemnity
against the Trust
Property;
(ii) its rights of
exoneration; or
(iii) its equitable lien over
the Trust Property; or
(c) sell, transfer, encumber or
otherwise dispose of any of the
Trust Property except pursuant
to the Put Option, the Call
Option or the Share Call Option
(in which case the Trustee
shall comply with clause 16 of
this Agreement) or otherwise
with the prior written consent
of the Authority (in which case
clauses 16(d)-(f) of this
Agreement shall apply mutatis
mutandis).
(b) Exhibit 44 (Casino Complex Works Agreement)
is deleted in its entirety.
7.3 Ratification and confirmation of compliance Deed
The parties to the Compliance Deed ratify and confirm
their respective obligations under the Compliance Deed as
hereby varied which, subject to the variation and
accession described herein, shall continue in full force
and effect.
<PAGE>
-28-
8. GUARANTORS' CONSENT AND RATIFICATION
8.1 Each of LPL, SDK and BSI consents to the amendments to the
Compliance Deed in the manner set forth in clause 7 and
ratifies and confirms its respective obligations under the
Lighten Guarantee and Showboat Guarantee respectively, in
respect of the Compliance Deed as so amended and as so
acceded to by the Trustee.
8.2 Each of SHC, SHC Holdings and SHC Properties consents to
the amendments to the Compliance Deed:
(a) set out in clause 7; and
(b) the first Amending Deed (as defined in the
Compliance Deed), which consent shall be taken to
have effect from and including 6 October 1994,
and in which case ratifies and confirms its respective
obligations under the CCA Cross Guarantee (as defined in
the Compliance Deed), in respect of the Compliance Deed as
so amended.
9. AMENDING PARTIES' CONSENT AND RATIFICATION
To the extent that the consent of, or approval by, any
Amending Party is required to the amendments to the
Compliance Deed set out in clause 7, under the terms of
any Executed Project Document and/or any executed
Application Documents to which it is a party, that consent
is hereby given and each such Amending Party ratifies and
confirms its obligations under each such Executed Project
document and/or executed Application Document, in respect
of the Compliance Deed as so amended.
10. LIMITATION ON TRUSTEE'S LIABILITY
Notwithstanding any other clauses in this Deed or in any
other Transaction Document:
(a) the Trustee enters into this Deed as trustee of the
Trust and not in its personal capacity;
(b) the Trustee has no personal liability in relation to
any of its obligations under or arising out of any
of the Transaction Documents;
(c) in relation to each such obligation the liability of
the Trustee is limited to and does not extend beyond
the Trust Property as it stands at the time at which
such obligation is not met or satisfied;
(d) the Trustee will not be liable to meet or satisfy
any such obligation from its own assets (except the
Trustee's Indemnity);
<PAGE>
-29-
(e) the preceding paragraphs apply notwithstanding the
fact that the liabilities of the Trustee in its
capacity as the trustee of the trust may from time
to time and at any time almost equal, equal or
exceed the value of the Trust Property at the
relevant time;
(f) paragraphs (a)-(e) do not apply to the liability of
the Trustee in relation to any obligation which in
any Transaction Document the trustee expressly
assumes in its personal capacity;
(g) it is acknowledged by the Trustee that the Trust
Property at any time will include the amount of any
compensation found by a Final Judgment (or admitted
by the Trustee) to be payable by the Trustee to
restore the Trust Property because of a failure by
the Trustee to exercise in relation to the Trust the
degree of care, diligence and prudence required of a
trustee or because of some other neglect, default or
breach of duty by the Trustee having regard to the
powers and duties conferred on the Trustee by the
Trust Deed or otherwise in either case occurring
before the time in question;
(h) for the purposes of this clause 10 "Final Judgment"
means a judgment of a court of law in Australia
against which there can be no appeal or in relation
to which the time to appeal has expired.
11. GENERAL
Any reference in any Transaction document to any document
amended by this Deed shall be read and construed and
have force and effect as including the amendments thereto
effected by this Deed.
12. MISCELLANEOUS
Clauses 7 and 8, 10 to 12, 13.2 and 14 to 32 inclusive of
the Compliance Deed are hereby incorporated in this
Deed as if expressly set out herein subject to the
following:
(a) each reference to the words "Application Parties" in
clauses 8, 10, 11, 12, 13.2, 16, 17, 27, 28 and 30
of the Compliance Deed shall be read and construed
as a reference to "Amending Parties";
(b) references to clauses within clause 8.2 and clause
11.5(b) shall be read as references to clauses of
the Compliance Deed;
(c) a reference to the Minister's Approval and Consent
Acknowledgment includes a reference to the Third
Supplementary Minister's Approval and Consent
Acknowledgment;
(d) insert the words "SDC and SBI" after "SOC" in line 1
of clause 17.3; and
<PAGE>
-30-
(e) delete the words "as set out in clause 9" from line
3 of clause 18.
EXECUTED AS A DEED.
THE COMMON SEAL of )
NEW SOUTH WALES CASINO )
CONTROL AUTHORITY was hereunto )
affixed in the presence of the Chief )
Executive: )
________________________________ ______________________________
(Signature of Witness) (Signature of Chief Executive)
________________________________ ______________________________
(Name of Witness) (Name of Chief Executive)
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _________________________
SYDNEY HARBOUR CASINO PTY. ) (Signature)
LIMITED, ACN 060 510 410 BY )
)
its Attorney under a Power of )
Attorney dated and who )
declares that he has not received )
any notice of the revocation of such )
Power of Attorney in the presence of:)
__________________________________
(Signature of Witness)
__________________________________
(Name of Witness in Full)
<PAGE>
-31-
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _________________________
SYDNEY HARBOUR CASINO ) (Signature)
PROPERTIES PTY. LIMITED, ACN 050 )
045 120 by its)
Attorney under a Power of Attorney )
dated) and who declares)
that he has not received any notice )
of the revocation of power of )
Attorney in the presence of: )
__________________________________
(Signature of Witness)
__________________________________
(Name of Witness in Full)
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _________________________
SYDNEY HARBOUR CASINO ) (Signature)
HOLDINGS LIMITED, ACN 064 054 431 )
by its Attorney under a)
Power of Attorney dated )
and who declares that he has not )
received any notice of the )
revocation of such Power of )
Attorney in the presence of: )
)
__________________________________
(Signature of Witness)
__________________________________
(Name of Witness in Full)
<PAGE>
-32-
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _________________________
SHOWBOAT AUSTRALIA PTY. ) (Signature)
LIMITED, ACN 061 299 625 by Harold )
Gregory Nasky its Attorney under a )
Power of Attorney dated )
and who declares that he has not )
received any notice of the )
revocation of such Power of )
Attorney in the presence of: )
)
_________________________
(Signature of Witness)
__________________________________
(Name of Witness in Full)
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _________________________
LEIGHTON PROPERTIES PTY. ) (Signature)
LIMITED, ACN 001 046 395 by )
its Attorney under a Power of )
Attorney dated )
and who declares that he has not )
received any notice of the revocation)
of such Power of Attorney in the )
presence of: )
)
____________________________
(Signature of Witness)
__________________________________
(Name of Witness in Full)
<PAGE>
-33-
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _________________________
LEIGHTON CONTRACTORS PTY. ) (Signature)
LIMITED, ACN 008 893 667 by )
its Attorney under a Power )
of Attorney dated )
and who declares that he has not )
received any notice of the revocation)
of such Power of Attorney in the )
presence of: )
)
__________________________________
(Signature of Witness)
__________________________________
(Name of Witness in Full)
SIGNED SEALED AND DELIVERED )
for and on behalf of ) ________________________
LEIGHTON HOLDINGS LIMITED, ) (Signature)
ACN 004 482 982 by )
its Attorney under a Power of )
Attorney and who declares that he has)
not received any notice of the )
revocation of such Power of Attorney )
in the presence of: )
)
__________________________________
(Signature of Witness)
__________________________________
(Name of Witness in Full)
<PAGE>
-34-
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _________________________
SYDNEY CASINO MANAGEMENT PTY. ) (Signature)
LIMITED, ACN 060 462 053 by )
its Attorney under a Power )
of Attorney dated )
and who declares that he has not )
received any notice of the revocation)
of such Power of Attorney in the )
presence of: )
)
__________________________________
(Signature of Witness)
__________________________________
(Name of Witness in Full)
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _________________________
SHOWBOAT OPERATING COMPANY ) (Signature)
by its Attorney )
under a Power of Attorney )
dated and who declares )
that he has not received any notice )
of the revocation of such Power of )
Attorney in the presence of: )
)
__________________________________
(Signature of Witness)
__________________________________
(Name of Witness in Full)
<PAGE>
-35-
SIGNED SEALED AND DELIVERED )
for and on behalf of ) ________________________
SHOWBOAT DEVELOPMENT ) (Signature)
CORPORATION by its )
Attorney under a Power of Attorney )
dated and who declares )
that he has not received any notice )
of the revocation of such Power of )
Attorney in the presence of: )
)
__________________________________
(Signature of Witness)
__________________________________
(Name of Witness in Full)
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _________________________
SHOWBOAT INC by its ) (Signature)
Attorney under a Power of Attorney )
dated and who declares )
that he has not received any notice )
of the revocation of such Power of )
Attorney in the presence of: )
)
__________________________________
(Signature of Witness)
__________________________________
(Name of Witness in Full)
<PAGE>
LIST OF EXHIBITS
EXHIBIT 1 Third Supplementary Minister's Approval and Consent
Acknowledgment
EXHIBIT 2 Third Supplementary Legal Opinion
<PAGE>
SIGNED SEALED AND DELIVERED )
for and on behalf of ) _________________________
NATIONAL MUTUAL TRUSTEES ) (Signature)
LIMITED, ACN 004 029 841, by )
its Attorney under a Power)
of Attorney dated and who)
declares that he has not received )
any notice of the revocation of such )
Power of Attorney in the presence of:)
)
__________________________________
(Signature of Witness)
__________________________________
(Name of Witness in Full)
<PAGE>
SHC
EXHIBIT 1 TO
THIRD AMENDING DEED
(Third Supplementary Minister's Approval
and Consent Acknowledgment)
- Sydney Casino Project -
<PAGE>
Third Supplementary Minister's Approval
and Consent Acknowledgment
DATE: 1994
THE HONOURABLE ANNE MARGARET COHEN MP
("Minister")
CLAYTON UTZ
Solicitors and Attorneys
Levels 27-35
No. 1 O'Connell Street
SYDNEY NSW 2000
Tel: (02) 353 4000
Fax: (02) 251 7832
Copyright Reserved
CONFIDENTIAL
<PAGE>
THIRD SUPPLEMENTARY MINISTER'S APPROVAL AND CONSENT
ACKNOWLEDGMENT
BY THE HONOURABLE ANNE MARGARET COHEN MP Chief Secretary and the
Minister of the Crown for the time being administering the Casino
Control Act 1992 (NSW) ("Act")
PURSUANT TO SECTION 142 OF THE ACT 1 HEREBY:
1. acknowledge having granted approval to the Authority for
and on behalf of the State, to conduct negotiations and to
enter into the agreement referred to in Schedule 1;
2. acknowledge that the agreement referred to in Schedule 1
are for or in connection with the establishment and
operation of a casino and any development of which a
casino or proposed casino forms part;
3. approve to the terms of the agreement referred to in
Schedule 1; and
4. consent to the assignment of rights and obligations under
or in respect of the agreement referred to in Schedule 1
and to the encumbering of the rights under or in respect
of the agreement referred to in Schedule 1 as specified in
the Item referable to the agreement and on condition that
each such assignment and encumbrance (and any later sale
of such rights) is given or occurs in accordance with the
provisions of the agreement as specified.
For the avoidance of doubt the terms of the agreement referred to
in clauses 1 to 4 inclusive are those contained in the document
marked for identification with the official stamp of the Chief
Secretary's Department and held and available during business
hours for inspection at the Department by any party to them.
In giving these approvals I note that the Authority must, under
section 12 of the Casino Control Act, satisfy itself as to the
suitability of any applicant to which a licence is ultimately
granted under section 18 of the Act.
This Acknowledgment shall not be taken as, nor is capable of,
being an approval, consent or acknowledgment in respect of any
agreement to which the Authority is not a party whether or not
such agreement forms an annexure, exhibit or schedule to the
agreement referred to in Schedule 1.
This acknowledgment is given solely for the purposes of section
142 of the Act and accordingly, any person entering into or
relying upon the agreement referred to in Schedule 1 does so
based solely upon the person's own commercial judgment of, and
professional advises in respect of, the terms of such agreement
and the matters, express or implied, contemplated by such
agreement.
<PAGE>
-2-
Terms used but not defined in this Acknowledgment have the same
meaning as in the Act.
SIGNED by THE HONOURABLE ANNE MARGARET COHEN MP on [ ]
1994
__________________________________
The Honourable Anne Margaret Cohen MP
__________________________________
Witnessed by: R D McGregor J.P.
<PAGE>
-3-
SCHEDULE 1
Parties and Agreement
SHC Third Amending Deed made or to be made between the Authority,
Sydney Harbour Casino Pty. Limited, Sydney Harbour Casino
Properties Pty. Limited, Sydney Harbour Casino Holdings Limited,
Showboat Australia Pty. Limited, Leighton Properties Pty.
Limited, Leighton Contractors Pty. Limited, Leighton Holdings
Limited, Sydney Casino Management Pty. Limited, Showboat
Operating Company, Showboat Development Corporation, Showboat
Inc. and National Mutual Trustees Limited.
Assignment and Encumbering and
Conditions Relating to the Same
Clause 12 **: Miscellaneous
<PAGE>
SHC
EXHIBIT 2 TO
THIRD AMENDING DEED
(Third Supplementary Legal Opinion)
- Sydney Casino Project -
<PAGE>
THIRD SUPPLEMENTARY LEGAL OPINION
[LETTERHEAD OF US LAWYERS]
[ ] 1994
New South Wales Casino Control Authority
and the State of New South Wales
Level 17
309 Kent Street
Sydney, New South Wales 2000
Australia
SYDNEY CASINO PROJECT: SHOWBOAT, INC., SHOWBOAT DEVELOPMENT
COMPANY AND SHOWBOAT OPERATING COMPANY
We have acted as counsel to Showboat, Inc., a Nevada Corporation
("SBO"), Showboat Development Company, a Nevada Corporation
("SDC"), and Showboat Operating Company, a Nevada Corporation
("SOC"), in connection with the SHC Third Amending Deed executed
by SBO, SOC, SDC, the New South Wales Casino Control Authority
(on behalf of the State of New South Wales) ("AUTHORITY"), Sydney
Harbour Casino Pty. Limited ("SHC"), Sydney Harbour Casino
Properties Pty. Limited ("SHC PROPERTIES"), Sydney Harbour Casino
Holdings Limited ("SHC HOLDINGS"), Showboat Australia Pty.
Limited ("SBA"), Leighton Properties Pty. Limited ("LPPL"),
Leighton Contractors Pty. Limited ("LCPL"), Leighton Holdings
Limited ("LHL"), Sydney Casino Management Pty. Limited ("SCM")
and National Mutual Trustees Limited ("TRUSTEE"), dated [ ]
1994 (Sydney time).
This Opinion is being issued and delivered to the Authority
pursuant to paragraph 3(d) of the SHC Third Amending Deed. SBO,
SOC and SDC shall be collectively referred to herein as the
"Companies". The SHC Third Amending Deed shall be referred to as
the "Relevant Document". Capitalised terms are used herein as
defined in the SHC Third Amending Deed unless otherwise defined.
As counsel to the Companies, we have examine originals, if
available, or copies of the following documents and instruments:
(a) Draft Third Amending Deed dated as of [ ] 1994 and
marked SHC: THIRD AD (FINAL [ ] ("DRAFT THIRD AMENDING
DEED");
(b) Powers of Attorney made by SBO, SOC and SDC each dated [ ]
1994 ("POWERS OF ATTORNEY").
The Draft Third Amending Deed, shall be referred to as the "DRAFT
RELEVANT DOCUMENT".
We have examined originals, where available, or copies of:
(a) Resolutions certified by the Secretary of SBO, SOC and SDC
dated as of [ ] 1994;
<PAGE>
-2-
and
(b) Certificates of the Secretary of State of Nevada, dated as
of [ ] 1994, attesting to the good standing in Nevada of
SBO, SOC and SDC.
We have conducted such other reviews as are necessary to give the
opinions hereinafter stated.
In rendering the opinions expressed herein we have assumed the
Relevant Document will not reflect any substantial change from
the Draft Relevant Document which, if considered by us, would
affect our opinions expressed herein. We have also assumed that
the Relevant Document will be executed by SBO, SOC and SDC
pursuant to the Powers of Attorney.
In our examinations we have assumed the due completion of each
document (where blanks appear), and the due execution and due
delivery of each document by each party as of the date hereof;
the genuineness of all signatures other than the signatures of
SBO, SOC and SDC; and the legal capacity of natural persons who
signed or who will sign the documents. We further assume that
the Relevant Document accurately describes and contains your
understanding of the matters described therein and that there are
no oral or written statements or agreements by you, that modify,
amend, or vary, or purport to modify, amend or vary any of the
terms of the Relevant Document. In our examination we have also
assumed the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents
submitted to us as certified or photostatic documents. We
further assume the absence of fraud or duress in the inducement
or effectuation of the subject transactions and affirm that we
have no actual knowledge that would lead us to believe that there
exists any such fraud or duress.
We are admitted to the Bar of the State of Nevada, and in
rendering our opinions hereinafter stated, we have relied on the
applicable laws of the State of Nevada as these laws presently
exist and as they have been applied and interpreted by courts
having jurisdiction with the State of Nevada. We express no
opinion as to the laws of any other jurisdiction other than laws
of the United States of America.
Based upon the foregoing and in reliance thereon and subject to
the assumptions, exceptions, qualifications and limitations set
forth herein, we are of the opinion that:
1. (a) SBO is a corporation duly organised, validly
existing and in good standing under the laws of
the State of Nevada;
(b) SOC is a corporation duly organised, validly
existing, and in good standing under the laws of the
State of Nevada;
(c) SDC is a corporation duly organised, validly
existing and in good standing under the laws of the
State of Nevada;
(d) Each of the Companies is:
(i) in good standing and has all requisite power
and authority to own and operate and deal
with its properties and assets and to manage
<PAGE>
-3-
and to carry on its business as presently
conducted; and
(ii) duly qualified or registered to do business
in every jurisdiction where a failure to be
so qualified or registered would have a
material adverse effect on the condition
(financial or otherwise), operations or
income of the Companies and is in good
standing in each such jurisdiction in which
the Companies are qualified or registered to
do business.
2. The Relevant Document has been duly authorised, executed
and delivered to you by the Companies. The Relevant
Document constitutes legal, valid and binding obligations
of the Companies, enforceable against the Companies in
accordance with its terms. The Powers of Attorney are
valid and binding appointments made by SBO, SOC and SDC
respectively, which authorise the execution and delivery
of the Relevant Document on behalf of the Companies by any
of the attorneys named therein.
3. The execution and delivery of the Relevant Document, the
performance and observance by the Companies of their
respective obligations thereunder, and the consummation of
the transactions contemplated thereby (including the grant
of security interests and liens thereunder) are within the
cooperate authority of the Companies and have been duly
authorised by all necessary corporate proceedings and
actions on the part of the Companies.
4. The execution and delivery of the Relevant Document by the
Companies does not, and the performance and observance by
the Companies of their respective obligations thereunder,
the transactions contemplated thereunder, and the
provisions thereof, do not and will not contravene,
conflict with, or result in a breach, default or violation
of:
(a) any provisions of the Companies' respective Articles
of Incorporation, their respective Bylaws or any
other constituent document of the respective
Companies;
(b) any provision of the laws, statutes, rules or
regulations of the State of Nevada or of the Federal
law or regulations of the United States; or
(c) any decree, judgment, order, regulation or rule of
any federal, state or municipal court, board or
government or administrative authority or any
agreement, instrument or arrangement binding on any
of the Companies or any of their assets or
properties or to which any of the Companies is a
party, including the Relevant Document, nor will the
same result in the creation of any security interest
or mortgage under any such agreement, arrangement or
instrument rather than as may be expressly set out
in the Relevant Document.
<PAGE>
-4-
5. No approval or consent or other action by, and no filling
with, any person, or state municipal or federal agency,
board, authority or other government or administrative
unit is required under any law, statute, rule or
regulation as a condition to he validity, effectiveness
or, enforceability of, or performance by the Companies of
their respective obligations under, the Relevant Document
or consummation of the transactions contemplated by the
Relevant Document.
6. There are no actions, proceedings, enquiries,
investigations or litigation of any nature pending, or, to
our knowledge, threatened at law or in equity by or before
any court, or government or administrative
instrumentality, board or agency having jurisdiction over
any of the Companies which has or may materially adversely
affect the condition (financial or otherwise), operation
or income of any of the Companies or which has or may
affect or place in question the authority of any of the
Companies to enter into or perform their respective
obligations under, or the validity or enforceability of,
the Relevant Document or the consummation of the
transactions contemplated by the Relevant Document.
7. Although we are not in a position to give an unqualified
opinion in this regard, we are of the opinion that there
is a reasonable basis on which to conclude that the courts
of the State of Nevada should give effect to the agreement
of the parties set forth in the Relevant Document which
will be governed by the laws of the State of New South
Wales. This opinion is based, in part, upon the
assumption, that the parties acted in good faith and not
for the purpose of evading the law of the real situs of
the contract and that the situs chosen by the parties has
a substantial relationship to the transaction. SEE, ENGEL
V. ERNST, 102 NEV. 390, 724 P.2D 215 (1986), CONSTANZO V.
MARINE REALTY, 101 NEV. 277, 701 P.2D 747 (1985), AND
SIEVERS V. DIVERSIFIED MORTGAGE INVESTORS, 95 NEV. 811,
603 P.2D 270 (1970).
8. The submission of the Companies to the jurisdiction of the
Courts of New South Wales and the appointment of SBA as
agent for service of process for any action or proceedings
commenced in New South Wales is valid and binding on each
of the Companies.
9. Any final and conclusive judgment obtained in the courts
of New South Wales or Australia will be recognised and
enforced by the courts of Nevada and the Federal Courts of
the United States without a further review of the merits.
10. Claims under the Relevant Document against any of the
Companies will rank at least pari passu with the claims of
all other unsecured creditors of the Companies
respectively, other than those claims which are preferred
by law generally.
11. In any proceedings taken in the State of Nevada and in any
Federal Court of the United States, none of the Companies
will be entitled to claim for itself or any of its assets
immunity from suit, execution, attachment or other legal
process.
12. Our opinion in paragraph 2 above as to the enforceability
of the documents is subject to:
<PAGE>
-5-
(i) bankruptcy, insolvency, reorganisation, fraudulent
transfer, moratorium or other laws of general
application relating to or affecting the enforcement
of creditors' rights;
(ii) general principles of equity regardless of whether
such issues are considered in a proceeding in equity
or at law which provide, among other things, that
the remedies of specific performance and other forms
of equitable relief are subject to equitable
defences and to the discretion of the court before
which any proceeding therefor may be brought;
(iii) the fact that a court may view any provision of the
Relevant Document as unconscionable or subject to an
obligation that the parties to the Relevant Document
reasonably or in a commercially reasonably manner;
(iv) the fact that certain remedies contained in the
Relevant Document may be qualified under the laws of
the State of Nevada, none of which qualifications
will materially interfere with the practical
realisation of the benefits and the security provide
thereby.
Our opinion in paragraph 8 above as to the valid and binding
nature of the submission of the Companies to the jurisdiction of
the Courts of New South Wales or Australia is subject to the
equitable principle of forum non-conveniens. The second Circuit
of the United States Court of Appeals addressed this issue in
ALLSTATE LIFE INSURANCE CO. V. LINTER GROUP LIMITED, 994 F.2d 996
(2d Cir. 1993). In LINTER GROUP, the Second Circuit discussed
the legal principle of forum non-conveniens in dismissing an
action in the State of New York despite a forum selection clause
in an indenture selecting the Courts of the State of New York.
"Although there is still a strong presumption in favor of
a plaintiff's choice of forum, the Supreme Court has
recognised that dismissal nevertheless may be appropriate
where certain private and public interest factors point
towards trial in an alternative forum. GULF OIL CORP. V.
GILBERT, 330 US 501, 508-09, 91 L.Ed. 1055, 67 S. Ct. 839
(1947) [remaining citations omitted].
The private and public interest factors recognised
by the Court in GILBERT include:
(1) the ease of access to sources of proof;
(2) the availability of compulsory process for
attendance of unwilling witnesses;
(3) the cost of obtaining attendance of unwilling
witnesses;
(4) practical problems involving the efficiency
and expense of a trial;
(5) enforceability of judgments;
<PAGE>
-6-
(6) administrative difficulties flowing from
court congestion;
(7) imposing jury duty on citizens of the forum;
(8) the local interest in having controversies
decided at home; and
(9) the avoidance of unnecessary problems in the
application of foreign law. GILBERT, supra
330 US at 508-09, LINTER, 994 F.2d at 1001.
Therefore the opinion expressed in opinion paragraph
8 assumes that a court will carefully consider the
factors listed in GULF OIL CORP. V. GILBERT, 330
U.S. 91 L. Ed. 1055, 67 E. Ct. 839 (1947) in
determining the propriety of an alternative forum.
Our opinion in paragraph 9 above as to the enforceability of a
judgment in the State of Nevada and in a Federal Court of the
United States is subject to the constitutional principle of
comity.
"The U.S. Supreme Court defined comity as 'the recognition
which one nation allows within its territory to the
legislative, executive or judicial acts of another nation,
having due regard both to international duty and
convenience, and to the rights of its own citizens or of
other persons who are under the protection of its laws.'
HILTON V. GUYOT, 159 U.S. 113, 164, 40 L.Ed. 95, 16 S. Ct.
139 (1895). As a general rule, comity may be granted
where 'it is shown that the foreign court is a court of
competent jurisdiction, and that the laws and public
policy of the forum state and the rights of its residents
will not be violated.' CUNARD S.S. CO. V. SALEN REEFER
SERV.AB, 773 F.2d 452, 457 (2 Cir. 1985). Indeed, as long
as the foreign court abides by 'fundamental standards of
procedural fairness,' granting comity is appropriate.
Id." ALLSTATE LIFE INSURANCE C. V. LINTER GROUP LIMITED,
994 F.2d 996. 998 (2d Cir. 1993).
We therefore assume in rendering opinion paragraph 9 that the
laws of New South Wales or Australia are "procedurally fair." In
particular, we assume that (1) the laws of New South Wales and
Australia do not favour its citizens over those of other nations,
states and provinces; (2) the Companies are provided the
opportunity to provide evidence in their defence; (3) the
Companies will receive timely notice to permit them sufficient
time to defend the action; and (4) the judgment rendered by an
Australian or New South Wales court will not be against the
public policy of the State of Nevada. We also assume that the
courts of Australia and New South Wales recognise and enforce
judgments rendered by courts of any state of the United States or
federal courts of the United States of America.
The foregoing opinions are subject to the following additional
qualifications:
(a) We express no opinion as to the effectiveness of any
provision directly or indirectly requiring that any
consent, modification, amendment or waiver be in writing.
(b) We express no opinion as to the enforceability of any
provision which requires the party to indemnify another
party for losses or damages caused by the indemnified
<PAGE>
-7-
party's gross negligence, intentional acts or omissions.
Moreover, we advise you that a Court may not enforce an
indemnity agreement which shifts the financial
responsibility that the contract of indemnity expresses
such intention in clear and unequivocal terms.
(c) Since the opinions expressed in this letter are based upon
the law in effect on the date hereof, we assume no
obligation to revise or supplement this opinion letter
should such law be changed by legislative action, judicial
decision or otherwise.
We are qualified to practice and are experts in the laws of the
State of Nevada and the Federal law of the United States. We are
qualified to give this legal opinion. These opinions are
effective as of the date hereof. No extensions of our opinions
may be made by implication or otherwise. We expressly consent to
and acknowledge your reliance on this opinion in executing the
Relevant Document. Our opinions are not to be otherwise quoted
in whole or in part without the express, written consent of this
firm.
Yours sincerely,
[US LAWYER]
<PAGE>
Sydney Harbour Casino Properties Pty Limited
and
Leighton Properties Pty Limited
DEVELOPMENT
AGREEMENT
Freehill Hollingdale & Page
Solicitors
MLC Centre
Martin Place
Sydney NSW 2000
Australia
Telephone: (02) 225 5000
Facsimile: (02) 233 6430
Reference: GTB:36B
<PAGE>
THIS AGREEMENT made on the 22 day of April 1994 between the
following parties:
1. SYDNEY HARBOUR CASINO PROPERTIES PTY LIMITED ACN 050 045
120 of Level 3, 472 Pacific Highway, St Leonards, New
South Wales (the "Principal"); and
2. LEIGHTON PROPERTIES PTY LIMITED ACN 001 046 395 of Level
3,472 Pacific Highway, St Leonards, NSW, 2065 (the
"Developer").
RECITALS:
A. The Principal and other members of the SHC Group have
entered into the Casino Agreements in respect of the
development and operation of the Sydney Casino. The
Developer is aware of the terms of the Casino Agreements
including the requirements of the Casino Authority and of
the business objectives of the Principal in respect of the
Project.
B. The Developer represents to the Principal that it has the
requisite skill, experience and ability to execute the
Project and to procure the execution of the residential
building work and the specialist work involved in the
Project in accordance with the Agreement and so as to
ensure that the Project meets the requirements of the
Casino Authority and the Principal in respect of the
Project and so as to ensure that the Principal complies
with its obligations under the Casino Agreements to the
extent those obligations relate to the obligations of the
Developer under this Agreement, or are to be performed on
behalf of the Principal by the Developer pursuant to this
Agreement.
C. In reliance on the Developer's representations, the
Principal wishes to engage the Developer to execute the
Project.
D. The Developer has agreed to accept such engagement upon
the terms of the Agreement.
E. The parties acknowledge that the Principal has approved
the extent and scope of the Development Proposal and
Project Briefs.
IT IS HEREBY AGREED as follows:
1. The Principal engages the Developer to execute the Project
in accordance with the Agreement.
2. The Developer shall:
(a) well and faithfully execute all activities involved in
the development, design, construction, Fitout and
Commissioning of the Sydney Casino in accordance with
the Agreement; and
(b) supply and provide at its own expense all things
necessary for the proper performance by the Developer
of its obligations under the Agreement.
3. The Developer warrants to the Principal that:
(a) the design of the Sydney Casino shall be carried out
and completed in accordance with the intent and
express requirements of the Development Proposal and
Project Briefs,
<PAGE>
2
as included in Annexure C, the requirements of the
Casino Authority, and the terms of this Agreement;
(b) the construction of the Sydney Casino shall be in
accordance with the design consented to by the
Principal pursuant to Clause 7.3, and shall be carried
out in a proper and workmanlike manner;
(c) all designs, materials, equipment and performance
requirements specified or incorporated in the Project
whether before or after the date of this Agreement,
shall comply with the intent and express requirements
of the Development Proposal and Project Briefs as
included in Annexure C or, if not stated therein,
shall be consistent with the general character and
quality of an international class casino complex;
(d) the Sydney Casino, at Completion, shall comply with
the requirements of the Casino Authority under the
Casino Agreements including the Planning Approval
(once it has been obtained), the Development Proposal
and Project Briefs, all legislation, subordinate
legislation, the Building Code of Australia,
Authorities, all relevant Australian standards and any
standard specified in the Development Proposal and
Project Briefs;
(e) it shall obtain from manufacturers or suppliers of
equipment incorporated in the Sydney Casino
appropriate warranties for the nature of the Project,
which warranties shall be provided to and in favour of
the Principal;
(f) the Sydney Casino, when constructed, shall be fit for
its intended purpose, as described in or to be
inferred from the Development Proposal and Project
Briefs; and
(g) it has the requisite skill, experience and ability to
execute the Project in accordance with this Agreement
and so as to ensure the Project meets the requirements
of the Casino Authority and the Principal.
4. Each party hereto shall perform, fulfil, observe, comply
with and submit to all and singular the provisions,
conditions, stipulations and requisitions and all matters
and things contained expressed implied or shown in the
Agreement and by and on the part of the respective party to
be performed, fulfilled, observed, complied with and
submitted to.
5. The Annexures listed below form part of this Agreement:
(a) Annexure A: Details of Agreement
(b) Annexure B: Conditions of Engagement;
(c) Annexure C: Development Proposal and Project
Briefs, Room Data Sheets, drawings and
other relevant documents;
(d) Annexure D: Design and Construction Programmes;
(e) Annexure E: Form of Security;
<PAGE>
3
(f) Annexure F: Not used;
(g) Annexure G: Preconstruction Period Drawdown
Schedule;
(h) Annexure H: Schedule of Monetary Allowances.
(i) Annexure I: Proforma Design Consultant's Report.
(j) Annexure J: Facility Agreement Insurance
Requirements.
(k) Annexure K: Progress Payments Control Document
(l) Annexure L: Excavation Plan
In construing this Agreement, all the Annexures shall be
read with this Agreement. In case of inconsistency the
following order of precedence shall apply:
This Agreement
Annexure B
Annexure C
Annexure A
Annexure D
Annexure E
Annexure K
Annexure J
Annexure G
Annexure H
Annexure I
Annexure L.
6. This Agreement and clauses 1.1, 2.1, 3.1, 3.2, 4, 5, 6,
7.2(c), (h), (k),(j) and (m), 7.3, 7.4, 8, 9.1, 11.1, 14,
15, 16, 17.1 to 17.3 (in respect only of the amounts in the
Preconstruction Drawdown Schedule) 19, 20, 22, 24, 25 and
28.1 of Annexure B commence on the Operative Date. The
remainder of the Agreement does not take effect until the
Licensing Date. If the Licensing Date has not occurred by
31 December 1994 either party may terminate this Agreement
by notice in writing to the other.
7. The Agreement, the Development Agreement Side Deed, the
Copyright Assignment Deed and the Project Certifier Deed
constitute the entire agreement between the parties in
respect of the Project and supersede all prior agreements,
correspondence, and other communications concerning the
Project.
8. The Agreement shall be governed by and construed with
reference to the laws at the time being in force in the
State of New South Wales.
<PAGE>
4
EXECUTED by the parties as an agreement:
SIGNED for and on behalf of
SYDNEY HARBOUR CASINO PROPERTIES
PTY LIMITED by its attorney in the
presence of:
/s/ David Fabian /s/ H. Gregory Nasky
Witness (print name) Attorney (print name)
David Fabian H. Gregory Nasky
SIGNED for and on behalf of
LEIGHTON PROPERTIES PTY LIMITED
by its attorney
in the presence of: ;
/s/ /s/
Witness (print name) Attorney (print name)
<PAGE>
5
ANNEXURE A
DETAILS OF AGREEMENT
SEPARABLE PORTIONS (CLAUSE 10)
SEPARABLE PORTION DATE FOR LIQUIDATED DEFECTS
OF THE PROJECT COMPLETION DAMAGES LIABILITY PERIOD
(CLAUSE 18.3)
1. TEMPORARY CASINO
The devleopment of 9 months 12 months
the Temporary Casino after $0/day
located at Wharves Licensing
12 and 13, Sydney Date
2. PERMANENT CASINO
The development of 38 months 12 months
the Permanent Casino after $150,000/day
at Pyrmont Licensing
and the transfer of Date
FF&E from the
Temporary Casino
3. PROJECT Maximum Amount
$30,000,000
- - CONTRACT LUMP SUM: $691,090,000
(CLAUSE 2)
- - SECURITY (CLAUSE 3) $ 20,000,000
(a) Time to provide security: Licensing Date
(b) Form of security: Two (2) unconditional bank
guarantees in the form set
out in Annexure E each for
half of the above sum.
- - DEVELOPER'S
REPRESENTATIVE (CLAUSE 4): MARK C GRAY
- - PRINCIPAL'S
REPRESENTATIVE (CLAUSE 4): GREGG NASKY
- - ADDRESSES FOR NOTICES
(CLAUSE 6):
(a) Principal - Address: Level 3
472 Pacific Highway
- Telephone: 925 6666
- Facsimile: 925 6003
<PAGE>
6
(b) Developer - Address: Level 3
472 Pacific Highway
St Leonards NSW 2065
- Facsimile: (02) 925 6003
- - Times for early access Temporary Casino: 60 days
(Clause 11.4) prior to Date for Completion
Permanent Casino: 90 days prior
to Date for Completion
- - MONETARY ALLOWANCES twenty percent (20%) applied to
PERCENTAGE (% PA) TO BE amount in excess of monetary
ADDED FOR INDIRECT COSTS allowances shown in Annexure H.
(CLAUSE 12):
- - PERCENTAGE (% PA) TO BE Increased Work -
ADDED FOR INDIRECT COSTS twenty five percent
(CLAUSE 16.4): Decreased work - nil percent
- - INTERESET (% PA) Authorised Dealers Bank Bill
(CLAUSE 17.6): Rate plus three percent (3%)
<PAGE>
7
ANNEXURE B
CONDITIONS OF ENGAGEMENT
TABLE OF CONTENTS
1. Definitions and Interpretation
2. Contract Sum
3. Assignment and Security
4. Representatives
5. Instructions
6. Notices
7. Documentation and Project Control Group
8. Quality and Quality Assurance
9. Design and Construction Programmes
10. Separable Portions of the Project
11. Access to the Site
12. Monetary Allowances
13. Items Supplied by Principal
14. Insurance
15. Time for Completion
16. Variations
17. Payment
18. Completion and Defects Liability Period
19. Termination on Default
20. Dispute Settlement
21. Co-Operation with Others
22. Site Conditions
23. Inspection and Testing
24. Services
25. Confidentiality
26. Design and Construction Contract
27. Waiver
28. Planning Approval
29. Light Rail Warranty Deed
30. Building Services Corporation Act, 1989
31. Developer's Security
32. Reviews
33. Other Consultants
34. Construction Lease
<PAGE>
8
PART 1
DEFINITIONS AND INTERPRETATION
1.1 INTERPRETATION
In the Agreement, except where the context otherwise requires:
"AGENT" means Commonwealth Bank of Australia or such other agent
as is engaged by the Principal's financiers in respect of the
Project;
"ARCHITECTURAL CONSULTANT" means the ARCHITECTURAL CONSULTANT
engaged by the Design and Construction Contractor being Philip
Cox Richardson Taylor & Partners Pty Limited (ACN 002 535 891)
and The Hillier Group (or any appropriate joint venture entity
formed by them), or such other consultant as is agreed to by the
Principal, the Developer and the Principal's financiers;
"AUTHORISED DEALERS BANK BILL RATE" means in relation to any
period, the average (expressed as a percentage yield to maturity
per annum rounded upwards, if necessary, to the nearest 0.01%)
bid rate for bills which have a term to maturity equal to that
period which average rate is displayed on the page of the Reuters
Monitor System designated "BBSY" at or about 10.00 am (Sydney
time) on the first day of the period for the purchase of bills
bearing the acceptance of a trading bank (as defined in the
Banking Act 1959 (Cwth)) but if that day is not a business day
then on the business day which immediately precedes that day.
"AUTHORITIES " means all Commonwealth, State, Territorial and
local government departments, bodies, instrumentalities and other
public authorities having jurisdiction over the Project;
"AUTHORITIES PLANNING REQUIREMENTS" means the planning
requirements of the Authorities which have been incorporated in
Annexure C or specified in the Casino Agreements;
"BUSINESS DAY" means a day (other than a Saturday or Sunday or
public holiday ) on which banks are open generally for business
in Sydney;
"CASINO AGREEMENTS" means:
(a) the Temporary Site Construction Sub-Lease for the
Temporary Casino between the Casino Authority and the
Principal ("the Construction Sub Lease " );
(b) the Permanent Site Lease (Construction Lease) for the
Permanent Casino between the Casino Authority and the
Principal ("the Construction Lease " );
(c) the Casino Duty and Community Benefit Levy Agreement
between the Treasurer of the State of New South Wales and
Sydney Harbour Casino Pty Limited;
(d) Deed of Covenant between inter alia the Casino Authority,
City West Development Corporation and the Principal; and
(e) Head Lease Temporary Casino between City West Development
Corporation and the Casino Authority;
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9
"CASINO AUTHORITY" means the New South Wales Casino Control
Authority or such other body or person authorised by the
Government of the State of New South Wales to have jurisdiction
over the Project or who is authorised to issue a casino licence
for the Sydney Casino;
"CASINO CONTROL ACT" means the Casino Control Act 1992 (NSW);
"CERTIFICATE OF FINAL COMPLETION" means the certificate issued by
the Principal to the Developer in accordance with clause 18.5;
"COMMISSIONING" means the checking, testing and acceptance of the
operational readiness of, and of the procedures for, the various
components of the Project relating to building services by the
Principal but excluding the Operator's Commissioning;
"COMPLETION" means the completion of the design, construction,
Fit-Out and Commissioning of the Project to a state of
operational readiness which complies with the Completion
Standards, including the provision to the Principal of all
warranties, all necessary interim operation and maintenance
manuals and necessary interim drawings;
"COMPLETION ACTION PLAN" means the plan referred to in clause
18.1(a) identifying the steps to be performed to achieve
Completion in accordance with this Agreement;
"COMPLETION STANDARDS" means:
(a) for construction of the Project or a Separable Portion when:
(1) the Project or Separable Portion is complete except
for minor omissions and minor defects the immediate
making good of which by the Developer is not
practical:
(A) which do not prevent the Project or Separable
Portion from being reasonably capable of being
used for its intended purposes; and
(B) rectification of which will not significantly
prejudice the convenient use of the Project or
Separable Portion by members of the public taking
into account the intended use of the items
concerned and their location; and
(C) which do not cause any legal impediment to the use
and/or occupation of the Project or a Separable
Portion; and
(2) those tests which are required by the provisions of
any statute or required to be carried out by any
competent authority or the Agreement to be carried
out and passed before Completion have been carried
out and passed and evidence to the reasonable
satisfaction of the Principal is given to the
Principal;
(3) the documents listed in the Development Proposal and
Project Briefs and any other documents and other
information which are required by this Agreement for
Completion have been supplied to the Principal;
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10
(4) an identification survey by a registered surveyor has
been provided to the Principal;
(5) a certificate of classification under the Local
Government Act 1993 (NSW) is issued;
(6) the Developer has provided to the Principal
statements signed by the Company Secretary of each of
the Developer and the Design and Construction
Contractor certifying that all claims due and
payable to subcontractors and suppliers in respect
of payments included in all Progress Claims paid to
the Developer, and all wages due and owing to
employees of the Contractor have been paid;
(7) all requirements under the Casino Agreements, this
Agreement and the Casino Control Act relevant to the
design and construction of the Project or a
Separable Portion have been complied with;
(8) for Commissioning, when all the procedures functions
and processes for operation of the various components
of the Project or a Separable Portion (including all
staff facilities and equipment) relating to building
services are in place have passed all tests and are
immediately and reliably available to the Principal
with the exception only of minor omissions and
maintenance items; and
(9) for Fit-Out, when all of the Fit-Out is installed in
place and operational with the exception only of
minor omissions and maintenance items;
"CONTAMINANTS" has the same meaning as in the Construction Lease;
"CONTRACT SUM" means the sum stated in Annexure A hereof or such
other sum as shall be determined from time to time in accordance
with the Agreement;
"COPYRIGHT ASSIGNMENT DEED" means the copyright assignment deed
entered into on or about the date of this Agreement by the Casino
Authority, the Principal, the Developer, the Design and
Construction Contractor and the Architectural Consultant;
"DATE FOR COMPLETIONS" means the dates as calculated in Annexure
A, being the date on or before which the Developer is to bring
each Separable Portion of the Project to Completion, as adjusted
in accordance with Clause 15 hereof;
"DATE OF COMPLETION" means the dates when each Separable Portion
of the Project reaches the stage of Completion;
"DAY" means calendar day;
"DESIGN AND CONSTRUCTION CONTRACT" means the contract entered
into on or about the date of this Agreement between the Developer
and the Design and Construction Contractor;
"DESIGN AND CONSTRUCTION CONTRACTOR" shall mean Leighton
Contractors Pty Limited or any replacement;
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11
"DESIGN CONSULTANTS" means the design, structural, services and
other consultants engaged by the Developer or the Design and
Construction Contractor for the Project including the
Architectural Consultant;
"DESIGN DOCUMENTS" means all drawings, specifications and design
documents developed by the Developer pursuant to the terms of
this Agreement;
"DESIGN AND CONSTRUCTION PROGRAMMES" means the programme for the
design, documentation, construction, fitout, commissioning and
completion of the Temporary Casino and the Permanent Casino (as
the case may be) set out in Annexure D as amended from time to
time with the prior written approval of the Principal.
"DETERMINATION DATE" means the earlier of:
(a) the date of the Review under clause 32 at which it is agreed
by the parties and the Agent that the Developer's Security
and Fortnightly Progress Claims are no longer required; and
(b) the date of payment of the payment certificate issued in
respect of the Final Statement under clause 17.5
"DEVELOPER'S SECURITY" means the security to be provided by the
Principal under clause 31;
"DEVELOPMENT AGREEMENT SIDE DEED" means the side deed entered
into on or about the date of this Agreement between the Casino
Authority, the Principal, the Agent, the Developer and the Design
and Construction Contractor;
"DEVELOPMENT PROPOSAL AND PROJECT BRIEFS" means the proposals of
the Principal, in relation to the construction, development and
establishment of the Project described in the documents listed in
Annexure C;
"DRAWINGS" means the plans, designs and working drawings relating
to the Project provided by the Principal to the Casino Authority
and described in Annexure C;
"FACILITY AGREEMENT" means the Sydney Harbour Casino Facility
Agreement between the Principal, the Agent and other parties
identified therein;
"FINANCIAL DEFAULT" means a default of the type referred to in
clause 19.3(b );
"FIT-OUT" means the installation of gaming equipment, furniture,
fittings, furnishings and such other built-in and loose items
required to bring the Project to a stage to enable Commissioning
to take place but excluding fitout to be performed by the
Operator or Tenants;
"FORCE MAJEURE" shall mean:
(a) any explosion, earthquake, natural disaster, sabotage, act
of a public enemy, war ( declared or undeclared ) or
revolution;
(b) action or inaction by a court, government or Authorities,
including denial, refusal or failure to grant any permit,
authorization, licence, approval or acknowledgement and
changes in law but, subject to clause 15.7(b ), excluding
any delay in the granting of a building approval;
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12
(c) fire or flood;
(d) lightning, major storm or hurricane;
(e) strikes, lockouts, industrial disputes, labour disputes,
work bans, blockages, picketing action, secondary boycotts
or any other industrial action or lack of action (provided
that they do not relate specifically to the Project, the
Site, the Developer or the Design and Construction
Contractor except if they are due to:
(1) attempts by industrial unions to have the Principal,
the Developer or the Design and Construction
Contractor act contrary to the New South Wales
Government Code of Practice for Construction; or
(2) industrial disputation arising from a breach by
industrial unions of an enterprise agreement
relating to the Site or the Project, provided such
enterprise agreement complies with the New South
Wales Government Code of Practice for Construction);
(f) riot, civil commotion or blockade; or
(g) a suspension by the Developer under clause 19.3,
which causes or results in delay in the Completion of the Project
but does not include events to the extent to which they are
caused or contributed to by the Developer or those for whom it is
responsible;
"FORTNIGHTLY PROGRESS CLAIMS" means progress claims for payment
by the Principal which are made by the Developer in accordance
with clause 17.3(g );
"INDIRECT COSTS" means all preliminaries, administration costs,
site overheads, head and branch office overheads, and profit;
"INSTRUCTION" means and includes any agreement, approval,
authorisation, certificate, decision, demand, determination,
direction, explanation, notice, order, permission, rejection,
request or requirement given or issued in writing by the
Principal;
"LICENSED CONTRACTOR" means a person authorised to contract to do
residential building work or specialist work under the Building
Services Corporation Act, 1989;
"LICENSING DATE" means the date on which the Casino Authority
grants Sydney Harbour Casino Pty Limited a casino licence
pursuant to section 18(1) of the Casino Control Act;
"MONETARY ALLOWANCE" means a rate, quantity or sum or a
combination thereof which has been used in evaluating the
Contract Sum and is scheduled in Annexure H. in respect of work
or an item of work which may be performed or supplied, at the
direction or approval of the Principal, either by the Developer
or the Design and Construction Contractor, or by a subcontractor
or supplier to the Design and Construction Contractor;
"OPENING OF THE TEMPORARY CASINO" means the date of commencement
of commercial operations to the public of the Temporary Casino;
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13
"OPERATIVE DATE" means the date upon which the Casino Authority
announces that Sydney Harbour Casino Pty Limited is the preferred
applicant;
"OPERATOR'S COMMISSIONING" means the checking, testing and
acceptance of the operational readiness of and procedures for the
gaming equipment, surveillance and other components of the
Project which are the responsibility of the Operator;
"OPERATOR" means Sydney Casino Management Company Pty Limited,
ACN 060 462 053 or any replacement operator;
"PERMANENT CASINO" means the permanent casino complex to be
developed at Pyrmont, Sydney as identified in the Development
Proposal and Project Briefs .
"PLANNING APPROVAL" means the planning approval to be obtained
from the Minister for Planning in respect of each of the
Temporary Casino and the Permanent Casino;
"PRECONSTRUCTION PERIOD" means the period between the Operative
Date and the Licensing Date.
"PRINCIPAL'S DELAY DAMAGES" means the sum of:
(a) amounts payable by the Principal under clause 7 of the
Casino Duty and Community Benefit Levy Agreement;
(b) additional pre-opening costs incurred by the Principal;
and
(c) the sum of the following incurred by the Principal under
the Facility Agreement (terms used in this sub-clause have
the same meaning as in the Facility Agreement):
(1) the interest or discounts applying to all Segments
outstanding under the Construction Facility at the
Bank Bill Rate (adjusted as necessary for clause
14.2(bb) of the Facility Agreement) plus the Margin;
and
(2) the interest applying to the overdraft accommodation
under the Working Capital Facility calculated at the
Overdraft Rate; and
(3) a pro-rated proportion of any amounts payable under
clauses 7.9 and 20 of the Facility Agreement,
LESS
(d) average net operating profits after tax since the opening
of the Temporary Casino except to the extent that such
profit has been committed by the Principal prior to being
advised in writing by the Developer of the likely extent
of the anticipated delay;
"PROGRAMMING CONSULTANT" means the external programming
consultant appointed pursuant to clause 7.5;
"PROGRESS CERTIFICATE" has the same meaning as payment
certificate;
"PROGRESS PAYMENTS CONTROL DOCUMENT" means a trade based breakup
of the Contract Sum prepared by the Design and Construction
Contractor and agreed to by the Quantity Surveyor which is set
out in Annexure "K";
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14
"PROJECT" means the whole of the development of the Sydney Casino
project including planning, design, construction and
commissioning in accordance with the Agreement as described
generally in the Development Proposal and Project Briefs and
includes variations provided for in the Agreement;
"PROJECT CERTIFIER DEED" means the project certifier's deed
entered into on or about the date of this deed between, inter
alia, the Principal, the Developer and the Quantity Surveyor;
"PROJECT CONTROL GROUP" means a group of persons comprising
representatives of the Principal, the Developer, the Agent and
others invited from time to time by the Developer or the
Principal;
"QUANTITY SURVEYOR" means the Quantity Surveyor appointed
pursuant to clause 17.2;
"RESIDENTIAL BUILDING WORK" has the same meaning as that
expression has in the Building Services Corporation Act, 1989;
"SEPARABLE PORTION" means a portion of the Project specified in
Annexure A or agreed to by the Principal and Developer pursuant
to clause 10.1;
"SHC GROUP" means Sydney Harbour Casino Pty Limited, Sydney
Harbour Casino Holdings Limited and the Principal;
"SITE" means:
(a) in respect of the Temporary Casino, the land to be made
available to the Principal pursuant to the Temporary Site
Sub-Lease (Construction Sub-Lease) entered into on or
about the date of this Agreement; and
(b) in respect of the Permanent Casino, the land to be made
available to the Principal pursuant to the Permanent Site
Lease (Construction Lease) entered into on or about the
date of this Agreement;
together with any other lands and other places made
available by the Principal to the Developer for the
purpose of the Agreement;
"SPECIALIST WORK" has the same meaning as that expression has in
the Building Services Corporation Act, 1989;
"SYDNEY CASINO" means the casino, hotel, serviced apartments and
related structures initially as the Temporary Casino at a
temporary location at Wharves 12 and 13 and subsequently as the
Permanent Casino, once completed, at Pyrmont Bay, Sydney;
"TEMPORARY CASINO" means the temporary casino complex to be
developed at Wharves 12 and 13, Sydney as identified in the
Development Proposal and Project Briefs;
"TENANT" means a person or entity who proposes to occupy part or
all of the Sydney Casino;
"VARIATION" means a change to the Development Proposal and
Project Briefs as may be authorised by the Principal under Clause
16 or required as a result of a change in a law or a requirement
of an Authority including any of the following:
(a) increases, decreases or omissions from any part of the
Project;
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15
(b) changes in the character or quality of any material or
work;
(c) changes in the levels, lines, positions or dimensions of
any part of the Project;
(d) execution of additional work;
(e) changes to the Project not consistent with the Development
Proposal and Project Briefs including any requirements of
the Planning Approval inconsistent with the Development
Proposal and Project Briefs.
PART 2
CONTRACT SUM
2.1 CONTRACT SUM
(a) The Principal shall pay the Developer the Contract Sum in
accordance with the terms of the Agreement.
(b) The Contract Sum is the Lump Sum stated in Annexure A for
all work carried out under this Agreement.
(c) The Contract Sum is not subject to adjustment or cost
escalation except as otherwise expressly provided for in
the Agreement.
(d) The Contract Sum (subject to any adjustment in accordance
with Parts 12, 15, 16, 21, 22 and 23 of this Agreement) is
fixed.
PART 3
ASSIGNMENT AND SECURITY
3.1 ASSIGNMENT
Neither party may assign the Agreement or any part thereof
without the prior written approval of the other party, which
approval shall not be unreasonably withheld. The Developer
consents to the Principal mortgaging and assigning its interest
in this Agreement to the Agent.
If this Agreement is validly terminated by the Principal, the
Developer must, if requested by the Principal in writing, use its
best endeavours to procure the Design and Construction Contractor
to agree to an assignment of the Developer's interest in the
Design and Construction Contract to the Principal or its nominee.
If the Design and Construction Contractor will not agree to such
assignment the Developer will, if requested by the Principal in
writing, procure the Design and Construction Contractor to assign
to the Principal or its nominee, its interest in any
subcontracts, supply or consultancy agreements it has entered in
respect of the Project.
3.2 DESIGN AND CONSTRUCTION CONTRACT
The entry by the Developer into the Design and Construction
Contract shall not relieve the Developer from any liability or
obligation under this Agreement. The Developer shall be liable to
the Principal for the acts and omissions of the Design and
Construction Contractor as if they were acts or omissions of the
Developer.
<PAGE>
16
3.3 SECURITY
The Developer shall procure that there be provided, or provide,
to the Principal two unconditional undertakings from a bank
acceptable to the Principal, within the time, in the form and in
the amount stated in Annexure A.
The security is for the due and proper performance by the
Developer of its obligations under the Agreement.
The Principal shall not convert the security or any part thereof
into money unless the Principal is reasonably satisfied on
reasonable grounds that there are moneys due and owing by the
Developer to the Principal which are not paid in accordance with
this Agreement or the Developer is otherwise in breach of this
Agreement in which case its right to convert the security shall
be limited to the amount it is entitled to under this Agreement.
The Developer will not convert any security held by it under the
Design and Construction Contract without the prior written
approval of the Principal.
Half of the security must be released to the Developer on the
Date of Completion of the last Separable Portion to be completed
and the other half must be released to the Developer on the date
of the issue of the Certificate of Final Completion.
The parties acknowledge that Leighton Holdings Limited has
provided a guarantee to the Principal and certain other parties
in respect of the Developer's obligations under this Agreement.
PART 4
REPRESENTATIVES
4.1 DEVELOPER'S REPRESENTATIVE
The Developer shall appoint and at all times have a
representative to exercise its powers, duties, discretions and
authorities under the Agreement. The Developer's representative
shall be the person stated in Annexure A. The Developer's
representative shall not be changed without the Principal's
approval.
4.2 PRINCIPAL'S REPRESENTATIVE
The Principal shall appoint and at all times have a
representative to exercise its powers, duties, discretions and
authorities under the Agreement. The Principal's representative
shall be the person stated in Annexure A or such other person as
may be advised in writing.
The Principal shall not communicate directly with the Design and
Construction Contractor, subcontractors, consultants or suppliers
engaged by the Developer or the Design and Construction
Contractor in regard to any matter for which the Developer is
responsible under this Agreement, without prior advice to the
Developer.
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17
PART 5
INSTRUCTIONS
5.1 INSTRUCTIONS
The Principal may give or issue instructions to the Developer
regarding the Project and the Developer shall be obliged to
comply with all such instructions provided that such instructions
are within the scope of the Agreement.
PART 6
NOTICES
6.1 SERVICE
All correspondence (including notices) shall be deemed to have
been served:
(a) if delivered personally, upon delivery to the recipient;
(b) if sent by facsimile machine, upon successful transmission
to the Developer or the Principal;
(c) if sent by post, upon the expiration of three (3) days
following the date of posting.
6.2 DELIVERY
All correspondence (including notices) shall be hand-delivered or
directed to the addresses or facsimile numbers as stated in
Annexure A, or as otherwise advised in writing by either party.
PART 7
DOCUMENTATION AND PROJECT CONTROL GROUP
7.1 PROJECT CONTROL GROUP
During the Project, the Developer shall convene monthly meetings
of the Project Control Group.
7.2 REPORTS, ASSESSMENT AND APPROVALS
The Developer shall:
(a) Attend meetings of the Project Control Group.
(b) Report in writing to the Principal in a manner agreed with
the Principal. The report shall include sections dealing
with:
- legal;
- finance;
- market;
- design;
- documentation;
- consultants;
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18
- approvals;
- procurement;
- construction;
- quality assurance;
- completion;
- programme;
- delay (anticipated or forecast);
- forward planning;
- subcontractors;
- site safety;
- industrial relations;
- pre-opening and commissioning.
The report shall also include site photographs detailing
the progress of the construction, schedules of variations,
schedules of extensions of time and all certificates.
(c) Obtain, organise and present to the Principal information
including design documents which the Principal or the
Project's financiers may require in connection with the
the Project.
(d) Assess and report in the Project Control Group meetings
the progress of the Project, consideration of design
alternatives and how the design as developed reflects the
design intent described in the Agreement.
(e) Assess and report in Project Control Group meetings on any
variation, progress of construction and pre-opening
activities by the Operator and time for completion.
(f) Assess and report in the Project Control Group meetings on
all aspects of the project's development programme
including any potential delays and appropriate strategies
to avoid or minimise them.
(g) Provide advice to the Principal as to such other matters
as may be required.
(h) Provide documents and information to the Casino Authority
and comply with all other design and construction
obligations of the Principal under the Casino Agreements.
(i) Procure each Design Consultant to prepare and provide to
the Principal (at no additional cost to the Principal)
reports on a monthly basis throughout the execution of the
Project. Each report shall report upon such matters as the
Principal may reasonably request including the quality of
the Project and the compliance and uniformity of the
execution of the Project with the Development Proposal and
Project Briefs and Design Documents relevant to that
Design Consultant's commission.
(j) Provide to the Principal such information as it requires
for the purposes of the project advisory meetings held
pursuant to the Casino Agreements, and, if requested by
the Principal, attend such meetings and procure Design
Consultants to attend such meetings accompanied by a
representative of the Developer and the Design and
Construction Contractor.
(k) Use its best endeavours to procure a Planning Approval,
provided that the failure to obtain such approval where
the Developer has
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19
used its best endeavours shall not be a breach of this
Agreement by the Developer.
(l) Obtain any building approvals for the Project from the
relevant Authorities and procure all other Authorities
approvals required for the execution of the Project other
than approvals in respect of which the Project is exempt.
(m) Notify the Principal and the Casino Authority of meetings
with Design Consultants in relation to the development of
Design Documents and allow their representatives to
attend such meetings.
(n) Procure and provide to the Principal the certificates
issued by consultants in the form and at the times
contemplated by clause 5.14 of the Construction Lease and
the Construction Sub Lease.
7.3 DOCUMENTATION
(a) The Developer shall submit all Design Documents to the
Principal in a timely manner. The Developer will establish
a procedure for continuously communicating and consulting
with and will progressively deliver Design Documents to
and report to the Principal on design development to
allow the Principal to review the design, seek comments
from the Operator on relevant design matters, and comment
on Design Documents in accordance with the Design and
Construction Programmes. For the purposes of this
sub-clause Design Documents shall include documents
leading to documents for construction. In the course of
design development relating to Monetary Allowances the
Developer will, in consultation with the Principal,
progressively refine and adjust the design so that the
cost plan for the Monetary Allowances remains within the
total of the Monetary Allowances consistently with the
design objectives of the Principal to the extent they can
be accommodated, with the objective of establishing
Monetary Allowance packages for submission to tenderers
in accordance with Part 12.
(b) The Principal shall review all Design Documents submitted
to it and shall provide the Developer with comments on the
documentation or approve it for use as being suitable for
the operation and management of the Sydney Casino.
(c) The giving of any approval by the Principal shall not
relieve or reduce the Developer's responsibility for the
execution of the Project in accordance with this
Agreement.
(d) The Developer must not amend any document approved in
accordance with this clause without resubmitting the
amended document in accordance with the procedure set out
in this clause.
(e) The Principal shall provide all comments or approvals
within 7 days of a request for approval by the Developer
relating to the Temporary Casino and within 16 days of a
request for approval by the Developer in relation to the
Permanent Casino. If a response is not received by this
date, the approval is deemed to have been given.
(f) Once the Principal has given, or is deemed to have given,
its approval in respect of any part of the Project, any
subsequent amendment by the Principal to that approval
will deemed to be a Variation. However, if the need for
the amendment arose due to a
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20
deficiency in the Design Documents prepared by the
Developer, the Developer will not be entitled to any
extension of time or additional payment in respect of the
amendment.
(g) The Developer indemnifies the Principal in respect of any
infringement of any patent, registered design, copyright
or similar protected right by any of the Design Documents.
7.4 PRINCIPAL'S APPROVAL
If the Developer is required by this Agreement to submit to the
Principal any documents or proposal for approval, subject to the
time periods referred to in clause 7.3(e), the Principal shall do
all things within its control to provide such approval:
(a) in a timely manner; and
(b) so as not to prevent the Developer from carrying out its
obligations under this Agreement.
7.5 PROGRAMMING CONSULTANT
The Developer shall appoint an external programming consultant to
report to the Project Control Group on timing and progress of the
Works. Prior to appointing the external programming consultant
the parties shall agree and prepare a brief of the external
programming consultant's scope of works.
The role of the external programming consultant shall not impinge
on the respective rights and obligations of the parties under the
Agreement.
7.6 ARCHITECTURAL CONSULTANT
The Developer will ensure the Design and Construction Contractor
engages the Architectural Consultant to provide design and other
architectural consulting services contemplated by this Agreement.
If for any reason the appointment of the Architectural Consultant
is terminated representatives of the Principal, the Agent, the
Developer and the Design and Construction Contractor will meet to
seek to agree on a suitable replacement having regard to the
nature of the Project.
PART 8
QUALITY AND QUALITY ASSURANCE
8.1 QUALITY ASSURANCE
The Developer shall ensure that the Design and Construction
Contractor establishes and maintains a quality system which will
assure the Principal that the quality of the design, construction
and FFE shall comply with this Agreement. The proposed system
shall meet the requirements of AS3901.
The Design and Construction Contractor shall submit to the
Developer the quality plans for review on an on-going basis
commensurate with the development of the design in sufficient
time to allow the Project to be carried out in an orderly manner.
The quality plan shall be reviewed by Technical Resources Pty
Limited Quality Systems Group.
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21
In addition to the requirements of AS3901 the Developer (or its
appointed agent) shall carry out audits to verify the operation
and effectiveness of the quality system. The first audit shall
take place within four weeks of commencement on Site by the
Design and Construction Contractor and shall be followed by
regular audits at three monthly intervals unless otherwise
required.
8.2 WORKMANSHIP
The Developer shall ensure that the Project is executed so that
all workmanship and the design shall be of a kind which is both
suitable for its purpose and consistent with the nature,
character and use of the Sydney Casino as described in Annexure
C.
PART 9
DESIGN AND CONSTRUCTION PROGRAMMES
9.1 DESIGN AND CONSTRUCTION PROGRAMMES
The Design and Construction Programmes included in Annexure D
show the times within which it is proposed that the various parts
of the Project including all relevant design activities
(including the submission of documents for approval) and on-site
and off-site construction activities are to be executed. Where
possible they will also show the times for supply of items by the
Principal pursuant to clause 13.1.
The Developer shall regularly monitor the Design and Construction
Programmes. These documents shall be revised, if necessary, at
monthly intervals, or at such shorter intervals as may be
appropriate having regard to the Developers' progress and
performance as compared to its then current programme. The
Developer shall provide the Principal with copies of such updated
programmes.
Within 6 weeks of the Operative Date the Developer will submit to
the Principal a schedule of estimated progress payments based on
the Design and Construction Programmes and the Progress Payments
Control Document.
PART 10
SEPARABLE PORTIONS OF THE PROJECT
10.1 SEPARABLE PORTIONS OF THE PROJECT
Unless a contrary intention is expressed in the Agreement, for
all purposes the provisions of the Agreement shall apply to a
Separable Portion as if it were the only work included in the
Project. The Separable Portions are listed in Annexure A.
Additional Separable Portions may be agreed between the Principal
and the Developer for the purpose of facilitating handover and
occupation of the Project. The Developer acknowledges the
requirement of the Principal to have access to parts of the
Project prior to Completion in order to train staff and to be
able to comply with its obligations under the Casino Agreements
and will take steps to provide such access. Such access will be
in accordance with the Design and Construction Contractor's site
control policies and procedures.
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22
PART 11
ACCESS TO SITE
11.1 ACCESS PRIOR TO LICENSING DATE
The Principal shall use its best endeavours to arrange access to
the Site during the period from the Operative Date to the
Licensing Date for the purpose of the Developer or the Design and
Construction Contractor and their consultants, to carry out
design investigations, as and when required. A failure by the
Principal to provide such access will not entitle the Developer
to an extension of time unless the Principal has not used its
best endeavours.
11.2 ACCESS FROM LICENSING DATE
The Principal shall give the Developer full access to the Site
from the Licensing Date.
11.3 ACCESS FOR PRINCIPAL
The Developer shall allow the Principal, its representatives, the
Casino Authority or others authorised in writing by the Principal
or Casino Authority, access to any part of the Site at any time,
subject to those authorised personnel complying with the Design
and Construction Contractor's site control policies and
procedures. These site control policies and procedures will be
reasonable and will not specifically preclude the Principal from
giving the Casino Authority and its representatives access to the
Site in accordance with the requirements of the Casino Agreements
provided the site control policies and procedures are complied
with.
11.4 ACCESS TO OTHERS
Without limiting the generality of clause 21, the Developer shall
provide the Principal, the Operator and the Tenants access to
areas of the Project when reasonably directed in writing by the
Principal including but not limited to the times prior to
Completion in accordance with clause 3.10 of the Development
Proposal and Project Brief for the Permanent Casino and as
nominated in Annexure A for the purposes of Fitout, Commissioning
and Operator's Commissioning. The Principal, the Operator and the
Tenants shall comply with the Design and Construction
Contractor's site control policies and procedures. The Developer
shall not be responsible for acts, defaults or omissions of
persons brought on site by the Principal, the Operator and the
Tenants.
PART 12
MONETARY ALLOWANCES
12.1 MONETARY ALLOWANCES
Monetary Allowances shall not by themselves be payable by the
Principal but shall be dealt with as follows:
(a) where at the direction or approval of the Principal the
work or item to which a Monetary Allowance relates is
performed or supplied by the Developer or the Design and
Construction Contractor, the work or item shall be valued
under clause 16 except that the percentages
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stated in Annexure A for clause 16 shall not apply, and
where the Monetary Allowance is:
(1) a rate, the rate is exclusive of Indirect Costs
relevant to the work or item;
(2) a sum, the sum is exclusive of Indirect Costs
relevant to the work or item;
(b) where at the direction of the Principal the work or item
to which a Monetary Allowance relates is performed or
supplied by a subcontractor or a supplier then the
Principal shall pay the Developer the actual amount
payable to the subcontractor or supplier for the work or
item, without any added margin. In respect of work or
items to be performed or supplied pursuant to paragraph
(b) the following procedure shall apply:
(1) The Developer will obtain at least three tenders for
the performance of the work or item.
(2) Prior to calling tenders the Developer will prepare
in consultation with the Principal and provide to
the Principal a brief on the work or item and the
proposed terms of the contract and consult with the
Principal in respect of the persons from whom
tenders will be called and the form of the tenders.
(3) The Developer will include among the tenderers
anyone nominated by the Principal unless the
Developer reasonably believes such person is not
capable of performing the work or supplying the item
in accordance with this Agreement. If the Developer
reasonably objects to a tenderer proposed by the
Principal and the Principal confirms the nomination
the Developer must seek a tender from such tenderer.
If the tenderer defaults under its contract (for the
work the subject of the tender) then the Principal
must pay to the Developer as an adjustment to the
Contract Sum the amount of loss which the Developer
could not reasonably avoid. Nothing in this
sub-clause shall relieve the Developer from its
normal obligations to procure proper administration
of the tenderer's contract.
(4) The Developer will procure the calling of tenders
from the tenderers selected by it and nominated by
the Principal and will then procure negotiation as
may be appropriate with them to attempt to obtain
more favourable tenders and additional information.
The Developer will report in writing to the
Principal on the outcome of such negotiations and
provide a comparative review of and access to the
tenders as negotiated and a recommendation of the
preferred tenderer.
(5) The Developer shall advise the Principal whether
any, and if so what, contingency should be allowed
by the Principal and the specific reasons why that
contingency should be allowed. The Developer will
continuously monitor the adequacy of any contingency
and will advise the Principal if it is necessary to
adjust the contingency and the specific reasons why
that adjustment is necessary. The Developer may
recommend to the Principal that the work be
performed for a fixed lump sum which, if accepted by
the Principal, will be deemed to be the
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24
actual amount payable under clause 12.1(b) in respect
of the relevant item or work for the purposes of this
clause.
(6) After receiving such information the Principal must
direct the Developer which tenderer to accept or, if
desired in order to maintain the cost plan, further
adjust the design in consultation with the Developer
to achieve the necessary economies. If the Principal
fails to so direct or adjust within a reasonable
time the Developer will procure the acceptance of
the recommended tenderer.
(7) Both the Principal and the Developer must exercise
any rights or perform any obligations pursuant to
this clause promptly and in accordance with
reasonable time limits.
If the final aggregate amount of (a) and (b) above exceeds the
aggregate amount included in the Contract Sum for Monetary
Allowances, then the Principal shall pay the Developer as an
adjustment to the Contract Sum the amount calculated by
multiplying the percentage stated in Annexure A of such excess to
compensate the Developer and the Design and Construction
Contractor for their Indirect Costs.
PART 13
ITEMS SUPPLIED BY PRINCIPAL
13.1 ITEMS SUPPLIED BY PRINCIPAL
Where materials, goods or equipment have been supplied by the
Principal or its agent, the Developer shall arrange for the
Design and Construction Contractor to inspect and check the
materials, goods or equipment in order to ensure that they comply
with the Agreement. The Developer shall advise the Principal in
writing immediately upon receipt of materials, goods or equipment
which do not comply with the Agreement. The Principal shall
advise the Developer in writing of the requirements with regard
to such materials, goods or equipment in sufficient time such
that the orderly progress of the Project will not be delayed.
Where any such materials, goods or equipment contain defects
which should have been apparent on reasonable inspection but
which are not notified to the Principal by the Developer, the
Developer will be liable for any subsequent loss or damages,
arising from such defect, to the extent the loss or damage is not
covered by the warranty from the subcontractor, supplier or
manufacturer of the materials, goods or equipment.
13.2 NO WARRANTY
Where materials, goods or equipment have been supplied or have
been specified by brand name or by specific type of material by
the Principal or its agent, the Developer does not warrant or
guarantee the performance of those materials, goods or equipment
beyond the limits stated by the relevant subcontractors,
suppliers or manufacturers as the case may be.
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PART 14
INSURANCE
14.1 INSURANCE
(a) The Developer shall ensure that the Design and
Construction Contractor has effected or caused to be
effected the following insurances for the Project:
(1) professional indemnity and workers' compensation as
of the date of this Agreement;
(2) contractor's all risks and public liability
insurance prior to the commencement of work on Site;
(3) appropriate insurances by Consultants,
subcontractors, suppliers and others engaged by the
Developer and Design and Construction Contractor on
the Project.
(b) The Developer will ensure that the Design and Construction
Contractor complies with its obligations pursuant to
clauses 14.2, 14.3, 14.5, 14.6 and 14.7 of the Design and
Construction Contract.
(c) The Developer shall effect professional indemnity
insurance (in an amount of $70,000,000) with a vicarious
liability extension which requires the policy to respond
in the case of negligence on the part of the Developer,
the Design and Construction Contractor or a Design
Consultant (or some combination thereof) and workers
compensation insurances for the Project as of the date of
this Agreement.
(d) The Developer shall provide the Principal at the Date of
the Agreement with the details of the insurance cover
provided for the Project.
14.2 PLANT AND EQUIPMENT
The Developer will ensure that, throughout the currency of the
Project, insurance for constructional plant and equipment in
respect of the Project whether carried out by sub-contractors or
by the Design and Construction Contractor is maintained by the
plant and equipment owners.
14.3 SUB-CONTRACTORS
The Developer shall ensure that all sub-contractors maintain all
appropriate insurances including workers' compensation insurance.
14.4 CASINO AGREEMENTS
The Developer must ensure that all insurance required to be
effected by this clause in respect of the Project is in
accordance with the Principal's obligations set out in the Casino
Agreements provided that the Developer is not obliged to take out
any additional insurances including, without limitation, business
interruption or product liability insurance.
14.5 FACILITY AGREEMENT
The Developer must, in respect of the insurances required to be
effected by this clause comply with the Principal's financiers
requirements as
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26
detailed in Annexure J.
14.6 INDEMNITY
The Developer indemnifies the Principal against liability for
death or personal injury to persons and damage to or loss or
destruction of property arising out of the Project caused by the
negligence, omission or default of the Developer or any
subcontractor or consultant of the Developer. This indemnity will
be reduced proportionally to the extent that the injury or damage
is due to the Principal, the Operator or the Tenants.
14.7 DETAILS OF INSURANCE
The Developer must ensure that all insurance required to be
effected by clause 14.1(a)(1) and (2) and 14.1(c):
(a) includes a cross liability clause in which the insurer
agrees to waive all rights of subrogation or action
against any of the persons comprising the insured and for
the purpose of which the insurer accepts the term
"insured" as applying to each of the persons comprising
the insured as if a separate policy of insurance had been
issued to each of them (subject always to the overall sum
insured not being increased thereby);
(b) expressly provides that any breach of a policy term or
condition or any non disclosure or misrepresentation by an
insured or persons whose interest is noted on the policy
will not invalidate the cover in respect of other
insured's or persons whose interests are noted on the
policy;
(c) (except in respect of professional indemnity insurance)
notes the interests of the Principal, the Casino Authority
and the Agent by endorsement on the policy;
(d) is maintained throughout the term of this Agreement and,
in respect of the professional indemnity cover, for a
period of 6 years after the Date of Completion.
14.8 CARE OF THE PROJECT
Until the Date of Completion of the Project the Developer shall
be responsible for the care of the Project. After the Date of
Completion the Developer shall be liable for damage occasioned by
the Developer in the course of completing any outstanding work or
complying with its obligations under clause 18.3.
PART 15
TIME FOR COMPLETION
15.1 MINIMISE DELAY
(a) The Developer shall not be entitled to an extension of
time for Completion pursuant to clauses 15.2 and 15.3
unless:
(1) Completion might reasonably be expected to be
delayed.
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(2) The delay must involve a critical activity or
critical resource or other factor that the Developer
can demonstrate will be critical to Completion.
(3) The Developer has taken all reasonable steps to
avoid and minimise the delay.
(b) Where more than one event causes concurrent delays and the
cause of at least one of those events is not a cause
referred to in clause 15.2, to the extent that the delays
are concurrent, the Developer shall not be entitled to an
extension of time for Completion. The Developer will not
be entitled to allege time is at large as a consequence of
such non-entitlement.
15.2 EXTENSION OF TIME
Subject to clause 15.1, and subject to the Developer complying
with clause 15.9 in respect of the relevant event the Developer
shall be entitled to an extension of time to the Date for
Completion by an amount equal to the full extent that the delay
will be critical to Completion where the delay is caused by:
(a) acts, defaults or omissions by the Principal or those for
whom it is responsible (including, without limitation, any
acts, defaults or omissions by the Principal, the Operator
or the Casino Authority in respect of their various
obligations relevant to Completion);
(b) a breach of the Casino Agreements by the Casino Authority;
(c) a "Force Majeure" event;
(d) a Variation directed by the Principal in accordance with
this Agreement.
15.3 NOTICE OF DELAY
The Developer shall give written notice to the Principal of the
fact or likelihood of a delay as soon as it becomes aware of the
fact or likelihood and provide with the notice details of the
cause of delay and how the Project is likely to be delayed and if
the delay is concurrent with other delays.
The Developer shall give a written claim for an extension of time
to the Principal specifying the number of days claimed and
providing all necessary supporting information, including, if
applicable, the costs or estimated costs of the Developer of the
delay within fourteen (14) days after the cessation of the delay.
Where several delaying events or circumstances are concurrent and
such concurrence continues for a period exceeding one month, the
Developer shall provide to the Principal at monthly intervals
detailed statements quantifying the effect of such concurrent
delaying events and circumstances on the progress of the Project.
15.4 GRANT OF EXTENSION
The Principal shall as soon as reasonably practicable and in any
event not later then 28 days after receiving the Developer's
fully detailed claim pursuant to clause 15.3, determine what, if
any, extension of time to a Date for Completion shall be granted
to the Developer and shall thereupon notify the Developer in
writing accordingly.
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15.5 EXTENSIONS BY PRINCIPAL
If the Developer does not give:
(a) the written notice to the Principal of the fact or
likelihood of a delay for which the Developer is entitled
to an extension of time; or
(b) a written claim for an extension of time to the Principal;
within 45 days of the times required by clause 15.3, then the
Developer shall not be entitled to an extension of time and the
delay shall be deemed not to have occurred but the Principal may
in its absolute discretion (but shall not be obliged) at any time
by notice in writing addressed to the Developer extend a Date for
Completion if in its opinion the Developer would otherwise be
entitled to such an extension.
15.6 ACCELERATION
Where the Developer is entitled to an extension of time pursuant
to clause 15.2, the Principal may elect instead to direct the
Developer in writing to take such steps as the Principal
considers necessary to accelerate, expedite or reschedule
activities in order to ensure that the progress of the work is
maintained in accordance with the Design and Construction
Programmes. In this event, the Developer shall forego its
entitlement to an extension of time and shall comply with the
Principal's direction. The Developer shall be entitled to be paid
as an adjustment to the Contract Sum for all additional costs for
which the Developer is liable to pay as a result of such
direction. To assist the Principal in making any such direction
the Developer will, if requested by the Principal, advise the
Principal about possible alternatives for overcoming delays and
their estimated cost.
15.7 DELAY COSTS
(a) Subject to paragraph (b) of this clause the Developer
shall be entitled as an adjustment to the Contract Sum to
delay costs in respect of all extensions of time granted
other than those due (whether concurrently with other
delays or not) to the events referred to in clause 15.2(c)
in respect only of paragraph (e) of the definition of
Force Majeure.
Such delay costs shall be the total amount of all costs
and expenses including but not limited to Indirect Costs
other than profit proven to the reasonable satisfaction of
the Principal.
Any additional costs incurred by the Developer in respect
of a delay or disruption caused by a Variation shall be
included in the value of the Variation calculated in
accordance with clause 16.
(b) If the relevant Authority refuses to grant a building
approval or issues a conditional building approval and, in
either case, the Casino Authority directs the Principal to
appeal against the refusal or any one or more of the
conditions sought to be imposed the Developer will:
(1) not be entitled to delay costs in respect of the
first two months of any delay consequential on the
appeal; and
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(2) be entitled to an extension of time in respect of
any delay consequential on the appeal.
15.8 MILESTONES
If the Project is behind schedule as set out in the Design and
Construction Programmes such that any of the milestone events set
out below are more than 35 days behind schedule as a consequence
of an event other than a Variation or an event for which the
Developer is entitled to an extension of time, the Principal may
direct the Developer in writing to prepare and submit to the
Principal within 14 days a draft amended programme demonstrating
how the Developer can comply with its obligations under this
Agreement without acceleration and a report on any alternatives
to acceleration, their feasibility, ramifications and likely
costs. After careful analysis of all relevant facts the Principal
may then either direct the Developer to comply with the draft
amended programme or to accelerate the progress of the Project.
If so directed to accelerate the Developer must accelerate the
Project in order to achieve the schedule in the Design and
Construction programmes and will not be entitled to recover any
costs resulting from the direction to accelerate.
MILESTONES
1. Completion of Temporary Casino
2. Completion of Carpark Structure
3. Handover of LRT
4. Completion of Podium Structure
5. Completion of Structure including Towers
6. Completion of Facade Works
7. Completion of Permanent Casino
15.9 EXTENSION OF TIME UNDER CASINO AGREEMENTS
In addition to its other obligations under this clause, the
Developer must give notice to the Principal of all events
relating to the Project which would entitle the Principal to an
extension of time under the Casino Agreements and reasonably
assist the Principal with its claim under the Casino Agreements
whether or not the Developer is entitled to an extension of time
in respect of such event under this Agreement. All such
notifications must be given to the Principal in sufficient time
to allow the Principal to comply with the requirements of the
Casino Agreements for claiming an extension of time.
15.10 ACCELERATION BY DEVELOPER
If at any time the Developer elects to accelerate or alter the
sequence of the Project such that the time by which the Principal
must perform obligations under this Agreement is altered, the
Developer will notify the Principal of the impact on the
Principal's obligations, provided that the Principal may not, by
this process, be deprived of a reasonable opportunity to review
and make decisions about the Project without thereby giving rise
to entitlement to a claim by the Developer for time or money nor
of its rights under sub-clause 7.3(e).
15.11 ACCELERATION DIRECTED BY PRINCIPAL
The Principal may at any time direct the Developer to accelerate
the Project in order to achieve Completion by any reasonable
date. The
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Developer shall be entitled to be paid as an adjustment to the
Contract Sum for all additional costs for which the Developer is
liable to pay as a result of such direction. To assist the
Principal in making such direction the Developer will, if
requested by the Principal, advise the Principal about possible
alternatives for achieving acceleration and their estimated
cost.
PART 16
VARIATIONS
16.1 VARIATIONS
The Principal without invalidating this Agreement may instruct
the Developer to make Variations. All such instructions shall be
made in writing by the Principal.
16.2 PERFORMANCE OF VARIATIONS
(a) The Developer shall not vary the Project without the
agreement of the Principal. If the Developer considers
that a variation is required, notice in writing to that
effect shall be given to the Principal. If the Developer
considers that an instruction given by the Principal which
is not identified as a Variation, in fact constitutes a
Variation, the Developer must, reasonably promptly after
receipt of the instruction, notify the Principal in
writing.
(b) If a Variation is instructed by the Principal, the
Developer must before performing the varied work, and in
any event within a reasonable time after the instruction,
provide to the Principal in writing a price for the
Variation calculated in accordance with this Agreement and
details of any delay or disruption likely to result from
the Variation.
(c) Unless the Principal directs otherwise, the Developer must
not perform any Variation until the value of the Variation
and any extension of time has been agreed by the Principal
and the Developer.
(d) The value of variations shall be agreed within seven (7)
days of the date of instruction provided that failing such
agreement the value of the variation shall be as
reasonably determined by the Quantity Surveyor.
(e) If the Developer requests the Principal to approve a
variation for the convenience of the Developer, the
Principal may, in its absolute discretion, approve the
variation in writing. The Developer will not be entitled
to any extension of time or any additional payment in
respect of a variation approved for the convenience of the
Developer.
16.3 DEVELOPER PROPOSED VARIATIONS
If the Principal authorises a variation that has been proposed by
the Developer and such variation will result in a saving to the
Principal after all costs associated with the variation are taken
into account, the Principal will share equally with the Developer
50% of the said saving. The Principal is under no obligation to
authorise a variation proposed by the Developer.
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16.4 VALUATION OF VARIATIONS
Variations shall be valued by measuring the extent of the
variation and applying fair and reasonable rates and prices and
the Contract Sum will be adjusted accordingly. The valuation of
variations shall include the percentage for Indirect Costs set
out in Annexure A and the delay and disruption costs if any.
PART 17
PAYMENT
17.1 PAYMENT
Prior to the Licensing Date, payment shall be assessed by
reference to the Preconstruction Period Drawdown Schedule set out
under Annexure G. After the Licensing Date, payment shall be
assessed by reference to percentage completion and cost to
completion of the Project based on the Progress Payments Control
Document.
17.2 PROGRESS CLAIMS
On the last day of each month during the development of the
Project and at the Date of Completion the Developer shall submit
to the Principal a progress claim for payment by the Principal
which shall show:
(a) the value of work carried out which shall be assessed in
accordance with clause 17.1;
(b) the value of unfixed materials, goods and equipment
delivered to the Site for inclusion in the Project and the
value of unfixed materials, goods and equipment specially
manufactured or fabricated off-site for subsequent
inclusion in the Project, in respect of which all the
requirements of clause 17.4 have been met;
(c) the cost of the work to be carried out to bring the
Project to Completion and the cost of materials, goods and
equipment, still required to be purchased in order to
complete the Project (together the "Cost to Complete");
(d) the amount and the particulars of any adjustments to the
Contract Sum in the terms of the Agreement;
(e) the total amount previously paid by the Principal;
(f) the amount claimed by the Developer.
Each progress claim shall include:
(g) a statement signed by the Company Secretary of the Design
and Construction Contractor, certifying that all claims
due and payable to sub-contractors, suppliers and
consultants (other than claims in respect of the current
period) have been paid by the Design and Construction
Contractor; and
(h) a report in the form of Annexure I from all Design
Consultants confirming that all works carried out during
the period to which the progress claim relates have been
executed to the satisfaction of that Design Consultant in
accordance with the Development Proposal
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and Project Briefs, Design Documents and the requirements
of Authorities.
The Principal shall appoint WT Partnership or such other quantity
surveyor as the Developer shall nominate and who is acceptable to
the Principal and the Agent to inspect the Project and review the
Developer's progress claim.
17.3 PAYMENT CERTIFICATE
(a) Within five (5) business days of the receipt of the
Developer's progress claim the Quantity Surveyor shall
review the progress claim.
(b) If the Quantity Surveyor is satisfied with the correctness
of the progress claim it shall within five (5) business
days of receipt of the progress claim issue a payment
certificate to the Principal and the Developer in
accordance with the Project Certifier Deed. Within two (2)
business days after receipt of the payment certificate the
Principal will pay to the Developer the amount of the
payment certificate less any amount which is due and
payable from the Developer to the Principal under or in
connection with the Agreement. The Principal may dispute
the correctness of any payment certificate issued by the
Quantity Surveyor in accordance with the Project Certifier
Deed as if it were a dispute arising under clause 3.8(a)
of that Deed. However, pending resolution of any such
dispute the Principal must pay the full amount of the
payment certificate to the Developer in accordance with
this clause.
(c) If the Quantity Surveyor disputes the correctness of the
progress claim it shall within five (5) business days of
receipt of the progress claim issue a payment certificate
to the Principal and the Developer for the undisputed
amount and the provisions of clause 17.3(b) will apply to
this payment certificate. The Quantity Surveyor must
provide with the payment certificate reasons for the
disputed amount. The Developer, Principal and Quantity
Surveyor shall make all efforts to resolve any disputed
items as expeditiously as possible. However, the Developer
or Principal may at anytime refer the matter to dispute
resolution pursuant to the Project Certifier Deed.
(d) If, as at the date of any Progress Claim, the Contract Sum
less the Cost to Complete is less than the sum of the
total amount previously paid by the Principal to the
Developer and the amount claimed in the progress claim
(the "Shortfall"), the Quantity Surveyor in calculating
the amount to include in the payment certificate will
deduct the Shortfall from the amount which would otherwise
be payable to the Developer
(e) Any payment certificate issued by the Quantity Surveyor
pursuant to this Agreement will certify the Cost to
Complete as well as the amount payable to the Developer
and will otherwise be substantially in the form required
by the Agent, and addressed to the Principal the Agent and
the Developer.
(f) The obligation of the Principal to pay the Developer
pursuant to clauses 17.3(b) and (c) is subject to the
Developer providing to the Principal on the date of
payment statements dated that day and signed by the
Company Secretary of each of the Developer and the
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Design and Construction Contractor certifying that all
wages due and owing to their respective employees have been
paid.
(g) Notwithstanding the balance of this clause 17, from the
Opening of the Temporary Casino until the Determination
Date:
(1) the Developer will be entitled to submit to the
Principal progress claims for payment by the
Principal (in the form required by clause 17.2) on a
fortnightly basis commencing on the date which is
fourteen (14) days after the day on which the
Developer last submitted a progress claim under
clause 17.2; and
(2) the period of five (5) business days referred to in
clause 17.3 within which the Quantity Surveyor is
required to issue a payment certificate will be
reduced to three (3) business days.
17.4 UNFIXED MATERIALS
It is hereby agreed between the Principal and the Developer that:-
(a) subject to the Developer complying with the provisions of
this clause payment will be made in respect of off-site or
unfixed materials or goods.
(b) where the Developer has been paid by the Principal in
respect of off-site or unfixed materials or goods the
Developer must provide evidence to the reasonable
satisfaction of the Principal when those materials or
goods are incorporated into the Sydney Casino.
(c) the Developer shall only be paid for off-site or unfixed
materials and/or goods if the Developer complies with
either I or II below:
(I) the Developer provides to the Principal (or to the
Agent if so directed by the Principal) additional
security in the form of Annexure E in an amount in
Australian dollars equal to the payment claimed for
the off-site or unfixed materials; or
(II) (1) the Developer has provided to the Principal
evidence satisfactory to the Principal that
title in the materials and/or goods free of any
liens or encumbrances will pass to the Principal
on payment and if requested by the Principal
insured the goods in the name of the Principal
as well as the Developer; and
(2) the Developer has clearly marked or otherwise
delineated all such materials and/or goods to
be the sole and exclusive property of the
Principal; and
(3) the Developer has provided the Principal with a
written statement addressed to the Principal
and signed by the Developer, the Design and
Construction Contractor (if appropriate) and
the supplier of the materials and/or goods to
the effect that upon payment being made by the
Principal the property in such materials and/or
goods will rest in the Principal, and the
materials and/or goods will be available for
delivery to the Site when required.
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(d) All such materials and/or goods shall become the property
of the Principal upon payment by the Principal to the
Developer of the amount in respect thereof included in any
such progress payment and thereafter the Developer shall
not remove the same except for use in the Sydney Casino
(unless the Principal shall have in writing authorised
removal) but, the Developer shall remain responsible for
loss or damage thereto and for insuring such materials
and/or goods.
(e) Any payment in advance made as aforesaid shall be accepted
as having been made at the express request of the
Developer and the making of the payment shall not:
(1) import the implication that the materials and/or
goods in respect of which the advance payment is
made are satisfactory and will subsequently be
accepted by the Principal as being in accordance
with this Agreement when built, fixed or installed
into the Sydney Casino; or
(2) prejudice the right of the Principal to reject or
direct the removal of any material and/or goods
whether fixed or not that is not in accordance with
this Agreement.
(f) for the purposes of this clause 17, unfixed materials or
goods are materials or goods which are intended to become
fixed but have not been fixed at the relevant date.
17.5 FINAL STATEMENT
Within 28 days after the Date of Completion the Developer shall
submit a final statement showing the Contract Sum and the final
amount it considers is owing to the Developer which statement
will include any security held by the Principal and its exercise
or release in accordance with this Agreement together with all
documents required and reasonably necessary for calculation of
the amount to be certified, including all moneys which the
Developer considers to be due from the Principal under or arising
out of the Agreement or any alleged breach thereof.
Within seven (7) days of the receipt of the Developer's final
statement the Quantity Surveyor shall review the final statement
and issue a payment certificate to the Principal.
The amount identified by the payment certificate as owing to the
Developer shall become a debt due and payable by the Principal to
the Developer seven (7) days after receipt of the payment
certificate by the Principal except to the extent that any part
of such amount is already a debt due and payable pursuant to the
terms of this Agreement. Either party may dispute the correctness
of the payment certificate issued by the Quantity Surveyor
pursuant to this clause. However, pending resolution of such
dispute the Principal must pay the full amount of the payment
certificate to the Developer.
The obligation of the Principal to pay the Developer pursuant to
this clause is subject to the Developer providing to the
Principal on the date of payment statements dated that day and
signed by the Company Secretary of each of the Developer and the
Design and Construction Contractor, certifying that all wages due
and owing to employees of each of them have been paid.
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35
17.5A ESTIMATED FINAL STATEMENT
On or before the second last day of the Availability Period to
the Construction Facility under the Facility Agreement the
Developer must provide to the Principal in form and substance
satisfactory to the Agent a statement being the best estimate by
the Developer as to the final statement to be submitted under
clause 17.5. Before becoming entitled to payment of any amount
payable under clause 17.5 the Developer must provide an
acknowledgement to the Principal (in form and substance
satisfactory to the Agent) that upon receipt by the Developer of
that amount the Developer does not dispute that the payment
discharges the Principal from further payment to the Developer
with respect to the subject matter of the claim to which that
payment relates.
17.6 INTEREST
Either party shall pay to the other interest at the rate
specified in Annexure A on any moneys due and unpaid on any
account whatsoever pursuant to the Agreement from the due date
for payment until the date upon which payment is made. Interest
shall be compounded at monthly intervals.
17.7 EFFECT OF PAYMENT CERTIFICATE
Neither the issue of a payment certificate nor payment in respect
to the Certificate shall constitute approval of any work.
PART 18
COMPLETION AND DEFECTS LIABILITY PERIOD
18.1 COMPLETION
(a) The Developer shall complete the Project to the stage of
Completion on or before the Date for Completion. During
the performance of the Project the Developer shall develop
and implement, in co-operation with the Principal, a
Completion Action Plan.
(b) Prior to Completion, the Developer shall provide the
Principal and the Casino Authority with at least
twenty-eight (28) days written notice of the date when the
Developer estimates the Project will reach Completion. The
Developer may revise this date by further written notice
to the Principal and Casino Authority.
(c) The Principal, the Casino Authority, the Architectural
Consultant, the Developer and Design and Construction
Contractor must promptly but in any event prior to the
date notified by the Developer pursuant to clause 18.1(b)
jointly inspect the Sydney Casino at a mutually convenient
time. Prior to such inspection the Developer must provide
to the Principal and the Architectural Consultant a list
prepared by each Design Consultant identifying all items
(if any) which that Consultant believes requires attention
for the Project to reach Practical Completion. Following
such inspection each party may make submissions to the
Architectural Consultant.
(d) If the Architectural Consultant determines that the
Project has reached Completion, the Architectural
Consultant shall issue to each
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36
of the Principal, the Agent, the Developer and the Design
and Construction Contractor a Certificate of Completion. If
the Principal seeks to dispute the issue of such
certificate, the certificate will remain valid unless and
until it is determined otherwise in accordance with this
Agreement.
If the Architectural Consultant determines that the
Project has not reached Completion, the Architectural
Consultant shall issue to the Developer a list of items
which require attention by the Developer in order for the
Project to reach Completion. The Developer shall
immediately attend to the list of items, and after
attending to these items give a further notice to the
Principal and the Casino Authority.
(e) Clause 18.1(c)-(e) shall apply in respect of each notice
given by the Developer until the Architectural Consultant
is satisfied that the Project has reached Completion.
(f) If the Date of Completion of the Permanent Casino occurs
after the Date for Completion of the Permanent Casino
then, subject to clause 18.1(g), in respect of each day
after the Date for Completion of the Permanent Casino up
to the Date of Completion of the Permanent Casino the
Developer shall, on a weekly basis, on receipt from the
Principal of a certificate with detailed calculations, pay
to the Principal by way of liquidated and pre-ascertained
damages the lesser of:
(1) the amount stated in Annexure A; and
(2) the Principal's Delay Damages for that day.
(g) The amount payable by the Developer under clause 18.1(f)
will in no circumstances exceed the amount stated in
Annexure A.
(h) The Developer will not be liable to the Principal in
contract, tort (including but not limited to negligence)
or otherwise in respect of the late or delayed completion
of the Project, other than as provided in clause 18.1(f)
and (g).
(i) The Principal must take reasonable steps to mitigate
Principal's Delay Damages.
(j) If the Developer notifies the Principal of an anticipated
delay (as contemplated in paragraph (d) of the definition
of Principal's Delay Damages in clause 1.1) the Principal
shall as soon as possible, given its existing commitments,
reserve an amount of net operating profit after tax of the
Temporary Casino equal to the product of the average daily
amount of such profit since the opening of the Temporary
Casino multiplied by the notified length of the delay.
(k) If the Developer disputes a certificate issued under
clause 18.1(f), the Developer shall pay the amount
referred to in the certificate but may refer the dispute
thereafter for resolution in accordance with Part 20.
(l) The parties acknowledge that the amount payable under
clause 18.1(f) is a genuine pre-estimate of the
Principal's damage.
(m) If the Developer does not bring the Permanent Casino to
Completion within 270 days of the Date for Completion or
becomes liable to pay
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37
to the Principal by way of liquidated and pre-ascertained
damages the amount stated in Annexure A, the Principal may,
without prejudice to any other rights or remedies which the
Principal may have, by notice left at or forwarded by
certified mail addressed to the Developer, forthwith
terminate the Agreement.
18.2 AS-BUILT DRAWINGS AND MANUALS
Within 6 months after Completion the Developer must provide to
the Principal:
(a) a complete set of as-built drawings for the Sydney Casino
being, with respect to architectural and structural
drawings, 1:100 scale equivalent to building approval
standard documentation; and
(b) final and complete versions of all operation and
maintenance manuals.
18.3 DEFECTS LIABILITY PERIOD
Each Defects Liability Period stated in Annexure A shall commence
on the Date of Completion.
As soon as possible after Completion but in any event within six
(6) months after Completion, the Developer shall rectify all
defects, omissions, or faults in the Sydney Casino notified to it
as at Completion.
As and when requested by the Principal during the Defects
Liability Period the Developer will procure each of the Design
Consultants to prepare and provide to the Principal (at no
additional cost to the Principal) a list of the defects,
omissions and faults apparent in the Sydney Casino relevant to
that Design Consultant's commission.
At any time prior to the expiration of the Defects Liability
Period, the Principal may instruct the Developer to rectify any
defect, omission or fault in the Sydney Casino which exists at
Completion or which becomes apparent in the Defects Liability
Period. The instruction shall identify the defect, omission or
fault and shall state a reasonable date by which the Developer
shall complete rectification.
If the Developer fails to rectify any defect, omission or fault
by the reasonable date stipulated in the instruction, the
Principal may have the rectification work carried out by others
and the cost of the work will be a debt due and payable by the
Developer to the Principal.
The Developer shall carry out rectification work at times and in
such manner as will cause as little inconvenience to the
Principal, the Operator, patrons and occupants of the Sydney
Casino as is reasonably possible in accordance with a proposal
which has been submitted by the Developer and approved by the
Principal. Failing agreement between the parties as to a proposal
the issue shall be resolved in accordance with clause 20.
18.4 CERTIFICATES
The Developer shall obtain and provide to the Principal prior to
the expiration of the Defects Liability Period all certificates
issued by relevant Authorities and consultants including a
building certificate under the Local Government Act 1993 (NSW)
and other documents as set out in the Development Proposal and
Project Briefs, unless the reason for non-issue of any such
certificates is a matter for which under the Agreement the
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38
Principal is responsible. The Principal shall procure and provide
to the Developer the consent of the owner to enable such an
application to be made.
18.5 ISSUE OF CERTIFICATE OF FINAL COMPLETION
Prior to the expiration of the Defects Liability Period the
parties will jointly participate in a detailed inspection of the
Sydney Casino. Such inspection must be attended by the
Architectural Consultant and representatives of each of the
Principal, the Developer and the Design and Construction
Contractor with appropriate expertise and experience to locate
and identify defects, omissions and faults. These representatives
will prepare, during such inspection, a detailed list of all
identified outstanding defects, omissions and faults to be
rectified.
Within fourteen (14) days of the expiration of the Defects
Liability Period, provided the Developer has rectified all
defects, omissions or faults notified to it and has provided to
the Principal a certificate signed by the Architectural
Consultant certifying that all defects have been satisfactorily
rectified and provided the Developer has satisfied all its
obligations under this Agreement, the Principal shall issue a
Certificate of Final Completion to the Developer.
18.6 EFFECT OF CERTIFICATE OF FINAL COMPLETION
Unless either party not less than twenty-eight (28) days after
the issue of the Certificate of Final Completion serves a notice
of dispute on the other party, the certificate shall be evidence
in any proceedings arising out of this Agreement that the Project
shall have been completed in accordance with the terms of this
Agreement to the reasonable satisfaction of both the
Architectural Consultant and any Quantity Surveyor appointed by
the Principal and that any necessary effect has been given to all
the terms of this Agreement which require an adjustment to be
made to the Contract Sum except in the case of:
(a) fraud, dishonesty or deliberate or fraudulent concealment
relating to the Project or any part thereof or to any
matter dealt with in the said certificate;
(b) any accidental or erroneous inclusion or exclusion of any
work or materials, goods or figures in any computation or
any arithmetical error in such computation;
(c) any defect, including, without limiting the generality of
the foregoing, any omission, in the Project or any part
thereof which was not apparent at the end of the Defects
Liability Period; or
(d) any defect, including, without limiting the generality of
the foregoing, any omission, in the Project or any part
thereof which should have been reasonably apparent at the
end of the Defects Liability Period but in respect of
which the cost of rectification will exceed $10,000.
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39
18.7 DEFECTS
(a) After the end of the Defects Liability Period the
Developer indemnifies the Principal against all costs,
losses, expenses and damages which the Principal suffers
or incurs due to:
(1) any structural defect to the Sydney Casino (being a
defect to the columns, slabs, foundations, footings
or lift cores) prior to the date 10 years after the
Date of Completion; and
(2) any other defect to the Sydney Casino prior to the
date 5 years after the Date of Completion;
other than defects which should have been reasonably
apparent to the Principal at the end of the Defects
Liability Period and in respect of which the cost of
rectification will not exceed $10,000.
(b) The Principal will not be entitled to make any claim
against the Developer in contract, tort or otherwise in
respect of any relevant defect in the Sydney Casino after
the respective periods set out above.
18.8 ARCHITECTURAL CONSULTANT
For the purposes of this clause 18 only, "Architectural
Consultant" means Philip Cox Richardson Taylor & Partners Pty
Limited (ACN 002 535 891).
PART 19
TERMINATION ON DEFAULT
19.1 DEFAULT BY DEVELOPER
Subject to clause 19.2, if the Developer makes default in any one
or more of the following respects:
(a) if without reasonable cause it fails to proceed diligently
with the Project, or wholly suspends the carrying out of
the Project (other than in accordance with the Agreement)
before Completion thereof; or
(b) if it commits any other substantial breach of the
Agreement;
then the Principal may give a written notice left at or
forwarded by certified mail addressed to the Developer
specifying the default and,
(c) if the default is capable of remedy, the default is not
remedied to the satisfaction of the Principal within the
time specified in the notice, which must not be less than
twenty-one (21) days; or
(d) if the default is not capable of remedy, the Developer
does not comply with any requirements in relation to the
default or redress of the prejudice arising from the
default in the manner specified in the notice, whether by
the payment of compensation or damages or otherwise within
the time specified in the notice which must not be less
than twenty-one (21) days;
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40
then the Principal without prejudice to any other rights or
remedies may, within a further period of twenty-one (21) days, by
notice left at or forwarded by certified mail addressed to the
Developer, forthwith terminate the Agreement.
19.2 INSOLVENCY OF DEVELOPER
If the Developer has a winding up order made against it or
(except for the purposes of reconstruction of terms approved by
the Principal) passes or attempts to pass a resolution for
winding up or becomes a party to the appointment of or has an
official manager or receiver or receiver and manager or
administrator or mortgagee in possession appointed for the whole
or any part of its property or undertaking or becomes a party to
or attempts to enter into any composition or scheme of
arrangement which materially affects this Agreement then the
Principal may at any time give a written notice left at or
forwarded by certified mail addressed to the Developer specifying
the default, forthwith terminate the Agreement.
19.3 DEFAULT BY PRINCIPAL
(a) If the Principal commits a substantial breach of the
Agreement (other than a Financial Default) then the
Developer subject to the provisions of the Development
Agreement Side Deed may give a written notice left at or
forwarded by certified mail addressed to the Principal
specifying the default and if the Principal shall continue
such default for twenty-one (21) days after receipt of
such written notice then the Developer without prejudice
to any other rights or remedies may, within a further
period of twenty-one (21) days of such continuance, by
notice left at or forwarded by certified mail addressed to
the Principal, forthwith terminate the Agreement or
suspend the performance of its obligations under the
Agreement.
(b) If the Principal makes default in any one or more of the
following respects:
(1) if it fails to make a payment due to the Developer
in accordance with the Agreement; or
(2) if it fails to provide the Developer's Security in
accordance with clause 31;
then the Developer subject to the provisions of the
Development Agreement Side Deed may give a written notice
left at or forwarded by certified mail addressed to the
Principal specifying the default and if the Principal
shall continue such default for ten (10) days after
receipt of such written notice then the Developer without
prejudice to any rights or remedies may by notice left at
or forwarded by certified mail addressed to the Principal,
forthwith terminate the Agreement or suspend the
performance of its obligations under the Agreement.
19.4 INSOLVENCY OF PRINCIPAL
If the Principal has a winding up order made against it or
(except for the purposes of reconstruction on terms approved by
the Developer) passes or attempts to pass a resolution for
winding up or becomes a party to the appointment of or has an
official manager or receiver or receiver and manager or
administrator or mortgagee in possession appointed for the whole
or any part of its property or undertaking or becomes a party to
or
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41
attempts to enter into any composition or scheme of arrangement
which materially affects this Agreement then the Developer
subject to the provisions of the Development Agreement Side Deed
may at any time give a written notice left at or forwarded by
certified mail addressed to the Principal specifying the default,
forthwith terminate the Agreement.
19.5 PAYMENT ON TERMINATION
In the event of termination pursuant to Clause 19.3 or 19.4 and
without prejudice to any other rights which the Developer may
possess, the Developer shall be entitled to be paid by the
Principal:
(a) the value of all design, construction and commissioning
work executed at the date of termination;
(b) the cost of materials or goods ordered for the Project for
which the Developer shall have paid or which the Developer
is legally bound to pay;
(c) the reasonable cost of demobilisation from the Site.
19.6 RETURN OF DOCUMENTS
In the event of termination pursuant to clause 19.1 or 19.2 the
Developer will, promptly after such termination, provide to the
Principal all Design Documents held by it.
PART 20
DISPUTE SETTLEMENT
20.1 DISPUTE SETTLEMENT
(a) If a dispute arises out of or relates to this Agreement
(including any dispute as to breach or termination of the
Agreement or as to any claim in tort, in equity or
pursuant to any statute) a party to the Agreement may not
commence any court proceedings relating to the dispute
unless it has complied with the following paragraphs of
this clause except where the party seeks urgent
interlocutory relief.
(b) A party to this Agreement claiming that a dispute ("the
Dispute") has arisen under or in relation to this
Agreement must give written notice to the other party to
this Agreement specifying the nature of the Dispute.
(c) On receipt of that notice by that other party, the parties
to this Agreement ("the Parties") must endeavour in good
faith to resolve the Dispute expeditiously using informal
dispute resolution techniques such as mediation, expert
evaluation or determination or similar techniques agreed
by them.
(d) If the Parties do not agree within seven (7) days of
receipt of the notice (or such further period as agreed in
writing by them) as to:
(1) the dispute resolution technique and procedures to
be adopted;
(2) the timetable for all steps in those procedures; and
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42
(3) the selection and compensation of the independent
person required for such technique,
the Parties must mediate the Dispute in accordance with the
Mediation Rules of the Law Society of New South Wales and
the President of the Law Society of New South Wales or the
President's nominee will select the mediator and determine
the mediator's remuneration.
(e) If the Dispute has not been resolved pursuant to
paragraphs (b)-(d) above within 28 days of the notice
referred to in paragraph (b), or such longer period as the
Parties agree then:
(1) if the Dispute involves an amount less than
$10,000,000 either party shall request the Secretary
General of the Australian Commercial Disputes Centre
Limited to appoint a suitable person of good repute
and who is an expert in the area of Dispute or
difference to act as an independent consultant for
the purpose of resolving the matter in dispute or
difference. The independent consultant appointed
shall act as an expert and not as an arbitrator and
his decision shall be final and binding on the
parties. The fees of the independent consultant
shall be payable as directed by the independent
consultant.
(2) If the Dispute involves an amount equal to or
greater than $10,000,000 either party shall refer
the Dispute to arbitration by requesting the
Secretary General of the Australian Commercial
Disputes Centre Limited to appoint a suitable person
of good repute to act as an arbitrator. The parties
agree that the rules of evidence will apply to any
such arbitration and that the parties will be
entitled to legal representation.
20.2 DISPUTE SETTLEMENT UNDER THE DESIGN AND CONSTRUCTION
CONTRACT
Neither the parties to this Agreement nor any person appointed
pursuant to clause 20.1, will be bound by the determination of
any dispute under the Design and Construction Contract.
20.3 DETERMINATIONS BY CONSULTANTS
Where pursuant to the terms of this Agreement the Architectural
Consultant or Quantity Surveyor is required to determine any
matter they shall have regard to but will not be bound by any
agreements reached between the Developer and the Design and
Construction Contractor.
The parties acknowledge that any dispute between them relating to
a determination under this Agreement by the Architectural
Consultant, Quantity Surveyor or other third party (other than
pursuant to this clause) may be resolved pursuant to this clause.
PART 21
CO-OPERATION WITH OTHERS
21.1 CO-OPERATION WITH OTHERS
Should the Principal require others to carry out work on the
Site, then the Developer shall give those personnel or
organisations reasonable access
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43
to undertake those works. Should the Principal require the
Developer to provide plant, equipment and facilities to
facilitate the work by others then to the extent that such plant,
equipment and facilities are on the Site and available for use,
the Developer shall do so at no cost to the Principal. Should
it be necessary to bring to the Site or re-establish the
necessary plant, equipment or facilities then the Developer shall
do so and be reimbursed the costs of so doing as an adjustment to
the Contract Sum.
PART 22
SITE CONDITIONS
22.1 PERMANENT SITE CONDITIONS
(A) CONDITION OF SITE
The Developer acknowledges that it has inspected the
following reports and certificates and agrees that it
will, subject only to clause 22.1(d), accept the Site in
its present state and condition and that it will not be
entitled to terminate this Agreement or to seek
compensation from the Principal should any Contaminants be
found at any time on, in or under the Site and whether
referred to in the documents or not:
(1) letter from Envirosciences Pty Limited to
Metropolitan Demolitions Pty Limited dated 17
November 1992;
(2) letter from Envirosciences Pty Limited to
Metropolitan Demolitions Pty Limited dated 18
November 1992;
(3) letter from Envirosciences Pty Limited to
Metropolitan Demolitions Pty Limited dated 20
November 1992;
(4) letter from Envirosciences Pty Limited to
Metropolitan Demolitions Pty Limited dated 25 May
1993;
(5) letter from Envirosciences Pty Limited to
Metropolitan Demolitions Pty Limited dated 16 April
1993;
(6) letter from Envirosciences Pty Limited to
Metropolitan Demolitions Pty Limited dated 7
December 1992;
(7) letter from Envirosciences Pty Limited to
Metropolitan Demolitions Pty Limited dated 14
December 1992;
(8) letter from Envirosciences Pty Limited to
Metropolitan Demolitions Pty Limited dated 8 January
1993;
(9) notice under section 35, Environmentally Hazardous
Chemicals Act dated 3 May 1990 addressed to
Electricity Commission of NSW;
(10) notice under section 35, Environmentally Hazardous
Chemicals Act, Annexure 1, dated 17 April 1990
addressed to Electricity Commission of NSW;
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44
(11) notice under section 35, Environmentally Hazardous
Chemicals Act, Annexure 2, dated 27 April 1990
addressed to Electricity Commission of NSW;
(12) notice under section 35, Environmentally Hazardous
Chemicals Act, Annexure 3, dated 13 February 1991
addressed to Electricity Commission of NSW;
(13) City West
Redevelopment Project
Master Plan No 1, Area 2 - Site Assessment Report,
Pyrmont, New South Wales, February 1994, Volumes I
and II prepared by AGC Woodward-Clyde Pty Limited;
(14) preliminary report
Soil Conditions Former Pyrmont Power Station
28 February 1994
The Principal does not warrant the accuracy of the
abovementioned documents and the Principal shall not be
liable for any errors or omissions in the documents.
Subject only to clause 22.1(d), the Developer hereby
releases the Principal for any costs, claims, demands,
losses, expenses or judgments that the Developer may
suffer or incur from the presence of any Contaminants in,
on or under the Site and whether known or not known and
any contamination, pollution, material degradation or
material harm to the Environment (as defined in clause
22.1(d)) or any breach of Environmental Laws (as defined
in clause 22.1(d)) . This release shall continue after
expiration or sooner determination of this Agreement.
(B) SITE CONDITIONS
Subject to clause 22.1(d), the Developer acknowledges that
no representation or warranty is or has been given by or
on behalf of the Principal:
(1) As to the Site or any structure on the Site
including, but not limited to the nature, geology,
condition or state of repair of the Site or any
structure on the Site;
(2) with respect to the suitability of the Site for the
Project or the Works; and
(3) in relation to the completeness of:
(A) any technical surveys of the Site provided to
the Developer or the Design and Construction
Contractor; or
(B) any other documents provided to the Developer
or the Design and Construction Contractor in
relation to the Site.
(c) Not used.
(d) INDEMNITY FOR ENVIRONMENTAL MATTERS
(1) In this clause 22.1(d) the following terms have
these meanings:
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45
"Environment" includes all aspects of the
surroundings of human beings including, without
limitation:
(i) the physical characteristics of those
surroundings such as the land, the waters
and the atmosphere;
(ii) the biological characteristics of those
surroundings such as the animals, plants
and other forms of life; and
(iii) the aesthetic characteristics of those
surroundings such as their appearance,
sounds, smells, tastes and textures.
"Environmental Laws" means current laws for
protection of the Environment against
contamination or pollution of air or water, soil
or ground water, chemicals, pesticides,
hazardous substances, the ozone layer, public
health, hazardous waste, dangerous goods,
environmental hazards, or noxious trades and
enforcement or administration of any of those
laws (whether that law arises under statute or
pursuant to any notice, decree, order or
directive of any governmental entity).
This clause applies notwithstanding clause 22.1(a).
(2) The Principal warrants that following the excavation
contemplated by clause 22.1 (e):
(A) The Casino Authority is not nor will the
Principal be in actual violation of any
Environmental Laws nor has it received written
notice of any alleged violation of any
Environmental Laws, arising from or in
connection with the Site (except insofar as it
has received the reports and associated
documents listed in clause 22.1(a)) nor is the
Principal aware of any claim, judgment,
enforcement action or the like regarding any
actual or alleged presence of substances on the
Site, the migration of substances emanating
from the Site on to other land or waters or the
violation of any Environmental Laws.
(B) There is no substance present in, on or under
the Site which would give rise to any liability
the value of which would exceed $50,000
(including, without limitation, damages,
penalties, clean-up or related orders, costs,
injunctive relief or enforcement orders of any
kind) under Environmental Laws nor which may
become or give rise to such a liability in the
future.
(C) The Site following the excavation contemplated
in clause 22.1(e) is safe and without risk to
the health of persons.
(D) Occupation and use of the Site following the
excavation contemplated in clause 22.1(e) will
not breach any Environmental Laws.
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46
(3) INDEMNITY
The Principal shall indemnify and keep indemnified
the Developer harmless from and in respect of any and
all damages, suits, claims, penalties, losses,
liabilities and expenses (including, without
limitation, all engineering, accounting, legal and
other expenses) which may be imposed upon or incurred
by or asserted against the Developer within the
twenty-five (25) year time period referred to in
sub-clause (4) by any other person (including,
without limitation, any governmental entity,
landowner, employee, independent contractor, invitee
or any other person) arising out of or in connection
with any contamination, pollution, material
degradation or material harm to the Environment or
any breach of Environmental Laws or any of the
warranties at sub-clause (2) involving any substance,
material or waste on or under the Site at the date of
this Agreement which is peculiar to the Site and not
commonly present in such quantities in the
Environment and which quantities are of such nature
or concentration as would potentially lead to the
Environmental Protection Authority requiring or
ordering site investigations or remedial action.
(4) PERIOD OF WARRANTIES
The warranties and indemnity provided by this clause
will remain in force for a period of twenty-five (25)
years from the date of this Agreement.
(5) RELIANCE
The Principal acknowledges that the Developer intends
to give exactly corresponding warranties and
indemnities to, inter alia, the Design and
Construction Contractor and agrees to indemnify the
Design and Construction Contractor against any or all
damages, suits, claims, penalties, losses,
liabilities and expenses (including, without
limitation, all engineering, accounting, legal and
other expenses) which may be imposed upon or incurred
by or asserted against the Design and Construction
Contractor by any other person (including, without
limitation, any governmental entity, landowner,
employee, independent contractor, invitee or any
other person) arising out of or in connection with
any breach of the Developer's warranty or loss or
liability pursuant to its indemnity.
(6) SURVIVAL OF WARRANTIES AND INDEMNITY
The warranties and indemnities given by the Principal
in this sub-clause 22.1(d) shall continue for the
full period of twenty-five (25) years referred to in
sub-clause (4) and for that purpose shall survive the
expiration or sooner determination of this Agreement.
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47
(e) The Principal must cause the Site to be excavated to the
levels and dimensions identified in Annexure L ("Bulk
Excavation") prior to the Licensing Date.
(f) The references to Site in this clause 22.1 means the Site
for the Permanent Casino.
22.2 TEMPORARY SITE CONDITIONS
(a) The Developer acknowledges that it is aware that the Site
is contaminated as identified in the report of
Envirosciences Pty Limited of August 1993 ("Envirosciences
Report") and the report titled "Public Works City West,
Darling Island Site Investigation" prepared by
Woodward-Clyde Pty Limited of 7 April 1994
("Woodward-Clyde Report").
(b) The Principal and the Developer acknowledge that the
Envirosciences Report discloses the existence of asbestos,
polychlorinated biphenyls, synthetic mineral fibres and
lead within the improvements erected upon the Site
("Envirosciences Contaminants"). The Principal must cause
the Envirosciences Contaminants to be removed from the
improvements in an appropriate manner (or in the case of
lead the same may be painted over) on or before the Lease
Commencement Date of the Construction Sub-Lease. If any
Contaminants are found in the improvements erected on the
Site other than the Envirosciences Contaminants (or
further contaminants of the same type) or if any notice is
issued by the Environmental Protection Authority in
relation to the Site then the Principal shall indemnify
the Developer against any costs, expenses, claims,
liabilities and losses suffered or incurred by the
Developer resulting therefrom.
(c) The references to Site in this clause 22.2 mean the Site
for the Temporary Casino.
22.3 CLAIMS
Subject to clauses 22.1, 22.2 and 24 the Developer assumes all
risks in relation to the conditions of the Site and its
surroundings including the subject matter of the Woodward-Clyde
Report and the Developer agrees not to take action or make any
claim for compensation or damages, costs or expenses other than
in accordance with or for breach of clauses 22.1 and 22.2 against
the Principal or any of its servants, agents or consultants in
relation to the condition of the Site and hereby releases each
such person from any such action or claim whether or not such
action or claim is known or foreseeable at the date of this
Agreement.
PART 23
INSPECTION AND TESTING
23.1 NOTICE
The Principal may, from time to time, give to the Developer
notice in writing that:
(a) the Principal proposes to carry out, during the progress
of the Project, inspections, measurements or tests; or
<PAGE>
48
(b) the Principal requires the Developer to carry out, during
the progress of the Project, inspections, measurements or
tests described in the notice.
Any notice given under this clause shall be given sufficiently in
advance of the proposed dates of completion of the work to be
inspected, measured or tested so as not to delay its completion.
23.2 INSPECTION AND TESTING
If the Principal gives to the Developer a notice pursuant to
clause 23.1;
(a) the Developer must ensure that no part of the Project
thereafter becomes inaccessible before any required
inspection, measurement or test is completed; and
(b) if the notice is pursuant to clause 23.1(a), the Developer
must permit the Principal or their respective agents to
carry out the inspection, measurement or test; or
(c) if the notice is pursuant to clause 23.1(b), the Developer
must carry out the inspection, measurement or test, in
accordance with the conditions set out in the notice and
at a time specified in the notice and must immediately
thereafter provide to the Principal a copy of the results
of the inspection, measurement or test; and
(d) if the results of the inspection, measurement or test
reveal that the Project complies with this Agreement then
the cost of any such inspection, measurement or testing
shall be added to the Contract Sum and, if not, the cost
shall be borne by the Developer.
23.3 NON-COMPLIANCE
If following any inspection, measuring or examination of the
Project the Project does not comply with the provisions of this
Agreement the Principal may by notice to the Developer specify:
(a) in what respect the Project does not comply; and
(b) what action must be taken to rectify the non-compliance
and the time within which that action is to be taken,
and the Developer must comply with such notice.
23.4 SUSPENSION
If the Developer fails for any reason to comply with a notice
given pursuant to clause 23.3 the Principal may, without
prejudice to any other right or remedy arising because of such
failure, by notice to the Developer direct the suspension of the
Project until the notice given pursuant to clause 23.3 is
complied with.
<PAGE>
49
PART 24
SERVICES
24.1 PERMANENT CASINO
(a) The Principal must use its best endeavours to ensure that
the Casino Authority uses its best endeavours to ensure
that all Authorities promptly and efficiently make
available, upon appropriate normal terms, including an
appropriate application by the Developer, if necessary,
services and utilities to, from and within the Site for
the Permanent Casino relating water, sewerage, drainage
and electricity to satisfy the loading requirements of the
Permanent Casino indicated in the Development Proposal and
Project Briefs.
(b) Subject to sub-clause (a) the Developer assumes the risk
in relation to services serving the Site for the Permanent
Casino.
24.2 TEMPORARY CASINO
(a) The Principal warrants that the services within, from and
to the Site for the Temporary Casino, including without
limitation, water, sewerage, drainage, electricity and gas
are located as indicated in and will satisfy the loading
requirements identified in the Development Proposal and
Project Briefs and will be sufficient for the development
of the Temporary Casino.
(b) The Principal indemnifies the Developer from and against
all losses, damages, costs and expenses incurred by the
Developer and the Design and Construction Contractor by
reason of the breach of the Principal's warranty under
this clause.
PART 25
CONFIDENTIALITY
25.1 CONFIDENTIALITY
All documents and information provided by one party to another
party under this Agreement must be kept confidential and not
disclosed to any person other than the Agent, other financiers
approached by the Agent in respect of the Project and the Casino
Authority without the consent of the other party unless:
(a) the information is in the public domain;
(b) disclosure is made to consultants to or financiers of the
party who are under an obligation not to disclose such
information; or
(c) disclosure is required by law.
25.2 TERMINATION
The obligation in clause 25.1 apply after termination of this
Agreement.
<PAGE>
50
PART 26
DESIGN AND CONSTRUCTION CONTRACT
26.1 BUILDING CODE OF PRACTICE
Any building contractor appointed by the Developer (including
Leighton Contractors Pty Limited) must comply with the New South
Wales Code of Practice for Construction.
26.2 OCCUPATIONAL HEALTH AND SAFETY PLAN
Any building contract entered into by the Developer (including
the Design and Construction Contract) must contain a provision
requiring the builder to prepare and comply with an occupational
health and safety plan which is acceptable to the Casino
Authority.
PART 27
WAIVER
27.1 WAIVER
No waiver by any party to this Agreement will be binding upon the
parties unless it is in writing. No waiver of one breach of any
term or condition of this Agreement will operate as a continuing
waiver unless expressed to so operate in writing.
PART 28
PLANNING APPROVAL
28.1 PLANNING APPROVAL
If, notwithstanding the best endeavours of the Developer, the
Planning Approval is not obtained within the time provided in the
Design and Construction Programme or if the Planning Approval, as
obtained, contains conditions not consistent with the Development
Proposal and Project Briefs, the Developer acknowledges that
notwithstanding any other provisions of this Agreement it will
not be entitled to extra costs by way of either delay costs or
Variations in respect of the first $1,000,000 of extra cost
incurred by the Developer as a result of the conditions
themselves or of the delay in obtaining the Planning Approval or
complying with the conditions attached to it.
PART 29
LIGHT RAIL WARRANTY DEED
29.1 LIGHT RAIL WARRANTY DEED
The Developer will execute and will procure the Design and
Construction Contractor to execute in favour of the owner of the
light rail works deeds of warranty at the times and in the form
contemplated by Clause 6.14 of the Construction Lease.
<PAGE>
51
The Developer will execute, and will procure the Design and
Construction Contractor to execute a power of attorney in
relation to the execution of the light rail warranty deeds at the
times and in the form contemplated by the Construction Lease.
Prior to the Principal conducting the negotiations contemplated
by Clause 6.14 of the Construction Lease the Principal shall
consult with the Developer and have due regard to its reasonable
requirements as to the form of the deeds. The Principal shall
seek to involve the Developer in all relevant negotiations and
shall act in good faith in protecting the Developer's interests
in such negotiations or any relevant dispute resolution process.
29.2 LIGHT RAIL WORKS
The Developer indemnifies the Principal for its liability under
clause 6.12 of the Construction Lease except to the extent to
which such liability is caused or contributed to by a breach by
the Principal of this Agreement or the Casino Agreements (not
being the Developer's conduct resulting in exercise by the Casino
Authority of that right).
PART 30
BUILDING SERVICES CORPORATION ACT, 1989
30.1 RESIDENTIAL BUILDING WORK AND SPECIALIST WORK
(a) Notwithstanding any term to the contrary, the Developer
must not do any residential building work or specialist
work forming part of the Sydney Casino.
(b) Any term of this Agreement which suggests that the
Developer is obliged to do residential building work or
specialist work means that the Developer must procure the
execution of the residential building work or specialist
work by entering into a contract with a Licensed
Contractor.
(c) This clause 30 will not relieve the Developer from any
liability under this Agreement. The Developer shall be
liable to the Principal for the acts and omissions of a
Licensed Contractor as if they were acts of the Developer.
PART 31
DEVELOPER'S SECURITY
31.1 On or prior to the Opening of the Temporary Casino the
Principal must provide to the Developer as security for
payment of amounts payable under this Agreement two
unconditional undertakings (the "Undertakings") in a form
acceptable to the Developer given by Australian banks (or
other financial institutions approved by the Developer)
each for an amount of twelve million dollars
($12,000,000).
31.2 In lieu of providing one of the Undertakings the Principal
may provide a duly completed and executed irrevocable
letter of credit in the form of Schedule 5 to the Facility
Agreement (allowing for partial drawings and with no
expiry date) issued by the Agent for
<PAGE>
52
an amount of twelve million dollars ($12,000,000) (the
"Letter of Credit").
31.3 The Developer may only make demands or requests for
payment under the Undertakings or the Letter of Credit at
the times and for the amounts referred to in this clause
31.
31.4 If the Principal fails to pay any amount payable under
this Agreement ("Unpaid Amount") within ten (10) business
days of the due date for payment the Developer may make a
demand or request for payment under each of the
Undertakings or alternatively one of the Undertakings and
the Letter of Credit (if it has been provided in lieu of
one of the Undertakings) each demand or request being for
an amount equal to one third of the Unpaid Amount.
31.5 The Developer must return the Undertakings and the Letter
of Credit (if applicable) to the Principal at the
Determination Date.
PART 32
REVIEWS
32.1 On a quarterly basis commencing on the day which is four
(4) months after the Opening of the Temporary Casino the
parties and the Agent must meet and review the
requirement for Fortnightly Progress Claims to continue
and for the Developer to continue to hold the Developer's
Security (the "Review").
32.2 The parties and the Agent must act in good faith in
conducting each Review and have regard, among other
things, to the free cashflow from the Temporary Casino (as
determined by the Principal and verified by the Agent) to
be applied after the Review from Gross Project Revenue (as
defined in the Facility Agreement) towards Completion (as
defined in the Facility Agreement).
PART 33
OTHER CONSULTANTS
33. If the Developer or the Design and Construction Contractor
engages a person in respect of the Project ("Engagement")
and that person is the subject of a nomination by the
Lessor under clause 5.8 of the Construction Lease or the
Construction Sub Lease the Developer must procure that
person to enter into a deed to the same effect as the
Copyright Assignment Deed in respect of the Engagement
within twenty (20) days of the Principal advising the
Developer of the nomination.
PART 34
CONSTRUCTION LEASE
34.1 If third alternative under clause 9.3 of the Construction
Lease or the Construction Sub Lease is adopted by the
parties to the Construction Lease or Construction Sub
Lease then the Developer
<PAGE>
53
shall, after notification by the Principal that the third
alternative has been adopted, promptly demolish the
improvements and clear the Site of all improvements,
structures, rubbish and debris.
34.2 If clause 34.1 applies then:
(a) the Developer will be entitled to be paid:
(1) the unpaid contract value of work completed prior to
the demolition (including any appropriate component
of the Contract Sum for profit);
(2) the cost of materials or services properly ordered
and intended for incorporation in the Project for
which the Developer has paid or is liable to pay;
(3) the reasonable cost of demobilisation and removal
from the Site of the Developer's tools, plant,
equipment and temporary buildings;
(4) all reasonable costs incurred in carrying out the
demolition and clearance; and
(5) a reasonable allowance for profit and off site
overheads in respect of the matters referred to in
sub-paragraphs (2) to (4); and
(b) the Developer will not be entitled to be paid for the work
under the Agreement which is not executed or any amount
for profit foregone in respect of the unexecuted work.
<PAGE>
54
ANNEXURE C
DEVELOPMENT PROPOSAL AND PROJECT BRIEFS
1. Development Proposal and Project Briefs for Temporary
Casino.
2. Development Proposal and Project Briefs for the Permanent
Casino complex including transfer of FF&E:
3. Room Data Sheets for:
(a) Temporary Casino;
(b) Permanent Casino.
4. Drawings prepared by the Architectural Consultant as
listed in this Annexure.
5. Indicative Site Control Policies and Procedures.
In case of any inconsistency between the above documents the
order of precedence shall be as set out above.
<PAGE>
ANNEXURE C
SYDNEY HARBOUR CASINO
A. PERMANENT CASINO
- Project Brief Issue G dated 22nd April 1994
- Room Data Sheets Issue D dated 22nd April 1994
- Architectural Drawings received as listed below:
CCA NO. DRAWING NO. TITLE
S1/2 J078/A/0049/SK/04 Site Plan
S2/2 J078/A/0065/SK/03 Site Landscape Plan
F1/12 J078/A/0053/SK/09 Floor Plan Level - 4 Carparking
F2/12 J078/A/0003/SK/14 Level - 3 Carparking
F3/12 J078/A/0004/SK/16 Level - 2 Carparking
F4/12 J078/A/0005/SK/15 Level - 1 Carparking
F5/12 J078/A/0006/SK/16 Back of House/
Pyrmont Street Level
F6/12 J078/A/0007/SK/16 Casino Level
F7/12 J078/A/0008/SK/12 Casino Mezanine Level
F8/12 J078/A/0087/SK/09 Podium/Roof Access
F9/12 J078/A/0009/SK/18 Private Gaming/
Function Rooms
F10/12 J078/A/0041/SK/07 Typical Hotel/
Apartments Floor
Plans(Lo Rise)
F11/12 J078/A/0103/SK/04 Typical Hotel/
Apartments Floor
Plans(Hi Rise)
F12/12 J078/A/0054/SK/05 Roof Plan
C1/5 J078/A/0011/SK/16 Section East-West
Section/Section AA
C2/5 J078/A/0027/SK/06 North-South
Section/Section BB
C3/5 J078/A/0119/SK/03 Showroom Theatre
C4/5 J078/A/0040/SK/06 Lyric Theatre
C5/5 J078/A/0127/SK/01 Casino Surveillance
Offices
E1/4 J078/A/0056/SK/07 Elevation Pyrmont Street
Elevation
E2/4 J078/A/0055/SK/07 Foreshore Road
Elevation
E3/4 J078/A/0057/SK/06 Jones Bay Road
Elevation
E4/4 J078/A/0126/SK/03 Edward Street
Elevation
SA1/7 J078/A/0098/SK/05 Back of House Level
SA2/7 J078/A/0058/SK/07 Casino Level
SA3/7 J078/A/0128/SK/01 Casino Mezzanine Level
SA4/7 J078/A/0097/SK/06 Private Gaming/Function Rooms Level
SA5/7 J078/A/0100/SK/03 Heritage Building
SA6/7 J078/A/0109/SK/03 Apartment Layouts
SA7/7 J078/A/0090/SK/02 Typical Hotel Guest Room
<PAGE>
*Lyric Theatre Sketches see LPPL Memo dated 17/3/94
B. TEMPORARY CASINO
- Project Brief Issue G dated 22nd April 1994
- Room Data Sheets Issue C dated 22nd April 1994
- Architectural Drawings received as listed below:-
CCA NO. DRAWER NO. TITLE
TS1/1 J078/A/1539/SK/02 Site Plan
TF1/2 J078/A/1536/SK/05 Ground Floor Plan
TF2/2 J078/A/1537/SK/05 Mezzanine & PPF Plan
TE1/1 J078/A/1540/SK/03 Elevations of Sections
LPPL/BRIEF/SK/001 Site Boundary Detail
LPPL/BRIEF/SK/002 Main Entrance Canopy Detail
NOTE: Details on drawings marked with an * take precedence over
details on other drawings.
<PAGE>
[Original on Leighton Properties Fax Transmission Cover Sheet]
LEIGHTON PROPERTIES
FAX TRANSMISSION
TO: Philip Cox Philip Cox, Richardson, Fax No: (02) 264 5844
Taylor & Partners
John Richardson
Karl Chee
Peter Longley Hillier Group
Colin Henson Ove Arup & Partners Fax No: (02) 261 2181
Bob O'Hea
Barry Webb Barry Webb & Associates Fax No: (02) 418 1191
Gary Lowe
Phil Turner Bruce Arundell Fax No: (02) 929 7986
& Partners
George Koutoulas
Robert Fitzell Robert Fitzell Fax No: (02) 498 7788
Acoustics
G. Gallagher TRACT Fax No: (02) 954 3825
Steve Calhoun
John Frost Cini Little Pty Limited Fax No: (02) 418 8335
Ashley Colley WT Partnership Fax No: (02) 957 3161
Tony Makin
Peter Rixon Vision Fax No: (07) 870 1002
David Bird Fax No. (03) 614 8612
Howard Tanner Howard Tanner & Fax No: (02) 281 4337
Associates
Roger Hale TWA Fax No: (02) 436 4127
David Weatherall
Mark Bouton Leighton Contractors Fax No: (02) 415 2509
Pty Limited (02) 233 3053
John Dunlop
_________________________________________________________________
FROM Andrew Cooper TEL NO: (02) 925 6080
DATE: 17 MAR 94 PAGES: 1+3
RE: SYDNEY HARBOUR CASINO
Lyric Theatre
Following review of Lyric Theatre Areas, the
following areas should be deducted from our
schedule of areas for 14 March 94 Drawings.
Regards,
ANDREW COOPER
<PAGE>
[4 Pages of Lyric Theatre Area Drawings]
<PAGE>
SYDNEY HARBOUR CASINO
ANNEXURE 'C'
SITE CONTROL POLICIES AND PROCEDURES
(PRO FORMA)
A. SITE VISITS - AGENT, PRINCIPAL, DEVELOPER AND C.C.A.
1. Report to Site Office
2. Complete Register of Site Visits
3. Visitor Identification Tag
4. Compliance with appropriate safety requirements, ie.
hats, boots, etc.
5. Return to Site Office and complete Visitor Register,
return hats, etc.
B. SEPARATE CONTRACTORS/OPERATOR COMMISSIONING
1. GENERAL CONDITIONS
- Crib and ablution facilities
- Carparking
- Service provision and charges, ie. power, water,
etc.
2. TRANSPORTATION (HORIZONTAL AND VERTICAL) OF GOODS AND
MATERIALS
- Access to builders lift, alimak and cranes
- Use of forklifts, type of forklift
- Use of pallet trucks
3. STORAGE AREAS
- Designated areas
- Storage compound requirements
- Storage compound size and location
4. RUBBISH REMOVAL
- Frequency
- Bin location
- Costs associated with failure to remove rubbish
Page 1 of 2
<PAGE>
SYDNEY HARBOUR CASINO
5. INDUSTRIAL RELATIONS
- Site Policy
- Compliance with Site Policy
- Details of individual employees
- Proof of payment of entitlements
- Employee identification
- N.S.W. Government-Code of Practice
6. OCCUPATIONAL HEALTH AND SAFETY
- Site Safety Policy
- Site Safety Induction/cost
- Tagging of electrical equipment
- Material safety data sheets
- Site Safety Committee
- O.H.&S. Act - specific project requirements
7. WORKING HOURS
- Normal working hours
- Overtime hours - procedure and notification
- R.D.O.
8. CO-OPERATION, CO-ORDINATION AND INTEGRATION
- Interface (direct and indirect) with Builder and
Builder's subcontractors
- Programme proposals
- Programme requirements
- Protection of existing works
- Damage to existing works
9. OBSTRUCTION TO SERVICES
- Avoidance of obstruction and damage to services
- Damage resulting from blocked drains, severed power
lines, etc.
- Repair and restoration
10. CONFIDENTIALITY
- Site photographs
- Site information disclosure
- Special requirements of Casino Site
Page 2 of 2
<PAGE>
55
ANNEXURE D
DESIGN AND CONSTRUCTION PROGRAMMES
1. Temporary Casino.
2. Permanent Casino.
<PAGE>
[Sydney Harbour Casino, Leighton Properties Pty Limited, Perm
Casino and Carpark Construction Drawings]
<PAGE>
56
ANNEXURE E
FORM OF SECURITY
Two Unconditional Bank Guarantees to be provided each for half of
the amount stated in Annexure A.
<PAGE>
ANNEXURE E
FORM OF SECURITY
COMMONWEALTH BANK OF AUSTRALIA
ACN 123 123 124
PROFORMA BANK GUARANTEE
Security Deposit Guarantee
To [Favouree] ..............................................
............................................................
Security Deposit by [Customer] .............................
At the request of the abovementioned Customer and in
consideration of the abovementioned Favouree at the request of
the Commonwealth Bank of Australia (hereinafter referred to as
the Bank) dispensing with the lodgement by the Customer of the
Security Deposit for:
............................................................
............................................................
............................................................
The Bank unconditionally undertakes to pay on demand any sum
which may from time to time be demanded by the Favouree to a
maximum aggregate sum of:
[Amount of Security Deposit].......................... ($.......)
The undertaking is to continue until a notification has been
received from the Favouree either that the Security Deposit is no
longer required by the Favouree or until payment to the Favouree
by the Bank of the whole of the said sum or such lesser sum as
may be required by the Favouree. Should the Favouree notify the
Bank that it desires payment to be made to it of the whole or any
part of the said Security Deposit, it is unconditionally agreed
that such payment or payments will be made to the Favouree
forthwith without further reference to the Customer and
notwithstanding any notice given by the Customer to the Bank not
to pay same.
Provided always that the Bank may at any time without being
required to do so pay to the Favouree the Security Deposit less
any amount it may have already paid hereunder and thereupon the
Bank's liability under this undertaking will immediately cease
and determine.
<PAGE>
The benefit of this guarantee is personal and not capable of
assignment.
Dated at .......... this ..... day of ................. 199..
For the Commonwealth Bank of Australia
.................................................
Branch
.................................................
Manager
<PAGE>
57
ANNEXURE F
Not used.
<PAGE>
58
ANNEXURE G
PRECONSTRUCTION PERIOD DRAWDOWN SCHEDULE
<PAGE>
ANNEXURE G
PRECONSTRUCTION DRAWDOWN SCHEDULE
Monthly Accumulative
$ $
1994 May 910,000 910,000
June 1,800,000 2,710,000
July 2,540,000 5,250,000
August 2,980,000 8,230,000
September 3,203,000 11,433,000
October 2,890,000 14,323,000
<PAGE>
59
ANNEXURE H
SCHEDULE OF MONETARY ALLOWANCES
<PAGE>
SYDNEY HARBOUR CASINO
SCHEDULE OF MONETARY ALLOWANCES
FILE: SHC05
DATE:22APR94
ISSUE: M
PERMANENT TEMPORARY
ITEM CASINO(S) CASINO(S) TOTAL(S)
1 Theming & FOH finishes 43,300,000 2,650,000
2 Landscaping - Casino 4,500,000 800,000
3 Landscaping - Street 400,000
4 Landscaping - Roof + 4,800,000
F/shore terrace
5 Kitchen & Bar Equipment# 6,550,000 3,300,000
6 Specialist Lighting 5,500,000 1,000,000
- Internal (VLS)
7 Specialist Lighting 2,500,000 250,000
- External (BWA)
8 Showroom Theatre - 4,240,000
Lighting & Equipment
9 Lyric Theatre - Lighting 1,500,000
& Equipment
10 Banquet & Function 500,000
rooms - L&E
11 Building Identification 650,000 350,000
Signage
12 Directional & Internal 650,000
Signage
13 Car Park Controls 350,000 70,000
14 Roof/Water Features at
Casino Roof inc
Rainbow Serpent 1,800,000
Glass Tower
Hydraulics 2,430,000
Electrical 900,000
Specialist 1,080,000
Lighting
Special Features 450,000
Membrane to 500,000
feature
7,160,000
15 Lift Car Finishes 380,000 40,000
(FOH Lifts x 17no/
16 Showroom Fitout of 1,500,000
Auditorium-Seats+
Finishes
17 Lyric Fitout of Auditorium 3,000,000
- Seats+Finishes
18 Charter Boat Wharf 750,000 0
19 Sydney Electrical Lighting 3,000,000
Station Refurbishment
20 Joinery - Casino Cage,coin 1,500,000 250,000
coin rdmpn,sec pod,cloak
21 Joinery - Hotel, Serv Apts 3,600,000
22 Acoustic Treatment 2,000,000
23 Facade - External + 24,500,000 1,750,000
Internal Skin
24 Pyrmont Bay Water Feature 4,000,000
25 Precinct Traffic Road 260,000
Signage Dynamic
26 Precinct Traffic Road 100,000
Signage Non active
27 Al fresco dining at 150,000
North end of T/C (roof)
28 Associated Precinct 1,360,000 300,000
Traffic Works (OAT)
29 Vidiscreen to Sports Bar 400,000
30 Reinstatement to Temp 60,000
Casino access
31 Handrail to Wharves 12+13 80,000
32 Roof features 1,300,000
TOTAL 130,250,000 11,050,000 141,300,000
33 FFE (Casino, Offices, 34,929,000 22,071,000 57,000,000
Hotel, Serv Apts)
Refer SHC8 (Issue H)
34 Allowance for Rise + Fall 5,200,000 5,200,000
TOTAL 170,379,000 33,121,000 203,500,000
LCPL is to allow for its preliminaries, indirect costs and design
fees separately in the base building price except for Items 25,
26, 28 whose allowance includes design fees.
# Kitchen allowance inclu transfer of equipment from Temp casino
<PAGE>
SYDNEY-HARBOUR CASINO
SCOPE OF WORKS FOR
SCHEDULE OF MONETARY ALLOWANCES
22 APRIL 1994
ISSUE B
THE CONTRACTOR IS DEEMED TO HAVE ALLOWED FOR INDIRECT COSTS AND
DESIGN FEES SEPARATELY IN THE CONTRACT PRICE, EXCEPT FOR ITEMS
25, 26, AND 28 WHICH INCLUDE AN ALLOWANCE FOR DESIGN FEES.
IF CONSTRUCTION PLANT AND/OR EQUIPMENT IS REQUIRED TO INSTALL ANY
WORK THE SUBJECT OF A MONETARY ALLOWANCE THEN:
(A) IF THE CONTRACTOR ALREADY HAS IN PLACE ON SITE APPROPRIATE
CONSTRUCTION PLANT AND/OR EQUIPMENT TO INSTALL SUCH WORK
THEN IT SHALL BE PROVIDED BY THE CONTRACTOR AT NO
ADDITIONAL COST TO THE DEVELOPER, OR
(B) IF CONSTRUCTION PLANT AND/OR EQUIPMENT IS REQUIRED TO BE
BROUGHT ON SITE SPECIFICALLY TO INSTALL SUCH WORK THEN THE
COST OF THE PLANT AND/OR EQUIPMENT SHALL BE TAKEN INTO
ACCOUNT IN VALUING THE COST SUCH WORK.
1. THEMING & FOH FINISHES:
The scope of this allowance includes for all work to supply and
install/construct/support:
(i) Finishes to floor, wall and columns
(ii) Bar and servery finishes.
(iii) Ceilings to the nominated FOH rooms as set out in the Room
Data Sheets.
(iv) Supplementary features, including internal landscaping, to
enhance the ambience of the nominated FOH rooms.
2, 3, 4 LANDSCAPING: PERMANENT CASINO
The scope of this allowance includes the supply and installation
of;
(i) Paving to
-Porte Cochere, -Foreshore Terrace steps,
-Through Site Link @ RL108.5, -External stair cases,
-LRT/Bus Coach setdown area, -Roof through site link and
-External colonnades, -Feature gravel to non
-Perimeter footpaths, trafficable rooves.
<PAGE>
(ii) Handrails and balustrades to:
-Terrace balconies
-Roof
-Foreshore Terrace Steps
-External stairs.
(iii) Soft landscaping to Foreshore Terrace Steps, Roof,
footpaths including associated structural container,
irrigation, soil, additional membrane over and above
horizontal roof membrane allowed by the Contractor.
(IV) Street furniture.
The Contractor has allowed for the necessary structural support
and drainage of all hard landscaping, and drainage from soft
landscaping where suspended.
LANDSCAPING: TEMPORARY CASINO
The scope of this allowance includes the supply and installation
of:
(i) pedestrian paving to selected entrance areas at the
Temporary Casino site
(ii) make good to existing Wharf Promenade pavement areas
(iii) soft landscaping
(iv) Street Furniture.
The Contractor has allowed for the necessary structural support
and drainage of all hard landscaping, and drainage from soft
landscaping where suspended.
5. KITCHEN & BAR EQUIPMENT:
The scope of this allowance includes the supply and installation
of equipment required to meet the Brief and as described in Cini
Little Room Data Sheets including:
- F&B equipment
- loose kitchen FFE
- shelving to coolrooms
but excluding shelving to Storerooms (included under FFE)
<PAGE>
6. SPECIALIST LIGHTING - INTERNAL:
The scope of this allowance includes the supply and installation
of all specialist, architectural lighting associated with
internal FOH areas (as defined in Room Data Sheets under "ESL5")
plus associated emergency and exit lighting to the respective
areas, controls and wiring from the relevant Distribution Board.
7. ETERNAL LIGHTING:
The scope of this allowance includes the supply and installation
of all architectural feature lighting to external public
landscape areas, illumination of buildings (floodlighting) and
footpath lighting, including associated controls and wiring from
the relevant Distribution Board. It shall include special
structures or posts required to support or contain the light
fitting.
8. SHOWROOM - LIGHTING & EQUIPMENT
The scope of this allowance includes the supply and installation
of the following works:
- Double purchase counter weight system
- Fire Curtain
- Stage Drapes
- House Curtain
- Cinema Screen
- Stage Communications & CCTV
- Stage Audio (Basic System)
- Stage Lighting (Basic System)
- 2 Offside Revolving Stages
- 2 Stage Elevators
- 1 Forestage Elevator
- 1 Catwalk Elevator
- 1 Rain Curtain
9. LYRIC - LIGHTING AND EQUIPMENT:
The scope of this allowance includes the supply and installation
of the following works:
- Double purchase counterweighting system
- Fire Curtain
- Stage Drapes
- House Curtain
- Cinema Screen
- Stage Communications & CCTV
- Stage Audio (Basic System)
- Stage Lighting (Basic System)
<PAGE>
10. BANQUET:
The scope of this allowance includes the supply and installation
of the following works:
- Lighting Droppers
- Stage Lighting (Basic System)
11. BUILDING IDENTIFICATION:
The scope of this allowance includes the supply and installation
of external identification signage to the Complex including
illumination, supports, controls and wiring.
12. INTERNAL & DIRECTIONAL SIGNAGE:
The scope of this allowance includes the supply and installation
of all directional and information signage to suit interior
decor, but excluding door name, number, statutory signage
(allowed for by the Contractor).
13. CAR PARK CONTROLS
The scope of works includes the supply and installation of boom
gates, ticket dispense machines, security controls magnetic card
readers, intercom equipment. (Construction of booths, plinths,
conduit, structure has been allowed for by the Contractor.)
14. ROOF/WATER FEATURES AT CASINO:
The scope of this allowance includes the supply and installation
of the following works:
(i) Additional structural work to support the roof/water
feature
(ii) Glass/Metalwork/masonry/etc to create the feature
(iii) Hydraulic works, including tanks, pumps, fittings and
piping, water treatment
(iv) Electrical works - including power and lighting, controls
and wiring
(v) Additional membrane, extra over to horizontal roof
membrane allowed for by the Contractor.
15. LIFT CAR FINISHES:
All internal lift car finishes (floor, wall, ceiling), lighting
and extra over treatment to lift control panel.
16. SHOWROOM AUDITORIUM FITOUT:
The scope of works includes the supply and installation of:
<PAGE>
(i) finishes to floor, walls
(ii) ceiling and ceiling finishes
(iii) tables and seats
(iv) baulstrading and handrails to steps
17. LYRIC AUDITORIUM FITOUT:
The scope of this allowance includes the supply and installation
of:
(i) finishes to floor, walls
(ii) ceiling and ceiling finishes
(iii) tables and seats
(iv) balustrading and handrails to steps
18. CHARTER BOAT FITOUT:
The scope of this allowance includes the supply and installation
of all work associated with the Charter Boat wharf to be located
at Pyrmont Bay:
(i) pontoon
(ii) superstructure
(iii) piling
(iv) connecting ramp
(v) lighting (from street system)
19. SELS BUILDING REFURBISHMENT:
The scope of work includes all refurbishment work to restore the
actual building from current condition to a completed, fitted
out, building including:
(i) cleaning and restoration of facade
(ii) repair and/or replacement of existing fenestration, and
new fenestration to east facade
(iii) repair/replace floors
(iv) repair/replace roof
(v) install new building services - electrical, hydraulic,
fire, mechanical, lifts, and security
(vi) fitout including finishes to floor, walls, ceilings as
described in the Room Data Sheets.
20. JOINERY - CASINO:
The scope includes for the supply and installation of all joinery
required to facilitate the operation of MGF and PGR including
those items listed in the Room Data Sheets.
<PAGE>
21. JOINERY TO HOTEL AND SERVICED APARTMENTS:
The scope includes for the supply and installation of:
(i) Hotel: Bedhead, vanity, wardrobe, luggage rack, minibar
and cupboards
(ii) Serviced Apartments: Bedhead, vanities, kitchen,
wardrobes, linen cupboard, laundry cupboards.
22. ACOUSTIC TREATMENT:
The scope of this allowance is to cover the works to be added to
contract price to achieve acoustic performance criteria as set
out in the Project Brief.
The following items have been included in the Contractor's price;
- - Separate Structure for Lyric Theatre
- - Acoustic treatment to Hotel and Serviced Apartments'
rooms/corridors
- - Side masonry walls to Lyric Auditorium to provide air gap
23. FACADE: PERMANENT CASINO
The scope of this allowance includes for the supply and
installation of the facade/perimeter wall elements to the project
(podium and towers) including:
(i) cast-in fixings
(ii) structural support system
(iii) external and internal skin, including finish of internal
skin and spandrel
(iv) glazing including openable windows to the towers
(v) internal and external sills
(vi) sunshading
(vii) balcony balustrading and "clip-on" balconies
(viii) cladding to columns
(ix) plant room enclosure
(x) flytower walls
(xi) terrace/balcony parapet walls
(xii) parapet walls at roof level
(xiii) building maintenance units to the towers, incorporating
fixed davits to top of towers
and as delineated on LPPL/Facade/SK1 - 11 attached (dated 14
April 1994)
<PAGE>
FACADE: TEMPORARY CASINO
The scope of this allowance includes all work necessary to
upgrade the existing facade of the Wharves 12 and 13 Building to
the designed quality of finish, as detailed on the relevant
contract drawings. The scope of works will include:
(i) new cladding as detailed (external and internal skin)
including finishes to internal skin
(ii) repair, paint and upgrading of external and internal skin
to facade elements that will be retained
(iii) new facade to Restaurant elements
(iv) enclosure to external services plant and equipment
but excluding Porte Cochere canopy which has been allowed for by
the Contractor in the Contract price.
24. PYRMONT BAY WATER FEATURE:
The scope of this allowance includes the supply and installation
of all equipment for the water feature located on the Foreshore
and in Pyrmont Bay including:
(i) hydraulic components - associated piping, pumps fittings
and controls.
(ii) electrical components - power and lighting, associated
controls and wiring.
25. PRECINCT TRAFFIC ROAD SIGNAGE - DYNAMIC
The scope of this allowance includes the supply and installation
of dynamic signage at a major intersection which will show the
carpark capacity of four nominated carparks including
computer/wiring from each carpark.
26. PRECINCT TRAFFIC ROAD SIGNAGE - NONACTIVE
The scope of this allowance includes the supply and installation
of all street signage required to implement the precinct and
local resident parking management scheme.
27. AL FRESCO DINING - TEMPORARY CASINO
The scope of this allowance includes the supply and installation
of:
(i) floor finish to structural slab
(ii) structure to support lightweight tensile membrane for
roof
(iii) tensile membrane
<PAGE>
28. ASSOCIATED PRECINCT TRAFFIC WORKS
The scope of this allowance includes for the following works:
(i) CWDC recommended changes:
- Ban right hand turns from Pyrmont Bridge Road into
Union Street and Edward Street.
- Full closure Pyrmont Street North.
- Linemarking and signage to denote one-way and two-way
operation of a number of roads.
- Replacement of roundabout at Jones Bay Road/Foreshore
Drive with a traffic signal control intersection on
opening of Permanent Casino.
(ii) Sydney Harbour Casino initiated improvements:
- Pier Street/Harbour Street/Goulburn Street improvements
- Slip lane to Darling Drive - extend left turn lane by
extending linemarking
- Pyrmont Bridge Road improve linemarking and
intersection arrangements.
- Edward Street/Union Street Intersection - Priority
Control and Pedestrian Provisions.
- Encourage truck traffic from Pyrmont Point sites to use
Foreshore Road North to access Bank Street (Load limits
etc).
- Signals at Foreshore road entry to Casino including
pedestrian crossings.
- Potential expenditure north of Jones Bay Road Foreshore
Road - if permitted by CWDC - and not covered by CWDC
proposed works ie interim pavement and lane marking
improvements if not constructed in early stages by CWDC
to allow car/bus parking and turnaround.
- Reopen Murray Street at Pyrmont Street/Allen Street and
signalise.
- Pedestrian crossings in Pyrmont Street and Jones Bay
Road.
Note: Temporary traffic management and signage during the
construction works of the two Casinos have been allowed for
by the Contractor.
(iii) Resident Amenity Plan
<PAGE>
29. VIDISCREEN
The scope of this allowance includes the supply and
installation of:
(i) 16 number Panasonic Multiscreen Video Projection
System (43"), or equal
(ii) Support structure for the units.
30. REINSTATEMENT TO TEMPORARY CASINO ACCESS
The scope of this allowance includes for all work to:
(i) Remove the canopy over the dining area.
(ii) Remove the temporary ramp.
(iii) Replace the access road and reinstatement with soft
landscaping on the south western elevation of the
Temporary Casino.
31. HANDRAIL WHARVES 12 AND 13
The scope of this allowance includes the supply and installation
of a safety handrail to comply with statutory requirements on the
eastern side of Wharves 12 and 13.
32. ROOF FEATURES:
The scope of this allowance includes the supply and installation
of:
(i) Towers' communication metalwork and support structure
(ii) canopies/awnings/trellage to terraces and public areas
(iii) Pyrmont Street entry awnings
excluding glazed rooves over porte cochere which have been
allowed for by the Contractor.
<PAGE>
60
ANNEXURE I
PRO FORMA DESIGN CONSULTANT'S REPORT (clause 17.2(h))
<PAGE>
ANNEXURE I (DEVELOPMENT AGREEMENT)
PROFORMA OF MONTH DESIGN CONSULTANTS REPORT
SYDNEY HARBOUR CASINO
Monthly Consultants Report for the month of___________
______________________ ("the Consultant") hereby certifies to
Leighton Contractors Pty Limited that to the best of the
Consultant's belief, from the Consultant's due provision of
services under and in accordance with the Consultancy Agreement
in respect of the above project (the Consultancy Agreement");
(i) The works of the said Project as depicted in all the
drawings, specifications, schedules and other documents
prepared by the Consultant and issued to Leighton
Contractors Pty Limited have been executed to the
satisfaction of the Consultant in accordance with with
the requirements for the Development and Project Brief (as
defined in the Consultancy Agreement), all relevant
Standards and Codes of Practice and the requirements of all
Authorities (as defined in the Consultancy Agreement) and;
................................................
DIRECTOR
(CONSULTANT)
<PAGE>
61
ANNEXURE J
FACILITY AGREEMENT INSURANCE REQUIREMENTS
<PAGE>
EXTRACT FROM FACILITY AGREEMENT - CLAUSE 14.2(1) - INSURANCE
The Borrower undertakes to:
(i) maintain or procure that there is maintained proper
and adequate insurances in an amount not less than
the full replacement value thereof or any lesser
amount approved by the Agent (acting on the
instructions of the Majority Participants) with
responsible and reputable insurance companies or
associations and in any case approved by the Agent
(acting on the instructions of the Majority
Participants which instructions shall not be
unreasonably withheld) for all the Secured Property
which is of a nature or kind capable of being
insured, with the relevant member of the Group as
being named insured or loss payee or endorsee or,
subject to the Transaction Documents, in the case of
a claim over $500,000 in respect of the Sydney
Casino Complex or any part of it, with the
Participants and the Working Capital Facility
Provider as loss payees or endorsees covering loss
or damage by earthquake, floods, cyclone, fire,
explosion or other risks for the time being and from
time to time customarily insured against by
companies engaged in similar businesses or in
similar areas or owning similar assets, and insure
against such other risks (including public liability
and business interruption insurance) which the Agent
(acting on the instructions of the Majority
Participants) may reasonably require (and for this
purpose the Agent and the Participants may, but
shall not be obliged to, rely upon the advice of any
insurance broker or adviser) in each case, to such
extent as is prudent or as the Agent (acting on the
instructions of the Majority Participants) may
reasonably require;
(ii) take out and maintain all proper insurance or
otherwise comply with the provisions of any
workmen's compensation laws or employers' liability
laws or other similar laws for the time being in
force, against liability on account of accident or
injuries to employees;
(iii) deposit with the Agent copies of the policy or
policies in respect of insurance referred to in
paragraphs (i) and (ii) above, deposit the originals
of those policies with the Agent upon request and
duly pay each premium when it becomes due and
payable, and deposit with the Agent a copy of the
receipt for such premium and ensure that each
insurance policy:
(i) provides that it may not be cancelled by any of
the insureds named therein without the prior
written consent of the Agent (acting on the
instructions of the Majority Participants) (but
the Agent shall not unreasonably withhold such
consent if proper policies in accordance with
this provision are substituted) and may not
lapse, be cancelled or avoided by the insurance
company for non payment of premiums or
otherwise until at least 15 days after the date
of written notice thereof to the Agent; and
(ii) contains a note of the interests of the
Participants, the Working Capital Facility
Provider and the Agent,
and provide the Agent with a copy of a certificate of
compliance issued by each insurer within 14 Business Days
after receipt by the Borrower.
<PAGE>
62
ANNEXURE K
PROGRESS PAYMENTS CONTROL DOCUMENT
<PAGE>
SYDNEY HARBOUR CASINO
ANNEXURE K
PROGRESS PAYMENT CONTROL DOCUMENT (PRO FORMA)
CONSTRUCTION ZONE
TRADE BREAKDOWN CARPARKS PODIUM TOWERS TEMPORARY
CASINO
16 Site Signage
17 Hoardings and
Temporary Fencing
18 Scaffolding
19 Dewatering
20 Demolition
21 Excavation and
Shoring
24 Piles and Piers
25 Concrete
26 Formwork
27 Reinforcement
28 Post Tensioning
29 Precast Concrete
30 Structural Steel
31 Metalwork
34 Tanking
35 Brickwork and
Blockwork
36 Carpentry and
Joinery
41 Curtain Wall
42 Windows and
Glazing
43 Metal Cladding
44 Roofing
50 Plastering
<PAGE>
SYDNEY HARBOUR CASINO
TRADE BREAKDOWN CARPARKS PODIUM TOWERS TEMPORARY
CASINO
53 Wall and
Floor Finishes
56 Painting
58 Furnishings
60 Builders Work (BWIC
with Services)
61 Hydraulic Services
62 Electrical Services
63 Security System
64 Mechanical Services
65 Fire Services
66 Lifts, Hoists and
Escalators
67 Kitchen, Bar and
Refrigeration
Equipment
73 Landscaping
76 External Works
79 Provisional Sums
79a (Breakdown of
provisional Sums)
91 Design and
Quality
Assurance
Other Trades as
Required
TOTAL
<PAGE>
SYDNEY HARBOUR CASINO
ANNEXURE K
PROGRESS PAYMENT CONTROL DOCUMENT (PRO FORMA)
CONSTRUCTION ZONE
TRADE BREAKDOWN EXTERNAL HISTORIC OTHER ZONES
WORKS BUILDING AS REQUIRED
16 Site Signage
17 Hoardings and
Temporary Fencing
18 Scaffolding
19 Dewatering
20 Demolition
21 Excavation and
Shoring
24 Piles and Piers
25 Concrete
26 Formwork
27 Reinforcement
28 Post Tensioning
29 Precast Concrete
30 Structural Steel
31 Metalwork
34 Tanking
35 Brickwork and
Blockwork
36 Carpentry and
Joinery
41 Curtain Wall
42 Windows and
Glazing
43 Metal Cladding
44 Roofing
50 Plastering
<PAGE>
SYDNEY HAROUR CASINO
TRADE BREAKDOWN EXTERNAL HISTORIC OTHER ZONES
WORKS BUILDING AS REQUIRED
53 Wall and
Floor Finishes
56 Painting
58 Furnishings
60 Builders Work (BWIC
with Services)
61 Hydraulic Services
62 Electrical Services
63 Security System
64 Mechanical Services
65 Fire Services
66 Lifts, Hoists and
Escalators
67 Kitchen, Bar and
Refrigeration
Equipment
73 Landscaping
76 External Works
79 Provisional Sums
79a (Breakdown of
provisional Sums)
91 Design and
Quality
Assurance
Other Trades as
Required
TOTAL
<PAGE>
SYDNEY HARBOUR CASINO
ANNEXURE K
PROGRESS PAYMENT CONTROL DOCUMENT (PRO FORMA)
CONSTRUCTION ZONE
TRADE BREAKDOWN TOTAL PER TRADE COMMENTS
16 Site Signage
17 Hoardings and
Temporary Fencing
18 Scaffolding
19 Dewatering
20 Demolition
21 Excavation and
Shoring
24 Piles and Piers
25 Concrete
26 Formwork
27 Reinforcement
28 Post Tensioning
29 Precast Concrete
30 Structural Steel
31 Metalwork
34 Tanking
35 Brickwork and
Blockwork
36 Carpentry and
Joinery
41 Curtain Wall
42 Windows and
Glazing
43 Metal Cladding
44 Roofing
50 Plastering
<PAGE>
SYDNEY HARBOUR CASINO
TRADE BREAKDOWN TOTAL PER TRADE COMMENTS
53 Wall and
Floor Finishes
56 Painting
58 Furnishings
60 Builders Work (BWIC
with Services)
61 Hydraulic Services
62 Electrical Services
63 Security System
64 Mechanical Services
65 Fire Services
66 Lifts, Hoists and
Escalators
67 Kitchen, Bar and
Refrigeration
Equipment
73 Landscaping
76 External Works
79 Provisional Sums
79a (Breakdown of
provisional Sums)
91 Design and
Quality
Assurance
Other Trades as
Required
TOTAL
<PAGE>
63
ANNEXURE L
EXCAVATION PLAN
<PAGE>
[Floor Plan Carparking Level-3]
<PAGE>
EXHIBIT 10.33
<PAGE>
AMENDED & RESTATED
SHOWBOAT MARINA
PARTNERSHIP AGREEMENT
<PAGE>
AMENDED & RESTATED
SHOWBOAT MARINA PARTNERSHIP AGREEMENT
TABLE OF CONTENTS
Page
1. Definitions 2
1.1 Affiliate 2
1.2 Agreement 2
1.3 Budget 2
1.4 Capital Account 2
1.5 Capital Budget 3
1.6 Capital Contribution 3
1.7 Carrying Value 3
1.8 Casino Facilities 3
1.9 Code 3
1.10 Commission 3
1.11 Comparable Companies 4
1.12 Development Expenses 4
1.13 Distributable Cash 4
1.14 Effective Date 4
1.16 Ground 4
1.17 Indiana Uniform Partnership Act 4
1.18 Interest 5
1.19 Losses 5
1.20 Managing Partner 5
1.21 Minimum Gain 5
1.22 Nonrecourse Deductions 5
1.23 Opening 5
1.24 Operating Budget 5
1.25 Partners 5
1.26 Partnership 5
1.27 Partnership's Auditor 5
1.28 Percentage Interest 5
1.29 Person 6
1.30 Project 6
1.31 Regulations 6
1.32 Vessel 6
2. Formation of the Partnership; Name; Applicable Law;
Etc. 6
2.1 Formation of Partnership 6
2.2 Applicable Law 6
2.3 The Scope of Partner's Authority 6
2.4 Business Purposes 6
2.5 Term of Partnership 7
-i-
<PAGE>
2.6 Principal Place of Business 7
2.7 Property of the Partnership 7
2.8 Certificate 7
2.9 Licensing 7
3. Funding of the Partnership 8
3.1 The Percentage Interest of Each Partner in the
Partnership 8
3.2 Capital Accounts 8
3.3 Return of Capital Contributions 9
3.4 No Priority 9
3.5 Preferential Return 10
3.6 Loans 10
3.7 (Deleted - no longer used) 10
3.8 Contributions 10
3.9 Failure to Contribute 11
4. Allocations and Distributions 12
4.1 Definitions 12
4.2 Allocation of Income, Gain, Loss, Deduction
(Including Depreciation), and Credit 12
4.3 Distributions and Investment of Cash 16
4.4 Development Fee 17
5. Management of the Partnership 18
5.1 Managing Partner 18
5.2 Restrictions 18
5.3 Actions Requiring Unanimous Consent of the Partners 19
5.4 Dealings with Affiliates 20
5.5 Removal of Managing Partner 20
5.6 Ground 20
5.7 Partnership Debts 20
5.8 Delegation of Authority 21
5.9 Other Ventures 21
5.10 Exculpation from Liability; Indemnification 21
5.11 Meetings of Partners 21
5.12 Reports 22
5.13 Partnership Development Financing 22
5.14 Management Agreement 24
6. Put Option 24
7. Transfer of Partner's Interest 25
7.1 Restrictions on Transfer 26
7.2 Right of First Refusal 26
7.3 Continuing Liability 26
8. PARTNER DEFAULT 27
8.1 Definition of Default 27
8.2 Defaults 27
8.3 Buyout Remedy 27
8.4 Injunctive Relief 28
9. Determination of Fair Market Value 28
-ii-
<PAGE>
9.1 Fair Market Value 28
10. Force Majeure 29
10.1 Force Majeure Defined 29
10.2 Actions to Resolve Force Majeure Events 29
11. Termination and Liquidation of Partnership 30
11.1 Termination 30
11.2 Winding Up and Liquidation 30
11.3 Bankruptcy or Insolvency; Involuntary Transfer 31
12. Disclosure of Other Business Interest Conflicts;
Business Opportunity 32
12.1 Other Business Interests 32
12.2 Competition 32
12.3 Business Opportunity 33
13. Tax Matters; Books and Records; Accounting 33
13.1 Tax Matters 33
13.2 Indemnity Against Breach 34
13.3 Records 34
13.4 Notices 35
13.5 Reports to Partners 36
14. Trademarks and Licenses 36
14.1 Showboat Marks 36
14.2 Use of Marks by Partnership 36
15. General Provisions 36
15.1 Foreign Gaming Licenses 36
15.2 Entire Agreement 36
15.3 Counterparts 37
15.4 Captions 37
15.5 Amendment 37
15.6 Grammatical Changes 37
15.7 Successors and Assigns 37
15.8 Consent of Partners 37
15.9 No Waiver 37
15.10 Disputes 38
15.11 Partial Invalidity 38
15.12 Cooperation with Nevada, Louisiana and New Jersey
Gaming Authorities 38
15.13 Administrative/Development/Trademark/License Fees 38
15.14 Applicable Law: Jurisdiction 39
15.15 Financing Fees 39
-iii-
<PAGE>
AMENDED & RESTATED
SHOWBOAT MARINA PARTNERSHIP AGREEMENT
This Amended & Restated Showboat Marina Partnership Agreement,
dated as of the 1st day of March, 1996, is executed by and
between:
WATERFRONT ENTERTAINMENT AND DEVELOPMENT,
INC. ("Waterfront"), an Indiana corporation
with its registered office at 8101 Polo Club
Drive, Suite D, Merrillville, Indiana 46410,
appearing herein by and through Michael
Pannos, its President, duly authorized
hereunto:
and
SHOWBOAT INDIANA INVESTMENT LIMITED
PARTNERSHIP ("Showboat"), a Nevada limited
partnership with its registered office at
2800 Fremont Street, Las Vegas, Nevada 89104,
appearing herein by and through J. Kell
Houssels, III, Chairman of the Board of its
general partner, Showboat Indiana, Inc., duly
authorized hereunto;
W I T N E S S E T H:
WHEREAS, Waterfront and Showboat formed the Partnership pursuant
to a Partnership Agreement dated January 31, 1994 (the "Original
Agreement")to construct, acquire, own, and operate an excursion
cruise vessel casino on Lake Michigan from a port in East
Chicago, Indiana, including all equipment and other facilities
required to own and operate the excursion cruise vessel casino,
including, but not limited to, docks, piers, restaurants,
entertainment facilities, vehicular parking area(s), waiting
areas, administrative offices for, but not limited to,
accounting, purchasing, and management information services
(including offices for management personnel) and other areas
utilized in support of the operations of the excursion cruise
vessel, and for the other purposes set forth in the Original
Agreement ; and
WHEREAS, since January 31, 1994, Waterfront and Showboat have
submitted applications with the Indiana Gaming Commission
("Commission") to operate a licensed excursion cruise vessel
casino on Lake Michigan from a port in East Chicago, Indiana; and
WHEREAS, as a part of the applications filed with the Commission,
Waterfront and Showboat have continuously evaluated the total
costs and expenses of constructing the excursion cruise vessel
casino and related facilities and believe that the total costs
and expenses have increased to an amount of up to $195 million,
which is $105 million higher than originally specified in the
Partnership Agreement; and
WHEREAS, following discussions with investment bankers and other
consultants, the parties have determined that development
financing for the Project may not be obtained by the Partnership
at interest rates of 15% per annum or less; and
<PAGE>
WHEREAS, under the Original Agreement, either the increase of
costs or the inability to obtain development financing at
interest rates of 15% or less permits either Partner to terminate
the Partnership unless the Partners can mutually agree to
appropriate courses of action to resolve the condition; and
WHEREAS, the Partnership has been advised by its financial
advisors that it should form a subsidiary partnership to own and
operate the Project and to obtain the Development Financing
making the Partnership the holder of partnership interests
instead of the operator and owner of the Project; and
WHEREAS, the Partners, following good faith discussions, are
executing this Amended & Restated Showboat Marina Partnership
Agreement to resolve the matters identified in the foregoing
Recitals and to make such other changes to the Original Agreement
as the Partners deem necessary and advisable.
Now, Therefore, in consideration of the covenants herein
contained and intending to be mutually bound thereby, the parties
hereto agree as follows:
1. Definitions
1.1 Affiliate
The term "Affiliate" when used with respect to any
Person specified herein, shall mean any other Person
who (i) controls, is controlled by or is under
common control with such specified Person; (ii) is
an officer or director of, partner in, shareholder
of, or trustee of, or serves in a similar capacity
with respect to, a Person specified in clause (i);
or (iii) is a twenty-five percent (25%) or more
owned subsidiary, spouse, father, mother, son,
daughter, brother, sister, uncle, aunt, nephew or
niece or any Person described in clauses (i) or
(ii). The term "control" shall mean and include
ownership of a 25% or greater equity interest in
such other Person.
1.2 Agreement
This Amended & Restated Showboat Marina Partnership
Agreement, as originally executed and as amended,
modified, supplemented, or restated, from time to
time, as the context may require.
1.3 Budget
A Capital Budget or an Operating Budget. All
Budgets shall set forth the assumptions and
qualifications underlying their preparation.
1.4 Capital Account
A separate account maintained for each Partner and
determined strictly in accordance with the rules set
forth in Section 704(b) of the Code, as amended, and
Section 1.704-1(b)(2)(iv) of the Regulations. In
accordance with those sections, a Partner's capital
account shall be equal to the amount of money
contributed by the Partner and the fair market value
of any property contributed by the Partner (net of
any liability secured by the property or to which
the property is subject), increased by allocations
of Net Income to the Partner and decreased by
(a) the amount of money distributed to the Partner,
(b) the fair market value of any property
distributed to the
2
<PAGE>
Partner by the Partnership (net of any liability
secured by the property or to which the property is
subject), (c) the Partner's share of expenditures of
the Partnership described in Section 705(a)(2)(B) of
the Code and (d) the net losses allocated to the
Partner. To the extent that anything contained
herein shall be inconsistent with
Section 1.704-1(b)(2)(iv) of the Regulations, the
Regulations shall control.
1.5 Capital Budget
A budget setting forth all estimated sources and
uses of funds for the initial development, including
related road improvements to the Project,
renovation, repair or replacement of the Project.
1.6 Capital Contribution
The amount of cash and the Carrying Value of any
property (net of any liabilities secured by such
property that the Partnership is considered to
assume or take subject to under Code Section 752)
contributed by a party in exchange for an Interest
in the Partnership.
1.7 Carrying Value
The adjusted basis of any assets of the Partnership,
as determined for federal income tax purposes,
except:
(A) The initial Carrying Value of any asset
contributed (or deemed contributed) to the
Partnership shall be such asset's gross fair
market value at the time of such
contribution;
(B) The Carrying Values of all Partnership assets
shall be adjusted to equal their respective
gross fair market values at the times
specified in Section 3.2(c) and (d) of this
Agreement if the Partnership has elected to
adjust the Partners' Capital Accounts as
provided in such Section; and
(C) If the Carrying Values of the Partnership
assets have been determined pursuant to
clause (a) or (b) of this section, such
Carrying Values shall be adjusted thereafter
in the same manner as the assets' adjusted
bases for federal income tax purposes, except
that the depreciation deductions shall be
computed in accordance with this Agreement.
1.8 Casino Facilities
All equipment and other property used in connection with
the ownership and operation of the Vessel and anything
used in connection with or in support of the Vessel
including, but not limited to, docks, piers, restaurants,
entertainment facilities, vehicular parking area(s),
working areas, restrooms, administrative offices for, but
not limited to, accounting, purchasing, and management
information services (including offices for Showboat
management personnel).
1.9 Code
The Internal Revenue Code of 1986, as amended, including
the corresponding provisions of any succeeding law.
1.10 Commission
The Indiana Gaming Commission.
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1.11 Comparable Companies
The following seven (7) companies: Argosy Gaming Co.;
Presidents Riverboat Casinos, Inc.; Grand Casinos, Inc.;
Aztar Corp.; Caesar's World, Inc.; Bally Manufacturing
Corp.; and Showboat, Inc. A substitution may be made only
by unanimous agreement of the Partners. The Partners
agree that Empress River Casino Corporation ("Empress")
shall be a Comparable Company only if, at the time any
calculations shall be made using data related to
Comparable Companies, the Empress shall have issued to the
public any security in an offering registered with the
Securities and Exchange Commission. In the event that
Empress is included as a Comparable Company, it shall
replace Aztar Corp. or, if that company is not then a
Comparable Company, it shall replace one of the companies
deriving the principal portion of its net revenue from
riverboat operations as mutually agreed between the
Partners.
1.12 Development Expenses
All expenses incurred in connection with the development
of the Project which were paid by either Partner and not
reimbursed by the Partnership. Each partner agrees to
prepare a budget reasonably detailing the Development
Expenses to be incurred by such Partner. Within thirty
(30) days of the Effective Date each Partner shall submit
to the other Partner, for the other Partner's approval
(which approval cannot be unreasonably withheld or
delayed) its Development Expenses budget. The other
Partner shall have twenty (20) days to review the
Development Expenses budget. Any dispute regarding the
budget shall be resolved by arbitration. The Development
Expenses budget may be amended from time to time with both
Partners' written consent which neither Partner may
unreasonably withhold or delay. Expenses not included in
the Development Expenses budget shall not be reimbursed by
the Partnership. Each Partner shall provide to the
Partnership a monthly detailed accounting, with supporting
documentation, of said Development Expenses paid by the
Partner.
1.13 Distributable Cash
All cash receipts of the Partnership, excluding Capital
Contributions and the proceeds of any sale or financing,
less cash expenditures, including but not limited to,
working capital reserves or other amounts as the Partners
reasonably determine to be necessary or appropriate for
the proper operation of the Partnership business,
discharge of current indebtedness, and, where appropriate,
its winding up and liquidation.
1.14 Effective Date
The Effective Date of this Agreement shall be the date
upon which Waterfront and Showboat executed the Original
Agreement.
1.15 Ground
The site for the Casino Facilities located on land which
the Partnership will have acquired by a ground lease,
option to purchase, acquisition in fee or other agreement
conveying control of the site to the Partnership.
1.16 Indiana Uniform Partnership Act
The law of the State of Indiana governing general
partnerships codified at IC 23-4-1-1 et seq., as amended.
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1.17 Interest
The entire ownership interest of a Partner in the
Partnership at any particular time, including the right of
such Partner to any and all benefits to which a Partner
may be entitled pursuant to this Agreement, together with
the obligation of such Partner to comply with the terms of
this Agreement.
1.18 Losses
The taxable losses (the excess of allowable deductions
over recognizable income items) of the Partnership for a
period, or as a result of a transaction, for federal
income tax purposes as determined in accordance with Code
Section 703(a) computed with the adjustments required
under this Agreement.
1.19 Managing Partner
The Managing Partner of the Partnership will be Showboat,
subject to removal as provided herein.
1.20 Minimum Gain
The amount determined strictly in accordance with the
principles of Section 1.704-2(b)(2) of the Regulations.
1.21 Nonrecourse Deductions
The Partnership's deductions characterized as "nonrecourse
deduction" under Section 1.704-2(b)(1) of the Treasury
Regulations.
1.22 Opening
The date the Project opens to the public for business for
gaming activities by paying customers.
1.23 Operating Budget
A budget setting forth all of the estimated sources and
uses of funds for the operation of the Project for a
specified period. The Operating Budget shall be reviewed
and evaluated quarterly.
1.24 Partners
The Partners of the Partnership are Waterfront and
Showboat.
1.25 Partnership
This Showboat Marina Partnership, an Indiana general
partnership, and its successor entities.
1.26 Partnership's Auditor
The initial independent auditor for the Partnership shall
be KPMG Peat Marwick.
1.27 Percentage Interest
With respect to each Partner, the Interest of such Partner
expressed as a percentage of the total of the Interests of
all Partners as set forth in Section 3.1 of the Agreement.
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1.28 Person
Any individual, partnership, limited partnership,
corporation, limited liability company, unincorporated
association, or other entity.
1.29 Project
The excursion cruise vessel casino development to be
acquired, developed in the City of East Chicago, in the
State of Indiana, and operated on Lake Michigan. Total
costs and expenses associated with the Project shall not
exceed $195,000,000 or be less than $170,000,000, subject
to Section 10.
1.30 Regulations
The regulations of the United States Treasury Department
pertaining to the Code, as amended, and any successor
provision(s).
1.31 Vessel
The excursion cruise vessel casino to be owned and
operated by the Partnership on Lake Michigan, Indiana, in
conjunction with the Casino Facilities. The gaming area,
to be contained in the Vessel, shall be approximately
51,000 square feet.
2. Continuation of Partnership
2.1 Continuation of Partnership
The Partners hereby agree to continue the Partnership
originally formed on the Effective Date as a general
partnership under the Indiana Uniform Partnership Act
under the name and style of Showboat Marina Partnership,
and on the terms and conditions set forth herein. This
Agreement shall amend and restate the Original Agreement
in its entirety effective as of the date hereof.
2.2 Applicable Law
The rights and obligations of the Partners and the
administration and termination of the Partnership shall be
governed by the Indiana Uniform Partnership Act and this
Agreement.
2.3 The Scope of Partner's Authority
Except as otherwise expressly provided herein, no Partner
shall have any authority to act on behalf of, or in the
name of, the Partnership, or to enter into or assume any
commitment or obligation or responsibility on behalf of
any other Partner or the Partnership.
2.4 Business Purposes
The purposes of the Partnership are (a) to acquire,
design, construct, own and operate the Project, (b) to
acquire, lease, sell, or otherwise dispose of other
properties used or useful in connection with the
foregoing, (c) to carry on any other activities necessary
or incidental to the foregoing, and (d) to engage in any
other business if such business is approved and agreed
upon unanimously by the Partners prior to entering into
such business.
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2.5 Term of Partnership
(a) Initial Term. The Partnership is constituted for an
initial term ending December 31, 2023, and shall be
continued for successive 1-year terms thereafter
until terminated as provided in section "b" below,
by operation of law or as otherwise provided in this
Agreement.
(b) Termination by Partner. If a Partner desires that
the Partnership terminate upon the expiration of the
initial term of the Partnership or any renewal term
thereafter, such Partner shall give written notice
to the other Partner of its intention to cause such
termination at least 90 days prior to the end of the
initial term or any renewal term thereafter, and the
Partnership shall terminate at the end of the
initial term or such renewal term, as the case may
be, and shall thereafter be liquidated in accordance
with the provisions of Section 11 hereof.
2.6 Principal Place of Business
The principal business establishment of the Partnership
shall be located in East Chicago, Indiana and shall be
mutually chosen by the Partners. The Managing Partner
may, in its sole discretion, change the location of the
principal place of business of the Partnership, and, if it
does so, it shall promptly notify Waterfront of such new
location within five (5) days of such change.
Notwithstanding the foregoing, in the event the Managing
Partner desires to change the location of the principal
business establishment of the Partnership to a location
outside of East Chicago, the Managing Partner shall obtain
the consent to such change from Waterfront, whose consent
may not be unreasonably withheld or delayed.
2.7 Property of the Partnership
All personal property and real property owned or leased by
the Partnership shall be deemed to be owned or leased by
the Partnership and none of the Partners shall have any
right, title, or interest therein; provided, however, that
a Partner may be a lessor or sublessor of property which
is leased to the Partnership. To the extent permitted by
law, title to all property owned by the Partnership shall
be held by the Partnership in its name.
2.8 Certificate
Upon the execution of the Original Agreement, the Managing
Partner shall perform all acts necessary to assure the
prompt filing of such certificate of fictitious or assumed
business name as is required by Indiana law, and shall
perform all other acts required by Indiana law or any
other law to perfect and maintain the Partnership as a
Partnership under the laws of the State of Indiana.
2.9 Licensing
Each Partner covenants to use its best efforts to
diligently obtain all state and local licenses, including
gaming licenses, necessary to conduct gaming operations in
the Project. The Partners agree to provide each other
with copies of all applications, reports, letters and
other documents filed or provided to the state or local
licensing authorities. In the event that either Partner
as a result of a communication or action by the Commission
or on the basis of consultations with its gaming counsel
and/or other professional advisors, reasonably believes in
good faith, with the concurrence of the other Partner's
board of directors, that the Commission is likely to:
(i) fail to license and/or approve the Partnership or its
Affiliates to own and operate any gaming related
businesses; (ii) grant required gaming licensing and/or
approval only upon terms
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and conditions which are unacceptable to Showboat and
Waterfront; (iii) significantly delay the licensing and/or
approval contemplated under this Agreement; or (iv)
revoke any existing license or casino operating contract
of the Partnership or its Affiliates, due to concerns of
any aspect of the suitability of a particular shareholder
or owner of an interest in a Partner or its Affiliate,
then the Partner shall divest itself of its interest in the
Affiliate or cause such shareholder or owner of an
interest in the Partner or the Affiliate to divest itself
of such interest. If, however, the events described in
subparagraphs (i) through (iv) arise from concerns with
respect to the suitability of a particular Partner
("Selling Party") then the Selling Party's entire interest
in the Partnership may be purchased by the other Partner
at a purchase price equal to the greater of the then fair
market value of the Selling Party's Partnership Interest
or the unreturned Capital Contributions and unreimbursed
Development Expenses of the Selling Party. The fair
market value shall be determined in accordance with
Section 9.1.
3. Funding of the Partnership
3.1 The Percentage Interest of Each Partner in the Partnership
The Percentage Interests of the Partners shall be:
Waterfront 45%
Showboat 55%
100%
3.2 Capital Accounts
(a) A separate Capital Account shall be maintained by
the Partnership for each Partner in accordance with
Section 704(b) of the Code and Regulations
Section 1.704-1(b)(2)(iv). Each Partner's capital
account shall be (i) credited for each contribution
of capital (at net fair market value) and
allocations to the Partner of Partnership Income and
Gain, and (ii) debited for each allocation of
Partnership Loss and Deduction (including
Depreciation), all as set forth in Section 4 hereof,
and by the amount of money and other property (at
net fair market value) distributed to the Partner by
the Partnership.
(b) If the Partnership at any time distributes any of
its assets in kind to any Partner, the Capital
Account of each Partner shall be adjusted to account
for that Partner's allocable share (as determined in
this Agreement) of the profits or losses that would
have been realized by the Partnership had it sold
the assets that were distributed at their respective
fair market values immediately prior to their
distribution.
(c) In the event the Partnership makes an election under
Code Section 754, the amounts of any adjustment to
the basis (or Carrying Value) of assets of the
Partnership made pursuant to Code Section 743 shall
be reflected in the Capital Accounts of the
Partners, and the amounts of any adjustments to the
basis (or Carrying Value) of assets of the
Partnership made pursuant to Code Section 734 as a
result of the distribution of property by the
Partnership to a Partner (to the extent that such
adjustments have not previously been reflected in
the Partner's capital accounts) shall be reflected
in the Capital Accounts of the Partner in the manner
prescribed in regulations promulgated under Code
Section 704(b).
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(d) If elected by the Partnership, upon the occurrence
of any of the following events, the Capital Account
balance of each Partner shall be adjusted to reflect
the Partner's allocable share (as determined under
this Agreement) of the profits and losses that would
be realized by the Partnership if it sold all of its
property at its fair market value on the day of the
adjustment: (i) any increase in any new or existing
Partner's Interest resulting from the contribution
of cash or property by such Partner to the
Partnership; (ii) any reduction in any Partner's
Interest resulting from a distribution of such
Partner in redemption of all or a portion of such
Partner's Interest in the Partnership; and
(iii) whenever else allowed under applicable
Regulations.
(e) In the event of a permitted transfer of an Interest
of a Partner pursuant to the terms of this
Agreement, the Capital Account of the Transferor
Partner shall become the Capital Account of the
transferee Partner to the extent it relates to the
transferred interest.
(f) The provisions of this section relating to the
maintenance of Capital Accounts are intended to
comply with Regulation Section 1.704-1(b) and shall
be interpreted and applied in a manner consistent
with such Regulations. If it is determined that it
is a burden to modify the manner in which Capital
Accounts or any debits or credits thereto
(including, without limitation, debits or credits
relating to liability secured by property
contributed to or distributed by the Partnership or
which are assumed by the Partnership or any of the
Partners) in order to comply with such Regulation,
after obtaining advice from the Partnership's
Auditor the Partners may make such modification
provided that there is no material effect upon the
amounts otherwise distributable to any Partner upon
dissolution of the Partnership.
3.3 Return of Capital Contributions
Except as may otherwise be provided herein, no Partner
shall be entitled to demand or receive the return of any
Capital Contribution made by such Partner. No Partner
shall be entitled to demand and receive property other
than cash in return for such Partner's Capital
Contribution. Notwithstanding the foregoing:
(a) at such time as the Partnership and its Partners are
licensed by the Commission, one-half (1/2) of
Waterfront's Capital Contribution and unreimbursed
Development Expenses, in each case together with the
preferred return thereon provided for in Section
3.5, shall be returned to Waterfront by the
Partnership; and
(b) within six months after the Opening, the Partnership
shall return to Waterfront its remaining unpaid
Capital Contribution and unreimbursed Development
Expenses, in each case together with the preferred
return thereon provided for in Section 3.5.
If the Partnership has insufficient funds to return such
amounts, Showboat shall make an immediate cash Capital
Contribution or loan to the Partnership in an amount
sufficient for the Partnership to discharge its
obligations to Waterfront.
3.4 No Priority
Unless otherwise agreed or as provided in this Agreement,
no Partner shall have any priority over any other Partner
with respect to distributions or the return of Capital
Contributions.
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3.5 Preferential Return
Each Partner shall be entitled to a preferential,
cumulative, but not compounded, annual return of twelve
percent (12%) on such Partner's outstanding Capital
Contribution and unreimbursed Development Expenses until
the Capital Contribution, unreimbursed Development
Expenses and interest thereon are paid in full.
3.6 Loans
The Partners, or any of them, upon prior unanimous consent
of the Partners, may lend, or procure the lending of,
money or property to or for the Partnership upon such
terms and conditions as may be agreed upon at that time.
Except as otherwise provided herein, any loans made to the
Partnership by the Partners shall be entitled to a
cumulative, but not compounded, annual return of twelve
percent (12%) on the outstanding loan balance until the
loan and such return thereon has been paid in full. Such
loans shall not be considered contributions to the capital
of the Partnership. Except as otherwise provided herein,
the annual return on such loans shall be paid out of
Distributable Cash or the proceeds of the sale or
refinancing of part or all of the assets of the
Partnership (in connection with the termination of the
Partnership or otherwise) in the same priority as the
preferred return on the Partners' outstanding Capital
Contributions and unreimbursed Development Expenses is
payable pursuant to Sections 4.3.b(iv), 4.3.d(iv) or
11.2(f), as the case may be. The principal amount of any
such loans shall be paid out of Distributable Cash or the
proceeds of the sale or refinancing of part or all of the
assets of the Partnership (in connection with the
termination of the Partnership or otherwise) in the same
priority as the Partners' outstanding Capital
Contributions and unreimbursed Development Expenses is
payable pursuant to Sections 4.3.b(v), 4.3.d(v) or
11.2(g), as the case may be.
3.7 (Deleted - no longer used)
3.8 Contributions
(a) Initial Capital Contribution. Immediately after the
Effective Date, the Partners shall contemporaneously
each make the following initial Capital
Contributions (each Partner's contribution shall be
conditioned on the other making its contribution):
(i) Waterfront - $2,100,000
(ii) Showboat - $2,600,000
(b) Additional Capital Contributions. The Partners
shall make additional Capital Contributions to the
Partnership under the following circumstances, which
amounts shall be credited to their respective
Capital Accounts:
(i) (Deleted - No Longer Used)
(ii) Showboat - In lieu of an additional Capital
Contribution, Showboat shall loan the
Partnership a total of $37.4 million. The
first $29.525 million of this loan shall bear
a preferential return at 12% per annum as
provided in Section 3.6 and the remaining
$7.875 million shall bear interest as
provided in Section 3.9.(a)(iii). Interest on
said loan
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shall be paid in the same manner and priority
as provided for the preferred return on loans
from Partners pursuant to Section 3.6; or
(iii) At such other times as the Partners shall
unanimously determine that additional funds
are needed to carry on the business of the
Partnership. In the absence of such
agreement, Showboat shall, subject to the
limitations in Section 10.2, make such
additional Capital Contributions or loans as
are needed to carry on the business of the
Partnership.
(c) Additional Capital Contributions pursuant to the
first sentence of (iii) above shall be made by the
Partners in the following percentages:
Waterfront 45%
Showboat 55%
100%
3.9 Failure to Contribute
(a) If either Waterfront or Showboat should fail to make
any Capital Contribution or a required loan on or
before the date such contribution or loan is due
(the "Defaulting Partner"), such failure shall
constitute a default under this Agreement and the
other Partner (the "Non-Defaulting Partner") may, at
any time thereafter while the contribution remains
unpaid, serve written notice ("Notice of Demand")
upon the Defaulting Partner requiring it to make the
Capital Contribution or loan, together with all
costs and expenses that may have been incurred by
the Partnership by reason of the nonpayment. The
Notice of Demand shall specify a date (which shall
be not less than ten (10) days after the date of the
notice) on which, and the place at which, the
contribution or loan and such costs and expenses are
to be paid. In the event of the nonpayment of the
additional Capital Contribution or loan on such date
and at such place, the Non-Defaulting Partner shall
have the right:
(i) To buy the Defaulting Partner's Interest for
an amount equal to the fair market value of
the Defaulting Partner's Interest, computed
as set forth in Section 9.1 (and for purposes
of such computation, the valuation date shall
be the end of the month next preceding the
month in which such contribution or loan
should have been made, as set forth in the
notice contemplated by this Section), such
amount to be payable in cash at a closing to
be held in East Chicago, Indiana on a date
set by the Non-Defaulting Partner not later
than ninety (90) days after the Non-
Defaulting Partner gives written notice of
such election to the Defaulting Partner,
which notice must be given thirty (30) days
after the expiration of the period specified
in the Notice of Demand, provided, however,
that the closing may be extended for a
reasonable period of time in the event the
procedures set forth in Section 9 have not
been completed within said 90-day period;
(ii) To sue the Defaulting Partner or any
guarantor to cause such Capital Contribution
or loan to be made or to sue for damages for
the failure to do so; or
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(iii) To advance to the Partnership an amount equal
to the Defaulting Partner's required
additional Capital Contribution or loan, and
the amount so advanced, together with any
corresponding Capital Contribution made by
the Non-Defaulting Partner for its own
account shall be considered loans to the
Partnership and shall be repaid by the
Partnership to such Non-Defaulting Partner
with interest thereon at an annual rate four
(4) percentage points above the rate shown in
the Wall Street Journal (or its successor
publication) from time to time as the prime
rate for money center banks but with a floor
of twelve percent (12%) per annum, which rate
shall be determined on the first day of each
month and shall be applied to the loan
balance for the month. However, in no event
shall the interest rate exceed the maximum
lawful rate. Such interest shall be payable
quarterly.
(b) A Non-Defaulting Partner entitled to the remedies
set out in subsections (ii) and (iii) above may
pursue both simultaneously.
4. Allocations and Distributions
4.1 Definitions
As used herein, the terms "Income," "Gain," "Loss,"
"Deduction," and "Credit" shall have the same meanings as
are generally used and understood in the context of
subchapter K of the Code, and the term "Depreciation"
shall have the same meaning as is generally used and
understood in the context of Sections 167 and 168 of the
Code.
4.2 Allocation of Income, Gain, Loss, Deduction (Including
Depreciation), and Credit
(a) General. Each item of Partnership Income, Gain,
Loss, Deduction (including Depreciation), and
Credit, as determined for federal income tax
purposes, shall be allocated between the Partners
and shall be credited to (in the case of Income,
Gain, and Credit) or charged against (in the case of
Loss or Deduction (including Depreciation)), their
respective capital accounts in proportion to their
Percentage Interests in the Partnership.
(b) Compliance with Section 704(c) of the Code. In
accordance with Section 704(c) of the Code and
applicable Regulations, items of Income, Gain, Loss
and Deduction (including Depreciation) with respect
to any property contributed to the Partnership
shall, solely for tax purposes, be allocated among
the Partners so as to take account of any variation
between the adjusted basis of such property to the
Partnership for federal income tax purposes and the
fair market value ascribed to that property under
this Agreement. In addition, in the event the value
of any Partnership asset is required to be adjusted
pursuant to the provisions of Section 704(b) and the
Regulations thereunder, subsequent allocations of
items of Income, Gain, Loss and Deduction (including
Depreciation) for tax purposes with respect to such
assets shall take account of any variation between
the adjusted basis of such asset for federal income
tax purposes and its adjusted value, in the same
manner as under Section 704(c) of the Code and the
applicable Regulations.
(c) Special Allocations. Notwithstanding the provisions
of Section 4.2(a) above, the following allocations
of Profits and Losses shall be made:
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(i) Minimum Gain Chargeback. Except as otherwise
provided in Section 1.704-2(f) of the
Regulations, in the event that there is a net
decrease in the Partnership Minimum Gain
during any taxable year, each Partner shall
be allocated items of income and gain for
such year, and, if necessary, subsequent
years, in an amount equal to such Partner's
share of the net decrease in such Partnership
Minimum Gain during such year in accordance
with Section 1.704-2(g) of the Regulations.
Any such allocation for a given year shall
consist first of gains from the disposition
of property subject to Partner non-recourse
debt and then, if necessary, a pro rata
portion of the Partnership's other items of
income and gain for such year. If there is
insufficient income and gain in a year to
make the allocations specified in this
section for all Partners for such year, the
income and gain shall be allocated among the
Partners in proportion to the respective
amounts they would have been allocated had
there been an unlimited amount of income and
gain for such year. This section is intended
to comply with the Minimum Gain Chargeback
requirement of Section 1.704-2(f) of the
Regulations and shall be interpreted
consistent with that section.
(ii) Partnership Minimum Gain Chargeback. Except
as otherwise provided in Section
1.704-2(i)(4) of the Regulations, in the
event there is a net decrease in the Minimum
Gain attributable to a Partner non-recourse
debt during any taxable year, each Partner
with a share of such Minimum Gain shall be
allocated income and gain for the year (and,
if necessary, subsequent years) in accordance
with Section 1.704-2(i) of the Regulations.
Any such allocation for a given year shall
consist first of gains from the disposition
of property subject to Partner non-recourse
debt, and then, if necessary, a pro rata
portion of the Partnership's other items of
income and gain. If there is insufficient
income and gain in a year to make the
allocations specified in this section for all
such Partners for such year, the income and
gain shall be allocated among such Partners
in proportion to their respective amounts
they would have been allocated had there been
an unlimited amount of income and gain for
such year. This section is intended to
comply with the Chargeback requirement of
Section 1.704-2(i)(4) of the Regulations and
shall be interpreted consistent with that
section.
(iii) Qualified Income Offset. Any Partner who
unexpectedly receives an adjustment,
allocation, or distribution described in
subparagraphs (4), (5) or (6) of Section
1.704-1(b)(2)(ii)(d) of the Regulations,
which adjustment, allocation or distribution
creates or increases a deficit balance in
that Partner's Capital Account, shall be
allocated items of "book" income and gain in
an amount and manner sufficient to eliminate
or to reduce the deficit balance in that
Partner's Capital Account so created or
increased as quickly as possible in
accordance with Section 1.704-1(b)(2)(ii)(d)
of the Regulations and its requirements for a
"qualified income offset."
For purposes of this section, Capital
Accounts shall be adjusted as provided for in
Sections 1.704-1(b)(2)(ii)(d), 1.704-2(g)(1)
and 1.704-2(i)(5) of the Regulations. The
Partners intend that the provisions set forth
in this section will constitute a "qualified
income offset" as described in the
Regulations. Regulations shall control in
the case of any conflict between those
Regulations and this subjection.
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(iv) Allocation of Net Income. The net income of
the Partnership shall be allocated as
follows: (i) to each Partner with a negative
Capital Account, pro rata in an amount equal
to (or in proportion to if less than) the
amount of the negative Capital Account of
each such party; and thereafter (ii) to the
Partners in accordance with their Percentage
Interests.
(v) Allocation of Net Losses and Non-Recourse
Deductions.
(a) Net losses shall be allocated as
follows:
A. To the Partners with positive
Capital Accounts, in accordance
with the ratio of their positive
Capital Account balances, until
no Partner has a positive
Capital Account; and thereafter,
B. To the Partners, in accordance
with the ratio of their
Percentage Interests.
(b) After the allocations of net losses,
non-recourse deductions shall be
allocated in accordance with the
Partner's Percentage Interests.
(c) After the allocations of net losses
and non-recourse deductions, Partner
non-course deductions shall be
allocated between the Partners as
required in Section 1.704-2(i)(1) of
the Regulations, in accordance with
the manner in which the Partner or
Partners bear the economic risk of
loss for the Partner non-recourse debt
corresponding to the Partner non-
recourse deductions, and if more than
one Partner bears such economic risk
of loss for a Partner non-recourse
debt, the corresponding Partner non-
course deductions must be allocated
among such Partners in accordance with
the ratios in which the Partners share
the economic risk of loss for the
party non-recourse debt.
(vi) Tax Allocations. To the extent permitted by
Section 1.704-1(b)(4)(i) of the Regulations,
all items of income, gain, loss and
deductions for federal and state income tax
purposes shall be allocated in accordance
with corresponding "book" items in accordance
with the principles of Section 704(c) of the
Code and Section 1.704-1(b)(4)(i) of the
Regulations. Where any provision depends on
the Capital Account of any Partner, that
Capital Account shall be determined after the
operation of all preceding provisions for the
year.
(vii) Varying Interest. Where any Partner's
interest, or proportion thereof, is acquired
or transferred during a taxable year, the
Partnership may choose to implement the
provisions of Section 706(d) of the Code in
allocating among the varying interests. The
methods, hereinabove set forth, by which net
income, net losses and distributions are
allocated and distributed are hereby
expressly consented to by the Partners as an
express condition of becoming a Partner.
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(d) Determination of Profits and Losses. For purposes
of this Agreement, profits and losses shall be
determined in accordance with the accounting method
utilized by the Partnership for federal income tax
purposes, with the following adjustments:
(i) Items of gain, loss and deduction shall be
computed based upon the Carrying Value of
each of the Partnerships' assets rather than
upon each such asset's adjusted basis for
federal income tax purposes.
(ii) Any tax exempt income received by the
Partnership shall be included as an item of
gross income.
(iii) The difference between the adjusted basis of
any assets for federal income tax purposes
and the Carrying Value of any assets of the
Partnership contributed or deemed contributed
to the Partnership shall not be taken into
account.
(iv) Any expenditures of the Partnership described
in Section 705(a)(2)(B) (including any
expenditures treated as being described in
Section 705(a)(2)(B) pursuant to the
regulation promulgated under Section 704(b)
of the Code) shall be treated as a deductible
expense.
(e) Recapture. In making the allocation of Gain or
Profit among the Partners, the ordinary income
portion, if any, of such Gain or Profit caused by
the recapture of cost recovery or any other
deductions shall be allocated among those Partners
who were previously allocated the cost recovery or
any other deductions in proportion to the amount of
such deductions previously allocated to them. It is
intended that the Partners, as between themselves,
shall bear the burden of recapture caused by cost
recovery or other deductions which were previously
allocated to them, in proportion to the amount of
such deductions which had been allocated to them,
notwithstanding that a Partner's share of Profits,
Losses or Liabilities may increase or decrease from
time to time. Nothing in this Section 4.3(e),
however, shall cause the Partners to be allocated
more or less Gain or Profit than would otherwise be
allocated to them pursuant to this Section 4.
(f) Allocation Savings Provision. The allocation method
set forth in this Section 4 is intended to allocate
Profits and Losses to the Partners for federal
income tax purposes in accordance with their
economic interests in the Partnership while
complying with the requirements of Section 704(b) of
the Code and the Regulations promulgated thereunder.
If in the opinion of the Managing Partner, the
allocation of Profits or Losses pursuant to the
preceding provisions of this Section 4 shall not
(1) satisfy the requirements of Section 704(b) of
the Code or the Regulations thereunder, (2) comply
with any other provisions of the Code or
Regulations, or (3) properly take into account any
expenditure made by the Partnership or transfer of
an interest in the Partnership, then withstanding
anything to the contrary contained in the preceding
provisions of this Section 4, Profits and Losses
shall be allocated in such a manner so as to reflect
properly (1), (2) or (3) as the case may be. The
Managing Partner shall have the right to amend this
Agreement with the consent of Waterfront (whose
consent shall not be unreasonably withheld or
delayed) to reflect any such change in the method of
allocating Profits and Losses.
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4.3 Distributions and Investment of Cash
(a) (Deleted - No longer used)
(b) Distributable Cash from operations shall be
distributed not less frequently than quarterly. All
such distributions shall be made to the Partners as
follows:
(i) first, payment of the Development Fee if not
previously paid pursuant to this Section 4.3
or pursuant to Section 4.4, below;
(ii) second, return of Waterfront's Capital
Contribution plus unreimbursed Development
Expenses, in each case together with the
preferred return thereon provided for in
Section 3.5, if not previously paid pursuant
to this Section 4.3 or pursuant to Section
3.3 above;
(iii) third, to the Partners in an amount equal to
the good faith estimate of the income tax
liability of each Partner (or each Partners'
owner or owners) with respect to the income
realized by each partner, including, without
limitation, any income realized pursuant to
Section 4.2(c)(iii) hereof, calculated by
multiplying such estimated income by the
highest combined federal and state income tax
rates of each such Partner (or its owners),
taking into account whether such Partner (or
its owners) will be subject to corporate or
individual taxes.
(iv) fourth, any accrued and unpaid preferred
return on each Partner's outstanding Capital
Contribution and expenses pursuant to Section
3.5 above;
(v) fifth, to the extent not previously repaid,
one-fifth (1/5th) (calculated on an
annualized basis together with all prior
distributions to such Partner in that
calendar year) of each Partner's outstanding
Capital Contributions, loans and unreimbursed
Development Expenses shall be repaid to the
Partners annually beginning one year after
the Opening; subject, however, to the
limitation that (a) no more than 80% of the
Distributable Cash available for disbursement
pursuant to the provisions of this subsection
shall be distributed pursuant hereto,
provided, however, the Partners may mutually
agree to repay more than one-fifth (1/5) of
each Partner's outstanding Capital
Contributions, loans and unreimbursed
Development Expenses and (b) the balance of
such Distributable Cash shall be available
for distribution pursuant to subsection
4.3.b(v) below; and
(vi) the balance, if any, to the Partners in
proportion to their respective Percentage
Interests.
(c) All distributions of cash, except for payment of the
Development Fee, reimbursement of Development
Expenses, payment of any preferred return on
Partners' Capital Contributions or Development
Expenses and repayment to Partners of loans and
interest thereon, shall be charged to the Partners'
respective Capital Accounts.
(d) All proceeds of the sale or refinancing of part or
all of the assets of the Partnership, net of
transaction costs, repayment of debt and reasonable
reserves, shall be distributed in the following
manner to the Partners:
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(i) first, payment of the Development Fee if not
previously paid pursuant to this Section 4.3
or pursuant to Section 4.4, below;
(ii) second, return of Waterfront's Capital
Contribution plus unreimbursed Development
Expenses, in each case together with the
preferred return thereon provided for in
Section 3.5, if not previously paid pursuant
to this Section 4.3 or pursuant to Section
3.3 above;
(iii) third, to the Partners in an amount equal to
the good faith estimate of the income tax
liability of each Partner (or each Partners'
owner or owners) with respect to the income
realized by each partner, including, without
limitation, any income realized pursuant to
Section 4.2(c)(iii) hereof, calculated by
multiplying such estimated income by the
highest combined federal and state income tax
rates of each such Partner (or its owners),
taking into account whether such Partner (or
its owners) will be subject to corporate or
individual taxes.
(iv) fourth, any accrued and unpaid preferred
return on each Partner's outstanding Capital
Contribution and expenses pursuant to Section
3.5 above;
(v) fifth, to the extent not previously repaid,
one-fifth (1/5) (calculated on an annualized
basis together with all other distributions
to such Partner in that calendar year) of
each Partner's outstanding Capital
Contributions, loans and unreimbursed
Development Expenses shall be repaid to the
Partners annually (beginning one year after
the Opening); subject, however, to the
limitation that (a) no more than eighty
percent (80%) of the proceeds available for
distribution pursuant to the provisions of
this subsection shall be distributed pursuant
hereto, provided, however, the Partners may
mutually agree to repay more than one-fifth
(1/5) of each Partner's outstanding Capital
Contributions, loans and unreimbursed
Development Expenses and (b) the balance of
such proceeds shall be available for
distribution pursuant to subsection 4.3.d(v)
below;
(vi) the balance, if any, to the Partners in
proportion to their respective Percentage
Interests.
(e) All liquidating distributions shall be made in
accordance with the provisions of Section 11.2
hereof.
(f) All cash distributions, except for repayment to
Partners of loans and interest thereon, shall be
made to the Partners simultaneously.
4.4 Development Fee
At such time as the Partnership (a) gains control of the
Ground pursuant to Sections 1.14 and 5.6 and (b) has been
licensed to operate a gaming facility by the Commission,
each Partner shall become entitled to a development fee of
no less than $1,000,000. One-half of the development fee
shall be paid to each Partner at the time that the
conditions specified in the preceding sentence have been
met. The balance of the development fee shall be payable
in six (6)
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equal monthly installments commencing one (1) month after
the payment specified in the preceding sentence, with
the balance, if any, payable upon the Opening. If the
Partnership has insufficient funds to make such payments,
Showboat shall make an immediate Cash Capital Contribution
or loan to the Partnership to allow such payments.
5. Management of the Partnership
5.1 Managing Partner
The management of the Partnership shall be vested in the
Managing Partner. The Managing Partner shall represent
and act for and on behalf of the Partnership in any matter
or thing whatsoever, being hereby expressly authorized and
empowered in its sole and unlimited discretion to conduct,
manage and transact the business, affairs, and concerns of
the Partnership in accordance with a Budget preapproved by
the Partners, except for those matters described in
Sections 5.2 and 5.3 that require the consent of
Waterfront. The Budget shall contain provisions for
economic incentives as specified by the certificate of
suitablility issued to the Partnership by the Indiana
Gaming Commission or the riverboat owner's license, if one
is issued . The Managing Partner shall submit a proposed
initial Capital Budget and a pro-forma five (5) year
projection ("Projection") of operations to Waterfront
within thirty (30) days after the Effective Date and a
proposed Operating and Capital Budget to Waterfront at
least thirty days prior to the commencement of each
calendar year. Waterfront agrees to review the proposed
Budget and to present objections or comments to Showboat
within thirty (30) days of receipt of the Budget.
Showboat agrees to review any such communications from
Waterfront within ten (10) business days of the receipt of
such comments. Waterfront and Showboat shall then
promptly meet in person or by telephone at a time and
location mutually convenient and acceptable to Mr. Michael
Pannos on behalf of Waterfront and Mr. J. Kell Houssels on
behalf of Showboat to approve or appropriately revise and
approve the Budget. Waterfront and Showboat may freely
substitute their representatives for this purpose upon
reasonable notice. A dispute over a Budget not resolved
within sixty (60) days of original receipt of such Budget
shall be resolved by arbitration. The Managing Partner
shall continue to operate under a prior approved Operating
Budget if one exists, and has authority to make all
payments for taxes, utilities, insurance and other amounts
to third parties outside of its control necessary for the
uninterrupted operation of the Project.
Managing Partner shall designate the placement of all
gaming equipment and ancillary furnishings and the
configuration of ancillary areas within the vessel. Once
operating, the Managing Partner shall have exclusive
control and responsibility for the operation of the Casino
Facilities.
5.2 Restrictions
The Managing Partner may not do any of the following
without the concurrence of Waterfront which concurrence
cannot be unreasonably withheld or delayed:
(a) Except as otherwise expressly provided for herein,
construct, improve, buy, own, sell, convey,
exchange, assign, rent, or lease any property (real,
personal or mixed), or any interest therein
totaling, during any one calendar year, more than
$500,000 unless in an approved Capital Budget;
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<PAGE>
(b) Borrow money, issue evidence of indebtedness, secure
any such indebtedness by mortgage, deed of trust,
pledge, or other lien, or execute agreements, notes,
mortgages, deeds of trust, assignments, security
agreements, financing statements or other documents
relating thereto which involve a credit facility to
carry out the same totaling, during any one calendar
year, more than $500,000 unless consented to by the
other Partner;
(c) Make or revoke any election permitted the
Partnership by any taxing authority (including,
without limitation, those within the contemplation
of Code Subtitle A, Chapter 1, Subchapter K), and to
act as the tax matters partner for purposes of Code
Subtitle F, Chapter 63, Subchapter C;
(d) Abandon any of the assets of the Partnership in
excess of $50,000;
(e) Perform any act in violation of the terms and
conditions of this Agreement, the Indiana Uniform
Partnership Act, or any other applicable law or
regulation;
(f) Make, execute, or deliver any general assignment for
the benefit of creditors or any bond, confession of
judgment, guaranty, indemnity bond or surety bond;
(g) Initiate or settle any litigation by or against the
Partnership for more than $100,000 or settle any
proceeding before any governmental or regulatory
body for more than $100,000;
(h) Vote any shares of stock owned by the Partnership.
(i) Disburse funds that exceed an approved Operating
Budget by more than five percent (5%) without prior
concurrence of Waterfront. Any such variance in
excess of five percent (5%) shall be promptly
reported to Waterfront with reasonable explanations.
(j) Sell, lease or otherwise dispose of the Vessel.
5.3 Actions Requiring Unanimous Consent of the Partners
(a) So long as Waterfront retains a Partnership Interest
in excess of twenty percent (20%), the following
actions or decisions shall require the unanimous
consent of the Partners which consent shall not be
unreasonably withheld or delayed;
(i) sale of all or substantially all of the
assets of the Partnership;
(ii) approval of the initial development plan,
initial Capital Budget and pro-forma
Operating Budget for the Project;
(iii) approval of the annual Operating Budget and
annual Capital Budget, and any amendments
thereto;
(iv) amendments to the Partnership Agreement;
(v) material changes in the nature of the
business of the Partnership;
(vi) application for additional gaming licenses by
the Partnership;
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<PAGE>
(vii) a change in the economic incentives as
described in Section 5.1 of this Agreement;
or
(viii) a change in the Partnership auditor.
(b) Notwithstanding subsection 5.3(a)(iv) above, the
Partners agree that any amendment to the Partnership
Agreement which would materially impair the rights
of Waterfront contained herein shall require the
consent of Waterfront.
5.4 Dealings with Affiliates
All fees paid or goods or services purchased from a
Partner or its Affiliate shall be at "arms length" on
terms no less favorable to the Partnership than are
commercially available to the Partnership from other
customarily available sources. All such transactions
shall require the consent of the unaffiliated or unrelated
Partner, which consent shall not be unreasonably withheld
or delayed. Notwithstanding the foregoing, consent to a
specific transaction shall not be required if the
transaction is expressly included within and identified in
an approved Operating Budget or Capital Budget.
5.5 Removal of Managing Partner
A Managing Partner may be removed by the other Partner in
the event that the Managing Partner shall ultimately be
proven, by an unappealable order or judgment of a court of
competent jurisdiction, to have engaged in criminal acts
or acts of fraud or willful misconduct with respect to the
business of the Partnership. If a Partner is removed as
the Managing Partner pursuant to this section, such
removal shall have no effect on such Partner's Partnership
Interest.
5.6 Ground
Waterfront shall be responsible for locating the Ground,
subject to the approval of Showboat, for the Project and
negotiating a site control agreement, such as a ground
lease with the City of East Chicago, or other appropriate
party with respect to the Ground, allowing the Partnership
to develop, construct and operate the Project. Showboat
shall assist Waterfront in locating the Ground and
negotiating the site control agreement. Wherever
possible, Waterfront shall consult with Showboat with
respect to all aspects of negotiating the site control
agreement and any other actions taken by Waterfront in
connection with the development and operation of the
Project. The site control agreement shall be subject to
the prior written consent of Showboat, which consent shall
not be unreasonably withheld. Waterfront shall use its
best efforts to obtain the longest possible term for the
site control agreement.
5.7 Partnership Debts
The Partnership shall be primarily liable to creditors of
the Partnership for all Partnership debts. Each Partner
shall be proportionately liable to such creditors on the
basis of such Partner's Percentage Interest. Each Partner
agrees to indemnify the other Partner to the extent such
other Partner may pay to a creditor of the Partnership any
amounts in excess of such Partner's proportionate share of
a Partnership debt. Notwithstanding anything in this
Section to the contrary, the Partners are responsible for
their respective obligations under Section 11.
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<PAGE>
5.8 Delegation of Authority
The Partners may delegate all or any of their powers,
rights, and obligations hereunder, and the person so
delegated may appoint, employ, contract, or otherwise deal
with any person, including any other Partner(s), for the
transaction of the business of the Partnership, which
person, under the supervision of the Partners, may perform
any acts or services for the Partnership as the Partners
may approve in writing.
5.9 Other Ventures
Nothing contained herein shall be construed to prevent any
of the Partners from engaging in any other business
venture. Except as expressly provided herein, neither the
Partnership nor any other Partner shall have any rights in
and to any such ventures or the profits, losses, or cash
flow derived therefrom.
5.10 Exculpation from Liability; Indemnification
(a) No Partner shall be liable to the Partnership or to
any other Partner because any taxing authority
contests, disallows, or adjusts any item of income,
gain, loss, deduction, credit, or tax preference in
the Partnership income tax returns.
(b) The Managing Partner shall not be liable to the
Partnership or any of the other Partners for, and
the Managing Partner shall be indemnified and held
harmless by the Partnership from and against, any
and all claims, demands, liabilities, costs,
expenses (including attorney's fees and court
costs), and damages of any nature whatsoever arising
out of or incidental to the Managing Partner's
management of the Partnership's affairs, except
where such claim is based upon the criminal acts,
fraud or willful misconduct of the Managing Partner,
or by the breach by the Managing Partner of any
provision of this Agreement. The indemnification
rights herein contained shall be cumulative of, and
in addition to, any and all other rights, remedies,
and recourse of the Managing Partner, whether
available pursuant to this Agreement or at law.
(c) The Partners shall not be liable to the Partnership
or to any of the other Partners for, and the
Partners shall be indemnified and held harmless by
the Partnership from and against, any and all
claims, demands, liabilities, costs, expenses
(including attorney's fees and court costs), and
damages of any nature whatsoever arising out of or
incidental to the Partners' management of the
Partnership's affairs, except where such claim is
based upon the criminal acts, fraud or willful
misconduct of the Partners, or by the breach by the
Partners of any provision of this Agreement. The
indemnification rights herein contained shall be
cumulative of, and in addition to, any and all other
rights, remedies, and recourse of the Partners,
whether available pursuant to this Agreement or at
law.
5.11 Meetings of Partners
The Partners shall meet in person or by telephone at least
once each month to discuss the operations of the
Partnership. The Managing Partner shall distribute daily
reports of operations to the Partners.
5.2 Reports
Deleted - not used.
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5.13 Partnership Development Financing
(a) Showboat shall obtain on behalf of the Partnership
and with the assistance of Waterfront, third-party
debt financing in an amount reasonably required for
the development of the Project and operating cash
flow deficits for a period of up to one year after
Opening in accord with the initial Capital Budget
and the Projection (collectively "Development
Financing"). The Development Financing shall be
nonrecourse to Waterfront and may be secured by the
Partnership's assets or cash flows only. Any
financing obtained by Showboat shall not require the
Partnership to issue warrants, participation of
equity or cash flow or other equity "kickers" except
as may be specifically agreed to by all Partners.
Subject to Force Majeure, if Showboat is unable to
obtain the Development Financing, or if it elects
not to pursue the Development Financing, it shall
make an additional Capital Contribution or loan to
fund such necessary amounts. Showboat shall, on or
before one hundred twenty (120) days after the
issuance of a certificate of suitability to the
Partnership or such later date as the Securities and
Exchange Commission has permitted for the
effectiveness of the Registration Statement for the
proposed debt financing if such financing is raised
in a public offering required to be registered under
the Securities Act of 1933 (the "Funding Date") and
further subject to market conditions, (i) obtain the
Development Financing, (ii) make such capital
contribution in lieu thereof, or (iii) obtain an
unconditional letter of credit, a guaranty of timely
and sufficient financing from a reputable financial
institution with sufficient assets, a bridge loan in
the amount of the Development Financing or other
similar instrument demonstrating the clear
availability of the funds equal to the Development
Financing from a reputable financial institution
with sufficient assets, all in a time frame
consistent with that set forth in the Capital
Budget. Showboat shall use its best efforts to
timely and in good faith complete all financing
arrangements by such Funding Date. The failure of
Showboat to timely provide the Development Financing
or, in the alternative, to make a sufficient Capital
Contribution or loan, shall constitute a breach of
this Agreement and a failure of Showboat to make the
Capital Contribution or loan shall entitle
Waterfront to the remedies resulting therefrom in
Section 3.9 of this Agreement.
(b) The Partnership will form another Indiana general
partnership called Showboat Marina Casino
Partnership ("Casino") and a finance corporation
(the "Financing Corporation" and together with
Casino, the "Issuers") to serve as joint issuers of
a portion of the Development Financing. The Issuers
shall be formed by Showboat pursuant to
organizational documents in form and substance
acceptable to both Partners. The only other partner
of Casino shall be an Indiana general partnership
formed for that purpose called Showboat Marina
Investment Partnership ("Investment"). Investment
shall be formed by the Partners and the equity
interests in Investment shall be owned by the
Partners in the same percentages as the Percentage
Interests of the Partners in this Partnership. The
Partnership shall hold a ninety-nine percent (99%)
interest in Casino and Investment shall hold a one
percent (1%) interest in Casino. The Partnership
shall be the managing partner of Casino.
(c) The Partnership shall enter into a management
agreements (the "Management Agreement") with Casino
providing, among other things, for the payment of a
management fee to the Partnership of at least two
percent (2%) of net revenue (as defined in the
Management Agreement)of the Project and five percent
(5%) of earnings before interest expense, taxes,
depreciation and amortization of the Project. The
Management Agreement shall further provide
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<PAGE>
that all costs, expenses, funding, operating
deficits, operating capital and other liabilities
incurred due to the operation of the Project shall
be the sole and exclusive obligation of Project.
(d) Showboat, Inc., the parent of Showboat, has agreed
that, if the proceeds of the Development Financing
and the Capital Contributions or loans are
insufficient to meet the costs of developing,
constructing and opening the Project, Showboat, Inc.
will provide additional funds up to a maximum of
$30.0 million to complete the Project, subject to
the debt covenants in Showboat Inc.'s indentures for
its 9 1/4% First Mortgage Bonds, its 13% Senior
Subordinated Notes, and in connection with the
Development Financing (the "Completion Guaranty").
Showboat shall cause Showboat, Inc. to (i) provide
the Completion Guaranty in form and substance
acceptable to Showboat, Inc. and the initial
purchasers of the Development Financing, (ii) to
perform all of its obligations under the Completion
Guaranty, and (iii) agree not to enter into
additional covenants which would materially further
limit its ability to comply with the Completion
Guaranty.
Moreover, the Partners recognize and acknowledge
that, (i) in the current interest rate climate for
debt transactions for gaming operations, equity or
cash flow participation is commonly sought by
prospective bond purchasers; and (ii) the Partners
are currently discussing a possible debt transaction
that may include a cash flow participation in the
net income from operations of the Partnership in
favor of bondholders. The Partners agree that
neither shall unreasonably withhold consent to cash
flow participation as long as such participation is
similar to participation rights required by debt
transactions completed within six months of the
Development Financing. Any such cash flow
participation shall be in the nature of that
currently being discussed by the Partners with
Donaldson, Lufkin & Jenrette Securities Corporation
as underwriters of the Development Financing.
(e) The Partners anticipate that, in connection with the
Development Financing, Showboat, Inc. will agree to
provide to the Issuers a written standby equity
commitment (the "Standby Equity Commitment"), which
will provide that if the cash flow (as defined
therein) of the Issuers is less than $35.0 million
for any of the first three full fiscal four-quarter
periods after Opening, Showboat, Inc. will
contribute to the Issuers cash in an amount equal to
the difference between $35.0 million and the amount
of such cash flow, subject to limits of $15.0
million in any one such period and $30.0 million in
the aggregate. Any payments made by Showboat, Inc.
to the Issuers pursuant to the Standby Equity
Commitment shall be treated as a loan to the
Partnership for purposes of this Agreement.
Showboat shall be entitled to receive a fee from
Waterfront (the "Guaranty Fee") in the amount of
$5.2 million for agreeing to provide the Standby
Equity Commitment. The Guaranty Fee shall be due
upon issuance of the Standby Equity Commitment, but
shall be treated as a loan from Showboat to the
Partnership under Section 3.6. Upon issuance of the
Standby Equity Commitment, the Partnership shall
book a receivable from Waterfront in an amount equal
to $5.2 million (the "Waterfront Receivable"). The
Partnership shall pay the Guaranty Fee only from
Distributable Cash or, should the Put Option
described in Article 6 be exercised at a time at
which the Waterfront Receivable has not been paid in
full, such remaining portion of the Waterfront
Receivable shall be due and payable from the Put
Option proceeds. At such time as the Partnership
pays the Guaranty Fee from Distributable Cash
pursuant to Sections 4.3(b)(v), 4.3(d)(v) or
11.2(g), the Waterfront Receivable will be reduced
dollar for dollar, with an offsetting reduction in
Waterfront's Capital Account. In accordance with
Section 4.2(c)(iii)
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hereof, Waterfront shall be allocated items of
gross income by the Partnership to the extent
such reduction in their Capital Account causes
or increases a deficit balance in such Capital
Account. In addition to any amounts otherwise
distributable to Waterfront pursuant to Sections
4.3(b)(iii), 4.3(d)(iii) or 11.2(e) to the extent it
is determined that the payment of the Guaranty Fee
to Showboat results in income to Waterfront other
than as income allocated to Waterfront by the
Partnership, such income shall be taken into account
in determining the distribution to be made to
Waterfront pursuant to such sections.
(f) The Partners expect that Showboat, Inc. will be
required to provide support to assist the
Partnership in obtaining a bond as directed by the
Commission for certain economic development
obligations to the City of East Chicago. Showboat,
Inc. has agreed to provide the support for such a
bond, if required to do so by the Commission, and
Showboat shall cause Showboat, Inc. to provide this
support, if so required. Neither Showboat nor
Showboat, Inc. shall be entitled to any fee or other
compensation from the Partnership or the Issuers for
agreeing to provide or providing such support.
5.14 Management Agreement
Subject to the provision of Section 6, in the event that
the Project is sold by the Partnership, a provision in the
sale contract shall require that the purchaser enter into
a management agreement with Showboat, Inc. for the balance
of the term of the site control agreement for the Ground
substantially in the form of the Management Agreement.
6. Put Option
Upon the third anniversary of the commencement of the
Opening and ending sixty (60) days thereafter, Waterfront
may elect to require Showboat to purchase all or a portion
of Waterfront's Partnership interest (the "Disposition
Portion") either by (i) a series of three (3) payments as
described below or (ii) by distributing the entire
Partnership Distributable Cash, cash from sales or
refinancings and liquidating distributions to Waterfront
for a period of four (4) years on account of Showboat's
acquisition of Waterfront's Disposition Portion. Showboat
shall have a period of sixty (60) days to elect option (i)
or (ii).
If Showboat elects option (i) above, Showboat shall
immediately purchase, at a minimum, one-third (1/3) of
Waterfront's Disposition Portion. The remaining portion
of Waterfront's Disposition Portion shall be purchased by
Showboat in no more than two (2) additional installments,
on the fifth anniversary and the seventh anniversary of
the Opening. At the fifth anniversary Showboat shall
purchase, at a minimum, one-half (1/2) of Waterfront's
remaining Disposition Portion not purchased on the third
anniversary. Any remaining Disposition Portion shall
subsequently be purchased by Showboat on the seventh
anniversary of the Opening.
The purchase price of Waterfront's Disposition Portion
under either option shall be calculated by multiplying the
percentage Disposition Portion being purchased by Showboat
by the equity market value of the Project ("Fair Value").
The Fair Value shall be determined by multiplying the
Project's earnings before interest, taxes, depreciation
and amortization ("EBITDA") for the most recent four (4)
calendar quarters for which quarterly financial statements
have been prepared immediately preceding the respective
anniversary dates under
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<PAGE>
option (i) and immediately preceding the date of
election under option (ii) by the average of the ratios
of the sum of the market value of equity plus long-term
debt divided by EBITDA of the seven (7) Comparable
Companies for the same period, provided, however, the
EBITDA multiplier shall not be less than five (5) nor more
than ten (10). Attached hereto and incorporated
herein by reference as Exhibit B is a calculation
format of the Fair Value of Waterfront's Disposition
Portion.
The Partnership may not incur additional indebtedness to
fund the purchase price of Waterfront's Disposition
Portion unless (i) Waterfront's entire Partnership
interest is purchased or (ii) Showboat obtains
Waterfront's written consent, which may be granted or
withheld in Waterfront's discretion. The purchase price
may be paid in cash or with registered shares of common
stock of Showboat, Inc., Showboat's parent corporation.
In the event Showboat elects option (ii) above, sums
distributed to Waterfront in excess of amounts otherwise
distributable to it shall be deemed a payment on account
of the purchase price of Waterfront's Disposition Portion.
Upon the seventh anniversary of the Opening all of
Disposition Portion must be purchased. Waterfront's
Percentage Interest in the Disposition Portion shall pass
to Showboat upon full payment therefore.
The Partners agree that, notwithstanding the foregoing
provisions of this Section, if Showboat, in its sole
discretion, determines within ten (10) days after
Waterfront's election that it is unwilling for any reason
to pay the Fair Value for Waterfront's Disposition Portion
as determined by the formula set forth in this Section,
then the Partnership shall retain reputable investment
bankers who shall market the Partnership or its assets for
sale to the highest reputable bidder, but free and clear
of the Management Agreement described in Section 5.14.
Waterfront and Showboat shall be permitted to submit bids
for the purchase of the Partnership or its assets in such
event.
7. Transfer of Partner's Interest
7.1 Restrictions on Transfer
Except as may otherwise be expressly provided herein, no
Partner shall sell, assign, pledge, encumber, hypothecate,
or otherwise transfer or dispose of all or any part of its
Interest or share of its Interest, as amended, without the
written consent of the other Partner. No transfer of an
Interest shall be made except in accordance with 68 IAC 5-
2 and other applicable regulations of the Commission. Any
sale or other transfer or attempted transfer in violation
of this Agreement shall be null and void and of no force
and effect. Further, no partner shall be admitted to the
Partnership without the unanimous consent of the Partners.
Each Partner acknowledges the reasonableness of the
restrictions on transfers imposed by this Agreement in
view of the relationship of the Partners. Any transfer,
with consent, must be of all of such Partner's Interest,
unless Waterfront and Showboat otherwise agree. This
prohibition shall include the direct disposition of an
Interest, as well as any voluntary transfer (by sale,
contract for sale, assignment, pledge, hypothecation or
otherwise) of a controlling interest in the stock of a
Partner, or the merger or other consolidation of a Partner
with or into another Person, but in such event, the
consent of Waterfront and Showboat shall not be
unreasonably withheld or delayed.
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<PAGE>
Notwithstanding the foregoing, Waterfront's shareholders
may transfer portions of their equity interests, or
Waterfront may issue new shares to new shareholders so
long as Michael Pannos and Thomas Cappas remain officers,
directors and collectively, including immediate family
holdings, at least 25% shareholders of Waterfront. At all
times stated herein Waterfront shall have not more than 35
shareholders each of whom shall be individuals and a
majority of whom shall be residents of the State of
Indiana.
7.2 Right of First Refusal
In the event that a Partner ("Transferring Partner")
intends to make a voluntary transfer of part or all of its
Interest to a third party, it shall first offer such
Interest to the other Partner ("Remaining Partner"), who
shall have a right of first refusal with respect to the
acquisition of such Interest. In the event that the
Transferring Partner receives a bona fide offer to
purchase acceptable to such Partner, then the Remaining
Partner shall have a right of first refusal to purchase
such Interest at the same price and under the same terms
and conditions as are contained in such written offer,
provided that if the transfer of such Interest is made
pursuant to Section 15.1 of this Agreement, the purchase
price shall be that which is set forth in Section 15.1 of
this Agreement. Upon receipt of any such acceptable
offer, the Transferring Partner shall certify a complete,
true and correct copy of such offer to the Remaining
Partner. The Remaining Partner shall have a period of
thirty (30) days from the date of receipt of such written
offer to elect whether or not it intends to accept or
reject such offer. If the Remaining Partner desires to
purchase the interest from the Transferring Partner upon
the same terms and conditions as are set forth in such
acceptable offer (or at a price specified in Section 15.1
of this Agreement, if applicable), then the Remaining
Partner shall notify the Transferring Partner within ten
(10) days of the receipt of such written offer and shall
accompany such notice with an earnest money deposit
equivalent to any earnest money deposit that was made with
the original offer. If the Remaining Partner fails to
notify the Transferring Partner within such ten (10) day
period, such failure to so notify shall be deemed a
rejection of such offer. Rejection of such offer shall
not terminate this right of first refusal as to any other
or subsequent sales of the Interest. In the event of the
exercise of the right of first refusal, the Remaining
Partner shall consummate the sale and purchase of the
Interest in accordance with, and within the time
limitations set forth in, the terms and conditions of such
offer to purchase as originally submitted (except with
respect to price if the transfer is made pursuant to
Section 15.1 of this Agreement). In the event that such
offer should include as a part of the consideration to be
paid any particular or unique property, or the exchange of
any other property, the Remaining Partner shall not be
required to deliver to the Transferring Partner such
property, but may satisfy such obligations by the payment
to the Transferring Partner of cash in an amount
equivalent in value to such other property. The
Transferring Partner may not combine the sale of an
interest with the sale of any other asset. A transfer
shall include a sale or a contract for sale of all or part
of an Interest as well as the sale, contract for sale or
assignment of a controlling interest in the Stock of a
Partner or a merger or other consolidation of a Partner
with or into another Person.
7.3 Continuing Liability
Unless otherwise agreed, in the event a Partner sells,
exchanges, assigns or otherwise transfers its Interest
(including any transfer in accordance with Section 8 of
this Agreement), such Partner shall remain liable for all
obligations and liabilities incurred by such Partner as a
Partner prior to the effective date of such transfer
(including any tax liability of such Partner), but shall
be
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<PAGE>
free of any obligations or liabilities incurred on
account of the activities of the Partnership after such
date.
8. Partner default
8.1 Definition of Default
The occurrence of any one or more of the following events
which is not cured within the time permitted shall
constitute a default under this Agreement (hereinafter
referred to as a "Default" or an "Event of Default," as
the case may be) as to the Partner failing in the
performance or effecting the breach act.
8.2 Defaults
(a) A Partner fails in a material way to properly staff
and timely perform its duties and obligations
hereunder.
(b) A Partner fails to perform or materially comply with
any of the covenants, agreements, terms or
conditions contained in the Agreement applicable to
it, provided that the remedy of a nondefaulting
Partner for a Partner's failure to make a Capital
Contribution or a required loan is treated
exclusively in Section 3.9 of this Agreement.
8.3 Buyout Remedy
Ten (10) days after notice of the occurrence of a default
where such default is not cured, an Event of Default shall
be deemed to exist. Upon the occurrence of an Event of
Default, the Partner not in default ("Offering Partner")
shall have ten (10) days to provide a notice ("Offering
Notice") to the other Partner (the "Non-Offering
Partner"), propose a price per one percent (1%)
Partnership Interest (the "Offering Price") at which the
Offering Partner is ready, willing and able either to (i)
sell to the Non-Offering Partner all of the Offering
Partner's Interest, or (ii) purchase from the Non-Offering
Partner all of its Interest. The Offering Notice shall be
presented in the alternative as described in the previous
sentence. The Non-Offering Partner shall have a period of
thirty (30) days after delivery of the Offering Notice in
which to elect, by timely written notice to the Offering
Partner, either to (i) purchase the Interest of the
Offering Partner at the Offering Price, or (ii) sell all
of its Interest to the Offering Partner at the Offering
Price. During such 30-day period and an additional 30-day
period, the Non-Offering Partner may not make any offer of
its own pursuant to this section.
If the Non-Offering Partner fails to elect either
alternative within such 30-day period, then the Offering
Partner may, within 15 days thereafter, elect one of the
alternatives. If the Offering Partner fails to select an
alternative within that 15-day period, the Offer shall
lapse.
If one of the alternatives is elected by Waterfront or
Showboat in accordance with the terms of this section,
payment for the affected Interest shall be made in cash at
a closing to be held in East Chicago, Indiana on a date
set by the party electing one of the alternatives not
later than ninety (90) days after such election.
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<PAGE>
8.4 Injunctive Relief
If a Partner violates any provision of Sections 5.4, 5.5,
7 or 12 of this Agreement, the other Partner shall also be
entitled to remedies in equity.
9. Determination of Fair Market Value
9.1 Fair Market Value
If Waterfront and Showboat cannot agree within fifteen
(15) days following the commencement of circumstances
calling for a determination of the fair market value of a
Partnership Interest ("Valuation Interest"), they shall
thereupon attempt in good faith, to agree upon a single
appraiser to appraise the Valuation Interest. If they
cannot agree upon a single appraiser within fifteen (15)
days, either of them (the "Electing Partner") may give the
other (the "Other Partner") a written notice calling for
appointment of an appraisal panel (the "Appraisal Panel"),
and such notice shall designate a disinterested person who
is familiar with the gaming operations and recognized by
those in the business of operating gaming facilities as
one who could fairly and accurately evaluate a gaming
operation (the "First Appraiser") to serve on the
Appraisal Panel.
Upon receipt of such notice, the Other Partner shall have
seven (7) days in which to designate a disinterested
person who is familiar with gaming operations and
recognized by those in the business of operating gaming
facilities as one who could fairly and accurately evaluate
a gaming operation (the "Second Appraiser") to serve on
the Appraisal Panel by serving notice of such designation
on the Electing Partner. If the Second Appraiser is not
so appointed and designated within or by the time so
specified, then the First Appraiser shall be the sole
appraiser to determine the fair market value of the
Valuation Interest. Upon the designation, if any, of the
Second Appraiser, the First Appraiser and the Second
Appraiser shall themselves appoint a third disinterested
person who is familiar with gaming operations and
recognized by those in the business of operating gaming
facilities as one who could fairly and accurately evaluate
a gaming operation (the "Third Appraiser") within seven
(7) days. If the First Appraiser and the Second Appraiser
are unable to agree upon such appointment within seven (7)
days, then the Electing Partner shall request such
appointment by the president and executive committee of
the Indiana Chapter of the American Institute of Real
Estate Appraisers. In the event of failure, refusal or
inability of any appraiser to act, a new appraiser shall
be appointed in the stead thereof, which appointment shall
be made in the same manner as provided in this Section 9
for the appointment of such appraiser so failing, refusing
or being unable to act.
The one or three appraisers appointed as the Appraisal
Panel shall each determine the fair market value of the
Valuation Interest, taking into account appropriate
indicators of the fair market value thereof in a cash sale
between a willing buyer and seller not under undue duress
and shall report their findings to the Partners in
writing. In the case of a three appraiser Appraisal
Panel, if one or more appraisers fail to deliver their
reports within sixty (60) days after the appointment of
the Third Appraiser, a new appraiser shall be appointed in
the stead thereof, which appointment shall be made in the
same manner as provided in this Section 9 for the
appointment of such appraiser failing to deliver his
report. The fair market value of the Valuation Interest
shall be equal to the mean of the two closest appraised
values reported by the Appraisal Panel; provided that if
such values are equally distributed, the fair market value
of the Valuation Interest
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<PAGE>
shall be equal to the mean of the three appraised values
reported by the Appraisal Panel. Such determination
shall be conclusive and shall be binding upon the Partners.
Except as otherwise provided herein, a Partner shall pay
the fees and expenses of the appraiser it appointed, and
the fees and expenses of the third appraiser, and all
other expenses, if any, shall be borne equally by both
parties.
To be qualified to be selected or designated as an
appraiser for purposes of this Section 9, an appraiser
must demonstrate (a) current good standing as a licensed
appraiser, and (b) past appraising experience of at least
five years, which experience shall include the appraisal
of casino gaming operations.
10. Force Majeure
10.1 Force Majeure Defined
The following events are beyond the control of either
Partner (a "Force Majeure Event"):
(a) The unavailability of financing in the marketplace
except at rates in excess of twenty percent (20%),
inclusive of any cash flow participation, per annum;
provided that an obligation to repurchase or prepay
at a premium any Development Financing using a
specified percentage of cash flow shall not be
deemed "cash flow participation" for purposes of
this subsection.
(b) The passage of material new legislation which
reduces the projected internal rate of return to
Showboat for the Project by more than thirty percent
(30%) compared to the Projection.
(c) An increase in the cost of the Project beyond $200
million, with the understanding that the current
Capital Budget is $195 million, including
contingencies.
(d) The receipt of material new conditions imposed by
the City of East Chicago or the Indiana Gaming
Commission or any other governmental entity which
reduces the projected internal rate of return to
Showboat by more than thirty percent (30%) compared
to the Projection.
(e) A delay in the opening of the Project for more than
one hundred eighty (180) days after the opening date
is established by the Partners or a closure of the
Project after Opening for more than one hundred
eighty (180) days.
(f) Any other event which materially alters the
assumptions and underlying facts upon which this
Agreement is based and which is reasonably expected
by both Partners to reduce the projected internal
rate of return to Showboat by more than thirty
percent (30%) compared to the Projection.
10.2 Actions to Resolve Force Majeure Events
In the event of a Force Majeure Event the Partners agree
to first meet in good faith effort to mutually agree on
appropriate courses of action to be taken in connection
with a Force Majeure Event, including the economic effect
thereof. In the event that the Partners fail to agree
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<PAGE>
on a course of action then either Partner may terminate
this Agreement on thirty (30) days written notice to the
other Partner. Provided, however, if the Force Majeure
Event can be cured by the contribution of additional
capital, Showboat shall contribute such capital only in the
event that the contribution shall not be more than
thirty-five percent (35%) of the initial Capital Budget. If
amounts beyond that limitation are required to cure the
Force Majeure Event and Showboat does not provide
such additional capital, then Waterfront shall be entitled
to contribute additional capital. If neither Partner
contributes the additional capital, then Showboat may
locate additional capital from qualifying third parties.
If Showboat is unable to do so, Waterfront may then
attempt to locate additional capital from qualifying third
parties.
11. Termination and Liquidation of Partnership
11.1 Termination
In addition to the provisions for termination of the
Partnership set forth elsewhere in this Agreement, the
Partnership will also terminate upon the sale, assignment
or other disposition of all or substantially all of the
tangible assets of the Partnership unless Waterfront and
Showboat agree in writing to the contrary. No termination
of the Partnership shall relieve or release any Partner
from its obligation to reimburse the other Partners as a
result of such termination if such termination has been
caused by a breach of any duty or obligation owed by such
Partner.
11.2 Winding Up and Liquidation
Upon the termination of the Partnership, the Managing
Partner shall act as liquidator of the Partnership in
disposing of and distributing the Partnership's assets.
Unless otherwise agreed upon, the property of the
Partnership shall be sold as soon as practicable following
termination of the Partnership, and any Partner or former
Partner may purchase property of the Partnership on terms
mutually agreed upon.
After the disposition of Partnership property and the
appropriate allocation of all items of Income, Gain, Loss,
Deductions (including Depreciation), and Credit in
accordance with the provisions of Section 4 hereof, the
proceeds therefrom, to the extent sufficient therefor,
shall be applied and distributed in the following order:
(a) First, to the payment and discharge of all the
Partnership's debts and liabilities to creditors
other than Partners;
(b) Second, to the payment and discharge of all the
Partnership's debts and liabilities to Partners
(other than for the Development Fee, any
unreimbursed Development Expenses, and accrued and
unpaid preferred return pursuant to Section 3.5 and
any loans made by a Partner pursuant to Section
3.6);
(c) Third, to the payment of the Development Fee if not
previously paid pursuant to this Agreement;
(d) Fourth, to the return of Waterfront's Capital
Contribution plus unreimbursed Development Expenses,
in each case together with the preferred return
thereon provided for in Section 3.5, if not
previously paid pursuant to this Agreement;
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<PAGE>
(e) Fifth, to the Partners in an amount equal to the
good faith estimate of the income tax liability of
each Partner (or each Partners' owner or owners)
with respect to the income realized by each Partner,
including, without limitation, any income realized
pursuant to Section 4.2(c)(iii) hereof, calculated
by multiplying such estimated income by the highest
combined federal and state income tax rates of each
such Partner (or its owners), taking into account
whether such Partner (or its owners) will be subject
to corporate or individual taxes.
(f) Sixth, to the payment of any accrued and unpaid
preferred return on each Partner's outstanding
Capital Contribution, loans and unreimbursed
Development Expenses pursuant to Section 3.5 above;
(g) Seventh, to the extent not previously repaid, to the
repayment of each Partner's entire unpaid Capital
Contribution, loans and unreimbursed Development
Expenses;
(h) Eighth, the balance, if any, to the Partners in
proportion to their respective positive Capital
Account balances.
Upon complete liquidation, dissolution and winding
up, the Partners shall cease to be Partners of the
Partnership.
11.3 Bankruptcy or Insolvency; Involuntary Transfer
(a) Subject to the rights and powers of a trustee and
court in bankruptcy under the Bankruptcy Code of
1978 or any similar, succeeding law, if:
(i) any Partner files a petition in bankruptcy or
a petition to take advantage of any
insolvency law, makes an assignment for the
benefit of creditors, consents to or
acquiesces in the appointment of a receiver,
liquidator, or trustee of the whole or any
substantial portion of such Partner's
properties or assets, or files a petition or
answer seeking reorganization, arrangement,
composition, readjustment, liquidation,
dissolution, or similar relief under the
federal bankruptcy laws or any other
applicable laws; or
(ii) a court of competent jurisdiction shall enter
an order, judgment, or decree appointing a
receiver, liquidator, or trustee of any
Partner of the whole or any substantial
portion of the property or assets of such
Partner or approving a petition filed against
such Partner seeking reorganization,
arrangement, composition, readjustment,
liquidation, dissolution, or similar relief
under the federal bankruptcy laws or any
other applicable laws, and such order,
judgment or decree is not vacated, set aside
or stayed within two (2) months from the date
of entry thereof;
then the other Partner shall have the right,
but not the obligation, to purchase the
entire Interest of such bankrupt or insolvent
Partner. In the absence of such an election,
the business of the Partnership shall be
continued in the name of the Partnership, in
which case there shall be compliance with all
of the terms and conditions of this
Agreement.
(b) If a Partner suffers an Involuntary Transfer of part
or all of its Interest, the transferee shall not be
a partner hereunder and shall take such Interest or
part thereof subject to an option in favor of the
remaining Partner to acquire such Interest or part
thereof. Until the
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<PAGE>
closing of a sale upon such election by the
remaining Partner, the transferee shall be
entitled to any cash distributions, but shall
not be entitled to any vote, consent or
similar rights, if any. An "Involuntary Transfer"
shall mean a transfer due to dissolution of a
Partner or a transfer without the choice of a
Partner, including but not limited to a transfer to
a judgment creditor, lienholder or the holder of a
security interest or encumbrance, or a transfer
ordered by a court.
(c) If the other Partner elects to purchase the Interest
of such bankrupt or insolvent Partner or the
Interest from a transferee after an involuntary
transfer, such remaining Partner shall inform the
bankrupt or insolvent Partner or transferee of such
election within thirty (30) days after receipt of
notice of institution of bankruptcy proceedings,
assignment for the benefit of creditors, or
appointment of receiver, liquidator or trustee or
transfer. In such event, the entire Interest shall
be purchased at a price equal to eighty percent
(80%) of the fair market value of such Interest as
determined in accordance with Section 9 of this
Agreement, payable in cash at a closing set by the
purchasing Partner within ninety (90) days after the
determination of such value.
12. Disclosure of Other Business Interest Conflicts; Business
Opportunity
12.1 Other Business Interests
(a) No Partner shall be required to devote its entire
time or attention to the business of the
Partnership.
(b) All of the Partners understand that the Partners and
the stockholders of corporate Partners may be
interested, directly or indirectly, individually, or
through one or more Affiliates, in various other
businesses outside of Cook County, Illinois and the
State of Indiana, and non-gaming businesses in East
Chicago or elsewhere, not included in this
Partnership ("Unrelated Businesses"). The Partners
hereby agree that the creation of the Partnership
and the assumption by each of the Partners of its
duties hereunder shall be without prejudice to its
right (or the right of its Affiliates) to have
Unrelated Businesses and to receive and enjoy
profits or compensation therefrom.
12.2 Competition
Waterfront agrees that Showboat and its Affiliates
("Showboat Parties") are pursuing gaming opportunities
throughout the United States and other jurisdictions and
may be pursuing gaming opportunities in Cook County,
Illinois. Waterfront acknowledges that the Showboat
Parties may pursue such opportunities, including
opportunities in Cook County, Illinois. Neither the
Showboat Parties nor Waterfront shall engage in other
gaming activities in Indiana. If Showboat or Waterfront
or any of their Affiliates commence gaming operations in
Cook County, Illinois, the other Partner may purchase
fifteen percent (15%) of the first Partner's or its
Affiliates' interest in such gaming venture at the first
Partner's or its Affiliates' purchase price at any time
within one (1) year of the opening of such operation(s).
In the event that the Showboat Parties or Waterfront or
their Affiliates enter into a gaming opportunity in Cook
County, Illinois such Partner shall covenant that key
customers of the Project shall not be solicited by such
Partner to become customers of the gaming venture in Cook
County nor may such Partner assign management talent from
the Project to the Cook County gaming venture without the
consent of the other Partner, which consent shall not be
unreasonably withheld or delayed.
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The Partners acknowledge that Showboat and/or its
Affiliates operate other casinos and may in the future
operate additional casinos in different areas of the
world, including, without limitation, casinos in the state
of Illinois and that marketing efforts may cross over in
the same market and with respect to the same potential
customer base. Showboat, in the course of its Affiliates
managing the Vessel, may refer customers of the Vessel and
other parties to other facilities operated by Affiliates
of Showboat to utilize gaming, entertainment and other
amenities, without payment of any fees to the Partnership
or the Partners. The Partnership and the Partners
acknowledge and agree that Showboat or its Affiliates may
distribute promotional materials for Showboat or its
Affiliates and facilities, including casinos, at the
Riverboat. However, if such facility to which a customer
of the Project would be referred or which is promoted is
within a county identified below, the consent of
Waterfront shall be required, which consent may be
withheld in Waterfront's sole discretion.
<TABLE>
<CAPTION>
Michigan Counties Illinois Counties
<S> <C>
Berrien Cook
Van Buren DuPage
Allegan Grundy
Cass Lake
St. Joseph Will
Branch Kentall
Kankakee
</TABLE>
12.3 Business Opportunity
In the event that a Partner or any of its Affiliates has
the opportunity to acquire an interest in any Unrelated
Business (a "Business Opportunity"), whether individually
or as a member of a partnership or joint venture or other
entity or as a shareholder of a corporation, such Partner
or its Affiliate shall not be required to offer such
Business Opportunity to the Partnership or to the other
Partners except as expressly required hereunder, and the
failure of such Partner or its Affiliate to do so shall
not constitute a breach of such Partner's fiduciary duty
to the Partnership or to the other Partners.
13. Tax Matters; Books and Records; Accounting
13.1 Tax Matters
If unanimously approved by the Partners, the Partnership
shall file an election under Section 754 of the Code in
accordance with applicable regulations, to cause the basis
of the Partnership's property to be adjusted for federal
income tax purposes as provided by Sections 734 and 743 of
the Code.
No election shall be made by the Partnership or by any of
the Partners to be excluded from the application of the
provisions of Subchapter K of the Code or any similar
provisions of the state tax laws.
The Managing Partner is designated as the "Tax Matters
Partner."
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13.2 Indemnity Against Breach
Each Partner agrees that it will indemnify and hold the
Partnership and the other Partners harmless from and
against any and all losses, costs, liabilities and
expenses, including, but not limited to, attorneys' fees
of every kind and description, absolute and contingent,
which result from any breach of this Agreement by such
indemnifying Partner.
Except as may otherwise be decided pursuant to Section
13.1, in the event any claim or liability (which if proved
would constitute, or create a liability subject to
indemnification under this Section 13.2) is made or
asserted against the Partnership or a Partner
(collectively the "Accused party") it shall notify the
Partner which the Accused party believes should indemnify
the Accused party pursuant to the provisions of this
Section 13.2 (the "Notified Partner") in writing that such
claim or demand has been made. Upon receipt of such
notice, the Notified Partner (a) shall be entitled to
participate at its own expense in the defense of such suit
brought to enforce any claim, or (b) in the event the
Notified Partner and the Accused party agree that the
Notified Partner would be wholly liable for, and is
financially able to satisfy, such claim, the Notified
Partner may elect to assume the defense thereof, in which
event it shall not be liable for attorneys' fees and court
costs thereafter incurred by the Accused party in defense
of such action, or (c) the Notified Partner and the
Accused party may agree to conduct a defense jointly and
to share expenses in any manner in which they agree.
Payment of sums finally determined to be due hereunder
shall be made upon demand to the Partner or Partnership to
whom a right of indemnity has accrued under this Section
13.2. The Partner entitled to payment shall also be
entitled to receive reasonable attorneys' fees for
collection of such payment if not paid within thirty (30)
days after demand is made, if such Partner or the
Partnership prevails in any claims against another Partner
for any such payment hereunder.
13.3 Records
Accurate, current, and complete books, shall be maintained
on a calendar year and accrual basis in accordance with
generally accepted accounting principles consistently
applied and for tax purposes the Partnership's tax year
will be the tax year of the Managing Partner in accordance
with the federal tax laws. The Partnership shall keep any
and all other records necessary, convenient, or incidental
to recording the business and affairs of the Partnership.
The Managing Partner shall provide monthly, quarterly and
annual unaudited income statements, balance sheets and
changes in cash position to Waterfront not later than
twenty-eight (28) days after each calendar month, forty-
five (45) days after each calendar quarter and sixty (60)
days after each calendar year. Waterfront shall keep
monthly statements confidential at its board level.
The Managing Partner shall select the Partnership's
Auditor and shall determine all matters regarding methods
of depreciation and accounting and shall make all tax
elections and decisions relating to taxes.
The Partnership's Auditor shall audit the books and
records of the Partnership annually and render an opinion
on the financial statements of the Partnership as of the
end of each calendar year. Copies of the financial
statements certified by the Partnership's Auditor shall be
provided to the Partners within ninety (90) days following
the end of each calendar year. Waterfront may designate
an additional reputable accounting firm ("Special
Auditor") to conduct an audit of the
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<PAGE>
operations of the Partnership at Waterfront's expense;
provided, however, that if the additional audit by the
Special Auditor shall reveal a discrepancy in gross
revenues, net income or cash to be distributed to the
Partners of more than three percent (3%), Showboat shall
bear the costs of such audit.
The Partners and their representatives shall have the
right to inspect the books and records of the Partnership
at any time during normal business hours.
13.4 Notices
Any notice which may be or is required to be given
hereunder shall be deemed given 3 days after such notice
has been deposited, by registered or certified mail, in
the United States mail, addressed to the Partnership or
the Partners at the addresses set forth after their
respective names below, or at such different addresses as
to the Partnership or any Partner as it shall have
theretofore advised the other parties in writing:
Partnership: Showboat Indiana, Inc.
2800 Fremont Street
Las Vegas, Nevada 89104
with a copy to: Waterfront Entertainment and
Development, Inc.
8101 Polo Club Drive, Suite D
Merrillville, Indiana 46410
Waterfront: Waterfront Entertainment &
Development, Inc.
8101 Polo Club Drive, Suite D
Merrillville, Indiana 46410
with a copy to: Phillip L. Bayt, Esq.
Ice Miller Donadio & Ryan
One American Square
Indianapolis, Indiana 46282
Showboat: Showboat Indiana, Inc.
2800 Fremont Street
Las Vegas, Nevada 89104
with a copy to: John N. Brewer, Esq.
Kummer Kaempfer Bonner &
Renshaw
Seventh Floor
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
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<PAGE>
13.5 Reports to Partners
The Partners agree that the Managing Partner will provide
all of the information necessary for the preparation of a
U.S. Partnership Return of Income (Form 1065) for the
Partnership accounts within two (2) months after the close
of each calendar year. The Managing Partner agrees to
provide each of the Partners with all information
necessary for their timely preparation of the required
U.S. Income tax returns.
14. Trademarks and Licenses
14.1 Showboat Marks
Showboat, Inc., the parent corporation of Showboat, is the
owner of the marks and trade names listed on Exhibit C
(collectively "Showboat Marks"). Showboat, Inc. has
reserved to itself certain rights, most particularly those
rights concerned with the exploitation of the Showboat
Marks. Showboat, Inc. believes that the Showboat Marks
have and will increasingly become a popular and valuable
asset in various fields of use not only throughout the
United States but also in foreign countries.
14.2 Use of Marks by Partnership
Showboat shall cause Showboat, Inc. to grant to the
Partnership the non-exclusive license to use the Showboat
Marks in connection with the Project at no cost to the
Partnership only for such period of time that Showboat is
the Managing Partner (the "Use Period"), provided that
such use is in accord with reasonable criteria established
by Showboat, Inc. Upon termination of the Use Period all
uses of the Showboat Marks shall cease and the Partnership
shall remove from the vessel and the Casino Facilities any
furnishings, personal property, fixtures and other items
which contain any of the Showboat Marks.
15. General Provisions
15.1 Foreign Gaming Licenses
If Showboat determines, at its sole discretion, that any
of its gaming licenses in other jurisdictions may be
adversely affected or in jeopardy because of its status as
a Partner, Showboat shall have the option at any such time
to sell its Interest, subject to the right of first
refusal granted to Waterfront. If this occurs prior to or
within the first six (6) months after Opening and
Waterfront elects its right of first refusal, Showboat
shall receive as sole compensation for Waterfront's
purchase of its Interest, the Capital Contribution
Showboat has made to the Partnership plus interest thereon
at the Federal funds rate for the period during which its
Capital Contribution was made to the Partnership. If this
occurs after the first six (6) months after Opening and
Waterfront elects its right of first refusal, Showboat
shall receive as sole compensation for Waterfront's
purchase of its interest the fair market value of such
interest determined in accordance with Section 9, payable
within ninety (90) days after the determination of the
fair market value. In case of a sale by Showboat of its
Interest under this Section, the Management Agreement
shall terminate upon the consummation of such sale.
15.2 Entire Agreement
This Agreement constitutes the entire understanding of the
Partners with respect to the subject matter hereof, and
there are no understandings, representations, or
warranties of any kind
36
<PAGE>
between the Partners except as expressly set forth
herein and as set forth in that certain agreement of
even date among Showboat, Waterfront and Showboat, Inc.
15.3 Counterparts
This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original and all of which
shall constitute one and the same instrument.
15.4 Captions
The captions in this Agreement are solely for the
convenience of the parties and do not constitute a part of
this Agreement.
15.5 Amendment
All additions, changes, corrections or amendments to the
terms, responsibilities, obligations, and conditions
contained herein must and will be in writing signed by all
the Partners before they become effective.
15.6 Grammatical Changes
Whenever from the context it appears appropriate, each
term stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated
in either the masculine, the feminine or the neuter gender
shall include the masculine, feminine and neuter gender as
the circumstances require.
15.7 Successors and Assigns
Subject to the restrictions on transfer expressly set
forth in this Agreement, this Agreement shall inure to the
benefit of and be binding upon, the successors and assigns
of the parties hereto.
15.8 Consent of Partners
Whenever consent of the Partners is required for any
action, such consent shall be by a written instrument
signed by the Partners, sent to the Partners in the manner
provided for notices or by facsimile transmission and
deposited in the regular mail prior to the action
requiring the consent being made.
15.9 No Waiver
(a) The failure of any Partner or the Partnership to
insist, in any one or more instances, upon
observance and performance of any provision of this
Agreement shall not be construed as a waiver of such
provision or the relinquishment of any other right
granted herein or of the right to require future
observance and performance of any such provision or
right.
(b) The waiver by any Partner or the Partnership of any
breach of any provision herein contained shall not
be deemed to be a waiver of such provision on
account of any other breach of the same or any other
provision of this Agreement.
(c) No provision of this Agreement shall be deemed to
have been waived, unless such waiver be in writing
and signed by the person sought to be charged with a
waiver of such provision.
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<PAGE>
15.10 Disputes
In the event any dispute should arise between the parties
hereto where the parties cannot agree on a matter
requiring unanimity, to enforce any provision hereof, for
damages by reason of any alleged breach hereunder, for a
declaration of such party's rights or obligations
hereunder, or for any other remedy, such dispute shall be
settled by arbitration by a single arbitrator pursuant to
the rules of the American Arbitration Association. Such
arbitration shall be conducted in East Chicago, Indiana in
accordance with the rules then in effect by the American
Arbitration Association, provided that the parties shall
be entitled to afford themselves of the discovery allowed
under the then current rules of Federal Civil Procedures
for the Northern District of Indiana. The decision of the
arbitrator shall be final and may be entered as a judgment
by a court of competent jurisdiction for any matter in
controversy below $1,000,000. The decision of the
arbitrator where the matter in controversy is in excess of
that amount shall be appealable to a circuit or superior
court in Lake County, Indiana for a mistake of law or
fact. The prevailing party (as determined by the
arbitrator) shall be entitled to recover such amounts, if
any, as the arbitrator may adjudge to be reasonable
attorneys' fees for the prevailing party; and such amount
shall be included in any judgment rendered in such action
or proceeding.
15.11 Partial Invalidity
If any term, covenant, or condition of this Agreement or
the application thereof to any person or circumstance
shall, to any extent, be invalid or unenforceable, the
remainder of this Agreement or the application of such
term, covenant, or condition to persons or circumstances,
other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each
term, covenant, or condition of this Agreement shall be
valid and enforced to the fullest extent permitted by law.
15.12 Cooperation with Gaming Authorities
The Partners shall use their best efforts to cause its
officers, directors, employees and stockholders to provide
the Nevada Gaming Authorities, the New Jersey Casino
Control Commission or such other gaming authority having
jurisdiction over Showboat or its affiliates with such
documents and information necessary for Showboat to (i)
obtain the approval of the Nevada Gaming Authorities or
the New Jersey Casino Control Commission to conduct gaming
operations in the state of Indiana, and (ii) maintain
Showboat's and Showboat's Affiliates gaming licenses.
15.13 Administrative/Development/Trademark/License Fees
Showboat is a subsidiary of Showboat, Inc. Showboat, Inc.
through another subsidiary ("Related Subsidiary") provides
development, management, administrative, trademark and
licensing services (the "Services") to its operating
subsidiaries for a fee. The Partners agree that Showboat
may enter into agreements for such Services for the
benefit of the Project. Provided, however, the fees
earned by the Related Subsidiary for Services rendered to
the Partnership shall be paid only from Partnership
distributions to Showboat unless otherwise consented to in
writing by Waterfront.
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15.14 Applicable Law: Jurisdiction
(a) The laws of the State of Indiana shall govern the
validity, performance, and enforcement of the terms
and conditions of this Agreement and any other
obligation secured hereby.
(b) The Partners agree that any proceedings with respect
to the performance or enforcement of this Agreement
shall be brought in the state of Indiana.
15.15 Financing Fees
The Partners agree that, except with respect to the
Development Financing, neither Partner nor any of their
affiliates, shareholders, parents, or other related
entities will seek fees from the Partnership or any other
related person or entity for arranging financing,
extending guaranties or otherwise lending comfort,
security or credit support for Partnership financing or
for bringing other assets to the Partnership other than as
specified herein. This Section 15.15 shall not prohibit
the Partnership from paying fees to third parties
unrelated to the Partners.
IN WITNESS WHEREOF, the parties have executed this Agreement in
multiple originals as of the date first hereinabove written.
WATERFRONT ENTERTAINMENT AND
DEVELOPMENT, INC.
By:________________________________
MICHAEL PANNOS, PRESIDENT
SHOWBOAT INDIANA INVESTMENT LIMITED
PARTNERSHIP, a Nevada Limited
Partnership
By: Showboat Indiana, Inc., its
General Partner
By:________________________________
J. KELL HOUSSELS, III,CHAIRMAN OF
THE BOARD
<PAGE>
AGREEMENT OF PARTNERSHIP
OF
SHOWBOAT MARINA INVESTMENT PARTNERSHIP
AN INDIANA GENERAL PARTNERSHIP
<PAGE>
AGREEMENT OF PARTNERSHIP
OF
SHOWBOAT MARINA INVESTMENT PARTNERSHIP
AN INDIANA GENERAL PARTNERSHIP
TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS 1
Affiliate 1
Cash Available for Distribution 2
Code 2
Depreciation 2
Gross Asset Value 2
Gross Revenue 2
Interest or Partnership Interest 3
Majority Interest 3
Net Profits or Net Losses 3
Nonrecourse Debt or Partner Nonrecourse Debt 3
Original Capital Contribution 3
Partner 3
Partnership 3
Partnership Property 4
Project 4
Regulations 4
Showboat Marina 4
Unrecovered Capital Contribution 4
ARTICLE II. FORMATION AND ORGANIZATION MATTERS 4
Agreement of General Partnership 4
Fictitious Business Name Statement 4
Name 5
Purpose 5
Term 5
Principal Place of Business 5
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Title to Property 5
ARTICLE III. CAPITAL CONTRIBUTIONS 6
Showboat Indiana 6
Waterfront 6
No Interest on Capital Contributions 6
Withdrawal of Capital Contributions 6
Additional Capital Contributions 6
Failure to Contribute 7
Adjustment of Capital Contributions 8
Put Option 8
ARTICLE IV. CAPITAL ACCOUNTS 9
Increases 9
Decreases 10
Other Adjustments 10
General Provisions 10
ARTICLE V. LOANS 11
Partner's Loans to the Partnership 11
Other Loans to the Partnership 11
Showboat Indiana Advances and Affiliate Loans 12
Loans from the Partnership 12
ARTICLE VI. ALLOCATIONS OF PROFITS AND LOSSES 12
Determination of Net Profits and Net Losses 12
Net Profits 13
Net Losses 13
Special Allocations 13
Curative Allocations 14
Other Allocation Rules 14
Tax Allocations Code Section 704(c) 15
Certain Elections 16
ARTICLE VII. DISTRIBUTIONS 16
Operating Distributions 16
Distributions Upon Dissolution or Liquidation 17
Restoration of Capital Account 17
Method of Distribution 18
Distributions to Owners of Record 18
ARTICLE VIII. BOOKS AND RECORDS, ACCOUNTING, AND TAXES 18
Fiscal Year of Partnership 18
Books and Records 18
Tax Returns and Reports to Partners 19
Gross Value Adjustment of Partnership Assets 19
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ARTICLE IX. POWERS AND OBLIGATIONS OF PARTNERS 19
Authority of Showboat Indiana 19
Duties of Showboat Indiana 20
Partnership Meetings 21
Activities of Partners 21
Liability of the Partners 22
Indemnification of the Partners 22
Representations 22
Right to Rely Upon the Authority
of Showboat Indiana 23
ARTICLE X. BANK ACCOUNTS 23
Bank Accounts 23
Expenses of the Partnership 23
ARTICLE XI. TRANSFER OF A PARTNERSHIP INTEREST 23
Transfer of a Partner's Interest 23
Right of First Refusal 24
Continuing Liability 24
Effectiveness of Substitution 25
Further Limitations of Transfers 26
Payment to Withdrawing Partner 26
ARTICLE XII. DISSOLUTION OF PARTNERSHIP 26
Events of Dissolution 26
Winding-Up of Partnership Business 27
Distribution of Partnership Property
Upon Dissolution 27
Assets Other Than Cash 27
Capital Account Adjustments 28
ARTICLE XIII. NOTICES 28
ARTICLE XIV. DISCLOSURE OF OTHER BUSINESS
INTEREST CONFLICTS; BUSINESS OPPORTUNITY 28
Other Business Interests 28
Competition 28
Business Opportunity 29
ARTICLE XV. MISCELLANEOUS PROVISIONS 30
Limited Power of Attorney
Amendment 31
Binding Effect; Further Instruments 33
Headings 33
Gender and Number 33
Severability 33
Waiver of Action for Partition 33
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Governing Law 33
Arbitration; Attorneys' Fees and Costs 33
Integration 34
Counterparts 34
Exhibits 34
<PAGE>
AGREEMENT OF PARTNERSHIP
OF
SHOWBOAT MARINA INVESTMENT PARTNERSHIP
AN INDIANA GENERAL PARTNERSHIP
THIS AGREEMENT OF PARTNERSHIP of SHOWBOAT MARINA INVESTMENT
PARTNERSHIP, an Indiana general partnership (this "Agreement"),
is made as of this 1st day of March, 1996, by and between
SHOWBOAT INDIANA INVESTMENT LIMITED PARTNERSHIP, a Nevada limited
partnership ("Showboat Indiana"), and WATERFRONT ENTERTAINMENT
AND DEVELOPMENT, INC., an Indiana corporation ("Waterfront").
RECITALS
A. The parties hereto have joined together for the purpose
of forming a general partnership pursuant to the Uniform
Partnership Act under the laws of the state of Indiana, upon the
terms and conditions and for the purposes hereinafter set forth.
B. The parties desire to form a general partnership on the
terms and conditions set forth herein, for the purpose of holding
a one percent (1%) partnership interest in the Showboat Marina
Casino Partnership, an Indiana general partnership.
NOW, THEREFORE, in consideration of the mutual promises
contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, and with the intention of being bound by this
Agreement, the parties stipulate and agree as follows:
ARTICLE I. DEFINITIONS
For purposes of this Agreement, and in addition to terms
defined elsewhere herein, the following terms shall have the
following meanings:
1.01 AFFILIATE
The term Affiliate shall refer to (i) any person
("first person") directly or indirectly controlling, controlled
by, or under common control with a second person, or owning or
controlling 10% or more of the outstanding securities of that
second person; (ii) any officer, director, partner or member of
the immediate family of that first person; and (iii) if that
second person is an officer, director or partner, any company for
which that second person acts in that capacity. "Person"
includes any individual, partnership, corporation, limited
liability company, association or other legal entity. The term
"control" (including the terms "controlled by" and
<PAGE>
"under common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise.
1.02 CASH AVAILABLE FOR DISTRIBUTION
The Cash Available for Distribution shall mean Gross Revenue
less cash expenditures (including but not limited to, debt
service and operating expenses) and amounts set aside for
reserves, but not including any amount which, if distributed,
would cause a default of any covenant contained in any financing
agreement between the Partnership and a third party lender.
1.03 CODE
The Internal Revenue Code of 1986, as amended, codified as
Title 26 of the U.S. Code.
1.04 DEPRECIATION
For each fiscal year or other period, an amount equal to the
depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period,
except that if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning
of such year or other period, depreciation shall be an amount
which bears the same ratio to such beginning Gross Asset Value as
the federal income tax depreciation, amortization or other cost
recovery deduction for such year or other period bears to such
beginning adjusted tax basis; provided, however, that if the
federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, depreciation shall be
determined with reference to such beginning Gross Asset Value
using any reasonable method selected by Showboat Indiana.
1.05 GROSS ASSET VALUE
With respect to any asset, the asset's adjusted basis for
federal income tax purposes, except that the initial Gross Asset
Value of any asset contributed by a Partner to the Partnership
shall be the fair market value of such asset, as determined by
the contributing Partner and the Partnership. The Gross Asset
Value of any Partnership assets distributed to any Partner shall
be the gross fair market value of such asset on the date of
distribution.
1.06 GROSS REVENUE
All of the revenue generated by the Partnership Property and
miscellaneous sources, including, without limitation, all cash
receipts from operation of the Partnership Property and cash
proceeds from (a) any loan secured by the Partnership Property,
(b) a sale or refinancing of all or part of the Partnership
Property remaining after retirement of debt secured by such
Partnership Property and all expenses relating to the transaction
and retention of reasonable reserves, and (c) net condemnation
proceeds.
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<PAGE>
1.07 INTEREST OR PARTNERSHIP INTEREST
The proportionate interest of a Partner in the profits,
losses, and capital of the Partnership, set forth as such
Partner's "Percentage Interest" on Exhibit A hereto.
1.08 MAJORITY INTEREST
Any combination of Partnership Interests that, in the
aggregate, constitutes more than fifty percent (50%) of all
Partnership Interests.
1.09 NET PROFITS OR NET LOSSES
The net income or loss of the Partnership, as determined by
the auditors or accountants employed by the Partnership, in
accordance with Section 703 of the Code, applied consistently
with prior periods.
1.10 NONRECOURSE DEBT OR PARTNER NONRECOURSE DEBT
Any debt or liability of the Partnership as to which no
Partner has any liability for repayment beyond its investment in
the Partnership.
1.11 ORIGINAL CAPITAL CONTRIBUTION
The amount contributed by a Partner to the capital of the
Partnership upon its formation or upon the Partner's admission
thereto.
1.12 OPENING
The date the Project opens to the public for business for
gaming activities by paying customers.
1.13 PARENT AGREEMENT
The Amended & Restated Showboat Marina Partnership Agreement
between Showboat Indiana and Waterfront dated as of March 1,
1996.
1.14 PARTNER
Initially, Showboat Indiana and Waterfront, and thereafter,
any person or entity which holds a Partnership Interest and is
admitted as a substitute Partner in accordance with this
Agreement.
1.15 PARTNERSHIP
Showboat Marina Investment Partnership, an Indiana general
partnership.
3
<PAGE>
1.16 PARTNERSHIP PROPERTY
The Partnership's interest in such property, whether real or
personal, as may from time to time belong to the Partnership.
1.17 PROJECT
The excursion cruise vessel casino development to be
acquired and developed by Showboat Marina in the City of East
Chicago, Indiana, and operated on Lake Michigan.
1.18 REGULATIONS
The regulations promulgated by the U.S. Treasury Department
under the Code.
1.19 SHOWBOAT MARINA
Showboat Marina Casino Partnership, an Indiana general
partnership.
1.20 UNRECOVERED CAPITAL CONTRIBUTION
The Original Capital Contribution made by a Partner to the
Partnership reduced by any distributions to said Partner, which
constitute a return of capital, thereby decreasing such Partner's
Capital Account.
1.21 Undefined Terms
Capitalized terms used but not defined herein that are
defined in the Parent Agreement shall have the meaning ascribed
thereto in the Parent Agreement.
ARTICLE II. FORMATION AND ORGANIZATION MATTERS
2.01 AGREEMENT OF GENERAL PARTNERSHIP
Showboat Indiana and Waterfront agree to associate
themselves together as a general partnership pursuant to the
provisions of the Indiana Uniform Partnership Act (IC 23-4-1-1 et
seq.), as amended from time to time, and upon the terms and
conditions set forth in this Agreement.
2.02 FICTITIOUS BUSINESS NAME STATEMENT
Showboat Indiana shall execute and promptly cause to be
filed in the applicable Indiana counties, a certificate of
assumed or fictitious business name, or such other document that
may be required, with respect to the name of the Partnership and
with respect to any other assumed or fictitious business names
used by the Partnership in carrying out its purpose.
4
<PAGE>
2.03 NAME
The name of the Partnership shall be Showboat Marina
Investment Partnership.
2.04 PURPOSE
The purposes of the Partnership are (a) to hold a one
percent (1%) interest in Showboat Marina to be purchased at a
price of $390,000, (b) to carry on any other activities necessary
or incidental to the foregoing, and (c) to engage in any other
business if such business is approved and agreed upon unanimously
by the Partners prior to entering into such business.
2.05 TERM
The term of the Partnership shall commence upon the
execution of this Agreement and shall continue until the earlier
of either (i) December 31, 2023; or (ii) the sale of all or
substantially all of the Partnership Property (the "Initial
Term"); unless the life of the Partnership shall be terminated or
extended pursuant to law or any provision of this Agreement. The
term of the Partnership shall be continued automatically for
successive one-year terms (each, a "Renewal Term") after December
31, 2023 until terminated as provided herein. If Showboat Indiana
desires that the Partnership terminate upon the expiration of the
Initial Term of the Partnership or any Renewal Term thereafter,
Showboat Indiana shall give written notice to Waterfront of its
intention to cause such termination at least ninety (90) days
prior to the end of the Initial Term or any Renewal Term
thereafter. The Partnership shall terminate thereafter at the end
of the Initial Term or such Renewal Term, as the case may be, and
shall thereafter be liquidated in accordance with the provisions
hereof.
2.06 PRINCIPAL PLACE OF BUSINESS
The location of the principal place of business of the
Partnership shall be: 2001 E. Columbus Drive, East Chicago,
Indiana 46312, or at such other place as Showboat Indiana may
from time to time determine.
2.07 TITLE TO PROPERTY
Legal title to all Partnership Property shall be taken and
at all times held in the name of the Partnership.
2.08 LICENSING
Each Partner covenants to use its best efforts to diligently
obtain all state and local licenses, including gaming licenses,
necessary to conduct gaming operations in the Project. The
Partners agree to provide each other with copies of all
applications, reports, letters and other documents filed or
provided to the state or local licensing authorities. In the
event that either Partner as a result of a communication or
action by the Commission or on the basis of consultations with
its gaming counsel and/or other professional advisors, reasonably
believes in good faith, with the concurrence of the other
Partner's board of directors, that the Commission is
5
<PAGE>
likely to: (i) fail to license and/or approve the Partnership or
its Affiliates to own and operate any gaming related businesses;
(ii) grant required gaming licensing and/or approval only upon
terms and conditions which are unacceptable to Showboat Indiana
and Waterfront; (iii) significantly delay the licensing and/or
approval contemplated under this Agreement; or (iv) revoke any
existing license or casino operating contract of the Partnership
or its Affiliates, due to concerns of any aspect of the
suitability of a particular shareholder or owner of an interest
in a Partner or its Affiliate, then the Partner shall divest
itself of its interest in the Affiliate or cause such shareholder
or owner of an interest in the Partner or the Affiliate to divest
itself of such interest. If, however, the events described in
subparagraphs (i) through (iv) arise from concerns with respect
to the suitability of a particular Partner ("Selling Party") then
the Selling Party's entire Interest in the Partnership may be
purchased by the other Partner at a purchase price equal to the
greater of the then fair market value of the Selling Party's
Partnership Interest.
ARTICLE III. CAPITAL CONTRIBUTIONS
3.01 SHOWBOAT INDIANA
Showboat Indiana shall contribute Fifty-Five Dollars
($55.00) to the capital of the Partnership, whether such funds
shall be contributed as debt or equity, as Showboat Indiana shall
determine, in its sole and absolute discretion. The Interest of
Showboat Indiana in the Partnership shall be fifty-five percent
(55%).
3.02 WATERFRONT
Waterfront shall contribute Forty-Five Dollars ($45.00) to
the capital of the Partnership. The Interest of Waterfront in
the Partnership shall be forty-five percent (45%).
3.03 NO INTEREST ON CAPITAL CONTRIBUTIONS
All contributions to the capital of the Partnership shall be
made in cash. Capital contributions to the Partnership shall not
bear interest.
3.04 WITHDRAWAL OF CAPITAL CONTRIBUTIONS
Except as expressly provided in this Agreement, no part of
the contributions of any Partner to the capital of the
Partnership may be withdrawn by such Partner without the prior
written consent of Showboat Indiana. The Partners shall not have
the right to receive property, other than cash, in return for
their capital contributions, but this shall not be construed to
limit the Partners' rights to receive their respective Interest
in any property distributions made pursuant to this Agreement.
3.05 ADDITIONAL CAPITAL CONTRIBUTIONS
At such time or times as the Partners shall unanimously
determine that additional capital ("Additional Capital
Contribution") is required by the Partnership, such Additional
Capital Contribution shall be made by the Partners in proportion
to the Partners' Interests in the
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Partnership. If any Partner shall fail to make any Additional
Capital Contribution, then Showboat Indiana shall have the right
to acquire, on behalf of the Partnership, such additional capital
as may be required, from whatever sources, in whatever amounts,
and upon whatever terms and conditions Showboat Indiana deems
necessary and appropriate, in its business judgment, to meet the
ongoing needs of the Partnership. To obtain the required capital
on behalf of the Partnership, the Partners shall each be entitled
to the remedies set forth below.
3.06 FAILURE TO CONTRIBUTE
If either Waterfront or Showboat Indiana should fail to make
any Capital Contribution or a required loan on or before the date
such contribution or loan is due (the "Defaulting Partner"), such
failure shall constitute a default under this Agreement and the
other Partner (the "Non-Defaulting Partner") may, at any time
thereafter while the contribution remains unpaid, serve written
notice ("Notice of Demand") upon the Defaulting Partner requiring
it to make the Capital Contribution or loan, together with all
costs and expenses that may have been incurred by the Partnership
by reason of the nonpayment. The Notice of Demand shall specify
a date (which shall be not less than ten (10) days after the date
of the notice) on which, and the place at which, the contribution
or loan and such costs and expenses are to be paid. In the event
of the nonpayment of the additional Capital Contribution or loan
on such date and at such place, the Non-Defaulting Partner shall
have the right:
(a) To buy the Defaulting Partner's Interest for an
amount equal to the fair market value of the Defaulting
Partner's Interest, computed as set forth in Section 9.1 of
the ParentAgreement (and for purposes of such computation,
the valuation date shall be the end of the month next
preceding the month in which such contribution or loan
should have been made, as set forth in the notice
contemplated by this Section), such amount to be payable in
cash at a closing to be held in East Chicago, Indiana on a
date set by the Non-Defaulting Partner which is not later
than ninety (90) days after the Non-Defaulting Partner gives
written notice of such election to the Defaulting Partner
Suchnotice must be given no later than thirty (30) days
after the expiration of the period specified in the Notice
of Demand, provided, however, that the closing may be
extended for a reasonable period of time in the event the
procedures set forth in Section 9 of the Parent Agreement
have not been completed within said 90-day period;
(b) To sue the Defaulting Partner or any guarantor to
cause such Capital Contribution or loan to be made or to sue
for damages for the failure to do so; or
(c) To advance to the Partnership an amount equal to
the Defaulting Partner's required additional Capital
Contribution or loan, and the amount so advanced, together
with any corresponding Capital Contribution made by the Non-
Defaulting Partner for its own account shall be considered
loans to the Partnership and shall be repaid by the
Partnership to such Non-Defaulting Partner with interest
thereon at an annual rate four (4) percentage points above
the rate shown in THE WALL STREET JOURNAL (or its successor
publication) from time to time as the prime rate for money
center banks but with a floor of twelve percent (12%) per
annum, which rate shall be determined on the first day of
each
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<PAGE>
month and shall be applied to the loan balance for the
month. However, in no event shall the interest rate exceed
the maximum lawful rate. Such interest shall be payable
quarterly.
3.07 ADJUSTMENT OF CAPITAL CONTRIBUTIONS
As of any date, a Partner's capital contribution shall be
deemed to be adjusted as follows:
(a) Increased by the amount of any Partnership
liabilities which, in connection with distributions pursuant
to Section 7.01 or Section 7.02 hereof, are assumed by such
Partner or are secured by any Partnership Property
distributed to such Partner; and
(b) Reduced by the amount of cash and the Gross Asset
Value of any Partnership Property distributed to such
Partner pursuant to Section 7.01 or Section 7.02 hereof; and
(c) Reduced by the amount of any liabilities of such
Partner assumed by the Partnership or which are secured by
any property contributed by such Partner to the Partnership.
3.08 PUT OPTION
Upon the third anniversary of the commencement of the
Opening and ending sixty (60) days thereafter, Waterfront may
elect to require Showboat Indiana to purchase all or a portion of
Waterfront's Partnership Interest (the "Disposition Portion")
either by (i) a series of three (3) payments as described below,
or (ii) by distributing the entire Partnership Distributable
Cash, cash from sales or refinancing and liquidating
distributions to Waterfront for a period of four (4) years on
account of Showboat Indiana's acquisition of Waterfront's
Disposition Portion. Showboat Indiana shall have a period of
sixty (60) days to elect option (i) or (ii).
If Showboat Indiana elects option (i) above, Showboat
Indiana shall immediately purchase, at a minimum, one-third (1/3)
of Waterfront's Disposition Portion. The remaining portion of
Waterfront's Disposition Portion shall be purchased by Showboat
Indiana in no more than two (2) additional installments, on the
fifth anniversary and the seventh anniversary of the Opening. At
the fifth anniversary Showboat Indiana shall purchase, at a
minimum, one-half (1/2) of Waterfront's remaining Disposition
Portion not purchased on the third anniversary. Any remaining
Disposition Portion shall be purchased by Showboat Indiana on the
seventh (7th) anniversary of the Opening.
The purchase price of Waterfront's Disposition Portion shall
be calculated by multiplying (i)the percentage Partnership
Interest represented by the Disposition Portion to be purchased
by Showboat Indiana, by (ii) one percent (1%) of the Fair Value
of the Project determined in accordance with the formula
specified in Article 6 of the Parent Agreement.
The Partnership may not incur additional indebtedness to
fund the purchase price for Waterfront's Disposition Portion
unless (i) Waterfront's entire Partnership interest is purchased
or (ii) Showboat Indiana obtains Waterfront's written consent,
which may be granted or withheld in
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Waterfront's discretion. The purchase price may be paid in cash
or with registered shares of common stock of Showboat, Inc.,
Showboat Indiana's parent corporation.
In the event Showboat Indiana elects option (ii) above, (a)
sums distributed to Waterfront in excess of amounts otherwise
distributable to it shall be deemed a payment on account of the
purchase price of Waterfront's Disposition Portion, and (b) upon
the seventh (7th) anniversary of the Opening all of Disposition
Portion must be purchased. Waterfront's Percentage Interest in
the Disposition Portion shall pass to Showboat Indiana upon full
payment therefor.
The Partners agree that, notwithstanding the foregoing
provisions of this Section, if Showboat Indiana, in its sole
discretion, determines within ten (10) days after Waterfront's
election that it is unwilling for any reason to pay the purchase
price prescribed in this Section for Waterfront's Disposition
Portion as determined by the formula referred to in this Section,
then the Partnership shall retain reputable investment bankers
who shall market the Partnership or its assets for sale to the
highest reputable bidder. Waterfront and Showboat Indiana shall
be permitted to submit bids for the purchase of the Partnership
or its assets in such event.
ARTICLE IV. CAPITAL ACCOUNTS
There shall be established and maintained on the books of
the Partnership a separate capital account ("Capital Account")
for each Partner. The Partnership shall maintain such Capital
Accounts in accordance with the capital account maintenance rules
of Regulations Section 1.704-1(b)(2)(iv), as such rules may be
amended from time to time. Unless otherwise required by such
rules, the Capital Account of each Partner shall be maintained
for such Partner in accordance with the following provisions:
4.01 INCREASES
Each Partner's Capital Account shall be increased by:
(a) The amount of the Partner's cash or, to the extent
permitted by the terms of any Development Financing, in-
kind capital contributions to the Partnership; and
(b) The fair market value of any property contributed
by the Partner to the Partnership (net of liabilities
secured by any such contributed property that the
Partnership is considered to assume or take subject to for
purposes of Section 752 of the Code); and
(c) The amount of Net Profits (or items thereof)
allocated to the Partner pursuant to Article VI.; and
(d) Any other increases required by the Regulations.
If Section 704(c) of the Code applies to property
contributed by a Partner to the Partnership, then the
Partners' Capital Accounts shall be adjusted in accordance
with Regulations Section 1.704-1(b)(2)(iv)(g).
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4.02 DECREASES
Each Partner's Capital Account shall be decreased by:
(a) The amount of Net Losses allocated to the Partner
pursuant to Article VI.; and
(b) All amounts paid or distributed to the Partner
pursuant to Article VII., other than amounts required to be
treated as a payment for property or services under the
Code; and
(c) The fair market value of any property distributed
in kind to the Partner (net of any liabilities secured by
such distributed property that such Partner is considered to
assume or take subject to for purposes of Section 752 of the
Code); and
(d) Any other decreases required by the Regulations.
4.03 OTHER ADJUSTMENTS
(a) Before decreasing a Partner's Capital Account (as
described above) with respect to the distribution of any
property to such Partner, all Partners' Capital Accounts
shall be adjusted to reflect the manner in which the
unrealized income, gain, loss, and deduction inherent in
such property (that has not been previously reflected in the
Partners' Capital Accounts) would be allocated among the
Partners if there were a taxable disposition of such
property by the Partnership on the date of distribution, in
accordance with Regulations Section 1.704-1(b)(2)(iv)(e).
(b) Partners' Capital Accounts shall be adjusted in
accordance with, and upon the occurrence of an event as
permitted by Regulations Section 1.704-1(b)(2)(iv)(f), or
upon the receipt of additional Capital Contributions
pursuant to Section 3.06(b), hereof, to reflect a
revaluation of the Partnership's assets on the Partnership's
books. Such adjustments to the Partners' Capital Accounts
shall be made in accordance with Regulations Section 1.704-
1(b)(2)(iv)(g) for allocations of depreciation, depletion,
amortization and gain or loss with respect to such revalued
property.
4.04 GENERAL PROVISIONS
(a) COMPLIANCE WITH REGULATIONS - All provisions of
this Agreement relating to the maintenance of Capital
Accounts are intended to comply with Regulations Section
1.704-1(b)(2)(iv), and shall be interpreted and applied in a
manner consistent with such Regulations. In the event
Showboat Indiana shall determine that it is prudent to
modify the manner in which the Capital Accounts, or any
debits or credits thereto (including, without limitation,
debits or credits relating to liabilities which are secured
by contributed or distributed property or which are assumed
by the Partnership or Showboat Indiana) are computed in
order to comply with such Regulations, Showboat Indiana may
make such modification, provided that it is not likely to
have a material effect on the amount
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distributable to any Partner pursuant to Section 7.01(a) and
Section 7.02 hereof upon the dissolution of the Partnership.
(b) DETERMINATION OF LIABILITIES - In determining the
amount of any liability for purposes of Sections 4.01(b) and
4.02(c) above, there shall be taken into account Code
Section 752(c) and any other applicable provisions of the
Code and any Regulations promulgated thereunder.
(c) FEDERAL INCOME TAX ELECTIONS - Showboat Indiana
may , on behalf of the Partnership, make all elections for
federal income tax purposes, including but not limited to an
election, pursuant to Code Section 754, to adjust the basis
of the Partnership's assets under Code Sections 734 or 743.
In the event an election pursuant to Code Section 754 is
made, upon the adjustment to the basis of the Partnership's
assets, the Capital Accounts of all Partners shall be
adjusted in accordance with the requirements of Regulation
Section 1.704-1(b)(2)(iv)(m).
(d) TRANSFER OF PARTNERSHIP INTEREST - In the event
any Interest in the Partnership is transferred to a
transferee who is entitled to be admitted to the Partnership
as a substitute Partner in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the
transferred Interest.
ARTICLE V. LOANS
5.01 PARTNER'S LOANS TO THE PARTNERSHIP
No Partner shall lend or advance money to or for the
Partnership's benefit without the prior written consent of
Showboat Indiana. If any Partner shall make loans or lend money
to the Partnership or advance money on its behalf, the amount of
any such loan or advance shall not be an increase in the
Partner's Capital Contribution or Interest, nor shall it entitle
such Partner to any increase in his share of the distributions of
the Partnership, nor subject such Partner to any greater
proportion of the losses which the Partnership may sustain. The
amount of any such loan or advance shall be a debt due from the
Partnership to such Partner, at such rates and on such terms as
shall be reasonably determined by Showboat Indiana.
5.02 OTHER LOANS TO THE PARTNERSHIP
If Showboat Indiana determines that funds are reasonably
necessary for maintaining and protecting the assets of the
Partnership, conducting its business, or making capital
improvements (or similar expenditures), Showboat Indiana is
authorized (but not obligated) to borrow the needed funds on the
Partnership's behalf on commercially reasonable terms existing at
the time of the borrowing, and all or any portion of the
Partnership Property may be pledged or conveyed as security for
the indebtedness. In order for the Partnership to acquire its
interest in Showboat Marina, a loan or advance will be obtained
from Showboat Marina Partnership.
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5.03 SHOWBOAT INDIANA ADVANCES AND AFFILIATE LOANS
From time to time, Showboat Indiana may advance to the
Partnership such funds as shall be required for the business
expenses or other obligations of the Partnership. Such loan or
advance shall become an obligation and liability of the
Partnership, shall be evidenced in writing by a promissory note
(whether secured by Partnership Property or unsecured) or other
document of indebtedness and shall bear interest and otherwise be
subject to the terms and conditions as shall be provided in such
note or document; provided, however, any interest paid to
Showboat Indiana on any such loans or advances shall not exceed
the interest that would be charged by independent commercial
lending institutions or private lenders for similar loans for the
same purpose and in the same locality as the Partnership
Property. Showboat Indiana shall not require a prepayment charge
or penalty on any such loan. Showboat Indiana shall not provide
permanent financing for the Partnership.
5.04 LOANS FROM THE PARTNERSHIP
No loans shall be made from the Partnership to any Partner.
ARTICLE VI. ALLOCATIONS OF PROFITS AND LOSSES
6.01 DETERMINATION OF NET PROFITS AND NET LOSSES
The amount of Net Profits or Net Losses available for
allocation for each fiscal year or other period, shall be an
amount equal to the Partnership's taxable income or loss for such
year or period, determined in accordance with Code Section 703(a)
(for this purpose, all items of income, gain, loss or deduction
required to be stated separately pursuant to Code Section
703(a)(l) shall be included in taxable income or loss) with the
following adjustments:
(a) Any income of the Partnership that is exempt from
federal income tax or not otherwise taken into account in
computing net profits or net losses pursuant to this Section
6.01, shall be added to such taxable income or loss; and
(b) Any expenditures of the Partnership described in
Code Section 705(a)(2)(B) or treated as Code Section
705(a)(2)(B) expenditures pursuant to Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing net profits or losses pursuant to this Section
6.01 shall be subtracted from such taxable income or loss;
and
(c) In the event the Gross Asset Value of any
Partnership Property is adjusted pursuant to Section 8.04,
the amount of such adjustment shall be taken into account as
gain or loss from the disposition of such asset for purposes
of computing Net Profits or Net Losses; and
(d) Gain or loss resulting from any disposition of any
Partnership Property with respect to which gain or loss is
recognized for federal income tax purposes shall be computed
by reference to the Gross Asset Value of the Partnership
Property disposed of, notwithstanding that the adjusted tax
basis of such Partnership Property differs from its Gross
Asset Value; and
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(e) In lieu of the depreciation, amortization and
other cost recovery deductions taken into account in
computing such taxable income or loss, there shall be taken
into account depreciation for such fiscal year or other
period, computed in accordance with Section 1.04.
Notwithstanding any other provision of this Section 6.01,
any items which are specially allocated pursuant to Sections 6.04
or 6.05 hereof shall not be taken into account in computing Net
Profits or Net Losses.
6.02 NET PROFITS
After giving effect to any special allocations set forth in
Sections 6.04 and 6.05 hereof, Net Profits for any fiscal year
shall be allocated to the Partners in proportion to their
respective Partnership Interests.
6.03 NET LOSSES
After giving effect to the special allocations set forth in
Section 6.04 and 6.05 hereof, Net Losses for any fiscal year
shall be allocated to the Partners in proportion to their
respective Partnership Interests; provided however that no Net
Loss may be allocated to a partner with a negative Capital
Account unless all Partners have a negative Capital Account.
6.04 SPECIAL ALLOCATIONS
(a) MINIMUM GAIN CHARGEBACK - Except as otherwise
provided in Regulations Section 1.704-2(i)(4),
notwithstanding any other provision of this Section 6.04, if
there is a net decrease in Partnership Minimum Gain, as
defined in the Regulations, during any Partnership fiscal
year, each Partner who would otherwise have an Adjusted
Capital Account Deficit (as defined below) at the end of
such year shall be specially allocated items of Partnership
income and gain for such year (and, if necessary subsequent
years) in an amount and manner sufficient to eliminate such
Adjusted Capital Account Deficit as quickly as possible.
The items to be so allocated shall be determined in
accordance with Regulations Section 1.704-2(i). This
Section is intended to comply with the minimum gain
chargeback requirement Regulations Section 1.704-2(i)(4),
and shall be interpreted consistently therewith.
(b) QUALIFIED INCOME OFFSET - In the event any Partner
unexpectedly receives any adjustments, allocations or
distributions described in Regulations Section
1.704-l(b)(2)(ii)(d)(4), (5) or (6); items of Partnership
income and gain shall be specially allocated to each such
Partner in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, the Adjusted Capital
Account Deficit of such Partner as quickly as possible,
provided that an allocation pursuant to this Section 6.04(b)
shall be made only if and to the extent that such Partner
would have an Adjusted Capital Account Deficit after all
other allocations have been made as if this Section were not
in this Agreement.
(c) NON-RECOURSE DEDUCTIONS - Non-recourse deductions
for any fiscal year or other period shall be allocated fifty-
five percent (55%) to Showboat Indiana and forty-five
percent (45%) to Waterfront.
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(d) CODE SECTION 754 ADJUSTMENTS - To the extent an
adjustment to the adjusted tax basis of any Partnership
asset pursuant to Code Section 734(b) or Code Section 743(b)
is required, pursuant to Regulations Section 1.704-
1(b)(2)(iv)(m), to be taken into account in determining
Capital Accounts, the amount of such adjustment to the
Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss ( if
theadjustment decreases such basis) and such gain or loss
shall be specially allocated to the Partners in the manner
consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to such section of the
Regulations.
(e) ADJUSTED CAPITAL ACCOUNT DEFICIT - The Adjusted
Capital Account Deficit with respect to any Partner shall be
the deficit balance, if any, in such Partner's Capital
Account as of the end of the relevant fiscal year, after
giving effect to the following adjustments:
1. Credit to such Capital Account any amounts
which such Partner is obligated to restore
(pursuant to any provision of this agreement,
pursuant to the terms of such Partner's
promissory note, if any, or otherwise) or is
deemed to be obligated to restore pursuant to
the penultimate sentence of Regulations
Section 1.704-2(g)(1) and 1.704-2(i)(5); and
2. Debit to such capital account the items
described in Regulations Sections 1.704-
1(b)(2)(ii)(d)(4), (5) and (6); and
3. The foregoing provisions regarding the
determination of the amount of an Adjusted
Capital Account Deficit are intended to
comply with the provisions of Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith
6.05 CURATIVE ALLOCATIONS
The allocations set forth in Sections 6.04 (the "Regulatory
Allocations") are intended to comply with certain requirements of
Regulations Section 1.704-1(b). Notwithstanding any other
provisions of this Agreement (other than the Regulatory
Allocations), the Regulatory Allocations shall be taken into
account in allocating other profits, losses and items of income,
gain, loss and deduction among the Partners so that, to the
extent possible, the net amount of such allocations of other
profits, losses and other items and the Regulatory Allocations to
each Partner shall be equal to the net amount that would have
been allocated to each such Partner if the Regulatory Allocations
had not occurred.
6.06 OTHER ALLOCATION RULES
(a) Generally, all Net Profits and Net Losses
allocated to Showboat Indiana and Waterfront pursuant to
Sections 6.01 through 6.04 hereof, are in turn allocated
among the Partners in proportion to the Interest held. In
the event the Partners are admitted to the Partnership on
different dates during any fiscal year, the Net Profits (or
Net Losses) allocated
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to the Partners for each such fiscal year shall be allocated
among the Partners in proportion to the Interest each holds
from time to time during such fiscal year in accordance with
any convention permitted by law and selected by Showboat
Indiana.
(b) For purposes of determining the Net Profits, Net
Losses or any other items allocable to any period, Net
Profits, Net Losses and any other such items shall be
determined on a daily, monthly or other basis, as determined
by Showboat Indiana using any permissible method under Code
Section 706 and the Regulations thereunder.
(c) Except as otherwise provided in this Agreement,
all items of Partnership income, gain, loss, deduction and
any other allocation not otherwise provided for shall be
divided among the Partners in the same proportion as they
share Net Profits or Net Losses, as the case may be, for the
year.
(d) The Partners are aware of the income tax
consequences of the allocations made by this Article VI and
hereby agree to be bound by the provisions of this Article
VI in reporting their share of Partnership income and loss
for income tax purposes.
(e) Solely for the purpose of determining a Partner's
proportionate share of the "excess nonrecourse liabilities"
of the Partnership within the meaning of Regulations Section
1.752-3(a)(3), the interests in the Partnership profits are
in proportion to the Interests held by the Partners.
(f) To the extent permitted by Regulations Section
1.704-2(h)(3), Showboat Indiana shall endeavor to treat
distributions of Cash Available for Distribution, whether
from operations or from the sale or refinancing of
Partnership Property as having been made from the proceeds
of a Nonrecourse Liability or a Partner Nonrecourse Debt
unless such distributions would cause or increase an
Adjusted Capital Account Deficit for any Partner.
6.07 TAX ALLOCATIONS CODE SECTION 704(C)
In accordance with Code Section 704(c) and the Regulations
thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Partnership shall,
solely for tax purposes, be allocated among the Partners so as to
take into account any variation between the adjusted basis of
such property to the Partnership for federal income tax purposes
and its initial Gross Asset Value. In the event the Gross Asset
Value of any Partnership asset is adjusted, subsequent
allocations of income, gain, loss and deduction with respect to
such asset shall take account of any variation between the
adjusted basis of such asset for federal income tax purposes and
its Gross Asset Value in the same manner as under Code Section
704(c) and the regulations thereunder. Any elections or other
decisions relating to such allocations shall be made by Showboat
Indiana in any manner that reasonably reflects the purpose and
intention of this Agreement. Allocations pursuant to this
Section 6.07 are solely for purposes of federal, state and local
taxes and shall not affect, or in any way be taken into account
in computing, any person's capital account or share of profits,
losses, other items or distributions pursuant to any provision of
this Agreement.
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6.08 CERTAIN ELECTIONS
Where a distribution of property is made in the manner
provided in Code Section 734 or where a transfer of a Partnership
Interest permitted by this Agreement is made in the manner
provided in Code Section 743, Showboat Indiana shall have the
sole and absolute discretion to file or not to file on behalf of
the Partnership, upon any Partner's written request, an election
under Code Section 754 in accordance with the procedures set
forth in the applicable Regulations. Except insofar as an
election pursuant to Code Section 754 has been made with respect
to the Interest of any Partner, the determination of profits,
losses, distributions, and Capital Accounts shall be made as
provided for in this Agreement. With respect to any Partner
whose Interest has been affected by an election pursuant to Code
Section 754, appropriate adjustments shall be made with respect
to the determination of profits, losses, distributions, and
Capital Accounts. Each Partner agrees to promptly provide
Showboat Indiana with all information necessary to give effect to
such election.
ARTICLE VII. DISTRIBUTIONS
7.01 OPERATING DISTRIBUTIONS
Showboat Indiana shall distribute all Cash Available for
Distribution from time to time (but not less frequently than
quarterly) as Showboat Indiana may determine; provided, however,
that the aggregate amount of each such distribution shall be that
amount which Showboat Indiana reasonably determines is not
required to be retained by the Partnership to meet the reasonably
foreseeable cash requirements and needs of the business and
activities of the Partnership and to establish an adequate
reserve for the payment of Partnership liabilities and
contingencies. All proceeds from the sale or refinancing of
part or all of the assets of the Partnership, net of transaction
costs, repayment of debt and reasonable reserves shall be
distributed to the Partners as promptly as practicable upon
receipt thereof. All distributions made pursuant to this Section
7.01 shall be made in cash and shall be divided among the
Partners as follows:
(a) first, to return Waterfront's Unrecovered Capital
Contribution if not previously paid pursuant to this
Agreement ;
(b) second, to the Partners in an amount equal to the
good faith estimate of the income tax liability of each
Partner (or each Partners' owner or owners) with respect to
the income realized by each Partner, including, without
limitation, any income realized pursuant to Section 6.05
hereof, calculated by multiplying such estimated income by
the highest combined federal and state income tax rates of
each such Partner (or its owners), taking into account
whether such Partner (or its owners) will be subject to
corporate or individual taxes.
(c) third, to the extent not previously repaid, one-
fifth (1/5th) (calculated on an annualized basis together
with all prior distributions to such Partner in that
calendar year) of each Partner's Unrecovered Capital
Contribution and loans , such distribution to be made
annually beginning one year after the Opening; subject,
however, to the limitation that (a) no more than 80% of the
Distributable Cash available for disbursement pursuant to
the Provisions of this subsection shall be distributed
pursuant hereto, provided, however, the
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Partners may mutually agree to repay more than one-fifth
(1/5) of each Partner's Unrecovered Capital Contribution and
loans and (b) the balance of such Distributable Cash shall
be available for distribution pursuant to subsection 7.01(d)
below; and
(d) fourth, the balance, if any, to the Partners in
proportion to each Partner's respective Interest in effect
at the time the distribution is made.
7.02 DISTRIBUTIONS UPON DISSOLUTION OR LIQUIDATION
Upon dissolution or liquidation of the Partnership, cash and
any other assets being distributed in-kind shall be distributed
in the following order of priority:
(a) first, to the payment and discharge of all the
Partnership's debts and liabilities to creditors other than
Partners;
(b) second, to the payment and discharge of all the
Partnership's debts and liabilities to Partners (other than
for any loans made by a Partner to the Partnership and any
interest thereon); and
(c) third, to the return of Waterfront's Unrecovered
Capital Contribution plus unreimbursed Development Expenses
if not previously paid pursuant to this Agreement;
(d) fourth, to the Partners in an amount equal to the
good faith estimate of the income tax liability of each
Partner (or each Partners' owner or owners) with respect to
the income realized by each Partner, including, without
limitation, any income realized pursuant to Section 6.05
hereof, calculated by multiplying such estimated income by
the highest combined federal and state income tax rates of
each such Partner (or its owners), taking into account
whether such Partner (or its owners) will be subject to
corporate or individual taxes.
(e) fifth, to the extent not previously repaid, to the
repayment of each Partner's entire Unrecovered Capital
Contribution and loans;
(f) fifth, the balance, if any, to the Partners in
proportion to their respective positive Capital Account
balances.
7.03 RESTORATION OF CAPITAL ACCOUNT
Distributions made to a Partner pursuant to Section 7.01 or
Section 7.02 shall not be made in violation of Regulations
Section 1.704-1(b)(2)(ii)(b)(3). If the Partner's Capital
Account has a deficit balance (after giving effect to all
contributions, distributions and allocations for all taxable
years, including the year during which such liquidation occurs),
such Partner shall contribute to the capital of the Partnership
the amount necessary to restore such deficit balance to zero in
compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(3).
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7.04 METHOD OF DISTRIBUTION
In the discretion of Showboat Indiana, a pro rata portion of
the distributions that would otherwise be made to the Partners
pursuant to Section 7.02 may be:
(a) distributed to a trust established for the benefit
of the Partners for the purposes of liquidating Partnership
assets, collecting amounts owed to the Partnership, and
paying any contingent or unforeseen liabilities or
obligations of the Partnership or of the Partners arising
out of or in connection with the Partnership. The assets of
any such trust shall be distributed to the Partners from
time to time, in the reasonable discretion of Showboat
Indiana, in the same proportions as the amount distributed
to such trust by the Partnership would otherwise have been
distributed to the Partners pursuant to this Agreement; or
(b) withheld to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to
reflect the unrealized portion of any installment
obligations owed to the Partnership, provided that such
withheld amounts shall be distributed to the Partners as
soon as practicable.
7.05 DISTRIBUTIONS TO OWNERS OF RECORD
Distributions shall be made only to persons who, according
to the books and records of the Partnership, are the owners of
record on a date to be determined by Showboat Indiana with
respect to each distribution. Neither Showboat Indiana nor the
Partnership shall incur any liability for making distributions in
accordance with the preceding sentence.
ARTICLE VIII. BOOKS AND RECORDS, ACCOUNTING, AND TAXES
8.01 FISCAL YEAR OF PARTNERSHIP
The fiscal year of the Partnership shall be the calendar
year for accounting purposes and June 30 or such other date which
is the same date as the majority partner for income tax reporting
purposes.
8.02 BOOKS AND RECORDS
The Partnership shall maintain full and accurate books and
records at its principal place of business, as required under the
Indiana Uniform Partnership Act, and all Partners shall have the
right to inspect and copy, at the Partner's expense, such books
and records during ordinary business hours. Showboat Indiana
shall maintain such books and records under the accrual method of
accounting and shall have the authority to determine the
necessary federal, state and local tax return elections as
Showboat Indiana deems advisable and in the best interests of the
Partnership. The books shall be closed at the end of each fiscal
year.
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8.03 TAX RETURNS AND REPORTS TO PARTNERS
The Partnership shall make a reasonable effort to deliver to
each Partner by March 15th of each year, or as soon thereafter as
reasonably possible, a copy of each Partner's Internal Revenue
Service Form 1065, Schedule K-l, or such successor form, to be
filed with the Partner's own tax return. A copy of the income
tax returns of the Partnership shall be available to any Partner.
The Partnership shall provide the Partners with quarterly
unaudited financial statements and annual unaudited financial
statements of the Partnership.
8.04 GROSS VALUE ADJUSTMENT OF PARTNERSHIP ASSETS
(a) The Gross Asset Values of all Partnership Assets shall
be adjusted to equal their respective gross fair market values,
as determined by Showboat Indiana, as of the following times:
1. The acquisition of an additional interest in the
Partnership (other than pursuant to Section 5.03
hereof) by any new or existing Partner in exchange
for more than a de minimus capital contribution;
2. The distribution by the Partnership to a Partner
of more than a de minimus amount of Partnership
property as consideration for an interest in the
Partnership if Showboat Indiana reasonably
determines that such adjustment is necessary or
appropriate to reflect the relative economic
interests of the Partners in the Partnership; and
3. The liquidation of the Partnership within the
meaning of Regulations Section 1.704-
1(b)(2)(ii)(g).
(b) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustment to the
adjusted basis of such assets pursuant to Code Section 734(b) or
Code Section 743(b), but only to the extent that such adjustments
are taken into account in determining capital accounts pursuant
to Regulations Section 1.704-1(b)(2)(iv)(m) and Section 6.05(d)
(Code Section 734(b) or Code Section 743(b) adjustments) hereof;
provided, however, that Gross Asset Values shall not be adjusted
pursuant to this Section to the extent Showboat Indiana
determines that an adjustment pursuant to Section 8.04(a) is
necessary or appropriate in connection with a transaction that
would otherwise result in an adjustment pursuant to this Section.
ARTICLE IX. POWERS AND OBLIGATIONS OF PARTNERS
9.01 AUTHORITY OF SHOWBOAT INDIANA
Showboat Indiana shall have full, exclusive, and complete
authority to direct and manage the affairs of the Partnership
with all rights and powers generally conferred by law together
with those that are necessary or appropriate for the overall
management and control of the Partnership's business, as required
under the Indiana Uniform Partnership Act.
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9.02 DUTIES OF SHOWBOAT INDIANA
Showboat Indiana will use its best efforts to carry out the
purpose, business, and objectives of the Partnership and will
devote such time to Partnership business as is reasonably
required. Showboat Indiana will use its best efforts to assure
the efficient management and operation of the Partnership and
will fully discharge its fiduciary duties to the Partnership and
the Partners. Without limiting the generality of the foregoing,
and in addition to all other duties imposed by law or this
Agreement, Showboat Indiana is obligated to:
(a) Subject to the provisions hereof, act in a
fiduciary manner regarding the Partnership, the Partners and
the Partnership Property;
(b) File and publish all certificates, statements, or
other documents required by law for the formation and
operation of the Partnership and for the conduct of its
business in all appropriate jurisdictions; provided,
however, that performance will be excused whenever the
remaining Partners refuse to cooperate and their cooperation
is required in order to perform these duties;
(c) Furnish the Partners with the reports and
information specified in this Agreement;
(d) Maintain complete books of account and records
regarding Partnership operations and business affairs;
(e) Keep all books and records of the Partnership
available for inspection and audit by the Partners or their
representatives;
(f) Use best efforts to maintain the status of the
Partnership as a "partnership" for federal income tax
purposes;
(g) File all federal, state, or local tax returns and
reports and make all other filings which are required by law
or governmental agencies;
(h) Use reasonable efforts to operate the business of
the Partnership;
(i) Cause the Partnership at all times to maintain
insurance (including liability insurance) in the amounts and
against the risks as are generally maintained for comparable
property and business;
(j) Invest the funds of the Partnership (including
reserves) that are not distributed to the Partners and
temporarily are not, in Showboat Indiana's opinion, required
for the conduct of the Partnership's business in
(a) governmentally-insured, interest-bearing savings
accounts, (b) short-term governmental obligations, or (c)
certificates of deposit of a commercial bank or savings and
loan association having at least $10,000,000 of assets;
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(k) Act as the "tax matters Partner" of the
Partnership pursuant to Code Section 6231(a)(7) and cause
the Partnership to make such timely federal, state and local
income tax elections as may be in the best interests of the
Partnership;
(l) Subject to the restrictions and conditions set
forth in Article XI, admit transferees of Partnership
Interests as substitute Partners;
(m) Make all decisions concerning the operational
aspects of the Partnership and execute and deliver all
contracts, deeds, and other instruments in connection
therewith;
(n) Borrow money on behalf of the Partnership and
execute and deliver in the name of the Partnership notes
evidencing the same and mortgages, deeds of trust, and any
other security instruments securing the same. The signature
of Showboat Indiana shall be sufficient to bind the
Partnership and all the Partners as to the execution of any
documents concerning the Partnership's acquisition,
development, rental and/or sale of any or all the
Partnership Property or the execution of any mortgages,
deeds of trust, or any other security instruments securing
any borrowing by the Partnership;
(o) Pay from Partnership assets all expenses of
organizing and conducting the business of the Partnership,
including, without limitation, legal and accounting fees;
(p) Execute any and all instruments and take any and
all other action necessary or desirable to carry out the
purposes and business of the Partnership;
(q) Employ, at the expense of the Partnership, such
consultants, accountants, attorneys, brokers, escrow agents,
property managers and other professionals as Showboat
Indiana shall deem necessary or desirable, some of whom may
also be employed by Showboat Indiana itself; and
(r) Assume the overall duties imposed on a partner by
the Indiana Uniform Partnership Act.
9.03 PARTNERSHIP MEETINGS
The Partnership may, in Showboat Indiana's discretion, hold
annual meetings for any reason. Partnership meetings may be held
when and where designated by Showboat Indiana.
9.04 ACTIVITIES OF PARTNERS
It is expressly understood that any Partner, any Affiliate
or any stockholder of any Partner may engage in any business,
investment, or profession, and neither the Partnership nor any
other Partner shall have any rights in and to said business,
profession or investment, or in the income or profits derived
therefrom by reason of this Agreement. The fact that a Partner,
or a person or an entity that is an Affiliate of or related to
such Partner, is directly or indirectly interested in or
connected with any person, firm, or corporation employed by the
Partnership to render services or perform a service or to sell or
to buy merchandise or other property shall not prohibit Showboat
Indiana from employing or contracting with such person, firm, or
corporation or from dealing
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with him or it, and neither the Partnership nor the Partners
shall have any rights in or to any income or profits derived
therefrom. Showboat Indiana is not obligated to devote its full
time to the affairs of the Partnership. Showboat Indiana may
become involved in other businesses and ventures. It is likely
that Showboat Indiana and its Affiliates will participate in
other partnerships which may be in direct competition with the
Partnership. Neither the Partnership nor any Partner shall have
any right or interest in any business, profession, investment, or
business opportunity that Showboat Indiana or its Affiliate is en
gaged in, practices, or pursues.
Neither Showboat Indiana nor any Affiliate shall be
obligated to present any particular investment opportunity to the
Partnership, even if the opportunity is of a character that, if
presented to the Partnership, could be taken by the Partnership,
and Showboat Indiana shall have the right to take for its own
account or to recommend to others any investment opportunity.
9.05 LIABILITY OF THE PARTNERS
The Partners and any of them shall not be liable in damages
or otherwise to the Partnership or the other Partners, or any of
them, for any loss suffered by it or them, or any of them, in
connection with the activities of the Partnership.
The Partners shall not be personally liable for the return
of any capital of any remaining Partner, or for the return of any
other contribution to the Partnership made by any Partner, other
than loans made pursuant to this Agreement.
9.06 INDEMNIFICATION OF THE PARTNERS
The Partnership shall indemnify and hold harmless the
Partners and any of them from and against any and all loss,
liability, claim, damage, and the like, including reasonable
attorneys' fees, suffered by a Partner solely by virtue of its
acting as a Partner in this Partnership in connection with any
activity of the Partnership. The provisions of this Section to
hold the Partners harmless and indemnify the Partners, shall be
enforceable only against and out of the assets of the Partnership
and not against or out of the assets of the Partners, or any of
them, individually.
9.07 REPRESENTATIONS
Each of the Partners acknowledges and agrees (i) that no
representation or promise not expressly contained in this
Agreement has been made by any other Partner or by any of such
Partner's agents, employees, or representatives; (ii) that this
Agreement is not being entered into on the basis of, or in
reliance on, any promise or representation, expressed or implied,
other than such as is set forth expressly in this Agreement;
(iii) that each Partner has had the opportunity to be represented
by counsel of said Partner's choice in this matter, including the
negotiations and transactions that preceded the execution of this
Agreement; and (iv) that each Partner, or counsel representing
such Partner, has read this Agreement and each Partner agrees to
be bound by the terms contained herein.
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9.08 RIGHT TO RELY UPON THE AUTHORITY OF SHOWBOAT INDIANA
No person dealing with Showboat Indiana shall be required to
determine its authority to make any commitment or undertaking on
behalf of the Partnership nor to determine any fact or
circumstance bearing upon the existence of its authority. In
addition, no purchaser of any property or interest owned by the
Partnership shall be required to determine the sole and exclusive
authority of a Partner to sign and deliver on behalf of the
Partnership any such instrument of transfer or to see to the
application or distribution of revenues or proceeds paid or
credited in connection therewith, unless such purchaser shall
have received written notice affecting the same.
ARTICLE X. BANK ACCOUNTS
10.01 BANK ACCOUNTS
All funds of the Partnership shall be deposited in the name
of the Partnership in such bank account or accounts as shall be
determined by Showboat Indiana. All withdrawals therefrom shall
be made upon checks signed on behalf of the Partnership by such
individuals as may be designated from time to time by Showboat
Indiana. Showboat Indiana shall not make deposits in or issue
any checks against the Partnership bank account without full,
proper, and complete supporting records.
10.02 EXPENSES OF THE PARTNERSHIP
All operating and administrative expenses of the Partnership
shall be billed directly to the Partnership, in the name of the
Partnership, and shall be paid by the Partnership from funds
received by it.
ARTICLE XI. TRANSFER OF A PARTNERSHIP INTEREST
11.01 TRANSFER OF A PARTNER'S INTEREST
Except as may otherwise be expressly provided herein, no
Partner shall sell, assign, pledge, encumber, hypothecate, or
otherwise transfer or dispose of all or any part of its Interest
or share of its Interest, as amended, without the written consent
of the other Partner. Any sale or other transfer or attempted
transfer in violation of this Agreement shall be null and void
and of no force and effect. Further, no partner shall be
admitted to the Parthership without the unanimous consent of the
Partners. Each Partner acknowledges the reasonableness of the
restrictions on transfers imposed by this Agreement in view of
the relationship of the Partners. Any transfer, with consent,
must be of all of such Partner's Interest, unless Waterfront and
Showboat Indiana otherwise agree. This prohibition shall include
the direct disposition of an Interest, as well as any voluntary
transfer (by sale, contract for sale, assignment, pledge,
hypothecation or otherwise) of a controlling interest in the
stock of a Partner, or the merger or other consolidation of a
Partner with or into another Person, but in such event, the
consent of Waterfront and Showboat Indiana shall not be
unreasonably withheld or delayed.
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Notwithstanding the foregoing, Waterfront's shareholders may
transfer portions of their equity interests, or Waterfront may
issue new shares to new shareholders so long as Michael Pannos
and Thomas Cappas remain officers, directors and collectively,
including immediate family holdings, at least 25% shareholders of
Waterfront. At all times stated herein Waterfront shall have not
more than 35 shareholders each of whom shall be individuals and a
majority of whom shall be residents of the State of Indiana.
11.02 RIGHT OF FIRST REFUSAL
In the event that a Partner ("Transferring Partner") intends
to make a voluntary transfer of part or all of its Interest to a
third party, it shall first offer such Interest to the other
Partner ("Remaining Partner"), who shall have a right of first
refusal with respect to the acquisition of such Interest. In the
event that the Transferring Partner receives a bona fide offer to
purchase acceptable to such Partner, then the Remaining Partner
shall have a right of first refusal to purchase such Interest at
the same price and under the same terms and conditions as are
contained in such written offer. Upon receipt of any such
acceptable offer, the Transferring Partner shall certify a
complete, true and correct copy of such offer to the Remaining
Partner. The Remaining Partner shall have a period of thirty
(30) days from the date of receipt of such written offer to elect
whether or not it intends to accept or reject such offer. If the
Remaining Partner desires to purchase the interest from the
Transferring Partner upon the same terms and conditions as are
set forth in such acceptable offer, then the Remaining Partner
shall notify the Transferring Partner within ten (10) days of the
receipt of such written offer and shall accompany such notice
with an earnest money deposit equivalent to any earnest money
deposit that was made with the original offer. If the Remaining
Partner fails to notify the Transferring Partner within such ten
(10) day period, such failure to so notify shall be deemed a
rejection of such offer. Rejection of such offer shall not
terminate this right of first refusal as to any other or
subsequent sales of the Interest. In the event of the exercise
of the right of first refusal, the Remaining Partner shall
consummate the sale and purchase of the Interest in accordance
with, and within the time limitations set forth in, the terms and
conditions of such offer to purchase as originally submitted. In
the event that such offer should include as a part of the
consideration to be paid any particular or unique property, or
the exchange of any other property, the Remaining Partner shall
not be required to deliver to the Transferring Partner such
property, but may satisfy such obligations by the payment to the
Transferring Partner of cash in an amount equivalent in value to
such other property. The Transferring Partner may not combine
the sale of an interest with the sale of any other asset. A
transfer shall include a sale or a contract for sale of all or
part of an Interest as well as the sale, contract for sale or
assignment of a controlling interest in the Stock of a Partner or
a merger or other consolidation of a Partner with or into another
Person.
11.03 CONTINUING LIABILITY
Unless otherwise agreed, in the event a Partner sells,
exchanges, assigns or otherwise transfers its Interest, such
Partner shall remain liable for all obligations and liabilities
incurred by such Partner as a Partner prior to the effective date
of such transfer (including any tax liability of such Partner),
but shall be free of any obligations or liabilities incurred on
account of the activities of the Partnership after such date.
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11.04 EFFECTIVENESS OF SUBSTITUTION
The failure to obtain the requisite approvals and consents
of the Partners to the substitution of an assignee as a Partner
of the Partnership shall not, except to the extent that approval
by the Indiana Gaming Commission is required, affect the validity
or effectiveness of any such instrument as an assignment to an
assignee of the right to receive that share of the profits or
other compensation by way of income, or the return of
contributions, to which his assignor would otherwise be entitled
and which were assigned, provided a duly executed and
acknowledged written instrument of assignment in proper form and
substance, the terms of which are not in contravention of any of
the provisions of this Agreement, is filed with the Partnership.
However, an assignee of a Partner who has not obtained the
requisite approvals and consents has no right to require any
information or account of the Partnership transactions or to
inspect the Partnership books, or to vote on any matters as to
which a Partner would be entitled to vote. Such an assignee of a
Partner is only entitled to receive the share of the profits or
other compensation by way of income, or the return of capital
contributions, to which the assignor would otherwise be entitled.
In the event of the admission of a Partner, a permitted
withdrawal of a Partner, or transfer by a Partner, this Agreement
promptly will be amended as necessary to reflect any changes in
the profit and loss allocations of Partners, to reflect the
capital contributions of the newly admitted Partner or the
withdrawal of capital by any withdrawing Partner, and to set
forth any new provisions or to amend any existing provisions of
this Agreement that may be necessary or desirable in light of the
admission of a Partner or Transfer by a Partner. In the event
such an amendment of this Agreement is required, such newly
admitted Partner or withdrawing Partner shall bear all costs
associated with such amendment.
11.05 DEATH OR LEGAL INCOMPETENCY OF A PARTNER
Upon the death or legal incompetency of an individual
Partner, his or her personal representative shall have all the
rights of a Partner for the purpose of settling or managing the
Partner's estate, and such power as the decedent or incompetent
possessed to designate a successor as a transferee of his
interest in the Partnership, and to join with such transferee in
making an application to substitute such transferee as a Partner.
The estate of a deceased Partner shall be liable for the
decedent's liabilities as a Partner. Upon the bankruptcy,
insolvency, dissolution, or other cessation of the existence, as
a legal entity, of a non-individual Partner, the authorized
representative of such entity shall have the rights of a Partner
for the purpose of effecting the orderly disposition of the
Interest of said Partner.
11.06 TRANSFER OF ALLOCATIONS
In the event of the Transfer of all or any part of the
Interest of any Partner, for the fiscal year during which the
Transfer occurs, the share of Net Profit or Net Loss or any item
of income, gain, loss, deduction, or credit of the Partnership
allocable to the Interest transferred shall be allocated between
the transferor and the transferee in accordance with the
provisions of Code Sections 706(c) and 706(d).
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11.07 FURTHER LIMITATIONS OF TRANSFERS
Notwithstanding any other provision of this Agreement,
Transfers of Interests shall be made only in accordance with 68
IAC 5-2, as amended, and no Transfer shall be permitted if: (i)
the proposed Transfer or the proposed transferee will or could
(a) impair the ability of the Partnership to be taxed as a
Partnership under the federal income tax laws, or (b) cause any
certificate of suitability, gaming license or similar
authorization or license to be denied to the Partnership or, if
held by the Partnership, to be suspended, revoked or not renewed;
(ii) the Transfer will, or could, cause the Partnership's tax
year to close, or the Partnership to terminate, for federal
income tax purposes, or impair the validity of the Partnership
under Indiana law; or (iii) such Transfer would cause the
Partnership to be in default under any agreement relating to any
of its indebtedness. Any purported Transfer in violation of the
terms of this Section 11.05 shall be null and void and of no
force and effect.
11.08 PAYMENT TO WITHDRAWING PARTNER
The Partnership shall pay to a withdrawing Partner all
amounts then accrued and owing to it, together with an amount
equal to the then present fair market value of the withdrawing
Partner's interest in income, gains, losses, deductions, credits,
distributions, and capital determined by agreement of the
withdrawing Partner and any remaining Partners. If there are no
remaining Partners or if they cannot agree within thirty (30)
days following the effective date of termination of the Partner,
the purchase price to be paid by the Partnership shall be the
fair market value of such interest determined by appraisal. The
withdrawing Partner shall appoint an appraiser who is a member of
the Appraisal Institute of the American Association of Real
Estate Appraisers (an "MAI" appraiser) and the appraiser so
appointed shall determine the fair market value of the
withdrawing Partner's interest. The appraiser's determination
shall be final and binding upon the Partners, the Partnership and
their successors in interest. The costs and expenses of all such
appraisal shall be borne by the Partnership. The purchase shall
be consummated within thirty (30) days following (i) the date of
receipt by the Partnership of the appraisal or (ii) the date of
agreement in writing by the withdrawing Partner and the
Partnership with respect to the fair market value of the
withdrawing Partner's interest in the Partnership.
ARTICLE XII. DISSOLUTION OF PARTNERSHIP
12.01 EVENTS OF DISSOLUTION
The Partnership shall be dissolved and terminated upon the
first to occur of the following events:
(a) Upon the filing by any Partner of a bankruptcy
under Chapter 11 of the United States Bankruptcy Code,
unless the Partners elect to continue the Partnership;
(b) Upon retirement or withdrawal by a Partner, unless
the Partners elect to continue the Partnership;
(c) The expiration of the term of the Partnership;
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(d) By operation of law;
(e) Upon the sale by the Partnership of all or
substantially all the Partnership Property and the final
distribution of the proceeds thereof (whether the same be
cash, notes, or other property); or
(f) Upon the termination of the Parent Agreement.
(g) Upon the written consent of the Partners.
12.02 WINDING-UP OF PARTNERSHIP BUSINESS
(a) Upon termination of the Partnership upon the
occurrence of any of the events described in Section 12.01
above, the Partnership shall be dissolved, and Showboat
Indiana shall take full account of the Partnership's assets
and liabilities. The receivables of the Partnership shall
be collected and its assets liquidated as promptly as is
consistent with obtaining the fair value thereof upon
dissolution. The Partnership shall engage in no further
business thereafter other than as necessary to develop,
maintain or market the Partnership Property on an interim
basis, collect its receivables, and liquidate its assets.
(b) Upon completion of winding up the Partnership's
affairs and the dissolution of the Partnership, Showboat
Indiana shall cause to be prepared, executed, and filed with
the Secretary of State of Indiana, a Certificate of
Cancellation of Partnership or any certificate required by
any amendment of such provision or successor provision.
12.03 DISTRIBUTION OF PARTNERSHIP PROPERTY UPON DISSOLUTION
Upon dissolution or liquidation of the Partnership, the
proceeds realized upon sale and liquidation of the Partnership
Property shall be applied and distributed in accordance with the
provisions hereof.
12.04 ASSETS OTHER THAN CASH
Assets other than cash that are distributed in kind shall be
distributed on the basis of (i) in the case of notes receivable,
their then fair market value, and (ii) in the case of real estate
or in the case of other assets, their then fair market value as
determined by an independent appraiser appointed by Showboat
Indiana. As necessary, distributions in kind will be made to the
Partners as tenants-in-common, or in trust as provided in Section
7.04(a). If Partnership Property should be sold, and a portion
of the consideration for such sale should be notes or other
evidences of indebtedness, then such notes or other evidences of
loans may be sold or hypothecated to realize funds for
distribution to the Partners including at a discount from the
face value thereof. Sale or hypothecation of evidences of
indebtedness constituting substantially all the assets of the
Partnership may be accomplished only with the same consent of the
Partners as is necessary for the sale of substantially all the
Partnership Property. It is agreed that such sale or borrowing
on the security of said notes or other evidence of indebtedness
affects the basic structure of the Partnership.
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12.05 CAPITAL ACCOUNT ADJUSTMENTS
To the extent not otherwise recognized to the Partnership,
the amount by which the fair market value of any property to be
distributed in kind to the Partners exceeds (or is less than) the
basis of such property shall be allocated as gain (or loss) to
the Partners' capital accounts as if such property had been sold.
Such property shall then be distributed at its fair market value
with appropriate adjustments made to the capital accounts of the
Partners receiving it.
ARTICLE XIII. NOTICES
All notices, demands, and requests required or permitted to
be given pursuant to this Agreement shall be in writing. All
notices, demands, and requests to be sent to any Partner shall be
deemed to have been properly given when the same are deposited in
the United States mail, addressed to such Partner, postage
prepaid, registered or certified with return receipt requested,
or sent by United Parcel Service, Federal Express, or similar
next day service, to such Partner's address as set forth herein,
or sent by facsimile transmission with written confirmation of
receipt to a known and operating facsimile receiving device
designated by such Partner. Any such notice shall be deemed
received three (3) days after deposit in the United States mail
or with United Parcel Service, Federal Express, or similar next
day service; or upon dispatch when sent by facsimile
transmission. Any Partner may, by notice to Showboat Indiana
given in accordance with this Article XIII, change the address to
which all future notices to such Partner shall be mailed.
ARTICLE XIV. DISCLOSURE OF OTHER BUSINESS INTEREST CONFLICTS;
BUSINESS OPPORTUNITY
14.01 OTHER BUSINESS INTERESTS
(a) No Partner shall be required to devote its entire
time or attention to the business of the Partnership.
(b) All of the Partners understand that the Partners
and the stockholders of corporate Partners may be
interested, directly or indirectly, individually, or through
one or more Affiliates, in various other businesses outside
of Cook County, Illinois and the State of Indiana, and non-
gaming businesses in East Chicago or elsewhere, not included
in this Partnership ("Unrelated Businesses"). The Partners
hereby agree that the creation of the Partnership and the
assumption by each of the Partners of its duties hereunder
shall be without prejudice to its right (or the right of its
Affiliates) to have Unrelated Businesses and to receive and
enjoy profits or compensation therefrom.
14.02 COMPETITION
Waterfront agrees that Showboat Indiana and its Affiliates
("Showboat Parties") are pursuing gaming opportunities throughout
the United States and other jurisdictions and may be pursuing
gaming opportunities in Cook County, Illinois. Waterfront
acknowledges that the Showboat Parties may pursue such
opportunities, including opportunities in Cook County,
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Illinois. Neither the Showboat Parties nor Waterfront shall
engage in other gaming activities in Indiana. If Showboat
Indiana or Waterfront or any of their Affiliates commence gaming
operations in Cook County, Illinois, the other Partner may
purchase fifteen percent (15%) of the first Partner's or its
Affiliates' interest in such gaming venture at the first
Partner's or its Affiliates' purchase price at any time within
one (1) year of the opening of such operation(s). In the event
that the Showboat Parties or Waterfront or their Affiliates enter
into a gaming opportunity in Cook County, Illinois such Partner
shall covenant that key customers of the Project shall not be
solicited by such Partner to become customers of the gaming
venture in Cook County nor may such Partner assign management
talent from the Project to the Cook County gaming venture without
the consent of the other Partner, which consent shall not be
unreasonably withheld or delayed.
The Partners acknowledge that Showboat Indiana and/or its
Affiliates operate other casinos and may in the future operate
additional casinos in different areas of the world, including,
without limitation, casinos in the state of Illinois and that
marketing efforts may cross over in the same market and with
respect to the same potential customer base. Showboat Indiana,
in the course of its Affiliates managing the Vessel, may refer
customers of the Vessel and other parties to other facilities
operated by Affiliates of Showboat Indiana to utilize gaming,
entertainment and other amenities, without payment of any fees to
the Partnership or the Partners. The Partnership and the
Partners acknowledge and agree that Showboat Indiana or its
Affiliates may distribute promotional materials for Showboat
Indiana or its Affiliates and facilities, including casinos, at
the Riverboat. However, if such facility to which a customer of
the Project would be referred or which is promoted is within a
county identified below, the consent of Waterfront shall be
required, which consent may be withheld in Waterfront's sole
discretion.
MICHIGAN COUNTIES ILLINOIS COUNTIES
Berrien Cook
Van Buren DuPage
Allegan Grundy
Cass Lake
St. Joseph Will
Branch Kentall
Kankakee
14.03 BUSINESS OPPORTUNITY
In the event that a Partner or any of its Affiliates has the
opportunity to acquire an interest in any Unrelated Business (a
"Business Opportunity"), whether individually or as a member of a
partnership or joint venture or other entity or as a shareholder
of a corporation, such Partner or its Affiliate shall not be
required to offer such Business Opportunity to the Partnership or
to the other Partners except as expressly required hereunder, and
the failure of such Partner or its Affiliate to do so shall not
constitute a breach of such Partner's fiduciary duty to the
Partnership or to the other Partners.
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ARTICLE XV. MISCELLANEOUS PROVISIONS
15.01 AMENDMENT
An amendment to this Agreement may be made only in writing
and signed by both Partners.
15.02 FOREIGN GAMING LICENSES
If Showboat determines, at its sole discretion, that
any of its gaming licenses in other jurisdictions may be
adversely affected or in jeopardy because of its status as a
Partner, Showboat shall have the option at any such time to
sell its Interest, subject to the right of first refusal
granted to Waterfront. If this occurs prior to or within
the first six (6) months after Opening and Waterfront elects
its right of first refusal, Showboat shall receive as sole
compensation for Waterfront's purchase of its Interest, the
Capital Contribution Showboat has made to the Partnership
plus interest thereon at the Federal funds rate for the
period during which its Capital Contribution was made to the
Partnership. If this occurs after the first six (6) months
after Opening and Waterfront elects its right of first
refusal, Showboat shall receive as sole compensation for
Waterfront's purchase of its interest the fair market value
of such interest determined in accordance with Section 9 of
the Parent Agreement, payable within ninety (90) days after
the determination of the fair market value. In case of a
sale by Showboat of its Interest under this Section, the
Management Agreement shall terminate upon the consummation
of such sale.
15.04 BINDING EFFECT; FURTHER INSTRUMENTS
This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective heirs,
personal representatives, successors, and assigns. The parties
hereto agree for themselves and for their heirs, personal
representatives, successors, and assigns to execute any and all
instruments in writing that may be necessary or proper to carry
out the purposes and intent of this Agreement.
15.05 HEADINGS
The headings of the paragraphs of this Agreement are
inserted solely for convenience of reference and are not a part
of or intended to govern, limit, or aid in the construction of
any term or provision hereof.
15.06 GENDER AND NUMBER
Whenever required by the context, the singular shall be
deemed to include the plural, and the plural shall be deemed to
include the singular, and the masculine, feminine, and neuter
genders shall each be deemed to include the other.
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15.07 SEVERABILITY
In the event that any provision or any portion of any
provision contained in this Agreement is found by a Court of
competent jurisdiction to be unenforceable, the remaining
provisions, and in the event that a portion of any provision is
found to be unenforceable, the remaining portion of such
provision, shall nevertheless be carried into effect.
15.08 WAIVER OF ACTION FOR PARTITION
During the term of the Partnership and during any period of
winding up and dissolution of the Partnership, each of the
Partners irrevocably waives any right that it may have to
maintain any action for partition as to the Partnership Property.
15.09 GOVERNING LAW
The Partnership shall be governed and this Agreement shall
be construed in accordance with the internal laws, and not the
law of conflicts, of the state of Indiana applicable to
agreements made and to be performed in such state.
15.10 ARBITRATION; ATTORNEYS' FEES AND COSTS
In the event any dispute should arise between the parties
hereto as to the validity, construction, enforceability, or
performance of this Agreement or any of its provisions, such
dispute shall be settled by arbitration before an American
Arbitration Association panel. Said arbitration shall be
conducted at East Chicago, Indiana, or such other location within
the state of Indiana as shall be designated by Showboat Indiana,
in accordance with the commercial rules then in use by the
American Arbitration Association. The decision of the arbitrator
shall be final and may be entered as a judgment by a court of
competent jurisdiction. The unsuccessful party to such
arbitration shall pay to the successful party all reasonable
costs and expenses, including reasonable attorneys' fees,
incurred therein by such successful party. The successful party
shall be determined by the arbitrator.
15.11 INTEGRATION
This Agreement sets forth the entire agreement among the
parties with regard to the subject matter hereof. All
agreements, covenants, representations, and warranties, express
and implied, oral and written, of the parties with regard to the
subject matter hereof are contained herein, in the Exhibits
hereto, and in the documents referred to herein or implementing
the provisions hereof. No other agreements, covenants,
representations, or warranties, express or implied, oral or
written, have been made by either party to the other as to the
subject matter of this Agreement. All prior and contemporaneous
conversations, negotiations, possible and alleged agreements and
representations, covenants, and warranties as to the subject
matter hereof are waived, merged herein, and superseded hereby.
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<PAGE>
15.12 COUNTERPARTS
This Agreement may be executed in counterparts and all
counterparts so executed shall constitute one Agreement binding
on all the parties. It shall not be necessary for each party to
execute the same counterpart.
15.13 EXHIBITS
Exhibits referred to in this Agreement are incorporated by
reference into this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
"SHOWBOAT INDIANA":
Showboat Indiana Investment Limited
Partnership
a Nevada limited partnership
By: Showboat Indiana, Inc.,
its general partner
By: /s/
Its:
Waterfront Entertainment and
Development Company
an Indiana corporation
By: /s/
Its:
33
<PAGE>
AGREEMENT OF PARTNERSHIP
OF
SHOWBOAT MARINA INVESTMENT PARTNERSHIP
EXHIBIT A
SCHEDULE OF PARTNERS' INTERESTS
<TABLE>
<CAPTION>
PARTNER DATE OF INITIAL PARTNER'S
(NAME & ADDRESS) ADMISSION CAPITAL PERCENTAGE
CONTRIBUTION INTEREST
<S> <C> <C> <C>
Showboat Indiana Investment March 1, 1996 $55.00 55%
Limited Partnership
Fremont Street
Las Vegas, Nevada 89109
Waterfront Entertainment March 1, 1996 $45.00 45%
and Development, Inc.
Polo Club Drive, Suite D
Merrillville, Indiana 46410
$100.00 100%
</TABLE>
34
<PAGE>
AGREEMENT OF PARTNERSHIP
OF
SHOWBOAT MARINA CASINO PARTNERSHIP
AN INDIANA GENERAL PARTNERSHIP
<PAGE>
AGREEMENT OF PARTNERSHIP
OF
SHOWBOAT MARINA CASINO PARTNERSHIP
AN INDIANA GENERAL PARTNERSHIP
TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS 1
1.01 Affiliate 1
1.02 Cash Available for Distribution 2
1.03 Code 2
1.04 Depreciation 2
1.05 Gross Asset Value 2
1.06 Gross Revenue 2
1.07 Interest or Partnership Interest 3
1.08 Majority Interest 3
1.09 Net Profits or Net Losses 3
1.10 Nonrecourse Debt or Partner Nonrecourse Debt 3
1.11 Original Capital Contribution 3
1.12 Partner 3
1.13 Partnership 3
1.14 Partnership Property 3
1.15 Regulations 3
1.16 Unrecovered Capital Contribution 4
ARTICLE II. FORMATION AND ORGANIZATION MATTERS 4
2.01 Agreement of General Partnership 4
2.02 Fictitious Business Name Statement 4
2.03 Name 4
2.04 Purpose 4
2.05 Term 4
2.06 Principal Place of Business 5
2.07 Title to Property 5
2.08 Licensing 5
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<PAGE>
ARTICLE III. CAPITAL CONTRIBUTIONS 5
3.01 Showboat Marina 5
3.02 Investment 6
3.03 No Interest on Capital Contributions 6
3.04 Withdrawal of Capital Contributions 6
3.05 Additional Capital Contributions 6
3.06 Adjustment of Capital Contributions 6
ARTICLE IV. CAPITAL ACCOUNTS 7
4.01 Increases 7
4.02 Decreases 7
4.03 Other Adjustments 8
4.04 General Provisions 8
ARTICLE V. LOANS 9
5.01 Partner's Loans to the Partnership 9
5.02 Other Loans to the Partnership 9
5.03 Showboat Marina Advances and Affiliate Loans 9
5.04 Loans from the Partnership 10
ARTICLE VI. ALLOCATIONS OF PROFITS AND LOSSES 10
6.01 Determination of Net Profits and Net Losses 10
6.02 Net Profits 10
6.03 Net Losses 11
6.04 Special Allocations 11
6.05 Curative Allocations 12
6.06 Other Allocation Rules 12
6.07 Tax Allocations Code Section 704(c) 13
6.08 Certain Elections 13
ARTICLE VII. DISTRIBUTIONS 14
7.01 Operating Distributions 14
7.02 Distributions Upon Dissolution or Liquidation 14
7.03 Restoration of Capital Account 15
7.04 Method of Distribution 15
7.05 Distributions to Owners of Record 15
ARTICLE VIII. BOOKS AND RECORDS, ACCOUNTING, AND TAXES 15
8.01 Fiscal Year of Partnership 15
8.02 Books and Records 15
8.03 Tax Returns and Reports to Partners 16
8.04 Gross Value Adjustment of Partnership Assets 16
ARTICLE IX. POWERS AND OBLIGATIONS OF PARTNERS 17
9.01 Authority of Showboat Marina 17
9.02 Duties of Showboat Marina 17
9.03 Partnership Meetings 18
9.04 Activities of Partners 19
9.05 Liability of the Partners 19
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<PAGE>
9.06 Indemnification of the Partners 19
9.07 Representations 19
9.08 Right to Rely Upon the Authority of Showboat 20
Marina
ARTICLE X. BANK ACCOUNTS 20
10.01 Bank Accounts 20
10.02 Expenses of the Partnership 20
ARTICLE XI. TRANSFER OF A PARTNERSHIP INTEREST 20
11.01 Transfer of Investment's Interest. 20
11.02 Transfer of Showboat Marina's Interest 21
11.03 Effectiveness of Substitution 22
11.04 Death or Legal Incompetency of a Partner 23
11.05 Transfer of Allocations 23
11.06 Further Limitations of Transfers 23
11.07 Payment to Withdrawing Partner 23
11.08 Continuing Liability 24
ARTICLE XII. DISSOLUTION OF PARTNERSHIP 24
12.01 Events of Dissolution 24
12.02 Winding-Up of Partnership Business 24
12.03 Distribution of Partnership Property Upon 25
Dissolution
12.04 Assets Other Than Cash 25
12.05 Capital Account Adjustments 25
ARTICLE XIII. NOTICES 25
ARTICLE XIV. MISCELLANEOUS PROVISIONS 26
14.01 Limited Power of Attorney 26
14.02 Amendment 26
14.03 Binding Effect; Further Instruments 27
14.04 Headings 27
14.05 Gender and Number 27
14.06 Severability 27
14.07 Waiver of Action for Partition 27
14.08 Governing Law 27
14.09 Arbitration; Attorneys' Fees and Costs 28
14.10 Integration 28
14.11 Counterparts 28
14.12 Exhibits 28
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<PAGE>
AGREEMENT OF PARTNERSHIP
OF
SHOWBOAT MARINA CASINO PARTNERSHIP
AN INDIANA GENERAL PARTNERSHIP
THIS AGREEMENT OF PARTNERSHIP of SHOWBOAT MARINA CASINO
PARTNERSHIP, AN INDIANA GENERAL PARTNERSHIP (this "Agreement"),
is made as of this 1st day of March, 1996, by and between
SHOWBOAT MARINA PARTNERSHIP, an Indiana general partnership
("Showboat Marina"), and SHOWBOAT MARINA INVESTMENT PARTNERSHIP,
an Indiana general partnership ("Investment").
RECITALS
A. The parties hereto have joined together for the purpose
of forming a general partnership pursuant to the Uniform
Partnership Act under the laws of the state of Indiana, upon the
terms and conditions and for the purposes hereinafter set forth.
B. The parties desire to form a general partnership on the
terms and conditions set forth herein, for the purpose of
managing and operating a gaming vessel in East Chicago, Indiana.
NOW, THEREFORE, in consideration of the mutual promises
contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, and with the intention of being bound by this
Agreement, the parties stipulate and agree as follows:
ARTICLE I. DEFINITIONS
For purposes of this Agreement, and in addition to terms
defined elsewhere herein, the following terms shall have the
following meanings:
1.01 AFFILIATE
The term Affiliate shall refer to (i) any person
("first person") directly or indirectly controlling, controlled
by, or under common control with a second person, or owning or
controlling 10% or more of the outstanding securities of that
second person; (ii) any officer, director, partner or member of
the immediate family of that first person; and (iii) if that
second person is an officer, director or partner, any company for
which that second person acts in that capacity. "Person"
includes any individual, partnership, corporation, limited
liability company, association or other legal entity. The term
"control" (including the terms "controlled by" and "under common
control with") means the possession, direct or indirect, of the
power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting
securities, by contract, or otherwise.
1.02 CASH AVAILABLE FOR DISTRIBUTION
The cash available for distribution shall mean Gross
Revenue less cash expenditures (including but not limited to,
gaming loss, debt service and operating expenses) and amounts set
aside for reserves, but not including any amount which, if
distributed, would cause a default of any covenant contained in
any indenture or any financing agreement between the Partnership
and a third party lender, including, without limitation, the
indenture relating to the First Mortgage Notes due 2003 (the
"First Mortgage Notes") issued by the Partnership, for so long as
such indenture remains in effect..
1.03 CODE
The Internal Revenue Code of 1986, as amended, codified as
Title 26 of the U.S. Code.
1.04 DEPRECIATION
For each fiscal year or other period, an amount equal to
the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period,
except that if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning
of such year or other period, depreciation shall be an amount
which bears the same ratio to such beginning Gross Asset Value as
the federal income tax depreciation, amortization or other cost
recovery deduction for such year or other period bears to such
beginning adjusted tax basis; provided, however, that if the
federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, depreciation shall be
determined with reference to such beginning Gross Asset Value
using any reasonable method selected by Showboat Marina.
1.05 GROSS ASSET VALUE
With respect to any asset, the asset's adjusted basis for
federal income tax purposes, except that the initial Gross Asset
Value of any asset contributed by a Partner to the Partnership
shall be the gross fair market value of such asset, as determined
by the contributing Partner and the Partnership. The Gross Asset
Value of any Partnership assets distributed to any Partner shall
be the fair market value of such asset on the date of
distribution.
1.06 GROSS REVENUE
All of the revenue generated by the Partnership Property
and miscellaneous sources, including, without limitation, all
cash receipts from operation of the Partnership Property and cash
proceeds from (a) any loan secured by the Partnership Property,
(b) a sale or refinancing of all or part of the Partnership
Property remaining after retirement of debt secured by such
Partnership Property and all expenses relating to the transaction
and retention of reasonable reserves, and (c) net condemnation
proceeds.
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<PAGE>
1.07 INTEREST OR PARTNERSHIP INTEREST
The proportionate interest of a Partner in the profits,
losses, and capital of the Partnership, set forth as such
Partner's "Percentage Interest" on Exhibit A hereto.
1.08 MAJORITY INTEREST
Any combination of Partnership Interests that, in the
aggregate, constitutes more than fifty percent (50%) of all
Partnership Interests.
1.09 NET PROFITS OR NET LOSSES
The net income or loss of the Partnership, as determined
by the auditors or accountants employed by the Partnership, in
accordance with Section 703 of the Code, applied consistently
with prior periods.
1.10 NONRECOURSE DEBT OR PARTNER NONRECOURSE DEBT
Any debt or liability of the Partnership as to which no
Partner has any liability for repayment, beyond its investment in
the Partnership.
1.11 ORIGINAL CAPITAL CONTRIBUTION
The amount contributed by a Partner to the capital of the
Partnership upon its formation or upon the Partner's admission
thereto.
1.12 PARTNER
Initially, Showboat Marina and Investment, and thereafter
any person or entity who holds a Partnership Interest and is
admitted as a substitute Partner in accordance with this
Agreement.
1.13 PARTNERSHIP
Showboat Marina Casino Partnership, an Indiana general
partnership.
1.14 PARTNERSHIP PROPERTY
The Partnership's interest in such property, whether real
or personal, as may from time to time belong to the Partnership.
1.15 REGULATIONS
The regulations promulgated by the U.S. Treasury Department
under the Code.
3
<PAGE>
1.16 UNRECOVERED CAPITAL CONTRIBUTION
The Original Capital Contribution made by a Partner to the
Partnership reduced by any distributions to said Partner which
constitute a return of capital, thereby decreasing such Partner's
Capital Account.
ARTICLE II. FORMATION AND ORGANIZATION MATTERS
2.01 AGREEMENT OF GENERAL PARTNERSHIP
Showboat Marina and Investment agree to associate
themselves together as a general partnership pursuant to the
provisions of the Indiana Uniform Partnership Act (IC 23-4-1-1
et seq.), as amended from time to time, and upon the terms and
conditions set forth in this Agreement.
2.02 FICTITIOUS BUSINESS NAME STATEMENT
Showboat Marina shall execute and promptly cause to be
filed in the applicable Indiana counties, a certificate of
assumed or fictitious business name, or such other document
that may be required, with respect to the name of the Partnership
and with respect to any other assumed or fictitious business
names used by the Partnership in carrying out its purpose.
2.03 NAME
The name of the Partnership shall be Showboat Marina Casino
Partnership.
2.04 PURPOSE
The purposes of the Partnership are to (a) develop,
construct, manage and operate a gaming vessel and related support
facilities, (b) acquire, lease, sell, or otherwise dispose of
properties used or useful in connection with the foregoing, (c)
carry on any other activities necessary or incidental to the
foregoing, and (d) engage in any other business if such business
is approved and agreed upon unanimously by the Partners prior to
entering into such business.
2.05 TERM
The term of the Partnership shall commence upon the
execution of this Agreement and shall continue until the earlier
of either (i) December 31, 2023; or (ii) the sale of all or
substantially all of the Partnership Property (the "Initial
Term"); unless the life of the Partnership shall be terminated
or extended pursuant to law or any provision of this Agreement.
The term of the Partnership shall be continued automatically for
successive one-year terms (each, a "Renewal Term")after December
31, 2023 until terminated as provided herein. If Showboat Marina
desires that the Partnership terminate upon the expiration of the
Initial Term of the Partnership or any Renewal Term thereafter,
Showboat Marina shall give written notice to Investment of its
intention to cause such termination at least ninety (90) days
prior to the end of the Initial Term or any Renewal Term
thereafter. The Partnership shall terminate thereafter at the end
of the Initial Term
4
<PAGE>
or such Renewal Term, as the case may be, and shall thereafter be
liquidated in accordance with the provisions hereof.
2.06 PRINCIPAL PLACE OF BUSINESS
The location of the principal place of business of the
Partnership shall be: 2001 E. Columbus Drive, East Chicago,
Indiana 46312, or at such other place as Showboat Marina may
from time to time determine.
2.07 TITLE TO PROPERTY
Legal title to all Partnership Property shall be taken and at all
times held in the name of the Partnership.
2.08 LICENSING
Each Partner covenants to use its best efforts to
diligently obtain all state and local licenses, including gaming
licenses, necessary to conduct gaming operations in the Project.
The Partners agree to provide each other with copies of all
applications, reports, letters and other documents filed or
provided to the state or local licensing authorities. In the
event that either Partner as a result of a communication or
action by the Commission or on the basis of consultations with
its gaming counsel and/or other professional advisors, reasonably
believes in good faith, with the concurrence of the other
Partner's board of directors, that the Commission is likely to:
(i) fail to license and/or approve the Partnership or its
Affiliates to own and operate any gaming related businesses;
(ii) grant required gaming licensing and/or approval only upon
terms and conditions which are unacceptable to the Partners or
their respective general partners; (iii) significantly delay the
licensing and/or approval contemplated under this Agreement; or
(iv) revoke any existing license or casino operating contract of
the Partnership or its Affiliates, due to concerns of any aspect
of the suitability of a particular shareholder or owner of an
interest in a Partner or its Affiliate, then the Partner shall
divest itself of its interest in the Affiliate or cause such
shareholder or owner of an interest in the Partner or the
Affiliate to divest itself of such interest. If, however, the
events described in subparagraphs (i) through (iv) arise from
concerns with respect to the suitability of a particular Partner
("Selling Party") then the Selling Party's entire interest in the
Partnership may be purchased by the other Partner at a purchase
price equal to the greater of the then fair market value of the
Selling Party's Partnership Interest.
ARTICLE III. CAPITAL CONTRIBUTIONS
3.01 SHOWBOAT MARINA
Showboat Marina shall contribute cash and net assets valued
at Thirty-eight Million Six Hundred Ten Thousand Dollars
($38,610,000.00) to the capital of the Partnership. The Interest
of Showboat Marina in the Partnership shall be ninety-nine
percent (99%).
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<PAGE>
3.02 INVESTMENT
Investment shall contribute Three Hundred Ninety Thousand
Dollars ($390,000) to the capital of the Partnership. The
Interest of Investment in the Partnership shall be one percent
(1%).
3.03 NO INTEREST ON CAPITAL CONTRIBUTIONS
Capital contributions to the Partnership shall not bear
interest.
3.04 WITHDRAWAL OF CAPITAL CONTRIBUTIONS
Except as expressly provided in this Agreement, no part of
the contributions of any Partner to the capital of the
Partnership may be withdrawn by such Partner without the prior
written consent of Showboat Marina. The Partners shall not have
the right to receive property, other than cash, in return for
their capital contributions, but this shall not be construed to
limit the Partners' rights to receive their respective Interest
in any property distributions made pursuant to this Agreement.
3.05 ADDITIONAL CAPITAL CONTRIBUTIONS
At such time as the partners of Showboat Marina unanimously
determine that additional capital ("Additional Capital
Contribution") is required by the Partnership, such Additional
Capital Contribution shall be made by the Partners in proportion
to the Partners' Interests in the Partnership. If any Partner
shall fail to make any Additional Capital Contribution, then
Showboat Marina shall have the right to acquire, on behalf of the
Partnership, such additional capital as may be required, from
whatever sources, in whatever amounts, and upon whatever terms
and conditions Showboat Marina deems necessary and appropriate,
in its business judgment, to meet the ongoing needs of the
Partnership.
3.06 ADJUSTMENT OF CAPITAL CONTRIBUTIONS
As of any date, a Partner's capital contribution shall be
deemed to be adjusted as follows:
(a) Increased by the amount of any Partnership
liabilities which, in connection with distributions pursuant
to Section 7.01 or Section 7.02 hereof, are assumed by such
Partner or are secured by any Partnership Property
distributed to such Partner; and
(b) Reduced by the amount of cash and the Gross Asset
Value of any Partnership Property distributed to such
Partner pursuant to Section 7.01 or Section 7.02 hereof; and
(c) Reduced by the amount of any liabilities of such
Partner assumed by the Partnership or which are secured by
any property contributed by such Partner to the Partnership.
6
<PAGE>
ARTICLE IV. CAPITAL ACCOUNTS
There shall be established and maintained on the books of
the Partnership a separate capital account ("Capital Account")
for each Partner. The Partnership shall maintain such Capital
Accounts in accordance with the capital account maintenance rules
of Regulations Section 1.704-1(b)(2)(iv), as such rules may be
amended from time to time. Unless otherwise required by such
rules, the Capital Account of each Partner shall be maintained
for such Partner in accordance with the following provisions:
4.01 INCREASES
Each Partner's Capital Account shall be increased by:
(a) The amount of the Partner's cash or, to the
extent permitted by the terms of any Development Financing,
in kind capital contributions to the Partnership; and
(b) The fair market value of any property contributed
by the Partner to the Partnership (net of liabilities
secured by any such contributed property that the
Partnership is considered to assume or take subject to for
purposes of Section 752 of the Code); and
(c) The amount of Net Profits (or items thereof)
allocated to the Partner pursuant to Article VI.; and
(d) Any other increases required by the Regulations.
If Section 704(c) of the Code applies to property
contributed by a Partner to the Partnership, then the
Partners' Capital Accounts shall be adjusted in accordance
with Regulations Section 1.704-1(b)(2)(iv)(g).
4.02 DECREASES
Each Partner's Capital Account shall be decreased by:
(a) The amount of Net Losses allocated to the Partner
pursuant to Article VI.; and
(b) All amounts paid or distributed to the Partner
pursuant to Article VII., other than amounts required to be
treated as a payment for property or services under the
Code; and
(c) The fair market value of any property distributed
in kind to the Partner (net of any liabilities secured by
such distributed property that such Partner is considered
to assume or take subject to for purposes of Section 752 of
the Code); and
(d) Any other decreases required by the Regulations.
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<PAGE>
4.03 OTHER ADJUSTMENTS
(a) Before decreasing a Partner's Capital Account (as
described above) with respect to the distribution of any
property to such Partner, all Partners' Capital Accounts
shall be adjusted to reflect the manner in which the
unrealized income, gain, loss, and deduction inherent in
such property (that has not been previously reflected in
the Partners' Capital Accounts) would be allocated among
the Partners if there were a taxable disposition of such
property by the Partnership on the date of distribution, in
accordance with Regulations Section 1.704-1(b)(2)(iv)(e).
(b) Partners' Capital Accounts shall be adjusted in
accordance with, and upon the occurrence of an event as
permitted by Regulations Section 1.704-1(b)(2)(iv)(f), or
the receipt of Additional Capital Contributions pursuant to
Section 3.06(b), hereof, to reflect a revaluation of the
Partnership's assets on the Partnership's books. Such
adjustments to the Partners' Capital Accounts shall be made
in accordance with Regulations Section 1.704-1(b)(2)(iv)(g)
for allocations of depreciation, depletion, amortization
and gain or loss with respect to such revalued property.
4.04 GENERAL PROVISIONS
(a) COMPLIANCE WITH REGULATIONS - All provisions of
this Agreement relating to the maintenance of Capital
Accounts are intended to comply with Regulations Section
1.704-1(b)(2)(iv), and shall be interpreted and applied in
a manner consistent with such Regulations. In the event
Showboat Marina shall determine that it is prudent to
modify the manner in which the Capital Accounts, or any
debits or credits thereto (including, without limitation,
debits or credits relating to liabilities which are secured
by contributed or distributed property or which are assumed
by the Partnership or Showboat Marina) are computed in
order to comply with such Regulations, Showboat Marina may
make such modification, provided that it is not likely to
have a material effect on the amount distributable to any
Partner pursuant to Section 7.02 hereof upon the
dissolution of the Partnership.
(b) DETERMINATION OF LIABILITIES - In determining the
amount of any liability for purposes of Sections 4.01(b)
and 4.02(c) above, there shall be taken into account Code
Section 752(c) and any other applicable provisions of the
Code and any Regulations promulgated thereunder.
(c) FEDERAL INCOME TAX ELECTIONS - Showboat Marina
may on behalf of the Partnership, make all elections for
federal income tax purposes, including but not limited to
an election, pursuant to Code Section 754, to adjust the
basis of the Partnership's assets under Code Sections 734
or 743. In the event an election pursuant to Code Section
754 is made, upon the adjustment to the basis of the
Partnership's assets, the Capital Accounts of all Partners
shall be adjusted in accordance with the requirements of
Regulation Section 1.704-1(b)(2)(iv)(m).
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<PAGE>
(d) TRANSFER OF PARTNERSHIP INTEREST - In the event
any Interest in the Partnership is transferred to a
transferee who is entitled to be admitted to the
Partnership as a substitute Partner in accordance with the
terms of this Agreement, the transferee shall succeed to
the Capital Account of the transferor to the extent it
relates to the transferred Interest.
ARTICLE V. LOANS
5.01 PARTNER'S LOANS TO THE PARTNERSHIP
No Partner shall lend or advance money to or for the
Partnership's benefit without the prior written consent of
Showboat Marina. If any Partner shall make loans or lend money
to the Partnership or advance money on its behalf, the amount of
any such loan or advance shall not be an increase in the
Partner's Capital Contribution or Interest, nor shall it entitle
such Partner to any increase in his share of the distributions of
the Partnership, nor subject such Partner to any greater
proportion of the losses which the Partnership may sustain. The
amount of any such loan or advance shall be a debt due from the
Partnership to such Partner, at such rates and on such terms as
shall be reasonably determined by Showboat Marina.
5.02 OTHER LOANS TO THE PARTNERSHIP
If Showboat Marina determines that funds are reasonably
necessary for maintaining and protecting the assets of the
Partnership, conducting its business, or making capital
improvements (or similar expenditures), Showboat Marina is
authorized (but not obligated) to borrow the needed funds on the
Partnership's behalf on commercially reasonable terms existing at
the time of the borrowing, and all or any portion of the
Partnership Property may be pledged or conveyed as security for
the indebtedness. Without limiting the foregoing, the Partners
agree that Showboat Marina is authorized to cause the Partnership
to issue and sell up to $140.0 million in principal amount of its
First Mortgage Notes on such terms and conditions (including
interest rate, maturity date security and covenants) as shall be
acceptable to Showboat Marina.
5.03 SHOWBOAT MARINA ADVANCES AND AFFILIATE LOANS
From time to time, Showboat Marina may advance to the
Partnership such funds as shall be required for the business
expenses or other obligations of the Partnership. Such loan or
advance shall become an obligation and liability of the
Partnership, shall be evidenced in writing by a promissory note
(whether secured by Partnership Property or unsecured) or other
document of indebtedness and shall bear interest and otherwise be
subject to the terms and conditions as shall be provided in such
note or document; provided, however, any interest paid to
Showboat Marina on any such loans or advances shall not exceed
the interest that would be charged by independent commercial
lending institutions or private lenders for similar loans for the
same purpose and in the same locality as the Partnership
Property. Showboat Marina shall not require a prepayment charge
or penalty on any such loan. Showboat Marina shall not provide
permanent financing for the Partnership. Showboat Marina shall be
entitled to receive repayment of any loans or advances made by
Showboat Marina pursuant to any section hereof prior to any
distributions to Investment, including distributions pursuant to
the provisions herein.
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<PAGE>
5.04 LOANS FROM THE PARTNERSHIP
No loans shall be made from the Partnership to any
Partner.
ARTICLE VI. ALLOCATIONS OF PROFITS AND LOSSES
6.01 DETERMINATION OF NET PROFITS AND NET LOSSES
The amount of Net Profits or Net Losses available for
allocation for each fiscal year or other period, shall be an
amount equal to the Partnership's taxable income or loss for such
year or period, determined in accordance with Code Section 703(a)
(for this purpose, all items of income, gain, loss or deduction
required to be stated separately pursuant to Code Section
703(a)(l) shall be included in taxable income or loss) with the
following adjustments:
(a) Any income of the Partnership that is exempt from
federal income tax or not otherwise taken into account in
computing net profits or net losses pursuant to this
Section 6.01, shall be added to such taxable income or
loss; and
(b) Any expenditures of the Partnership described in
Code Section 705(a)(2)(B) or treated as Code Section
705(a)(2)(B) expenditures pursuant to Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing net profits or losses pursuant to this Section
6.01 shall be subtracted from such taxable income or loss;
and
(c) In the event the Gross Asset Value of any
Partnership Property is adjusted pursuant to Section 8.04,
the amount of such adjustment shall be taken into account
as gain or loss from the disposition of such asset for
purposes of computing Net Profits or Net Losses; and
(d) Gain or loss resulting from any disposition of
any Partnership Property with respect to which gain or loss
is recognized for federal income tax purposes shall be
computed by reference to the Gross Asset Value of the
Partnership Property disposed of, notwithstanding that the
adjusted tax basis of such Partnership Property differs
from its Gross Asset Value; and
(e) In lieu of the depreciation, amortization and
other cost recovery deductions taken into account in
computing such taxable income or loss, there shall be taken
into account depreciation for such fiscal year or other
period, computed in accordance with Section 1.04.
Notwithstanding any other provision of this Section 6.01,
any items which are specially allocated pursuant to Sections 6.04
or 6.05 hereof shall not be taken into account in computing Net
Profits or Net Losses.
6.02 NET PROFITS
After giving effect to any special allocations set forth in
Sections 6.04 and 6.05 hereof, Net Profits for any fiscal year
shall be allocated to the Partners in proportion to their
respective Partnership Interests.
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6.03 NET LOSSES
After giving effect to the special allocations set forth in
Section 6.04 and 6.05 hereof, Net Losses for any fiscal year
shall be allocated to the Partners in proportion to their
respective Partnership Interests; provided however that no Net
Loss may be allocated to a partner with a negative Capital
Account unless all Partners have a negative Capital Account.
6.04 SPECIAL ALLOCATIONS
(a) MINIMUM GAIN CHARGEBACK - Except as otherwise
provided in Regulations Section 1.704-2(i)(4),
notwithstanding any other provision of this Section 6.04,
if there is a net decrease in Partnership Minimum Gain, as
defined in the Regulations, during any Partnership fiscal
year, each Partner who would otherwise have an Adjusted
Capital Account Deficit (as defined below) at the end of
such year shall be specially allocated items of Partnership
income and gain for such year (and, if necessary subsequent
years) in an amount and manner sufficient to eliminate such
Adjusted Capital Account Deficit as quickly as possible.
The items to be so allocated shall be determined in
accordance with Regulations Section 1.704-2(i). This
Section is intended to comply with the minimum gain
chargeback requirement Regulations Section 1.704-2(i)(4),
and shall be interpreted consistently therewith.
(b) QUALIFIED INCOME OFFSET - In the event any
Partner unexpectedly receives any adjustments, allocations
or distributions described in Regulations Section
1.704-l(b)(2)(ii)(d)(4), (5) or (6); items of Partnership
income and gain shall be specially allocated to each such
Partner in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, the Adjusted
Capital Account Deficit of such Partner as quickly as
possible, provided that an allocation pursuant to this
Section 6.04(b) shall be made only if and to the extent
that such Partner would have an Adjusted Capital Account
Deficit after all other allocations have been made as if
this Section were not in this Agreement.
(c) NON-RECOURSE DEDUCTIONS - Non-recourse deductions
for any fiscal year or other period shall be allocated
ninety-nine percent (99%) to Showboat Marina and one
percent (1%) to Investment.
(d) CODE SECTION 754 ADJUSTMENTS - To the extent an
adjustment to the adjusted tax basis of any Partnership
asset pursuant to Code Section 734(b) or Code Section
743(b) is required, pursuant to Regulations Section 1.704-
1(b)(2)(iv)(m), to be taken into account in determining
Capital Accounts, the amount of such adjustment to the
Capital Accounts shall be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss
( if the adjustment decreases such basis) and such gain or
loss shall be specially allocated to the Partners in the
manner consistent with the manner in which their Capital
Accounts are required to be adjusted pursuant to such
section of the Regulations.
(e) ADJUSTED CAPITAL ACCOUNT DEFICIT - The Adjusted
Capital Account Deficit with respect to any Partner shall
be the deficit balance, if any, in such Partner's Capital
Account as of the end of the relevant fiscal year, after
giving effect to the following adjustments:
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(1) Credit to such Capital Account any amounts
which such Partner is obligated to restore
(pursuant to any provision of this agreement,
pursuant to the terms of such Partner's
promissory note, if any, or otherwise) or is
deemed to be obligated to restore pursuant to the
penultimate sentence of Regulations Section
1.704-2(g)(1) and 1.704-2(i)(5); and
(2) Debit to such capital account the items
described in Regulations Sections 1.704-
1(b)(2)(ii)(d)(4), (5) and (6); and
(3) The foregoing provisions regarding the
determination of the amount of an Adjusted
Capital Account Deficit are intended to comply
with the provisions of Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith
6.05 CURATIVE ALLOCATIONS
The allocations set forth in Sections 6.04 (the "Regulatory
Allocations") are intended to comply with certain requirements of
Regulations Section 1.704-1(b). Notwithstanding any other
provisions of this Agreement (other than the Regulatory
Allocations), the Regulatory Allocations shall be taken into
account in allocating other profits, losses and items of income,
gain, loss and deduction among the Partners so that, to the
extent possible, the net amount of such allocations of other
profits, losses and other items and the Regulatory Allocations to
each Partner shall be equal to the net amount that would have
been allocated to each such Partner if the Regulatory Allocations
had not occurred.
6.06 OTHER ALLOCATION RULES
(a) Generally, all Net Profits and Net Losses
allocated to Showboat Marina and Investment pursuant to
Sections 6.01 through 6.04 hereof, are in turn allocated
among the Partners in proportion to the Interest held. In
the event the Partners are admitted to the Partnership on
different dates during any fiscal year, the Net Profits (or
Net Losses) allocated to the Partners for each such fiscal
year shall be allocated among the Partners in proportion to
the Interest each holds from time to time during such
fiscal year in accordance with any convention permitted by
law and selected by Showboat Marina.
(b) For purposes of determining the Net Profits, Net
Losses or any other items allocable to any period, Net
Profits, Net Losses and any other such items shall be
determined on a daily, monthly or other basis, as
determined by Showboat Marina using any permissible method
under Code Section 706 and the Regulations thereunder.
(c) Except as otherwise provided in this Agreement,
all items of Partnership income, gain, loss, deduction and
any other allocation not otherwise provided for shall be
divided among the Partners in the same proportion as they
share Net Profits or Net Losses, as the case may be, for
the year.
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(d) The Partners are aware of the income tax
consequences of the allocations made by this Article VI and
hereby agree to be bound by the provisions of this Article
VI in reporting their share of Partnership income and loss
for income tax purposes.
(e) Solely for the purpose of determining a Partner's
proportionate share of the "excess nonrecourse liabilities"
of the Partnership within the meaning of Regulations
Section 1.752-3(a)(3), the interests in the Partnership
profits are in proportion to the Interests held by the
Partners.
(f) To the extent permitted by Regulations Section
1.704-2(h)(3), Showboat Marina shall endeavor to treat
distributions of Cash Available for Distribution, whether
from operations or from the sale or refinancing of
Partnership Property as having been made from the proceeds
of a Nonrecourse Liability or a Partner Nonrecourse Debt
unless such distributions would cause or increase an
Adjusted Capital Account Deficit for any Partner.
6.07 TAX ALLOCATIONS CODE SECTION 704(C)
In accordance with Code Section 704(c) and the Regulations
thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Partnership shall,
solely for tax purposes, be allocated among the Partners so as to
take into account any variation between the adjusted basis of
such property to the Partnership for federal income tax purposes
and its initial Gross Asset Value. In the event the Gross Asset
Value of any Partnership asset is adjusted, subsequent
allocations of income, gain, loss and deduction with respect to
such asset shall take account of any variation between the
adjusted basis of such asset for federal income tax purposes and
its Gross Asset Value in the same manner as under Code Section
704(c) and the regulations thereunder. Any elections or other
decisions relating to such allocations shall be made by Showboat
Marina in any manner that reasonably reflects the purpose and
intention of this Agreement. Allocations pursuant to this
Section 6.07 are solely for purposes of federal, state and local
taxes and shall not affect, or in any way be taken into account
in computing, any person's capital account or share of profits,
losses, other items or distributions pursuant to any provision of
this Agreement.
6.08 CERTAIN ELECTIONS
Where a distribution of property is made in the manner
provided in Code Section 734 or where a transfer of a Partnership
Interest permitted by this Agreement is made in the manner
provided in Code Section 743, Showboat Marina shall have the sole
and absolute discretion to file or not to file on behalf of the
Partnership, upon any Partner's written request, an election
under Code Section 754 in accordance with the procedures set
forth in the applicable Regulations. Except insofar as an
election pursuant to Code Section 754 has been made with respect
to the Interest of any Partner, the determination of profits,
losses, distributions, and Capital Accounts shall be made as
provided for in this Agreement. With respect to any Partner
whose Interest has been affected by an election pursuant to Code
Section 754, appropriate adjustments shall be made with respect
to the determination of profits, losses, distributions, and
Capital Accounts. Each
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Partner agrees to promptly provide Showboat Marina with all
information necessary to give effect to such election.
ARTICLE VII. DISTRIBUTIONS
7.01 OPERATING DISTRIBUTIONS
Showboat Marina shall distribute all Cash Available for
Distribution from time to time (but not less frequently than
quarterly) at such times as Showboat Marina may determine;
provided, however, that the aggregate amount of each such
distribution shall be that amount which Showboat Marina
reasonably determines is not required to be retained by the
Partnership to meet the reasonably foreseeable cash requirements
and needs of the business and activities of the Partnership and
to establish an adequate reserve for the payment of Partnership
liabilities and contingencies. All proceeds from the sale or
refinancing of part or all of the assets of the Partnership, net
of transaction costs, repayment of debt, repurchase obligations
and reasonable reserves shall be distributed to the Partners as
promptly as practicable upon receipt thereof. All distributions
made pursuant to this Section 7.01 shall be made in cash and
shall be divided among the Partners as follows:
(a) First, to reimburse Showboat Marina for all
out-of-pocket expenses incurred by Showboat Marina
concerning the Project which have not previously been
reimbursed to Showboat Marina, including, without
limitation, legal and other professional fees incurred to
organize the Partnership;
(b) The balance, if any, among the Partners in
proportion to each Partner's respective Interest in effect
at the time the distribution is made.
7.02 DISTRIBUTIONS UPON DISSOLUTION OR LIQUIDATION
Upon dissolution or liquidation of the Partnership, cash
and any other assets being distributed in-kind shall be
distributed in the following order of priority:
(a) First, to the payment and discharge of all of the
Partnership's debts and liabilities (including any debts
and liabilities of the Partners who are creditors of the
Partnership) and including the establishment of any
necessary contingency reserves;
(b) Second, to Showboat Marina to the extent the
amount described in Section 7.01(a) has not previously
been satisfied; and
(c) The balance, if any, to the Partners, in
proportion to their positive capital accounts as of the
date of such distribution, after giving effect to all
contributions, distributions and allocations for all
periods, including the period during which such
distribution occurs.
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7.03 RESTORATION OF CAPITAL ACCOUNT
Distributions made to a Partner pursuant to Section 7.01 or
Section 7.02 shall not be made in violation of Regulations
Section 1.704-1(b)(2)(ii)(b)(3). If the Partner's Capital
Account has a deficit balance (after giving effect to all
contributions, distributions and allocations for all taxable
years, including the year during which such liquidation occurs),
such Partner shall contribute to the capital of the Partnership
the amount necessary to restore such deficit balance to zero in
compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(3).
7.04 METHOD OF DISTRIBUTION
In the discretion of Showboat Marina, a pro rata portion of
the distributions that would otherwise be made to the Partners
pursuant to Section 7.02 may be:
(a) distributed to a trust established for the
benefit of the Partners for the purposes of liquidating
Partnership assets, collecting amounts owed to the
Partnership, and paying any contingent or unforeseen
liabilities or obligations of the Partnership or of the
Partners arising out of or in connection with the
Partnership. The assets of any such trust shall be
distributed to the Partners from time to time, in the
reasonable discretion of Showboat Marina, in the same
proportions as the amount distributed to such trust by the
Partnership would otherwise have been distributed to the
Partners pursuant to this Agreement; or
(b) withheld to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to
reflect the unrealized portion of any installment
obligations owed to the Partnership, provided that such
withheld amounts shall be distributed to the Partners as
soon as practicable.
7.05 DISTRIBUTIONS TO OWNERS OF RECORD
Distributions shall be made only to persons who, according
to the books and records of the Partnership, are the owners of
record on a date to be determined by Showboat Marina with respect
to each distribution. Neither Showboat Marina nor the
Partnership shall incur any liability for making distributions in
accordance with the preceding sentence.
ARTICLE VIII. BOOKS AND RECORDS, ACCOUNTING, AND TAXES
8.01 FISCAL YEAR OF PARTNERSHIP
The fiscal year of the Partnership shall be the calendar
year for accounting purposes and June 30 or such other date which
is the same date as the majority partner for income tax reporting
purposes.
8.02 BOOKS AND RECORDS
The Partnership shall maintain full and accurate books and
records at its principal place of business, as required under the
Indiana Uniform Partnership Act, and all Partners shall have the
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right to inspect and copy, at the Partner's expense, such books
and records during ordinary business hours. The Partnership shall
maintain such books and records under the accrual method of
accounting. Showboat Marina shall have the authority to
determine the necessary federal, state and local tax return
elections as it deems advisable and in the best interests of the
Partnership. The books shall be closed at the end of each fiscal
year.
8.03 TAX RETURNS AND REPORTS TO PARTNERS
The Partnership shall make a reasonable effort to deliver
to each Partner by March 15th of each year, or as soon thereafter
as reasonably possible, a copy of each Partner's Internal Revenue
Service Form 1065, Schedule K-l, or such successor form, to be
filed with the Partner's own tax return. A copy of the income
tax returns of the Partnership shall be available to any Partner
upon reasonable request to the Partnership. The Partnership shall
provide the Partners with quarterly unaudited financial
statements and annual unaudited financial statements of the
Partnership.
8.04 GROSS VALUE ADJUSTMENT OF PARTNERSHIP ASSETS
(a) The Gross Asset Values of all Partnership Assets shall
be adjusted to equal their respective gross fair market values,
as determined by Showboat Marina, as of the following times:
1. The acquisition of an additional interest in the
Partnership (other than pursuant to Section 5.03
hereof) by any new or existing Partner in
exchange for more than a de minibus capital
contribution;
2. The distribution by the Partnership to a Partner
of more than a de minimus amount of Partnership
property as consideration for an interest in the
Partnership if Showboat Marina reasonably
determines that such adjustment is necessary or
appropriate to reflect the relative economic
interests of the Partners in the Partnership; and
3. The liquidation of the Partnership within the
meaning of Regulations Section 1.704-1(b)(2)(ii)
(g).
(b) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustment to the
adjusted basis of such assets pursuant to Code Section 734(b) or
Code Section 743(b), but only to the extent that such adjustments
are taken into account in determining capital accounts pursuant
to Regulations Section 1.704-1(b)(2)(iv)(m) and Section 6.05(d)
(Code Section 734(b) or Code Section 743(b) adjustments) hereof;
provided, however, that Gross Asset Values shall not be adjusted
pursuant to this Section to the extent Showboat Marina determines
that an adjustment pursuant to Section 8.04(a) is necessary or
appropriate in connection with a transaction that would otherwise
result in an adjustment pursuant to this Section.
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ARTICLE IX. POWERS AND OBLIGATIONS OF PARTNERS
9.01 AUTHORITY OF SHOWBOAT MARINA
Showboat Marina shall have full, exclusive, and complete
authority to direct and manage the affairs of the Partnership
with all rights and powers generally conferred by law together
with those that are necessary or appropriate for the overall
management and control of the Partnership's business, as required
under the Indiana Uniform Partnership Act
9.02 DUTIES OF SHOWBOAT MARINA
Showboat Marina will use its best efforts to carry out the
purpose, business, and objectives of the Partnership and will
devote such time to Partnership business as is reasonably
required. Showboat Marina will use its best efforts to assure
the efficient management and operation of the Partnership and
will fully discharge its fiduciary duties to the Partnership and
the Partners. Without limiting the generality of the foregoing,
and in addition to all other duties imposed by law or this
Agreement, Showboat Marina is obligated to:
(a) Subject to the provisions hereof, act in a
fiduciary manner regarding the Partnership, the Partners
and the Partnership Property;
(b) File and publish all certificates, statements, or
other documents required by law for the formation and
operation of the Partnership and for the conduct of its
business in all appropriate jurisdictions; provided,
however, that performance will be excused whenever the
remaining Partners refuse to cooperate and their
cooperation is required in order to perform these duties;
(c) Furnish the Partners with the reports and
information specified in this Agreement;
(d) Maintain complete books of account and records
regarding Partnership operations and business affairs;
(e) Keep all books and records of the Partnership
available for inspection and audit by the Partners or their
representatives;
(f) Use best efforts to maintain the status of the
Partnership as a "partnership" for federal income tax
purposes;
(g) File all federal, state, or local tax returns and
reports and make all other filings which are required by
law or governmental agencies;
(h) Use reasonable efforts to operate the business of
the Partnership;
(i) Cause the Partnership at all times to maintain
insurance (including liability insurance) in the amounts
and against the risks as are generally maintained for
comparable property and business;
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(j) Invest the funds of the Partnership (including
reserves) that are not distributed to the Partners and
temporarily are not, in Showboat Marina's opinion, required
for the conduct of the Partnership's business in
(a) governmentally-insured, interest-bearing savings
accounts, (b) short-term governmental obligations, or (c)
certificates of deposit of a commercial bank or savings and
loan association having at least $100,000,000 of assets;
(k) Act as the "tax matters Partner" of the
Partnership pursuant to Code Section 6231(a)(7) and cause
the Partnership to make such timely federal, state and
local income tax elections as may be in the best interests
of the Partnership;
(l) Subject to the restrictions and conditions set
forth in Article XI, admit transferees of Partnership
Interests as substitute Partners;
(m) Make all decisions concerning the operational
aspects of the Partnership and execute and deliver all
contracts, deeds, and other instruments in connection
therewith;
(n) Borrow money on behalf of the Partnership,
including without limitation through the issuance and sale
of the First Mortgage Notes, and execute and deliver in the
name of the Partnership notes evidencing the same and
mortgages, deeds of trust, and any other security
instruments securing the same. The signature of Showboat
Marina shall be sufficient to bind the Partnership and all
the Partners as to the execution of any documents
concerning the Partnership's acquisition, development,
rental and/or sale of any or all the Partnership Property
or the execution of any mortgages, deeds of trust, or any
other security instruments securing any borrowing by the
Partnership;
(o) Pay from Partnership assets all expenses of
organizing and conducting the business of the Partnership,
including, without limitation, legal and accounting fees;
(p) Execute any and all instruments and take any and
all other action necessary or desirable to carry out the
purposes and business of the Partnership;
(q) Employ, at the expense of the Partnership, such
consultants, accountants, attorneys, brokers, escrow
agents, property managers and other professionals as
Showboat Marina shall deem necessary or desirable, some of
whom may also be employed by Showboat Marina itself; and
(r) Assume the overall duties imposed on a partner by
the Indiana Uniform Partnership Act.
9.03 PARTNERSHIP MEETINGS
The Partnership may, in Showboat Marina's discretion, hold
annual meetings for any reason. Partnership meetings may be held
when and where designated by Showboat Marina.
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9.04 ACTIVITIES OF PARTNERS
It is expressly understood that any Partner, any Affiliate
or any stockholder of any Partner may engage in any business,
investment, or profession, and neither the Partnership nor any
other Partner shall have any rights in and to said business,
profession or investment, or in the income or profits derived
therefrom by reason of this Agreement. The fact that a Partner,
or a person or an entity that is an Affiliate of or related to
such Partner, is directly or indirectly interested in or
connected with any person, firm, or corporation employed by the
Partnership to render services or perform a service or to sell or
to buy merchandise or other property shall not prohibit Showboat
Marina from employing or contracting with such person, firm, or
corporation or from dealing with him or it, and neither the
Partnership nor the Partners shall have any rights in or to any
income or profits derived therefrom. Showboat Marina is not
obligated to devote its full time to the affairs of the
Partnership. Showboat Marina may become involved in other
businesses and ventures. It is likely that Showboat Marina and
its Affiliates will participate in other partnerships which may
be in direct competition with the Partnership. Neither the
Partnership nor any Partner shall have any right or interest in
any business, profession, investment, or business opportunity
that Showboat Marina or its Affiliate is engaged in, practices,
or pursues.
Neither Showboat Marina nor any Affiliate shall be
obligated to present any particular investment opportunity to the
Partnership, even if the opportunity is of a character that, if
presented to the Partnership, could be taken by the Partnership,
and Showboat Marina shall have the right to take for its own
account or to recommend to others any investment opportunity.
9.05 LIABILITY OF THE PARTNERS
The Partners and any of them shall not be liable in damages
or otherwise to the Partnership or the other Partners, or any of
them, for any loss suffered by it or them, or any of them, in
connection with the activities of the Partnership.
The Partners shall not be personally liable for the return
of any capital of any remaining Partner, or for the return of any
other contribution to the Partnership made by any Partner, other
than loans made pursuant to this Agreement.
9.06 INDEMNIFICATION OF THE PARTNERS
The Partnership shall indemnify and hold harmless the
Partners and any of them from and against any and all loss,
liability, claim, damage, and the like, including reasonable
attorneys' fees, suffered by a Partner solely by virtue of its
acting as a Partner in this Partnership in connection with any
activity of the Partnership. The provisions of this Section to
hold the Partners harmless and indemnify the Partners, shall be
enforceable only against and out of the assets of the Partnership
and not against or out of the assets of the Partners, or any of
them, individually.
9.07 REPRESENTATIONS
Each of the Partners acknowledges and agrees (i) that no
representation or promise not expressly contained in this
Agreement has been made by any other Partner or by any of such
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Partner's agents, employees, or representatives; (ii) that this
Agreement is not being entered into on the basis of, or in
reliance on, any promise or representation, expressed or implied,
other than such as is set forth expressly in this Agreement;
(iii) that each Partner has had the opportunity to be represented
by counsel of said Partner's choice in this matter, including the
negotiations and transactions that preceded the execution of this
Agreement; and (iv) that each Partner, or counsel representing
such Partner, has read this Agreement and each Partner agrees to
be bound by the terms contained herein.
9.08 RIGHT TO RELY UPON THE AUTHORITY OF SHOWBOAT MARINA
No person dealing with Showboat Marina shall be required to
determine its authority to make any commitment or undertaking on
behalf of the Partnership nor to determine any fact or
circumstance bearing upon the existence of its authority. In
addition, no purchaser of any property or interest owned by the
Partnership shall be required to determine the sole and exclusive
authority of a Partner to sign and deliver on behalf of the
Partnership any such instrument of transfer or to see to the
application or distribution of revenues or proceeds paid or
credited in connection therewith, unless such purchaser shall
have received written notice affecting the same.
ARTICLE X. BANK ACCOUNTS
10.01 BANK ACCOUNTS
All funds of the Partnership shall be deposited in the name
of the Partnership in such bank account or accounts as shall be
determined by Showboat Marina. All withdrawals therefrom shall
be made upon checks signed on behalf of the Partnership by such
individuals as may be designated from time to time by Showboat
Marina. Showboat Marina shall not make deposits in or issue any
checks against the Partnership bank account without full, proper,
and complete supporting records.
10.02 EXPENSES OF THE PARTNERSHIP
All operating and administrative expenses of the
Partnership shall be billed directly to the Partnership, in the
name of the Partnership, and shall be paid by the Partnership
from funds received by it.
ARTICLE XI. TRANSFER OF A PARTNERSHIP INTEREST
11.01 TRANSFER OF INVESTMENT'S INTEREST.
Investment shall not voluntarily or involuntarily sell,
transfer, assign, gift, encumber, pledge, or convey
(collectively, for purposes of this Section 11.01 "Transfer") all
or any part of its Interest in the Partnership, except as
provided herein.
(a) In the event Investment (for purposes of this
Section 11.01, "Transferring Partner") desires to
voluntarily Transfer all or any part of its Interest, it
shall so notify
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Showboat Marina in writing and submit to Showboat Marina such
information (for purposes of this Section 11.01, "Transfer
Notice") concerning the proposed Transfer, transferee,
consideration, and terms and conditions relating thereto as
Showboat Marina may require in its sole and absolute discretion.
Within ten (10) days after receiving the Transfer Notice,
Showboat Marina shall have the option to acquire all or part of
the Interest proposed to be transferred. After such ten (10)-day
period, the remaining Interest proposed to be transferred which
has not been acquired by Showboat Marina may, subject to the
consent of Showboat Marina, which consent may not be
unreasonably withheld, be transferred by the Transferring
Partner upon the terms and conditions contained in the Transfer
Notice.
(b) Any transferee acquiring an Interest pursuant to
Section 11.01 (a) above shall be entitled to be admitted to the
Partnership as a substituted Partner, and this Agreement shall be
amended to reflect such admission provided that the following
conditions are complied with:
1. Showboat Marina approves the form and content
of the instrument of assignment;
2. The Transferring Partner and the transferee
and their spouses, if necessary, execute and
acknowledge such other instrument or instruments as
Showboat Marina may deem necessary or desirable to
effectuate such admission;
3. The transferee acknowledges all the terms and
provisions of this Agreement as the same may have been
amended and agrees to be bound by the same;
4. The transferee pays or obligates himself or
itself to Showboat Marina for all reasonable expenses
connected with such admission including, but not
limited to, legal fees and costs (i.e. the cost of
filing and publishing any amendment to this
Agreement);
5. The transferee provides the Partnership, if
required by Showboat Marina, proof of the investment
intent and financial status of the transferee; and
6. If requested, the transferring Partner shall
provide an opinion from counsel acceptable to Showboat
Marina that the transfer will not violate the
registration requirements of applicable state or
federal securities laws, and otherwise complies with
all applicable federal and state securities laws.
11.02 TRANSFER OF SHOWBOAT MARINA'S INTEREST
Showboat Marina shall not voluntarily or involuntarily
sell, transfer, assign, gift, encumber, pledge, or convey
(collectively, for purposes of this Section 11.02 "Transfer") all
or any part of its Interest in the Partnership, except as
provided herein.
(a) In the event Showboat Marina (for purposes
of this Section 11.02, "Transferring Partner") desires to
voluntarily Transfer all or any part of its Interest, it
shall so notify Investment in writing and submit to
Investment such information (for purposes of this Section
11.02, "Transfer Notice") concerning the proposed Transfer,
transferee,
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consideration, and terms and conditions relating thereto as
Investment may reasonably require. Within ten (10) days
after receiving the Transfer Notice, Investment shall have
the option to acquire all or part of the Interest proposed
to be transferred. After such ten (10)-day period, the
remaining Interest proposed to be transferred which has not
been acquired by Investment may, subject to the consent of
Investment which consent may not be unreasonably withheld,
be transferred by the Transferring Partner upon the terms
and conditions contained in the Transfer Notice.
(b) Any transferee acquiring an Interest pursuant to
Section 11.02 (a) above shall be entitled to be admitted to
the Partnership as a substituted Partner, and this
Agreement shall be amended to reflect such admission
provided that the following conditions are complied with:
1. The Transferring Partner and the transferee
and their spouses, if necessary, execute and
acknowledge such other instrument or instruments as
Investment may reasonably request to effectuate such
admission;
2. The transferee acknowledges all the terms
and provisions of this Agreement as the same may have
been amended and agrees to be bound by the same;
3. The transferee provides the Partnership, if
requested by the Partnership, proof of the investment
intent and financial status of the transferee; and
4. If requested, the Transferring Partner shall
provide an opinion from counsel that the transfer will
not violate the registration requirements of
applicable state or federal securities laws, and
otherwise complies with all applicable federal and
state securities laws.
11.03 EFFECTIVENESS OF SUBSTITUTION
The failure to obtain the requisite approvals and consents
of the Partners to the substitution of an assignee as a Partner
of the Partnership shall not, except to the extent that approval
by the Indiana Gaming Commission is required, affect the validity
or effectiveness of any such instrument as an assignment to an
assignee of the right to receive that share of the profits or
other compensation by way of income, or the return of
contributions, to which his assignor would otherwise be entitled
and which were assigned, provided a duly executed and
acknowledged written instrument of assignment in proper form and
substance, the terms of which are not in contravention of any of
the provisions of this Agreement, is filed with the Partnership.
However, an assignee of a Partner who has not obtained the
requisite approvals and consents has no right to require any
information or account of the Partnership transactions or to
inspect the Partnership books, or to vote on any matters as to
which a Partner would be entitled to vote. Such an assignee of a
Partner is only entitled to receive the share of the profits or
other compensation by way of income, or the return of capital
contributions, to which the assignor would otherwise be entitled.
In the event of the admission of a Partner, a permitted
withdrawal of a Partner, or transfer by a Partner, this Agreement
promptly will be amended as necessary to reflect any changes in
the profit and loss allocations of Partners, to reflect the
capital contributions of the newly admitted Partner or the
withdrawal of capital by any withdrawing Partner, and to set
forth
22
<PAG>
any new provisions or to amend any existing provisions of this
Agreement that may be necessary or desirable in light of the
admission of a Partner or Transfer by a Partner. In the event
such an amendment of this Agreement is required, such newly
admitted Partner or withdrawing Partner shall bear all costs
associated with such amendment.
11.04 DEATH OR LEGAL INCOMPETENCY OF A PARTNER
Upon the death or legal incompetency of an individual
Partner, his or her personal representative shall have all the
rights of a Partner for the purpose of settling or managing the
Partner's estate, and such power as the decedent or incompetent
possessed to designate a successor as a transferee of his
interest in the Partnership, and to join with such transferee in
making an application to substitute such transferee as a Partner.
The estate of a deceased Partner shall be liable for the
decedent's liabilities as a Partner. Upon the bankruptcy,
insolvency, dissolution, or other cessation of the existence, as
a legal entity, of a non-individual Partner, the authorized
representative of such entity shall have the rights of a Partner
for the purpose of effecting the orderly disposition of the
Interest of said Partner.
11.05 TRANSFER OF ALLOCATIONS
In the event of the Transfer of all or any part of the
Interest of any Partner, for the fiscal year during which the
Transfer occurs, the share of Net Profit or Net Loss or any item
of income, gain, loss, deduction, or credit of the Partnership
allocable to the Interest transferred shall be allocated between
the transferor and the transferee in accordance with the
provisions of Code Sections 706(c) and 706(d).
11.06 FURTHER LIMITATIONS OF TRANSFERS
Notwithstanding any other provision of this Agreement,
transfers of Interests shall be made only in accordance with 68
IAC 5-2 and no Transfer shall be permitted if: (i) the proposed
Transfer or the proposed transferee will or could (a) impair the
ability of the Partnership to be taxed as a Partnership under the
federal income tax laws, or (b) cause any certificate of
suitability, gaming license or similar authorization or license
to be denied to the Partnership or, if held by the Partnership,
to be suspended, revoked or not renewed; (ii) the Transfer will,
or could, cause the Partnership's tax year to close, or the
Partnership to terminate, for federal income tax purposes, or
impair the validity of the Partnership under Indiana law; or
(iii) such Transfer would cause the Partnership to be in default
under any agreement relating to any of its indebtedness. Any
purported Transfer in violation of the terms of this Section
11.06 shall be null and void and of no force and effect.
11.07 PAYMENT TO WITHDRAWING PARTNER
The Partnership shall pay to a withdrawing Partner all
amounts then accrued and owing to it, together with an amount
equal to the then present fair market value of the withdrawing
Partner's interest in income, gains, losses, deductions, credits,
distributions, and capital determined by agreement of the
withdrawing Partner and any remaining Partners. If there are no
remaining Partners or if they cannot agree within thirty (30)
days following the effective date of termination of the Partner,
the purchase price to be paid by the Partnership shall be the
fair market
23
<PAGE>
value of such interest determined by appraisal. The withdrawing
Partner shall appoint an appraiser who is a member of the
Appraisal Institute of the American Association of Real Estate
Appraisers (an "MAI" appraiser) and the appraiser so appointed
shall determine the fair market value of the withdrawing
Partner's interest. The appraiser's determination shall be final
and binding upon the Partners, the Partnership and their
successors in interest. The costs and expenses of all such
appraisal shall be borne by the Partnership. The purchase shall
be consummated within thirty (30) days following (i) the date of
receipt by the Partnership of the appraisal or (ii) the date of
agreement in writing by the withdrawing Partner and the
Partnership with respect to the fair market value of the
withdrawing Partner's interest in the Partnership.
11.08 Continuing Liability
In the event a Partner transfers its Interest, it shall
remain liable for all liabilities incurred by such Partner prior
to the transfer.
ARTICLE XII. DISSOLUTION OF PARTNERSHIP
12.01 EVENTS OF DISSOLUTION
The Partnership shall be dissolved and terminated upon the
first to occur of the following events:
(a) Upon the filing by any Partner of a bankruptcy
under Chapter 11 of the United States Bankruptcy Code,
unless the Partners elect to continue the Partnership;
(b) Upon retirement or withdrawal by a Partner,
unless the Partners elect to continue the Partnership;
(c) The expiration of the term of the Partnership;
(d) By operation of law;
(e) Upon termination of the Amended & Restated
Showboat Marina Partnership Agreement dated as of March 1,
1996;
(f) Upon the sale by the Partnership of all or
substantially all the Partnership Property and the final
distribution of the proceeds thereof (whether the same be
cash, notes, or other property); or
(g) Upon the written consent of the Partners.
12.02 WINDING-UP OF PARTNERSHIP BUSINESS
(a) Upon termination of the Partnership upon the
occurrence of any of the events described in Section 12.01
above, the Partnership shall be dissolved, and Showboat
Marina shall take full account of the Partnership's assets
and liabilities. The receivables of the Partnership shall
be collected and its assets liquidated as promptly as is
consistent with
24
<PAGE>
obtaining the fair value thereof upon dissolution. The
Partnership shall engage in no further business thereafter
other than as necessary to develop, maintain or market the
Partnership Property on an interim basis, collect its
receivables, and liquidate its assets.
(b) Upon completion of winding up the Partnership's
affairs and the dissolution of the Partnership, Showboat
Marina shall cause to be prepared, executed, and filed
with the Secretary of State of Indiana, a Certificate of
Cancellation of Partnership or any certificate required by
any amendment of such provision or successor provision.
12.03 DISTRIBUTION OF PARTNERSHIP PROPERTY UPON DISSOLUTION
Upon dissolution or liquidation of the Partnership, the
proceeds realized upon sale and liquidation of the Partnership
Property shall be applied and distributed in accordance with the
provisions hereof.
12.04 ASSETS OTHER THAN CASH
Assets other than cash that are distributed in kind shall
be distributed on the basis of (i) in the case of notes
receivable, their then fair market value, and (ii) in the case of
real estate or in the case of other assets, their then fair
market value as determined by an independent appraiser appointed
by Showboat Marina. As necessary, distributions in kind will be
made to the Partners as tenants-in-common, or in trust as
provided in Section 7.04(a). If Partnership Property should be
sold, and a portion of the consideration for such sale should be
notes or other evidences of indebtedness, then such notes or
other evidences of loans may be sold or hypothecated to realize
funds for distribution to the Partners including at a discount
from the face value thereof. Sale or hypothecation of evidences
of indebtedness constituting substantially all the assets of the
Partnership may be accomplished only with the same consent of the
Partners as is necessary for the sale of substantially all the
Partnership Property. It is agreed that such sale or borrowing
on the security of said notes or other evidence of indebtedness
affects the basic structure of the Partnership.
12.05 CAPITAL ACCOUNT ADJUSTMENTS
To the extent not otherwise recognized to the Partnership,
the amount by which the fair market value of any property to be
distributed in kind to the Partners exceeds (or is less than) the
basis of such property shall be allocated as gain (or loss) to
the Partners' capital accounts as if such property had been sold.
Such property shall then be distributed at its fair market value
with appropriate adjustments made to the capital accounts of the
Partners receiving it.
ARTICLE XIII. NOTICES
All notices, demands, and requests required or permitted
to be given pursuant to this Agreement shall be in writing. All
notices, demands, and requests to be sent to any Partner shall be
deemed to have been properly given when the same are deposited in
the United States mail, addressed to such Partner, postage
prepaid, registered or certified with return receipt requested,
or sent by United Parcel Service, Federal Express, or similar
next day service, to such Partner's
25
<PAGE>
address as set forth herein, or sent by facsimile transmission
with written confirmation of receipt to a known and operating
facsimile receiving device designated by such Partner. Any such
notice shall be deemed received three (3) days after deposit in
the United States mail or with United Parcel Service, Federal
Express, or similar next day service; or upon dispatch when sent
by facsimile transmission. Any Partner may, by notice to Showboat
Marina given in accordance with this Article XIII, change the
address to which all future notices to such Partner shall be
mailed.
ARTICLE XIV. MISCELLANEOUS PROVISIONS
14.01 LIMITED POWER OF ATTORNEY
Investment, by its execution of this Agreement, irrevocably
constitutes and appoints Showboat Marina as Investment's true and
lawful attorney-in-fact and agent, with full power and authority
in Investment's name, place, and stead to execute, acknowledge
and deliver and to file or record in any appropriate public
office (i) any certificate or other instrument that may be
necessary, desirable, or appropriate to qualify or to continue
the Partnership or to transact business as a Partnership in any
jurisdiction in which the Partnership conducts business; (ii) any
amendment to this Agreement or to any certificate or other
instrument that may be necessary, desirable, or appropriate
including an amendment to reflect the admission of a Partner, the
withdrawal of a Partner, or the transfer of all or any part of
the interest of a Partner in the Partnership or any additional
capital contributions or withdrawal of capital contributions made
by a Partner, all in accordance with the provisions of this
Agreement; (iii) any certificates or instruments that may be
appropriate, necessary, or desirable to reflect the dissolution
and termination of the Partnership; and (iv) any certificates
necessary to comply with the provisions of this Agreement. This
power of attorney shall be deemed to be coupled with an interest
and shall survive a subsequent bankruptcy, death, adjudication of
incompetence, disability, incapacity, dissolution, or termination
of Investment as well as the transfer by Investment of the
Interest in the Partnership. Notwithstanding the existence of
this power of attorney, Investment agrees to join in the
execution, acknowledgment, and delivery of the instruments
referred to above if requested to do so by Showboat Marina. This
power of attorney to Showboat Marina is a limited power of
attorney that does not authorize Showboat Marina to act on behalf
of Investment except to execute the documents described in this
paragraph.
14.02 AMENDMENT
Subject to Section 14.01 above, an amendment to this
Agreement may be made only in writing and signed by all the
Partners. Notwithstanding the foregoing, this Agreement may be
amended from time to time by Showboat Marina without the consent
of Investment (i) to add to the representations, duties, or
obligations of Showboat Marina or its Affiliates or to surrender
any right or power granted to Showboat Marina or its Affiliates
herein, for the benefit of Investment; (ii) to cure any
ambiguity, to correct or supplement any provision that may be
inconsistent with any other provision, or to make any other
provisions with respect to matters or questions arising under
this Agreement that will not be inconsistent with the provisions
of this Agreement; (iii) to delete or add any provision of this
Agreement required to be so deleted or added by the staff of the
Securities and Exchange Commission or state securities officials,
which addition or deletion is
26
<PAGE>
deemed by the official to be for the benefit or protection of
Investment; (iv) to elect for the Partnership to be governed by
any successor Indiana statute governing general partnerships; and
(v) as otherwise provided for pursuant to this Agreement.
Showboat Marina shall notify Investment within a reasonable time
of the adoption of any such amendment.
14.03 BINDING EFFECT; FURTHER INSTRUMENTS
This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective heirs,
personal representatives, successors, and assigns. The parties
hereto agree for themselves and for their heirs, personal
representatives, successors, and assigns to execute any and all
instruments in writing that may be necessary or proper to carry
out the purposes and intent of this Agreement.
14.04 HEADINGS
The headings of the paragraphs of this Agreement are
inserted solely for convenience of reference and are not a part
of or intended to govern, limit, or aid in the construction of
any term or provision hereof.
14.05 GENDER AND NUMBER
Whenever required by the context, the singular shall be
deemed to include the plural, and the plural shall be deemed to
include the singular, and the masculine, feminine, and neuter
genders shall each be deemed to include the other.
14.06 SEVERABILITY
In the event that any provision or any portion of any
provision contained in this Agreement is found by a Court of
competent jurisdiction to be unenforceable, the remaining
provisions, and in the event that a portion of any provision is
found to be unenforceable, the remaining portion of such
provision, shall nevertheless be carried into effect.
14.07 WAIVER OF ACTION FOR PARTITION
During the term of the Partnership and during any period of
winding up and dissolution of the Partnership, each of the
Partners irrevocably waives any right that itmay have to maintain
any action for partition as to the Partnership Property.
14.08 GOVERNING LAW
The Partnership shall be governed and this Agreement shall
be construed in accordance with the internal laws, and not the
law of conflicts, of the state of Indiana applicable to
agreements made and to be performed in such state.
27
<PAGE>
14.09 ARBITRATION; ATTORNEYS' FEES AND COSTS
In the event any dispute should arise between the parties
hereto as to the validity, construction, enforceability, or
performance of this Agreement or any of its provisions, such
dispute shall be settled by arbitration before an American
Arbitration Association panel. Said arbitration shall be
conducted at East Chicago, Indiana, or such other location within
the state of Indiana as shall be designated by Showboat Marina,
in accordance with the commercial rules then in use by the
American Arbitration Association. The decision of the arbitrator
shall be final and may be entered as a judgment by a court of
competent jurisdiction. The unsuccessful party to such
arbitration shall pay to the successful party all reasonable
costs and expenses, including reasonable attorneys' fees,
incurred therein by such successful party. The successful party
shall be determined by the arbitrator.
14.10 INTEGRATION
This Agreement sets forth the entire agreement among the
parties with regard to the subject matter hereof. All
agreements, covenants, representations, and warranties, express
and implied, oral and written, of the parties with regard to the
subject matter hereof are contained herein, in the Exhibits
hereto, and in the documents referred to herein or implementing
the provisions hereof. No other agreements, covenants,
representations, or warranties, express or implied, oral or
written, have been made by either party to the other as to the
subject matter of this Agreement. All prior and contemporaneous
conversations, negotiations, possible and alleged agreements and
representations, covenants, and warranties as to the subject
matter hereof are waived, merged herein, and superseded hereby.
14.11 COUNTERPARTS
This Agreement may be executed in counterparts and all
counterparts so executed shall constitute one Agreement binding
on all the parties. It shall not be necessary for each party to
execute the same counterpart.
14.12 EXHIBITS
Exhibits referred to in this Agreement are incorporated by
reference into this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
28
<PAGE>
"SHOWBOAT MARINA":
Showboat Marina Partnership,
an Indiana general partnership
By: Showboat Indiana Investment Limited Partnership,
a Nevada limited partnership, its partner
By: Showboat Indiana, Inc.,
its general partner
By: ___________________________________
Its:___________________________________
"INVESTMENT":
Showboat Marina Investment Partnership,
an Indiana general partnership
By: Showboat Indiana Investment Limited Partnership,
a Nevada limited partnership, its partner
By: Showboat Indiana, Inc.,
its general partner
By: ___________________________________
Its:___________________________________
29
<PAGE>
EXHIBIT A
SCHEDULE OF PARTNERS' INTERESTS
PARTNER'S
PARTNER DATE OF INITIAL PERCENTAGE
(NAME & ADDRESS) ADMISSION CAPITAL INTEREST
CONTRIBUTION
_________________________________________________________________
Showboat Marina Partnership
2001 E. Columbus Drive March 1,1996 $38,610,000 99%
East Chicago, Indiana 46312
Showboat Marina Investment
Partnership
2001 E. Columbus Drive March 1,1996 $390,000 1%
East Chicago, Indiana 46312 ----------- -----
$39,000,000 100%
30
<PAGE>
[Original on letterhead]
SHOWBOAT MARINA PARTNERSHIP
April 8, 1994
The Honorable Robert A. Pastrick
Mayor, City of East Chicago
4525 Indianapolis Boulevard
East Chicago, Illinois 46312
RE: Gaming Vessel Development Project
Dear Mayor Pastrick:
Since last fall Showboat Marina Partnership ("Showboat") has
had the privilege of pursing the development of a casino gaming
vessel to be docked on the shore of Lake Michigan in the City of
East Chicago ("City") at the Pastrick Marina, together with
additional land-based facilities to support the gaming vessel
(the "Project"). In connection with that effort, we have
conducted numerous community informational forums during which we
explained our concept of the project to the residents of the City
and, even more importantly, received comments and suggestions
from them concerning our proposal. Most recently, we had the
opportunity to participate in the work of the several gaming
tasks forces that you organized to make recommendations to your
office with respect to the gaming proposal and the economic
benefits expected to flow from this new industry. Based upon the
recommendations of the Mayor's Gaming Task Force, Investing in
the People, we have engaged in negotiations with the City to
identify and agree upon certain economic incentives that the City
requires of Showboat in connection with the Project.
This preliminary agreement ("Agreement") is intended to
memorialize the agreements between the City and Showboat
concerning development of the Project.
A. ECONOMIC DEVELOPMENT CONTRIBUTION
1. Upon commencement of gaming operations, Showboat agrees
to contribute annually to and for the benefit of economic
development, education and community development in the City an
amount equal to three (3%) percent of Showboat's adjusted gross
receipts (as that term is defined in the Indiana Riverboat
Gambling Act) (Contribution"). (Based upon the pro forma
financial projections for the Project which will be included in
Showboat's final application to the Indiana Gaming Commission,
Showboat estimates that such Contribution will range from
approximately six million ($6,000,000) dollars to seven and one-
half million ($7,500,000)
<PAGE>
dollars annually for the initial two and one-half years of
operation and from approximately four million ($4,000,000)
dollars to five million ($5,000,000) dollars annually thereafter.
2. Showboat proposes that its Contribution be distributed
as follows:
a. One (1%) percent to the City. Showboat suggests
that the City establish or select a board to determine the best
use of these funds.
In addition to the City's portion of the Contribution,
and as more particularly described later in this
Agreement, Showboat agrees to cause certain programs to
be instituted or projects to be commenced in 1994 and
1995 (or to provide the necessary funding therefor),
without regard to the issuance of a gaming license to
Showboat for the operation of the gaming vessel.
b. One (1%) percent to the Twin City Education
Foundation, Inc., ("TCEF"), an Indiana nonprofit corporation.
TCEF will be independent of Showboat. Members of a seven member
Board of Trustees of TCEF will be selected from or by the
following entities or individuals:
. Two representatives of two largest employers
. Mayor
. Common Council
. Board of Trustees of the School City
. Chamber of Commerce
. East Chicago Education Foundation
In addition, at Showboat's option, Showboat shall be
permitted to name an individual to the Board of
Trustees of TCEF.
TCEF will focus on funding training programs that
prepare workers for the 21st century. Training for
riverboat-related jobs will not be funded by TCEF.
TCEF will administer as one of its programs a
scholarship program (funded initially with a minimum of
$50,000) for post-secondary education for residents of
East Chicago. Showboat agrees that at least $25,000
shall be set aside annually from this scholarship fund
for the benefit of qualifying eighth graders entering
high school. Such funds will be placed in individual
interest bearing trust accounts for the benefit of such
qualifying students and will be made available to them
as college scholarships upon their graduation from high
school and enrollment in institutions of higher
education; provided that they have
<PAGE>
complied with the requirements of the scholarship
program during their high school tenure.
Showboat further agrees that the balance of TCEF's
funds will be dedicated to educational programs (both
academic and vocational) in and around the City, with
priority being given to programs in the City and for
City residents.
c. One (1%) percent to the East Chicago Community
Foundation, Inc. ("ECCF"), an Indiana nonprofit corporation.
ECCF will be independent of Showboat. ECCF will receive,
evaluate and select for funding proposals from individuals or
entities within the City, and will fund community development
projects within the City. A fifteen-to-twenty-one member Board
of Trustees will be selected by or from the following individuals
or entities:
. Various Neighborhood Leaders
. Mayor
. Common Council
. Chamber of Commerce
. Board of Trustees of the School City
In addition, at Showboat's option, Showboat shall be
permitted to name an individual to the Board of
Trustees of ECCF. The majority of Board members will
represent neighborhoods.
3. Showboat intends to maximize the effectiveness of the
funds contributed to TCEF and ECCF by "leveraging" such
contributions, possibly by ratios as high as 5 to 1 depending
upon the projects undertaken by such corporations. In this
context "leveraging" includes using foundation funds as seed
money that will attract other investment and using foundation
funds to provide matching monies for university, governmental,
and other endowments. The City and Showboat acknowledge,
however, that such leveraging will be fully successful only if
staff persons who are skilled and experienced in pursing and
obtaining grants from governmental and other entities are
employed by such corporations. Accordingly, Showboat will
require as a continuing condition of its Contribution that an
appropriate portion of the funds contributed to TCEF and ECCF
shall be allocated to administrative and professional salaries to
support the leveraging concept.
B. EAST CHICAGO SECOND CENTURY, INC.
1. In addition to the Contribution described above,
Showboat desires to be a catalyst for meaningful and significant
economic, commercial and housing development in the City. In
order to assist in the pursuit of these objectives, Showboat has
formed East Chicago Second Century, Inc. ("Second Century"), a
for-profit corporation. Showboat agrees to fund Second Century
<PAGE>
annually in an amount equal to three-fourths (.75%) percent of
adjusted gross receipts from its casino vessel operation.
2. Showboat intends to maximize the effectiveness of
Second Century by endeavoring to "leverage" the amounts with
which Second Century is funded, possibly by as much as an 8 to 1
ratio. In this context leveraging means using funds as seed
money and using Second Century funds as equity contributions in
various projects. In order to accomplish this goal, Second
Century will employ staff persons who are experienced in economic
and housing development, with particular expertise in applying
for and obtaining grants from governmental and other entities.
3. Showboat agrees further that (i) all of Second
Century's development activities will be directed to sites
located within the City, (ii) all projects pursued by Second
Century will conform to the City's development and master plans,
and (iii) all projects will receive prior approval from the City.
Showboat acknowledges that certain projects have already been
identified by the Mayor's Gaming Task Force, which projects
Second Century is prepared to undertake as priority projects in
the manner mutually determined by the City and Second Century.
4. By execution of this Agreement, the City authorizes
Second Century, at its option, to proceed with development of the
Washington High School and Michigan Avenue sites, subject to all
required regulatory approvals. Showboat agrees that all funds
expended in connection with these projects will be funded by and
through Second Century and that such expenditures will not
diminish the amount of the Contribution in any way. Even if a
gaming license is not granted, Showboat agrees that Second
Century will proceed with the development of the Washington High
School site.
C. ADDITIONAL COMMITMENTS BY SHOWBOAT
1. Reimbursement of City Expenses. Showboat agrees to
reimburse the City certain reasonable and necessary expenses
incurred by the City in connection with development of the
Project. These expenses include but are not limited to the
following:
. professional planning fees;
. professional design fees;
. engineering;
. construction of infrastructure, utilities or other
improvements at the Pastrick Marina or elsewhere
and related to the Project;
. legal fees and costs;
. financial consulting fees;
<PAGE>
. consulting fees of other professionals whose
services are deemed reasonably necessary by the
City.
2. Reimbursement of Payroll Expenses of City Planner.
Showboat acknowledges that the City requires the services of a
full-time City Planner, that the City currently does not employ
anyone in that capacity, and that the City has no funds budgeted
for such position for 1994. Accordingly, Showboat agrees that it
shall provide the funds necessary to enable the City to hire a
professional planner in 1994 at a cost to Showboat not to exceed
$70,000 annually, with the understanding that the City will
include the expenses of the professional planner in its 1995
municipal budget.
3. Projects to be Funded in 1994 and 1995. The City has
advised Showboat that certain projects and programs are of great
importance to the residents of East Chicago. The City has
required that Showboat agree to fund the following programs and
projects regardless of the issuance of a gaming license to
Showboat. Showboat agrees, therefore, to fund the following to a
maximum of the estimated expenditures listed for each project or
program:
a. Healthy East Chicago Wellness Program, with
estimated expenditures of $100,000 in 1994 and $100,000 in 1995.
b. Comprehensive market development assessment for
the Main Street/Broadway, Chicago Avenue/Indianapolis Boulevard,
and Columbus Drive corridors, with estimated expenditures of
$70,000 in 1994.
c. City capital improvement projects as determined
by the City, with expenditures of $250,000 in 1994 and $250,000
in 1995.
d. Development of a small business incubator program
at the abandoned Pepsi-Cola Bottling Plant building, 1112 W.
Chicago Avenue, with estimated expenditures of $250,000 in 1994
and $250,000 in 1995.
e. Engineering fees related to the water marketing
project for extension of the City's water main to south Lake
County, with estimated expenditures of $250,000 in 1994 and
$250,000 in 1995.
Showboat acknowledges that the foregoing is only a partial
list of projects and programs which the City has identified.
Showboat agrees to continue to cooperate with the Mayor's Gaming
Task Force and the City to accomplish these and certain other
projects and programs described in INVESTING IN THE PEOPLE as
determined by the City.
<PAGE>
The City agrees that fifty (50%) of the funds expended by
Showboat in connection with the projects and programs described
in this paragraph shall be credited against the City's one (1%)
percent share of the Contribution payable to the City during the
first and, if necessary, second years of operations. Credits
will not be carried over to the third and later years of
operations without the City's approval. Expenditures that are not
pre-approved by the City will not be eligible for the credit.
4. Employment Assistance. Showboat agrees to assist the
City in employing individuals required to staff positions
necessary to carry out the projects and programs contemplated by
this Agreement.
5. Other Studies. Showboat agrees to reimburse the City
for the costs of any studies not specifically described herein
which the City is required to perform in connection with the
Project. Such expenses incurred by Showboat shall be credited
against the City's one percent (1%) share of the contribution in
the manner described in paragraph 3, above.
6. Labor. Showboat agrees to use local, unionized labor
in construction of the Project as well as the other projects to
be undertaken by TCEF, ECCF and Second Century.
7. Opening Day. The City and Showboat agree that time is
of the essence in this Agreement. Accordingly, Showboat agrees
that it shall at all times exert its good faith efforts to cause
the Project to be completed and open to the public for regular
gaming operations on or before April 30, 1995. Showboat
acknowledges that the agreement contained in this paragraph will
require that Showboat continue to expend funds prior to the
issuance of a gaming license, and Showboat hereby agrees to
continue to make such expenditures.
8. Assessment and Training Center. The Mayor's Gaming
Task Force has identified as a top priority the need to establish
an assessment and training center for the benefit primarily of
the youth, but ultimately of all residents, of the City.
Showboat agrees to commence promptly the work required to
organize and establish such center. Such expenses incurred by
Showboat shall be credited against the City's one percent (1%)
share of the contribution in the manner described in paragraph 3,
above.
9. Training for East Chicago Residents. Showboat agrees
to provide training scholarships in the form of cost-free
training for residents of East Chicago who are hired as employees
for the Project.
<PAGE>
D. COMMITMENTS BY THE CITY
In consideration of the foregoing agreements made by
Showboat, Showboat has asked that the City take certain actions
for the benefit of the Project. Your Honor's signature below
will confirm that the City agrees to:
1. Support Showboat's application for an owner's license
to the Indiana Gaming Commission.
2. Work diligently in a cooperative effort with Showboat
to achieve the following:
a. Continued progress and ultimate completion of the
Cline Avenue extension project currently in the design phase;
b. Construction or expansion of roadways to
facilitate ingress to and egress from the gaming vessel site;
c. Acquisition (either by conveyance or lease) of
land necessary for convenient and efficient construction and
operation of the Project;
d. Construction of such infrastructure as is
necessary to support the Project;
e. Expedited issuance of permits and approvals from
all governmental agencies having jurisdiction over the Project.
3. Cooperate with and assist TCEF, ECCF and Second
Century to facilitate the achievement of the respective goals and
objectives of each entity to the extent that those goals are
compatible with the City's development goals.
4. Cooperate with and assist TCEF, ECCF, and Second
Century to achieve maximum "leveraging" of the funds made
available to those corporations by Showboat and effective use of
such corporations' resources.
5. Cooperate with Showboat to assure and promote public
health, safety and welfare.
E. OTHER MATTERS
1. Showboat acknowledges the City's desire that gaming
operations commence as promptly as possible and that the economic
benefits of the Project begin to flow to the City and its
residents as early as possible, with the expectation that gaming
operations will commence not
<PAGE>
later than April 30, 1995. Accordingly, Showboat and the City
agree that time is of the essence of this Agreement.
2. Showboat agrees that it shall continue its negotiations
with the City and that, within 90 days of the date of this
Agreement, the City and Showboat shall execute a definitive
Development Agreement, setting forth specially and in detail all
obligations of Showboat related to the development of the
Project. The parties acknowledge that achieving this goal will
require actions to be taken by governmental units and that if
these actions are not completed in a timely manner, the time
table may not be met.
3. This Agreement is subject to the approval of the Board
of Directors of Showboat, Inc. at its meeting April 26, 1994.
We are excited about the opportunities that this Project
presents for both the City and Showboat. If this letter
accurately sets forth the basic provisions of our Agreement, I
request that you sign the letter on behalf of the City and return
a copy to me. Thank you for your efforts to date in support of
this Project.
Respectfully submitted,
SHOWBOAT MARINA PARTNERSHIP
/s/ Thomas C. Bonner
Thomas C. Bonner
Executive Vice President and Chief Operating Officer
1802 East Columbus Drive
East Chicago, Indiana 46312
(219) 392-1111
April 8, 1994
<PAGE>
Agreed to and accepted by, subject to the ratification of the
Common Counsel of the City of East Chicago:
CITY OF EAST CHICAGO
/s/ Robert A. Pastrick
Robert A. Pastrick
Mayor
Date: /s/ April 8th 1994
<PAGE>
[Original on Letterhead]
SHOWBOAT MARINA
April 18, 1995
The Honorable Robert A. Pastrick
Mayor, City of East Chicago
4525 Indianapolis Blvd.
East Chicago, Indiana 46312
RE: Gaming Vessel Development Project
Dear Mayor Pastrick:
Pursuant to the economic development agreement executed
April 8, 1994 ("Agreement"), Showboat Marina Partnership
("Showboat") undertook certain obligations, including the
obligation to continue to cooperate with the Mayor's Gaming Task
Force ("Task Force") to accomplish projects and programs
described in Investing in the People. Showboat has negotiated
with City Planner Russ Taylor, who was designated as the
representative of the Task Force for this purpose. We wish to
report to you that these negotiations have resulted in Showboat's
agreement to fund the items on the attached list. as part of
these negotiations, Mr. Taylor has advised us that the City does
not wish Showboat to provide funding for the small business
incubator program, which had originally been scheduled for a
total of $500,000 of funding. The $500,000 has been redirected
to new items. When added to the previous items in the agreement,
the net amount of fixed sum commitments is more than $5,800,000.
In addition to these items, Showboat will commit to four
community development projects as follows:
1. Washington School Site Residential Development:
Showboat commits that East Chicago Second Century funds will be
used to build approximately 68 townhouses for moderate income
citizens from East Chicago on an abandoned school site. The
project cost is estimated at $5,000,000.
2. Michigan Avenue Retail Development: Showboat commits
that East Chicago Second Century funds will be used to build a 5-
to 8-unit retail center near the Showboat Marina Casino employee
parking lot. The project cost is estimated at $4,000,000.
<PAGE>
3. Homebuyer Guarantee Program: in order to increase home
ownership, Showboat will create a pool of $5,000,000 for a
minimum of 250 East Chicago residents through a mortgage
guarantee program of up to 25% of a home's purchase price. The
result of full utilization of this program would be $20,000,000
in the residential real estate market.
4. Down Payment Assistance: As a further step in
increased home ownership, Showboat will also create a pool of
$500,000 to provide down payment assistance of 5% of the purchase
price not to exceed $5,000 for first-time home buyers who are
employees of Showboat Marina Casino.
Please note that Showboat has agreed that the four programs
described above and the items listed on the attachment are not
subject to the fifty percent (50%)credit against future incentive
payments to the City contained in the Agreement. As a publicly
traded company, the expenditures described in this letter are
subject to ratification by the Board of Directors of Showboat,
Inc.
In addition, at this time we would like to take the
opportunity to briefly summarize the revised estimates of the
benefits that the City and its residents are expected to receive
under the Agreement. These estimates are based upon our current
revenue projections for the project, and could change as we
continue to refine our research.
- We estimate that the value of the 3% of adjusted gross
gaming revenues that will be dedicated to the City, the
Twin City Education Foundation, and the East Chicago
Community Foundation will range from $25.3 million to
$28.7 million in the first 5 years of licensure.
- We project that the additional .75% to be used for
community investment will result in additional
contributions ranging from $6.6 million to $7.4 million
over that same period.
- The value of job training to be provided to employees
is projected to be approximately $1.3 million. In
addition, Showboat intends to develop a tuition
reimbursement program for non-gaming educational
endeavors which will be open-ended. However, our
experience at our other properties shows that the
annual expenditure is likely to be approximately
$50,000.
- The contribution to the Cline Avenue Ramp is projected
to be $3.5 million.
<PAGE>
Depending upon our success in achieving our revenue
projections, which we believe are realistic for the East Chicago
market, the net impact of the Agreement with the additions (and
deletion) set forth in this letter has the potential to exceed
$52 million. The five-year value of incentives per resident of
the City of East Chicago is over $1,500. These figures do not
include anticipated leveraged funds of approximately $70,000,000,
as estimated by our experts, nor have we included actual hard
dollar investment in the Showboat Marina Casino project of
approximately $100,000,000.
In order to present a complete picture of the economic and
community development benefits for the City of East Chicago,
Showboat requests the opportunity to present a detailed update on
the status of the project to the Common Council.
It continues to be our pleasure to work with the City on
this project.
Very truly yours,
SHOWBOAT MARINA PARTNERSHIP
Thomas C. Bonner
Chief Executive Officer
Enclosure
cc: Russ Taylor
<PAGE>
ITEMS TO BE PURCHASED BY SHOWBOAT FOR CITY
Item Category Description Est. Cost
1. Neigh. Donation of Demolition $ 200,000
2. Neigh. Graffiti Removal Machine $ 40,000
3. Neigh. Donation to New Addition
Revitalization (RONA) $ 50,000
4. Neigh. Rehab City Little League Fields 120,360
5. Neigh. Landscape and Sidewalk Program $ 150,000
Neighborhood subtotal $ 560,360
6. Law Enf. Hire Gang and Violence Consultant $ 50,000
7. Law Enf. 5 Police Cars and 2 D.A.R.E. Vans $ 122,990
8. Law Enf. Hire Additional Policemen $1,071,790
9. Law Enf. Additional Police Equipment:
Evidence Collection Vehicle,
Mini Paddy Wagon, Mobile
Police Station $ 164,320
10. Law Enf. Emergency Management Department $ 100,000
Law Enforcement subtotal $1,509,100
11. OPS Ambulance $ 54,650
12. OPS Fire Equipment and Apparatus $ 174,870
13. OPS Pumper Fire Truck $ 190,000
14. OPS Drug Rehabilitation Program $ 100,000
15. OPS Gamblers Anonymous Contribution $ 60,000
Other Public Safety subtotal $ 579,520
16. Schools School City Athletic van $ 58,950
17. Schools Computer Hardware for Schools $ 500,000
Schools subtotal $ 558,950
18. Inf & Eqpt Utility Boom Truck $ 69,450
19. Inf & Eqpt Brownell Hydraulic Boat Handler $ 150,000
20. Inf & Eqpt Computer with 16 meg RAM microchip $ 3,700
21. Inf & Eqpt Past Expenses of City Employee on
Showboat $ 1,230
22. Inf & Eqpt Kennedy Avenue Matching Funds for
Construction $ 400,000
23. Inf & Eqpt Computer Equipt. for Public
Information Office $ 12,020
24. Inf & Eqpt Engineering Equipment $ 66,360
25 Inf & Eqpt Digital Aerial Mapping $ 125,000
26. Inf & Eqpt Transportation System Maintenance
Equipment $ 67,000
27 Inf & Eqpt New and Relocated Slips into new
harbor $ 404,800*
28. Inf & Eqpt Desk Top Publishing Equipment and
Software $ 50,000
Infrastructure & Equipment
Subtotal $1,349,560
Total all items $4,557,490
REVISED 4/13/95
* Contingent on approval of Phase 1.
<PAGE>
REDEVELOPMENT PROJECT LEASE
BY AND BETWEEN
THE CITY OF EAST CHICAGO, INDIANA
AND SHOWBOAT MARINA PARTNERSHIP
<PAGE>
REDEVELOPMENT PROJECT LEASE
THIS REDEVELOPMENT PROJECT LEASE ("Lease"), made and entered
into as of the 19th day of October, 1995, by and between the CITY
OF EAST CHICAGO, DEPARTMENT OF REDEVELOPMENT, existing pursuant
to Indiana Code 36-7-14 (the "City") and SHOWBOAT MARINA
PARTNERSHIP, an Indiana general partnership ("Tenant"),
WITNESSETH THE FOLLOWING:
Recitals:
A. Pursuant to IC 36-7-14 and IC 36-7-25 (collectively,
the "Act"), the Indiana General Assembly has authorized
redevelopment commissions to approve plans for and determine that
geographic areas within redevelopment districts are redevelopment
areas.
B. The East Chicago Redevelopment Commission (the
"Commission"), pursuant to the provisions of IC 36-7-14-41 and
Resolution No. 1165 and 1166, established a redevelopment area
within the East Chicago Redevelopment District known as the Lake
Front Development Area (the "Area") and adopted a redevelopment
plan for the Area, which resolution and Plan were amended by
Resolution No. 1213 (collectively, the "Plan").
C. The Commission has determined, in order to fulfill
the purposes and objectives of the Plan, to acquire certain real
property within the Area, and has acquired certain real property
in accordance with the provisions of applicable law.
D. The Commission has, pursuant to and in accordance
with the provisions of the Act, offered the real property so
acquired for lease and has received an offer from Tenant for the
lease of said real property which is in accordance with the
offering documents and meets the requirements and fulfills the
purposes and objectives of the Plan.
E. The Commission has determined that the development
of the Redevelopment Project (as defined herein) as proposed
in Tenant's offer will be beneficial to the citizens and
taxpayers of East Chicago, Indiana, and that it is in the best
interests of the citizens and taxpayers of the East Chicago
Redevelopment District for the City to enter into a lease as set
forth herein.
F. Pursuant to and in furtherance of the foregoing, the
parties desire to enter into this lease.
2
<PAGE>
Lease Agreement
NOW, THEREFORE, in consideration of the foregoing premises,
the mutual covenants of the parties herein contained, and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the City hereby demises and lets
to Tenant, and Tenant hereby leases from the City, the Leased
Premises, for the term and upon the covenants, terms and
conditions herein contained, and in connection therewith the
parties now agree as follows:
ARTICLE I.
Leased Premises
Section 1.01. Description of the Leased Premises. The
Leased Premises shall be and consist of certain real property
described in Exhibit "A" attached hereto and incorporated herein
by this reference and all rights, privileges, easements and other
interests appurtenant to such Leased Premises (collectively
called the "Leased Premises"). Upon the completion of any survey
required or permitted hereunder, the legal description contained
in Exhibit "A" shall be amended to reflect the legal description
included in such survey to the extent such legal description
differs from the description in Exhibit "A" attached hereto. To
the extent required or permitted under this Lease, Tenant shall
have the right to construct upon the Leased Premises any and all
buildings, structures and improvements and to make any
alterations thereof for the Redevelopment Project as described in
Section 5.02.
Section 1.02. Leasehold Title Insurance. Prior to the
Possession Date, Tenant may obtain a commitment issued by Chicago
Title Insurance Company (the "Title Company") for a leasehold
policy of title insurance, in which commitment said insurance
company shall agree that, after execution, delivery and
recordation of a memorandum of this Lease and payment of the
applicable premiums, it will insure, for (to be determined by
Tenant) Dollars ($ ) Tenant's leasehold interest in the
Leased Premises, subject only to current nondelinquent real
estate taxes and such other matters as Tenant shall agree to in
writing and with such policy endorsements as Tenant or any
Provider may request. Tenant shall provide a copy of the
commitment to City. In the event Tenant deems unacceptable any
defect in title or other matter disclosed in such commitment or
any refusal of the Title Company to agree to issue any policy
endorsement ("Title Defect"), Tenant may either waive such Title
Defect or may give written notice to City of such Title Defect,
and City shall have fifteen (15) days in which to cure such Title
Defect. In the event City fails to effect such a cure, Tenant
may terminate this Lease by written notice to City and obtain a
refund of any sums paid as rental to the date of such notice, or
Tenant may waive such Title Defect.
Section 1.03. Boundary Survey. Prior to the Possession
Date, Tenant may, at Tenant's expense, obtain a boundary survey
of the Leased Premises. Such survey shall be prepared to the
standards for an Indiana Land Title Association Minimum Standard
Detail Survey and shall
3
<PAGE>
certify as to whether any portion of the Leased Premises is
located within a flood hazard zone. Tenant shall provide a copy
of the survey to City. Such survey shall contain such other
certifications as Tenant or any Provider may request. In the
event the survey discloses any matter that is unacceptable to
Tenant, Tenant may either waive such matter or may give written
notice to City of such unacceptable matter, and City shall have
fifteen (15) days in which to cure such matter. In the event
City fails to effect such a cure, Tenant may terminate this
Lease by written notice to City and obtain a refund of any sums
paid as rental to the date of such notice, or Tenant may waive
such matter.
Section 1.04. Environmental Assessment. Prior to the
Possession Date, Tenant may conduct such environmental
assessments as it deems prudent in its sole discretion. Tenant
shall provide copies to City of any such environmental
assessments performed. If such assessments reveal environmental
conditions that are not acceptable to Tenant, Tenant may
terminate this Lease by giving notice thereof in writing to the
City, if, within fifteen (15) days after notice of such
condition, the City refuses to undertake a cure of such
environmental condition. If the City undertakes a cure of any
such environmental condition, it shall complete such cure
diligently to the satisfaction of Tenant and any Provider.
Section 1.05. Covenants of the City. The City's demise to
Tenant hereunder is expressly made subject to the following:
(a) The lien of real estate taxes, if any, and all general
and special governmental assessments, dues, charges
and impositions not delinquent;
(b) All easements, restrictions, agreements, covenants and
other matters of record to which Tenant consents in
writing;
(c) The rights of the public to reasonable access to the
marina basin adjacent to the real estate conveyed to
the City by the East Chicago Park and Recreation Board
pursuant to a Quitclaim Deed dated May 17, 1994 and
the beach area located on the eastern portion of the
such real estate, which areas shall be administered by
the East Chicago Park and Recreation Department, which
rights shall be incorporated in an appropriate
easement(s) agreement among the City, the Tenant and
the East Chicago Park and Recreation Board.
4
<PAGE>
ARTICLE II.
Term
Section 2.01. Term an Holdover. The term of this Lease
shall be deemed to have commenced on the date that Tenant
receives from the Indiana Gaming Commission a certificate of
suitability as authorized under regulations of said Commission
(the "Commencement Date"). The parties shall execute a separate
writing acknowledging the Commencement Date, which shall be
recorded in the Office of the Recorder of Lake County, Indiana.
This Lease shall continue to and including the thirtieth
anniversary of the Commencement Date or the last day of any
renewal term under Section 2.04 hereof, (the "Termination Date"),
unless sooner terminated under the provisions of this Lease (the
"Term"). In the event that Tenant remains in possession of the
Leased Premises with the consent of the City after the expiration
of this Lease, without any extension or renewal of the Term,
Tenant shall be deemed to be a tenant from month-to-month, at a
monthly rental of one-twelfth (1/12) the then current rental of
the Leased Premises and subject to all other covenants, terms and
conditions of this Lease, insofar as applicable to a month-to-
month tenancy shall be terminable by either party upon thirty
(30) days written notice to the other, delivered as of and prior
to the end of any calendar month. The exercise by Tenant of its
right under Section 17.02 of this Lease to enter the Leased
Premises during the sixty (60) day period following the
expiration of this Lease for the purpose of removing of trade
fixtures, business equipment and personal property from the
Leased Premises to the extent permitted by Section 17.02 of this
Lease shall not be deemed to constitute a holding over or create
a tenancy from month-to-month hereunder. Tenant shall, however,
during such period continue to be bound by the duties, covenants
and agreements of Tenant under this Lease, including, without
limitation, the covenants and agreements relating to insurance
and indemnification, excepting only the obligation to pay rent.
Section 2.02. Early Termination by Tenant. At any time
subsequent to the eighth anniversary of the Commencement Date, in
the event that Tenant, in its sole discretion, shall determine
that it is no longer economically feasible to operate the
Redevelopment Project, Tenant may terminate this lease upon
ninety (90) days written notice to the City. Upon termination,
the Tenant shall pay, in a lump sum, an amount equal to one
year's annual rental at the time of termination. The duties and
obligations of the parties in the event of an early termination
under this Section shall be the same as the duties and
obligations of the parties set forth in this Lease upon
expiration of this Lease at the end of its full term.
Section 2.03. License Contingency. The City acknowledges
that the ability of Tenant to perform its obligations under this
Lease is contingent upon Tenant acquiring from the State of
Indiana a license to operate a riverboat gaming casino. In the
event that (a) a person other than Tenant is issued such license
or (b) Tenant has not received a certificate of suitability under
the regulations of the Indiana Gaming Commission within three (3)
years of the date of the Commencement Date, does not have its
license renewed, or has its license revoked or suspended, either
party may terminate this Lease by written notice to the other
party. In the event the Lease is not so terminated, the
obligations of the parties shall continue hereunder,
5
<PAGE>
except that any obligations of Tenant hereunder relating to the
operation of a riverboat gaming casino shall be suspended until
such time, if any, that Tenant obtains a certificate of
suitability, a renewal of its license, or the issuance of a
license that has been suspended or revoked. In the event the
Lease is terminated and all or a portion of the Leased Premises
is subsequently leased to a person other than Tenant who has
obtained a license to operate a riverboat gaming casino, Tenant
shall be reimbursed by such new tenant for all its costs and
expenses incurred in connection with the work described in
Section 5.01 hereof, which costs shall be documented to the
City's reasonable satisfaction, and the City shall also use its
good faith efforts to cause any new tenant of the Leased
Premises to reimburse Tenant for all leasehold expenditures
made by Tenant to the date of termination, including, but not
limited to, rental payments made and the costs and expenses of
all leasehold improvements, fixtures and equipment. Tenant
reserves the right upon termination of the Lease for the reasons
stated in this Section 2.03 to demolish or remove all leasehold
improvements, fixtures and equipment constructed or installed by
it, in which event the City shall have no obligation under the
preceding sentence to seek reimbursement of the costs of
leasehold improvements to the extent such have been demolished or
removed.
Section 2.04. Renewal Terms. The term of this Lease may be
extended for two (2) additional thirty (30) year terms at the
election of the Tenant in writing, which election may be made at
any time prior to the expiration of the then existing term.
Section 2.05. Early Possession. Tenant shall be entitled
to exclusive possession of the Lease Premises from and after the
Possession Date, and the parties shall be bound by the terms and
provisions of this Lease from and after the Possession Date,
provided that Tenant shall not be obligated to pay any annual
rental payment (except for the 1/2 payment payable upon execution
hereof as provided in Section 4.01) until the Commencement Date.
ARTICLE III.
Definitions
The following terms, whenever appearing in this Lease with
initial capital letters, shall have the respective meanings set
forth or referred to in this Article III:
(a) "Condemnation Proceeds" shall mean the total aggregate
award resulting from any condemnation proceedings with
respect to the Leased Premises and Redevelopment
Project, exclusive of any award to Tenant or any of
its sublessees or licensees as an award for loss of
business or moving expenses.
(b) "Construction Period" shall mean the period during
which the Redevelopment Project is initially
constructed.
(c) "Constructive Total Taking" shall mean a taking in a
condemnation proceeding of such scope that the
remaining portion of the Leased Premises and
6
<PAGE>
Redevelopment Project would be insufficient to permit
the economically feasible operation of the Leased
Premises and Redevelopment Project.
(d) "Environmental Laws" shall mean federal, state and
local laws and implementing regulations, effective on
or after the Commencement Date, relating to pollution
or protection of the environment, including laws or
regulations relating to emissions, discharges,
releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or
hazardous substances or wastes into the environment
(including without limitation ambient air, surface
water, ground water or land), or otherwise relating to
the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of
pollutants, contaminates, chemical or industrial,
toxic or hazardous substances or wastes. Such laws
shall include, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability
Act, as amended, 42 U.S.C. Sec. 9601, et seq.
("CERCLA"), the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. Sec. 3251, et seq., the
Federal Water Pollution Control Act, as amended, 33
U.S.C. Sec. 466 et seq. ("Clean Water Act"), and
Indiana Code, Title 13 - Environment, as amended.
(e) "Event of Default" shall have the meaning set forth in
Section 11.01 herein.
(f) "Possession Date" shall mean the date upon which the
City receives written notice from Tenant of Tenant's
election to take possession of the Leased Premises.
(g) "Redevelopment Project" shall have the meaning set
forth in Section 5.02 herein.
(h) "Provider" shall mean an entity empowered to make
loans, enter into other financing arrangements, own,
lease, purchase or sell property or by any other means
provide for buildings and other improvements and
equipment on real estate, and the acquisition and
disposal of interests in such buildings, improvements,
equipment an real estate which furnishes to Tenant
(its successors and assigns) the primary source of
funds, buildings, improvements, equipment or other
things secured by or in connection with any mortgage,
assignment, lease, sublease, purchase subject to
seller's right of repurchase or other encumbrance,
financing, sale or lease document or agreement
whatsoever, relating to the financing, refinancing,
construction, sale, lease or development of the
Redevelopment Project.
(i) "Termination Date" shall have the meaning set forth in
Article II herein.
(j) "Trustee" shall have the meaning set forth in Article
XXII herein.
(k) "Unavoidable Delays" shall mean any delay in the
achievement of any deadline required under this Lease
by reason of fire, casualty, strikes, lockout, labor
7
<PAGE>
troubles, failure of power, governmental authority,
riots, insurrection, war or other reason of like
nature, or failure of timely performance by the other
party, which delay, hindrance or prevention of
performance is not within the reasonable control of
the party obligated to perform and is not avoidable by
reasonable diligence.
ARTICLE IV.
Lease Consideration
Section 4.01. Rent. The consideration for this Lease shall
be (a) an annual rental of Four Hundred Thousand Dollars
($400,000.00), subject to the adjustments as provided below,
through the Term and any extension of the Term pursuant to
Section 2.04 and (b) Tenant's undertakings for the development of
the Redevelopment Project on the leased Premises as described in
Section 5.02. The annual rental shall be payable to the City on
the Commencement Date and on each anniversary of the Commencement
Date by check subject to collection at the address of the City
specified in Article XX hereinbelow, provided that the first
annual rental payment shall be paid one-half (1/2) upon execution
of this Lease and one-half (1/2) upon the Commencement Date.
Section 4.02. Adjustments to Annual Rent. The annual
rental payable hereunder shall be adjusted beginning on the third
anniversary date of the Commencement Date and on the same date of
every third year thereafter, each such date being called a Rental
Adjustment Date. Such adjustments shall be based upon increases
in the Consumer Price Index (hereinafter the "Index"), all items,
published by the Bureau of Labor Statistics, United States
Department of Labor. In computing the rental adjustment for
each rental Adjustment Date (the "Current Rental Adjustment
Date") the Index last published preceding the last preceding
Rental Adjustment Date (the "Prior Rental Adjustment Date") (or
preceding the Commencement Date in event of the first
adjustment), shall be the base Index for purposes of calculating
the annual rental for the three (3) year period commencing on the
Current Rental Adjustment Date. Any increase in the Index from
the base Index to the Index last published preceding the Current
Rental Adjustment Date shall be computed as a percentage and the
annual rental to be paid by Tenant during the three (3) year
period commencing on the Current Rental Adjustment Date shall be
the annual rental payable by Tenant for the period immediately
prior to the Current Rental Adjustment Date multiplied by the sum
of One Hundred Percent (100%) plus such change in the Index; but
shall in no event be less than the annual rental payable by
Tenant for the period immediately prior to the Current Rental
Adjustment Date. Nothwithstanding the foregoing the rental
adjustment made for any Rental Adjustment Date shall not exceed
One Hundred Five Percent (105%) of the annual rental determined
on the Prior Rental Adjustment Date (or the Commencement Date in
the event of the first adjustment).
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<PAGE>
ARTICLE V.
Construction of Redevelopment Project
Section 5.01. The City's Assistance.
(a) The City shall in good faith take all procedural
steps that are reasonably and lawfully required and
necessary to enable the Tenant, its sublessees and/or
a not-for-profit building corporation to finance and
construct a breakwall, public parking facility,
roadwork for ingress and egress and utilities (sewer,
water, gas, electric, etc.) to the Redevelopment
Project. The parties acknowledge that such activity is
to be financed through a lease financed through a
lease financing under applicable Indiana statutes.
Section 5.02. Redevelopment Project. The "Redevelopment
Project" shall mean:
(a) The development and construction of a first-class
riverboat casino to be developed and operated by
Tenant, as licensed to do so under the provisions of
IC-4033, which may include land-based facilities,
including, but not limited to restaurants,
entertainment facilities and parking areas, and other
facilities or uses necessary and desirable for the
operation of the riverboat casino, all in accordance
with the provisions of the Lakefront Development Area
Redevelopment Plan, as amended, and substantially in
accordance with Tenant's bid submitted to City on
August 9, 1994.
(b) Any and all buildings, structures, improvements,
fixtures, equipment and appurtenances necessary or
incidental to the construction, maintenance and
operation of the project described in paragraph (a)
and any alterations thereof.
Section 5.03. Completion of the Redevelopment Project.
Tenant shall within one hundred eighty (180) days after receipt
of a certificate of suitability from the Indiana Gaming
Commission cause the commencement of construction of the
Redevelopment Project and diligently pursue such construction to
completion in a good and workmanlike manner. Tenant shall use
its best efforts to cause the construction of the Redevelopment
Project to be completed to such an extent that, subject to
Unavoidable Delays (which shall not include failure to obtain
financing), the Redevelopment Project is substantially ready for
operation no later than eighteen (18) months following the
receipt of such certification of suitability (the "Substantial
Completion Date"). In the event the Redevelopment Project is not
substantially ready for operation by the Substantial Completion
Date, Tenant agrees to pay to City, as liquidated damages, the
sum of $250,000.00 per month until the Redevelopment Project is
substantially ready for operation, it being agreed between the
parties that actual damages to the City for such failure cannot
be determined; provided, however, that Tenant shall not be liable
for the payment of such liquidated damages if it has, prior to
the Substantial Completion Date, opened a temporary riverboat
gaming casino for operation.
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Section 5.04. Compliance with Laws, Insurance Policies.
Tenant shall cause the construction of the Redevelopment Project,
and the same to be constructed and completed, in compliance with
all requirements of law (including Environmental laws and
building codes) and all ordinances, regulations, rules or orders
of any public agency or authority relating thereto. Tenant shall
provide evidence of insurance coverages, in the form of
certificates of new policies or endorsements to existing
policies, showing Tenant to be insured during the period of
construction, under policies providing the coverages required
under Article XII hereinbelow, and naming the City as an
additional insured, as appropriate. Tenant shall comply with all
requirements and conditions of such policies to ensure
continuation of the same throughout the course of the
construction of the Redevelopment Project.
ARTICLE VI.
Mortgages: Financing Documents and Liens
Section 6.01. Fee Mortgages or Liens. The City hereby
covenants and agrees that during the term of this Lease (and any
extension or renewal hereof), the City shall not mortgage, pledge
or otherwise create security interests or other liens or
encumbrances upon or affecting the City's fee estate in the
Leased Premises or its reversionary interest in the Redevelopment
Project, or any part thereof which is superior to the interest of
Tenant or the Provider or encumbers the interests of Tenant,
except with the prior written consent of Tenant and the Provider
except for such liens as may be created by statute or law;
provided that such liens or encumbrances are in all events
subordinate to the interests of Tenant hereunder and the
interests of any tenant under any lease entered into pursuant to
6.03(f) herein.
Section 6.02. Leasehold and Project Financing Documents.
Tenant and every successor and assignee of Tenant shall have the
right, at any time and from time-to-time, without the City's
consent, to mortgage, assign, lease, sublease, sell with right to
lease back or repurchase or otherwise pledge or hypothecate its
entire interest under this Lease or the entirety of the Leased
Premises and the Redevelopment Project, in each case as
collateral security for or in connection with any loan or other
furnishing of funds, building construction, fixtures or
equipment, from the Provider, to finance or refinance its
interests in the Leased Premises and the Redevelopment Project or
to obtain fixtures, equipment or construction in connection with
the Redevelopment Project; provided, that the primary security
for such financing or refinancing or such construction or
provision of fixtures or equipment shall consist of Tenant's
interests in the Leased Premises and Redevelopment Project and
the income therefrom together with letters of credit, cash
collateral accounts, guarantees and similar credit-enhancement
documents.
Section 6.03. Notices and Rights Upon Default. Tenant
shall provide the City with conformed copies of any and all
encumbrances or financing documents given upon its interest in
the Leased Premises and the Redevelopment Project, and shall give
the City written notice of the name and address of the Provider
involved in any such transactions. If the foregoing information
has been provided to the City, the City agrees that so long as
any such encumbrance
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or financing document shall remain unsatisfied of record or until
written notice of satisfaction is given to the City by such
Provider, the following provisions shall apply:
(a) Contemporaneously with any notice by the City to
Tenant, the City shall serve upon such Provider a copy
of each notice given to Tenant under this Lease. No
such notice shall be effective as against such
Provider unless and until a copy thereof is served
upon such Provider.
(b) In the case of any Monetary Event of Default (as such
term is defined in Article XI of this Lease), the City
shall not terminate this Lease until thirty (30) days
after the later of (a) expiration of Tenant's
applicable cure period, or (b) receipt by such
Provider of its copy of any such notice to remedy or
cause to be remedied the Monetary Event of Default
which is the basis of the notice; and further
provided, that said thirty-day period shall be
extended by a time commensurate with any period during
which the said Provider cannot take action against
Tenant or the Leased Premises on account of the stay
under Sec. 362 of the Bankruptcy Code or comparable
provision under any future laws relating to the
protection of debtors. The City shall accept
performance by such Provider as performance by Tenant.
If Tenant has had its license revoked or denied, the
City may terminate this Lease under Section 2.03
without regard to this paragraph (b).
(c) In the case of any Non-Monetary Event of Default or
Bankruptcy Event of Default (as such terms are defined
in Article XI of this Lease), the City shall not
terminate this Lease without first giving to the
Provider a reasonable time within which to cure such
default, if possible, or to institute and complete
foreclosure or other appropriate legal or equitable
proceedings, obtain possession of the Leased Premises
(including possession by a receiver), or otherwise
acquire Tenant's estate under this Lease. In the case
of a Bankruptcy Event of Default, such default shall
be deemed to be cured upon the Provider completing
such proceedings or otherwise obtaining Tenant's
estate under this Lease. In the case of any
Non-Monetary Event of Default, the Provider shall have
forty-five (45) days from the date on which it
obtains possession and control of the Leased Premises
to cure the Non-Monetary Event of Default; provided,
that, if the Non-Monetary Event of Default is
susceptible of being cured only by any such Provider's
acquisition of title to Tenant's estate under this
Lease, such Provider shall have forty-five (45) days
from the date on which such title is acquired by any
of them to cure such Event of Default. In the event
that it is not possible to effect such cure within
said forty-five (45) day period for reasons not within
the control of such Provider, said forty-five (45) day
period shall be extended as necessary to effect such
cure so long as any such Provider gives the City
notice of intention to cure with a written proposal
outlining the action the Provider intends to take and
a schedule (timetable) therefor (the "Cure Proposal")
and commences efforts to cure within said period and
thereafter continuously and diligently pursues the
same to completion in accordance with the Cure
Proposal.
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The provisions of this paragraph (c) of this Section
6.03 are conditioned on such Provider promptly
commencing and diligently pursuing to completion
appropriate legal or equitable proceedings against the
Leased Premises or otherwise attempting with
reasonable diligence to obtain possession of the
Leased Premises and/or Tenant's estate under this
Lease. The right of the Provider under this
paragraph (c) shall be exercisable concurrently, not
sequentially. For purposes of this paragraph (c),
possession of the Leased Premises by a receiver or
trustee in bankruptcy shall not be deemed possession
by the Provider.
(d) Such Provider shall not be required to continue
possession or continue foreclosure proceedings under
this Section 6.03 if the particular Event of Default
has been cured by Tenant.
(e) No amendment, modification, surrender or cancellation
of this Lease (other than a termination by the City in
compliance with the conditions of this Article VI or
except as may be permitted pursuant to Section 2.02 or
2.03 hereof) shall be effective without written
approval of the Provider of which the City has been
given notice as provided above; and so long as such
Provider shall have an interest of record in the
Leased Premises and/or Redevelopment Project, no
unification of the respective interests of the City
and Tenant therein in any one person or entity (other
than a termination of this Lease by the City in
compliance with the conditions of this Article VI or
except as may be permitted pursuant to Section 2.02 or
2.03 hereof) shall be deemed to create a merger of
such interests. The City and Tenant shall not enter
into any agreement modifying, canceling or
surrendering this Lease without the prior written
consent of such Provider.
(f) In the event of the termination of this Lease for any
reason prior to the expiration of the Term, whether by
summary proceedings to dispossess, service of notice
to terminate or otherwise, the City shall serve upon
the Provider of which the City has been given notice
as provided above a written notice that the Lease has
been terminated together with a statement of any and
all sums which would at that time be due under this
Lease but for such termination and of all other
defaults, if any, under this Lease then known to the
City. To the extent then permitted by law, such
Provider shall thereupon have the option to obtain a
new lease in accordance with and upon the following
terms and conditions:
(i) Upon the written request of such Provider, within
thirty (30) days after service of such notice
that the Lease has been terminated, the City
shall enter into a new lease pursuant to the next
paragraph for the Leased Premises and
Redevelopment Project with such Provider (or its
designee).
(ii) Such new lease shall be entered into at the cost
of the tenant thereunder, shall be effective as
of the date of termination of this Lease, and
shall be for the remainder of the Term and at the
rent and upon all the agreements,
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terms, covenants and conditions hereof, including
any applicable rights of extension. Such new
lease shall required the tenant to perform any
unfulfilled obligation of Tenant under this
Lease. Upon the execution of such new lease, the
tenant named therein shall pay any and all sums
which at the time of the execution thereof shall
be due under this Lease but for such termination.
(g) Any notice or other communication which the City shall
desire or is required to give or to serve upon the
Provider of which the City has been given notice under
this Lease shall be in writing and shall be served by
Registered or Certified Mail, return receipt
requested, addressed to such Provider at its address
as set forth in any encumbrance of financing document,
or in the last assignment thereof delivered to the
City pursuant to this Article VI, or at such other
address as shall be designated by such Provider by
notice in writing given to the City.
(h) Any notice or other communication which such Provider
shall desire or is required to give to or serve upon
the City shall be deemed to have been duly given or
served if sent by Registered or Certified Mail to the
City in accordance with Article XX of this Lease or at
such other addresses as shall be designated by the
City by notice in writing given to such Provider by
registered mail.
Section 6.04. Provider's Liability. If the Provider shall
acquire title to Tenant's interest in this Lease, by foreclosure
of a mortgage thereon or by assignment in lieu of foreclosure, or
by any other legal or equitable proceedings, or by an assignment
from a nominee or wholly owned subsidiary corporation of such
Provider, or under a new lease pursuant to this Article VI, such
Provider may assign such lease to a person holding a license to
operate a riverboat gaming casino and shall have no liability for
the performance or observance of the covenants and conditions in
such lease contained on Tenant's part to be performed and
observed from and after the date of such assignment. Any
Provider acquiring title to Tenant's interest in this Lease shall
be required within 12 months thereafter to either obtain a
license to operate a riverboat gaming casino or to assign the
Lease to a person holding such a license, and, in the event such
Provider fails to so obtain a license or assign the Lease within
such time period, this Lease shall automatically terminate.
Section 6.05. No Obligation to Cure. Nothing contained in
this Lease shall require the Provider to cure or undertake to
cure any default of Tenant, unless and until such Provider elects
to exercise any right under the foregoing Section 6.03 as to
which such cure or undertaking to cure is a condition.
Section 6.06. Notice to the City. Tenant shall provide the
City written notice of any default by Tenant pursuant to any
encumbrance or other financing documents upon or against Tenant's
interest in the Leased Premises and Redevelopment Project, and
Tenant shall obtain the agreement of the Provider that said
Provider will provide the City with notice of any default by
Tenant of its agreements with the Provider. Tenant shall also
attempt in good faith to obtain
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the agreement of the Provider to accept any cure tendered by the
City (without obligation of the City to undertake any such cure)
of any such default.
Section 6.07. Further Assurances. The City hereby
covenants and agrees to execute such additional documents and to
take such additional actions as the Provider may reasonably
require to further assure, implement and give effect to the
security of such Provider under any encumbrance or financing
document which such provider and Tenant may hereafter enter into
in connection with the financing or refinancing of the costs of
the Redevelopment Project, subject, however, to the provisions of
Section 6.02 of this Lease and provided that the form and
substance of such documents are reasonably satisfactory to the
City or that such actions do not adversely affect the City.
ARTICLE VII.
Discharge of Liens
Section 7.01. Covenant Against Liens. Tenant shall not
create or permit to be created or to remain, and shall promptly
discharge, any mechanic's, laborer's or materialmen's lien or any
conditional sale agreement, title retention agreement or
mortgage, which might be or become a lien, encumbrance or charge
upon the Leased Premises or any part thereof having any priority
or preference over or ranking on a parity with the estate, rights
and interests of the City in the Leased Premises or any part
thereof.
Section 7.02. Contesting of Liens. If any mechanic's,
laborer's or materialmen's lien shall be filed at any time
against the Leased Premises or any part thereof, Tenant shall
cause the same to be discharged of record within sixty (60) days
after notice of the filing thereof by payment, deposit, bond or
order of a court of competent jurisdiction; provided, that Tenant
shall have the right to contest the validity of such lien in any
manner permitted by law, so long as Tenant shall provide to the
City title insurance, bond or other assurance or security in an
amount equal to one hundred percent (100%) of the amount of the
claim, if and to the extent that the claimed lien has, or
lawfully may, attach to or adversely affect the City's interest
in the Leased Premises, and shall thereafter diligently proceed
to cause such lien to be removed or discharged. If Tenant shall
fail to discharge or seek to discharge any such lien affecting
the Leased Premises, then the City may, but shall not be
obligated to, discharge the same, either by paying the amount
claimed to be due or by procuring the discharge of such lien by
depositing in court a bond for the amount claimed, or by giving
security in such other manner as is, or may be permitted by law,
and Tenant shall reimburse and indemnify the City in respect
thereto, together with all costs, including attorneys' fees
related thereto or incurred in connection therewith.
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ARTICLE VIII.
Assignments and Subleases
Section 8.01. Assignment and Sublease. Tenant may assign
its interest in this lease to a person who has obtained a license
to operate a riverboat gaming casino, a not-for-profit building
corporation, a Provider or a Trustee and may sublease or permit
to be sub-subleased all or any part of the Leased Premises all
without the consent of the City, provided that any assignment to
a Provider or Trustee shall terminate and be of no effect, if
within twelve (12) months of such assignment, such Provider or
Trustee has been unable to further assign the Lease to a person
that has obtained a license to operate a riverboat gaming casino
or has failed to obtain such a license on its own behalf, an such
limitation shall be stated on any document assigning such lease.
A trustee in bankruptcy shall be permitted to assign this Lease
for a period of twelve (12) months following its assumption of
the lease to a person that has obtained a license to operate a
riverboat gaming casino or to any other person approved by the
City. Any assignment of Tenant's entire interest in the Lease
shall, to the extent required by law, be subject to the approval
of the Indiana Gaming Commission.
Section 8.02. Tenant's Liability Upon Assignment.
Notwithstanding the assignment of the Lease by Tenant, Tenant
shall remain liable for the performance of all of the obligations
of Tenant under the Lease, until such assignee has obtained a
license to operate a riverboat gaming casino.
ARTICLE IX.
Use Limitations
Section 9.01. Use by Tenant. The Leased Premises shall be
used primarily for the construction, development and operation of
the Redevelopment Project as described in Section 5.02 above, and
secondarily for incidental uses reasonably related thereto of the
nature enumerated in Section 5.02(b) of this Lease, or in the
event the Provider has an interest herein under circumstance
permitted by Section 6.02 of this Lease and obtains possession of
the Leased Premises and the Redevelopment Project, for the
operation of a riverboat gaming casino and for related incidental
uses by such new lessee.
Section 9.02. Compliance with Laws, Insurance Policies,
etc. Through the Term, Tenant, at its sole cost and expense,
shall promptly comply with all present an future laws (including
Environmental Laws, building and zoning laws), ordinances,
orders, rules, regulations and requirements of all federal, state
and municipal governments, departments, commissions, boards and
officers, including, but not limited to the Indiana Gaming
Commission, and all orders, rules and regulations of the National
Board of Fire Underwriters, the Indiana Board of Fire
Underwriters, or any other body or bodies exercising similar
functions, which may be applicable to the leased Premises, or to
the use or manner of use of the Leased Premises, or to the
owners, tenants or occupants thereof; provided, that Tenant shall
be entitled to contest in
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good faith by appropriate proceedings any such legal requirements
unless and until such contest shall subject the City to any
penalty or sanction, and until such time as a final determination
is made with respect to such legal requirements or until the City
is subjected to a penalty or sanction for Tenant's noncompliance,
Tenant shall not be deemed to be in default under this Section
9.02. Tenant shall indemnify and hold the City harmless against
all penalties, sanctions, costs, expenses, liabilities, claims,
actions and causes of action, including attorneys' fees caused by
Tenant's contesting of any proceedings or charge under this
Section 9.02. Tenant shall likewise observe and comply with the
requirements of all policies of insurance required to be supplied
coverage, or cancellation thereof.
Section 9.03. Covenant Against Waste. Tenant shall not do
or suffer any waste to the Leased Premises or Redevelopment
Project or any part thereof or any property adjacent thereto, or
allow the Leased Premises or Redevelopment Project to be used in
violation of a certificate of occupancy, if any, covering or
affecting the use of the Leased Premises or Redevelopment project
or any part thereof, or in any manner which may, in law,
constitute a nuisance, public or private. Tenant shall not
permit use of any portion of the Leased Premises by the public in
such manner as shall create prescriptive rights in, or an implied
dedication to, the public or any third person. Tenant shall not
allow the Leased Premises to be used so as to violate the
Environmental Laws, including the "release" or "threatened
release" of any "hazardous substance," "pollutant" or
"contaminant," as those terms are defined in CERCLA, in, at or
upon the Leased Premises.
ARTICLE X.
Repairs and Maintenance
Throughout the Term, Tenant, at its sole cost and expense,
shall maintain the Leased Premises and Redevelopment Project in
good repair and order and in safe and clean condition and shall
make, from time-to-time, all necessary repairs, renewals and
replacements thereof. In no event shall the City be required to
make any repairs, improvements, additions, replacements,
reconstructions or other changes to the Leased Premises or
Redevelopment Project or perform any maintenance thereon during
the Term.
ARTICLE XI.
Default Provisions
Section 11.01. Events of Default. Any of the following
shall constitute an "Event of Default" hereunder:
(a) If Tenant shall fail or refuse to pay when due any
rent or any other sum or charge payable under this
Lease, and such default shall continue for a period of
thirty (30) days after notice from the City to Tenant
specifying the items in default (herein called a
"Monetary Event of Default");
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(b) If Tenant shall fail or refuse to perform or comply
with any of the agreements, terms, covenants or
conditions provided in this Lease (other than those
referred to in the foregoing paragraph (a) or the
following paragraph (c) of this Section) for a period
of thirty (30) days after notice from the City to
Tenant specifying the items in default; provided,
however, that in the event such failure by its nature
or due to Unavoidable Delays cannot be cured within
such thirty (30) day period, then such thirty (30) day
period shall be extended until such failure is cured,
so long as Tenant gives the City notice of intention
to cure with a written proposal outlining the action
Tenant intends to take and a schedule (timetable)
therefor ("Tenant's Cure Proposal") and commences its
efforts to cure within such period and thereafter
continuously and diligently (subject to Unavoidable
Delays) pursues the same to completion in accordance
with Tenant's Cure Proposal (herein collectively
called a "Non-Monetary Event of Default"); or
(c) If (i) Tenant shall be adjudicated to be bankrupt or
insolvent, or (ii) Tenant shall make an assignment for
the benefit of creditors or shall file any petition or
answer seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or
similar relief under the present Bankruptcy Code or
any future federal bankruptcy act or any other present
or future federal, state or other bankruptcy or
insolvency state law, or (iii) Tenant shall seek,
consent to or acquiesce in the appointment of any
bankruptcy or insolvency trustee, receiver or
liquidator of Tenant or of all or any substantial part
of its properties or of the Leased Premises, or (iv)
within sixty (60) days after the commencement of any
proceeding against Tenant seeking any reorganization,
arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the present
Bankruptcy Code or any future federal bankruptcy act
or any other present or future federal, state or other
bankruptcy or insolvency statute or law, such
proceeding shall not have been dismissed or such
appointment shall not have been vacated or stayed
(herein collectively called a "Bankruptcy Event of
Default");
then and in any such event, Tenant's rights under this Lease
shall terminate (subject, however, to the rights of the Provider
to notice and cure provided for in Article VI of this Lease)
sixty (60) days after the election of the City, made in writing
to Tenant no more than sixty (60) days after the later of such
event or the expiration of any applicable cure period, to
terminate this Lease, and upon such election and the expiration
of such ten (10) day period the rights of Tenant to the use and
possession of the Leased Premises under this Lease, including
such rights under any extension privileges whether or not
exercised, shall expire and terminate (subject, however, to the
rights of the Provider to notice and cure provided for in Article
VI of this Lease).
Section 11.02. Surrender. Upon any such termination of
Tenant's rights under this Lease pursuant to Section 11.01,
hereof, Tenant shall quit and peacefully surrender the Leased
Premises to the City in accordance with the provisions of Section
17.01 hereof.
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Section 11.03. No Waiver. No failure by either the City or
Tenant to insist upon the strict performance of any agreement,
term, covenant or condition hereof or to exercise any right or
remedy consequent upon a breach thereof shall constitute a waiver
of any such breach or of such agreement, term, covenant or
condition. No agreement, term, covenant or condition hereof to
be performed or complied with by the City or Tenant, as the case
may be, shall be altered or modified except by a written
instrument executed by the City and Tenant. No waiver of any
breach shall affect or alter this Lease, but each and every
agreement, term, covenant and condition hereof shall continue in
full force and effect with respect to any other then existing or
subsequent breach thereof.
Section 11.04. Cumulative Remedies. Each right and remedy
provided for in this Lease shall be cumulative and shall be in
addition to every other right or remedy provided for in this
Lease or now or hereafter existing at law or in equity or by
statute or otherwise, and the exercise or beginning of this
exercise by the City or Tenant of any such rights or remedies
shall not preclude the simultaneous or later exercise by the
party in question of any such rights or remedies, except as
otherwise expressly provided in this Lease. The provisions of
this Article XI are hereby expressly made subject to the
provisions of Article XX and the rights and remedies of the
Provider under Article VI.
ARTICLE XII.
Insurance
Section 12.01. Tenant's Liability Insurance. From the
Possession Date and throughout the Term, Tenant shall maintain in
force the following types and amounts of liability insurance,
covering Tenant and, during any period in which construction,
renovation, alteration or substantial repair work is being
performed by third parties on the Redevelopment Project, Tenant's
construction contractors, subcontractors and agents, as
appropriate; and at all times naming the City as an additional
insured:
(a) Comprehensive General Liability Insurance ("Occurrence"
Form):
(i) Basic coverage and limits:
Bodily injury,including death resulting therefrom,
and Property Damage to a Combined Single Limit of
$1,000,000 per occurrence. A $1,000,000 annual
aggregate limit applies to P remises-Operations
Property Damage Liability and to the hazards of
Products/Completed Operations and Contractual
Liability.
(ii) Extensions of coverage to include:
Blanket contractual liability for written or oral
contracts;
Broad form property damage;
Blanket explosion, collapse and underground
coverage.
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(b) Umbrella Excess Liability:
(i) Limits:
(A) Bodily Injury, Personal Injury and Property
Damage to a limit of $5,000,000 per
occurrence excess of the primary
Comprehensive General Liability and
Employer's Liability, subject to a Project
aggregate limit for all insured interests of
$5,000,000 excess of the Primary annual
aggregate limits.
(ii) Coverage:
Includes all underlying extensions of coverage.
(c) Changes in Limits: Notwithstanding the foregoing, and
so long as City is named as an additional insured on
Tenant's liability insurance, the policy limits of
Tenant's insurance for tort claims shall not be less
than the maximum liability of the City for tort claims
under the Indiana Tort Claims Law (IC 34-4-16.5), as
the same may be amended from time-to-time.
Section 12.02. Automobile Liability Insurance. Throughout
the Term, Tenant shall maintain in force, in its own name only
and not in the name of the City or other third parties,
automobile liability insurance covering the use of all owned, non-
owned and hired vehicles, with bodily injury and/or property
damage liability limits of $1,000,000 (combined single-limit per
accident).
Section 12.03. Tenant's Workers' Compensation and
Employer's Liability Insurance. Throughout the Term, Tenant
shall maintain the following amounts of workers, compensation and
employer's liability insurance, covering Tenant and, during any
period in which construction, renovation, alteration or repair
works being performed by third parties on the Redevelopment
Project, Tenant's construction contractors, subcontractors and
agents, as appropriate, and at all times naming the City as an
additional insured.
(a) Coverage A - Statutory Benefits:
Liability imposed by the Workers, Compensation and/or
Occupational Disease statute of the State of Indiana
and any other state or governmental authority if
related to the work performed on the Redevelopment
Project.
(b) Coverage B - Employer's Liability
Limits of $1,000,000 Bodily Injury by accident
$1,000,000 Bodily Injury by disease, and
$1,000,000 Policy Limit by disease.
(c) Extensions of Coverage to include:
Broad Form All States Endorsement
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Sixty (60) days notice of cancellation.
Section 12.04. Tenant's Casualty-Loss Insurance. During
the period of original construction of the Redevelopment Project,
and during any period in which construction, renovation,
alteration or repair work is being performed by third parties on
the Redevelopment Project, Tenant shall maintain in force
builder's "all risk" property damage coverage to protect Tenant,
its construction contractors, subcontractors and agents, as
appropriate, and naming the City as an additional insured.
At all times during the Term, Tenant shall maintain in
force, through such builder's all-risk coverage or through
separate casualty-loss policies, insurance covering the Leased
Premises and the Redevelopment Project, including all equipment
in or appurtenant to the Leased Premises or Redevelopment Project
essential to the operation and maintenance of the buildings (as
distinguished from equipment for operation of the business
conducted upon the Leased Premises) and all alterations, changes
or additions thereto, naming the City, the Provider and Tenant,
as their respective interests may appear, as insureds and
insuring the Leased Premises and the Redevelopment Project
against loss or damage by fire or other casualties covered by
customary extended coverage endorsements, in such amounts as
Tenant determines.
Section 12.05. Proof of Insurance. All insurance provided
for in this Article XII shall be effected under valid and
enforceable policies, issued by insurers of recognized
responsibility authorized to do business in Indiana. Upon the
execution of this Lease, and thereafter not less than fifteen
(15) days prior to the expiration dates of any expiring policies
theretofore furnished pursuant to this Article XII, originals of
the policies (or, in the case of general public liability
insurance, certificates of the insurers), shall be delivered by
Tenant to the City bearing notations evidencing the payment of
premiums or accompanied by other evidence satisfactory to the
City of such payment; except, that whenever the Leased Premises
shall be subject to any mortgage or other form of financing
instrument to secure any debt of Tenant such policies of
insurance may be lodged with the Provider until the mortgage
debt shall be paid, and certificates of such policies shall
meanwhile be delivered to the City.
Section 12.06. Notice of Cancellation. The insurance
required by this Article XII shall contain a provision (to the
extent that such provision is commercially available) that
coverages afforded under the policies will not be canceled, not
renewed or materially changed until sixty (60) days prior written
notice has been given to both the City and Tenant and any other
persons named as insured thereunder.
Section 12.07. Adjustment in Insurance. Tenant shall
provide such insurance, with such coverages and in such amounts,
as may be agreed upon from time-to-time between Tenant and the
Provider.
Section 12.08. Waiver of Subrogation. The City and Tenant
waive all rights against each other and against those for whom
the other is legally liable for (i) all losses or damages covered
by insurance provided for under this Article XII to the extent
the upper limits of such
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insurance are adequate to cover such damages, it being the intent
of this clause to allocate all risk of such loss to such
insurance and (ii) for all losses and damages which are not
covered by insurance but which could have been insured against
by the insured. If the policies of insurance provided under this
Article XII require an endorsement to provide for continued
coverage where there is a waiver of subrogation, Tenant will
cause such policies to be so endorsed.
Section 12.09. Application of Proceeds for Redevelopment
Project. The proceeds of any and all policies of insurance upon
the Redevelopment Project maintained pursuant to Section 12.04 of
this Article XII shall be used as a trust fund toward the repair,
reconstruction, replacement or rebuilding of the Redevelopment
Project. Accordingly, all such policies of insurance shall
provide that, as to any loss in excess of $500,000.00, all
proceeds payable at any time and from time-to-time by any
insurance company under such policies shall be paid to the
Trustee for the benefit of Tenant, the City, the Provider and any
other person or entity having any interest under any such policy
and applied by such Trustee as provided in this Lease. Tenant
shall pay the reasonable charges of the Trustee for its services
hereunder. The City, Tenant, the Provider and any other person
or entity having an interest under any such insurance policy
shall cooperate with and aid the Trustee in collecting any and
all insurance money and will execute and deliver as requested by
the Trustee any and all proofs, receipts, releases and other
instruments whatsoever which may be necessary or proper for such
purpose. In the event that any person having an interest under
any such insurance policy shall fail or neglect to cooperate or
to execute, acknowledge and deliver any such instrument, the
Trustee may, as the agent or attorney-in-fact of any such person,
execute and deliver any proofs of loss or any other instruments
as may seem desirable to the Trustee for the collection of such
insurance moneys, and all such person or entities having obtained
an interest in any such insurance policy shall be deemed to have
irrevocably nominated constituted and appointed the Trustee its
proper and legal attorney-in-fact for such purpose. As to all
other policies, the proceeds shall be paid to the insured party
or parties as their interests shall appear and in proportion to
their respective insured losses.
Section 12.10. Special Provisions. If reasonably
obtainable, all such policies of insurance maintained pursuant to
Section 12.01 and 12.03 hereinabove shall provide that the
proceeds thereof shall be payable without regard to any fault or
negligence of the City, Tenant, any contractor or agent of Tenant
or any other person or entity having an interest under any such
policy which may have caused or contributed to such loss and
without any rights of the insurance company of set-off,
counterclaim or deduction against the City or Tenant.
Section 12.11. General Provisions. In the event Tenant
shall fail or refuse to obtain any insurance required by this
Article XII, the City may obtain such insurance. The costs of
such insurance shall constitute additional rent payable by Tenant
upon demand by the City.
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ARTICLE XIII.
Indemnification
Section 13.01. Indemnification by Tenant. Subject to the
provisions of Section 12.08 and regardless of whether separate,
several, joint or concurrent liability may be imposed upon the
City, Tenant shall, but only to the extent permitted by law, at
its sole cost and expense, indemnify and save harmless the City
and any member, officer, director, agent, partner, trustee or
employee thereof against and from any and all claims, liability
and damages arising from or in connection with (a) Tenant's
possession, use or control of the Leased Premises or the
Redevelopment Project, (b) any occurrence or circumstance on or
related to the Leased Premises or Redevelopment Project
(including the loss or damage to any property, including the
Leased Premises, the injury to or death of any person, or the
contamination of or adverse effects on the environment, which
result from any pollutant or from any chemical, hazardous or
toxic substances or wastes emitted from or discharged by the
Redevelopment Project while occupied by Tenant), or (c) Tenant's
breach of any covenant or obligation under this lease, other than
claims, liability or damages arising from failure of the City to
perform or the negligence of the City in the performance of, any
of its obligations hereunder or arising out of any willful acts
of the City. The indemnification provided by this Section 13.01
shall include all costs, counsel fees, expenses and liabilities
incurred in connection with any such claim, action or proceeding
brought thereon; and in case any action or proceeding shall be
brought against the City by reason of any such claim, Tenant,
upon written notice from the City, shall defend such action or
proceeding. The terms of this Section 13.01 shall survive any
termination of this Lease.
Section 13.02. Indemnification by the City. Subject to the
provisions of Section 12.08 and regardless of whether separate,
several, joint or concurrent liability may be imposed upon
Tenant, the City shall, but only to the extent permitted by law,
at its sole cost and expense, indemnify and save harmless Tenant
and the Provider from and against any and all claims, liability
and damages arising from the sole negligence of the City or
arising out of any willful acts of the City. The indemnification
provided by this Section 13.02 shall include all costs, counsel
fees, expenses and liabilities incurred in connection with any
such claim, action or proceeding brought thereon. In case any
action or proceeding shall be brought against Tenant or the
Provider by reason of any such claim, the City upon written
notice from Tenant or such Provider shall defend such action and
proceeding. The terms of this Section 13.01 shall survive any
termination of this Lease.
ARTICLE XIV.
Casualty Damage
Section 14.01. Tenant's Obligation to Repair. In the event
that, at any time during the Term, the Redevelopment Project
shall be destroyed or damaged in whole or in part by fire or
other cause within the extended coverage of the casualty
insurance policies or builder's risk policies required to be
maintained by Tenant in accordance with Article XII of this
Lease, then
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Tenant shall cause the same to be repaired, restored, replace or
rebuilt within a period of time which, under all prevailing
circumstances, shall be reasonable. In the repair or restoration
of the Redevelopment Project under this Article XIV, Tenant will,
as nearly as practicable, repair, restore, replace or rebuild the
Redevelopment Project so damaged or destroyed to the condition
and character of the Redevelopment Project existing immediately
prior to such occurrence, subject to applicable zoning and
buildings laws then in existence. Tenant shall be entitled to
apply all insurance proceeds of policies maintained pursuant to
Article XII of this Lease remaining after any required payments
to the Provider to such repair, restoration, replacement and
rebuilding. Tenant shall notify the City in writing of any
payments (whether total or partial) made of insurance proceeds.
If the insurance proceeds recovered in respect of any such
insured damage or destruction, less any cost of recovery and any
amounts required to be applied to repayment of the Provider,
shall be insufficient to pay the entire cost of such repair,
restoration, replacement or rebuilding, Tenant may bear the cost
of such deficiency or in lieu of undertaking such repair,
restoration, replacement or rebuilding, terminate this Lease
upon written notice to the City. The time within which Tenant
must perform any obligations under this Section 14.01 shall
include a reasonable time to obtain and close the necessary
equity or mortgage loan or other financing to cover any
deficiency that Tenant agrees to bear.
Section 14.02. Disbursement of Insurance Proceeds in the
Event of Repair by Tenant. The Trustee shall permit any
insurance proceeds paid to it to be applied in payment of the
cost of such repair, restoration, replacement and rebuilding of
the Redevelopment Project by Tenant pursuant to the foregoing
Section 14.01 as the same progresses, payments to be made against
applications for payment properly certified by Tenant's
supervising architect or other appropriate certifying official.
The Trustee shall contribute out of such insurance proceeds with
respect to each such certified application for payment an amount
in proportion to such payment as the whole amount received by the
Trustee shall bear to the total estimated cost of repairing or
rebuilding the Redevelopment Project. If the insurance proceeds
should exceed the cost of repairing or rebuilding the
Redevelopment Project, the Trustee shall pay the balance
remaining after payment of the cost of repairing or rebuilding
the Redevelopment Project to Tenant. The Trustee may deduct from
any insurance proceeds paid to it the amount of its charges for
acting as such trustee and any reasonable expenses incurred by it
in connection with such trust.
Section 14.03. Prompt Performance of Work by Tenant. All
work of repairing, replacing, restoring or rebuilding the
Redevelopment Project by Tenant pursuant to the foregoing Section
14.01 shall be commenced within one hundred twenty (120) days
after settlement shall have been made with the insurance
companies, the insurance money shall have been paid to the
Trustee and all necessary permits for such work shall have been
obtained. All such work shall be governed by the provisions of
Section 5.04 of this Lease and shall be completed within a
reasonable time, under all prevailing circumstances. In case any
mortgage, financing lease or other financing document on Tenant's
interest in the leased Premises or Redevelopment Project shall be
in force at the time of any damage to or destruction of the
Redevelopment Project, then, the Provider which is a party
thereto is authorized to repair, replace, restor or rebuild the
Redevelopment Project under the same terms and conditions as are
applicable in the case of repair, restoration, replacement, or
rebuilding by Tenant. The Provider so repairing, restoring,
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replacing or rebuilding the Redevelopment Project shall, subject
to compliance with all the conditions contained in this Article
XIV, be subrogated to the rights of Tenant to the insurance
proceeds payable as a result of the damage or destruction, and
shall be entitled to have (and the City and Tenant hereby
authorize the Trustee to so pay) all said insurance proceeds paid
out by the Trustee in the same manner in every respect as if the
Provider were Tenant under this Lease.
ARTICLE XV.
Condemnation
Section 15.01. Total Condemnation. If, at any time during
the Term, there shall be a permanent total taking or a permanent
Constructive Total Taking of the Leased Premises or Redevelopment
Project in condemnation proceedings or by any right of eminent
domain, Tenant may by written notice to the City elect to end the
Term on the date of such taking, and Tenant shall remove its
personal property from the Leased Premises without delay. The
rent and all other items payable to Tenant under this Lease shall
be prorated and paid to the date of such taking.
Section 15.02. Proceeds of Total Condemnation. In the
event of any such permanent total taking or Constructive total
Taking of the Leased Premises and Redevelopment Project and the
termination of this Lease, the Condemnation Proceeds shall be
allocated as follows:
(a) To the City for its fee interest in the Leased
Premises (including its interest as landlord under
this Lease, and reversionary interest in the
Redevelopment Project); and then,
(b) To Tenant for its leasehold estate in the Leased
Premises and its fee interest in the Redevelopment
Project (subject to the City's reversionary interest
therein) immediately prior to such total taking or
Constructive Total Taking.
Nothing herein contained shall impair the right to Tenant or any
of its sublessees, licensees, concessionaires or others to the
full award, compensation or damages payable as an award for loss
of business or for moving expenses.
Section 15.03. Partial Condemnation. In the event of a
taking less than a Constructive Total Taking, this Lease shall
not terminate or be affected in any way, except as provided in
the following Sections 15.04, 15.05 and 15.06. In such case, the
Condemnation Proceeds shall be apportioned and paid, to the
extent available in the following priority:
(a) The Condemnation Proceeds shall be payable in trust to
Tenant for application by Tenant to the cost of
restoring and rebuilding the Redevelopment Project as
required by the following Section 15.04; and
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(b) The Condemnation Proceeds, if any, remaining after
restoration shall, subject to the requirements of any
financing documents and the rights of the Provider, be
retained by Tenant, except to the extent of an
equitable portion of the Condemnation Proceeds
allocable by agreement of the City and Tenant to the
City on account of any taking of its reversionary fee
title interest to any portion of the Leased Premises.
If Tenant and the City cannot agree upon the amount of
such payment, the amount of such payment shall be
determined by an independent appraiser selected by
agreement of the City and Tenant.
Section 15.04. Restoration. In the event of a taking less
than a Constructive Total Taking, Tenant, at its sole cost and
expense (but subject to reimbursement from the Condemnation
Proceeds) and regardless of whether the Condemnation Proceeds are
sufficient for the purpose, shall proceed with due diligence to
restore and rebuild the remaining portion of the Redevelopment
Project, to the extent feasible to the condition and character in
which the same was immediately prior to such taking. All such
work in connection with the restoration and rebuilding of the
Redevelopment Project shall be governed by the provisions of
Section 5.04 of this Lease.
Section 15.05. Rent Adjustment. In the event of a taking
of the character referred to in the foregoing Section 15.03, this
Lease shall terminate as to the portion of the Leased Premises so
taken and the rent payable hereunder shall be proportionally
adjusted from the date of the taking. Such adjustment shall be
based on the ratio between the fair market value of Tenant's
leasehold estate in the Leased Premises at the date of taking to
the faire market value of such leasehold estate remaining
immediately thereafter, valued for the use being made of the
Leased Premises by Tenant immediately prior to such partial
taking.
Section 15.06. Temporary Condemnation. If, at any time
during the Term, the whole or any part of the Leased Premises or
Redevelopment Project shall be taken in Condemnation Proceedings
or by any right of eminent domain for temporary use or occupancy,
except to the extent that Tenant may be prevented from so doing
pursuant to the terms of the order of the condemning authority,
or by the practical effects of such temporary taking, Tenant
shall perform and observe all of the terms, covenants, conditions
and obligations of this lease on Tenant's part to be performed
and observed as though such taking and not occurred. In the
event of any such taking of the character described in this
Section 15.06, Tenant shall be entitled to receive the entire
amount of the Condemnation Proceeds awards for such taking,
whether paid by way of damages, rent, costs of moving or
restoration or otherwise, unless such period of temporary use or
occupancy shall extend beyond the Term, in which case the
Condemnation Proceeds shall be apportioned between the City and
Tenant as of the date of termination of this Lease. Upon the
expiration of any such period of temporary use or occupancy, if
it be during the Term, Tenant will, to its sole cost and expense,
restore the Leased Premises, as nearly as practicable, to the
condition and character in which the same were immediately prior
to such taking. Any portion of the Condemnation Proceeds
received by Tenant as compensation for the cost of restoration of
the Leased Premises shall, if such period of temporary use or
occupancy shall extend beyond the Term (and Tenant has not
exercised its option to purchase), be paid to the City on the
date
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of termination of this Lease, and Tenant shall be thereby
relieved of its obligation hereunder to perform such restoration.
Section 15.07. Rights to Appear. The City, Tenant and the
Provider shall have the right to participate in any Condemnation
Proceeding for the purpose of protecting their rights hereunder,
and in this connection, specifically and without limitation, to
introduce evidence to establish the value of or damage to the
Leased Premises or Redevelopment Project.
Section 15.08. Rights of Provider. Notwithstanding
anything to the contrary contained in this Lease, the provisions
of this Lease relating to the application of any proceeds arising
from the taking of any part or all of the Leased Premises or
Redevelopment Project in Condemnation Proceedings shall be
subject to any rights reserved by the Provider having an interest
herein under circumstances permitted by Section 6.02 of this
Lease, to apply to the indebtedness to such Provider, all or any
part of such proceeds.
Section 15.09. City's Exercise of Eminent Domain. To the
extent permitted by law, City agrees not to use its powers of
eminent domain in a manner that is inconsistent with the
provisions of this Lease or that materially interferes with the
enjoyment of the benefits hereof to Tenant.
ARTICLE XVI.
Consents and Approvals
Section 16.01. Standards of Consent. Where any provision
of this Lease requires the consent, cooperation or approval of
either party, each party agrees that, except as otherwise
expressly provided in this Lease (such as by use of words to the
effect of "sole" and/or "complete" discretion), it will not
unreasonably withhold, condition or delay such consent,
cooperation or approval, and the reasonableness of each party's
determination shall be evaluated in accordance with any
particular standards governing such particular consent or
approval as expressly set forth in this Lease, or if no standards
are expressly set forth, then in accordance with all relevant
facts and circumstances. Where any provision of this Lease
requires one party to do anything to the satisfaction of the
other party, the other party agrees that it will not unreasonably
refuse to state its satisfaction with such action.
Section 16.02. Waiver of Claims. Notwithstanding anything
contained in this Lease, neither party shall have any claim, and
hereby waives the right to any claim, against the other party for
money damages or off-set by reason of any refusal, withholding or
dealing by the other party of any consent, cooperation, approval
or statement of satisfaction, and in such event, the requesting
party's only remedies therefor shall be an action for declaratory
relief or specific performance to enforce any such requirement;
provided, that this waiver shall not apply as to an refusal
withholding or delay made in bad faith.
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ARTICLE XVII.
Surrender
Section 17.01. Surrender of Leased Premises. Except as
herein otherwise expressly provided in this Lease, Tenant shall
surrender and deliver upon the Leased Premises to the City at the
expiration or other termination of this Lease or of Tenant's
right to possession hereunder, without fraud or delay, in good
order, condition and repair, except for reasonable wear and tear
after the last necessary repair, replacement or restoration made
by Tenant and except for damage by reason of any temporary
condemnation to the extent Tenant is relieved of its obligation
to restore the Leased Premises under Section 15.06 of this Lease,
free and clear of all liens and encumbrances except the liens for
taxes and assessments not then due and payable, matters reflected
in Section 1.05 hereinabove and any matters created, caused or
consented to by the City, and without any payment or allowance
whatever by the City on account of any improvements made by
Tenant. The Redevelopment Project shall become the property of
the City upon such expiration or termination.
Section 17.02. Removal of Certain Property. All trade
fixtures, business equipment and personal property furnished by
or at the expense of Tenant or any subtenant shall be removed by
or on behalf of Tenant within sixty (60) days following the
expiration or other termination of this Lease but only if and to
the extent that the removal thereof will not cause physical
injury or damage to the Leased Premises or necessitate changes or
repairs to the same.
Section 17.03. Property Not Removed. Any personal property
of Tenant or any subtenant which shall remain in or upon the
Leased Premises for more than sixty (60) days after Tenant or any
subtenant has surrendered possession of the Leased Premises
shall be deemed to have been abandoned by Tenant or such
subtenant, and at the option of the City, such property: (a)
shall be retained by the City as its property; (b) shall be
disposed of by the City in such manner as the City shall
determine, without accountability to any person; or (c) shall be
promptly removed by Tenant at Tenant's expense upon written
request from the City. The City shall not be responsible for any
loss or damage occurring to any property owned by Tenant or any
subtenant.
Section 17.04. City's Right to Require Removal of
Improvements. Upon surrender of the Leased Premises, the City
may require Tenant, its sublessees or a not-for-profit building
corporation to remove any improvements constructed by Tenant, its
sublessees or a not-for-profit building corporation on the Leased
Premises.
Section 17.05. Survival of Terms. The terms of this
Article XVII shall survive any termination of this Lease.
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ARTICLE XVIII.
Quiet Enjoyment
Section 18.01. Tenant's Right to Quiet Enjoyment. The City
hereby warrants and represents that Tenant, upon paying rent and
other charges herein provided for, and upon observing and keeping
all covenants, agreements and conditions of this Lease to be kept
on its part, and also during the applicable periods specified in
Section 11.01 of this Lease for curing any alleged default
(subject, however, to the provisions of Section 6.03(b) and (c)
of this Lease), shall quietly have and enjoy the Leased Premises
during the Term without hindrance or molestation by anyone
claiming by, through or under the City, subject, however, to the
exceptions, reservations and conditions of this Lease.
Section 18.02. The City's Right of Entry. Tenant shall
permit the City and its authorized representatives, upon
reasonably prior notice, to enter the Leased Premises for the
purpose of (a) inspecting the Leased Premises, or (b) making any
repairs or performing any work in the Leased Premises or
Redevelopment Project that may be necessary by reason of Tenant's
failure to make any such repairs or performs any such work. The
City, however, shall proceed with such repairs no sooner than ten
(10) days after receipt of written notice to Tenant, specifying
the needed repairs and only if Tenant has not begun such repairs
within such 10 day period. Nothing herein shall imply duty upon
the part of the city to do any such work, and performance thereof
by the City shall not constitute a waiver of Tenant's default in
failing to perform the same. During the progress of any work in
the Leased Premises of Redevelopment Project performed by the
City pursuant to the provisions of this Article XVIII, the City
may keep and store therein all necessary materials, tools,
supplies and equipment. The City shall not be liable for
inconvenience, annoyance, disturbance, loss of business or other
damage to Tenant or any subtenant by reason of making such
repairs or performing any such work, or on account of bringing
materials, tools, supplies and equipment into the Leased Premises
or Redevelopment Project during the course thereof, and the
obligations of Tenant under this Lease shall not be affected
thereby. The City shall have the right to enter the Leased
Premises without notice in the case of any emergency which
required the exercise of the City's governmental powers for the
preservation or protection of the public health or safety.
ARTICLE XIX.
Certificates
Each party shall, at the requesting party's cost and
expense, as reasonably requested by the other party from time-to-
time and within ten (10) days after request by the other party,
certify by written instrument, duly executed, acknowledged and
delivered to the requesting party or any other person, firm or
corporation specified by the requesting party:
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(a) That this Lease is unmodified and in full force and
effect, or, if there have been any modifications, that
the same is in full force and effect as modified and
stating the modifications;
(b) Whether or not there are, to the best of the
certifying party's knowledge and belief, then existing
any set-offs or defenses against the enforcement of
any of the agreements, terms, covenants or conditions
hereof and any modifications hereof upon the part of
Tenant to be performed or complied with, and, if so,
specifying the same;
(c) The rent then payable under this Lease and the dates,
if any, to which the rent and any other charges
hereunder have been paid;
(d) The dates of commencement and expiration of the Term;
(e) Whether or not, to the best knowledge of the
certifying party, the other party is in default in the
performance of any covenant, agreement or condition
contained in this Lease and, if so, specifying each
such default.
ARTICLE XX.
Notices
Any and all notices, demands, requests, submissions,
approvals, consents, disapprovals, objections, offers or other
communications or documents required to be given, delivered or
served or which may be given, delivered or served under or by the
terms and provisions of this Lease or pursuant to law or
otherwise, shall be in writing and shall not be effective unless
and until received; provided, that such notice shall be presumed
to have been received, if hand-delivered, on the date of such
delivery, and, if mailed, on the third business day following the
date on which it is sent by Registered or Certified Mail, return
receipt requested, first-class postage prepaid thereon and
deposited with any regularly maintained United States Post
Office, branch Post Office, Post Office Station or Substation, at
the following addresses:
If to the City: City of East Chicago
4920 Larkspur Drive
P.O. Box 394
East Chicago, IN 46312
Attn: John Artis, Director
If to Tenant: Showboat Marina Partnership
Attn:
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or to such other address as either party shall specify to the
other by similarly given notice.
ARTICLE XXI.
Limitation of Liability
The term "the City" as used in this Lease, as far as the
covenants and agreements of the City in this Lease are concerned,
shall be construed to mean only the holder or holders of the
City's interest in this Lease at the time in question. Any
transfer or transfers of the City's interest, other than a
transfer for security prior to foreclosure thereof, shall be
subject to Tenant's prior written approval, which shall not be
unreasonably withheld, provided, however, that Tenant's approval
shall not be required for a transfer to another entity created or
established by the Indiana General Assembly having all of the
City's present powers and authority with regard to this Lease and
the Leased Premises. Subject to the foregoing, in the event of
any transfer of the City's interest, if Tenant receives any
executed assignment instrument permitted under the terms of this
Lease, wherein the assignee of the City assumes and agrees to
perform all of the liabilities and covenants of the City
hereunder, then the City herein named (and in case of any
subsequent transfer, the then transferor) shall be automatically
freed and relieved, as to occurrences after the date of such
transfer, from all duties and obligations relating to the
performance of any covenants or agreement on the part of the City
to be performed or observed after such transfer. Any funds in
which Tenant has an interest and which are in the hands of the
City at the time of such transfer shall be turned over to the
transferee, and any amount then due and payable to Tenant shall
be paid to Tenant by the then transferor. It is the intent of
this Article XXI that the provisions of this Lease shall be
binding upon the City, its successors and assigns only during and
in respect to the respective successive periods of ownership. In
any event, and notwithstanding any other provision of this Lease,
neither the City (including any successor or the City) nor any
member, officer, director, agent, partner, trustee or employee
thereof shall be liable in an individual or personal capacity for
the performance or nonperformance of any agreement, covenant or
obligation of the City contained in this Lease, and the City's
liability shall be limited to the value of Leased Premises in its
then current condition.
ARTICLE XXII.
Trustee
Whenever in Articles XII or XIV of this Lease a "Trustee" is
mentioned, or any action by the "Trustee" is required, the
following provisions shall apply:
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(a) So long as there exists on the Leased Premises a
mortgage or other financing lease, assignment or other
financing document given pursuant to Article VI of
this Lease, the Provider shall, if it so elects, act
as Trustee for purposes of this Lease. Such Provider
shall also be entitled to designate any bank, savings
bank or savings and loan association having an office
in East Chicago, Indiana, to act as Trustee should
such Provider elect not to act as Trustee or, having
once elected to act as Trustee, elect to cease acting
as Trustee and designate a successor Trustee.
(b) If the Provider elects not to act as Trustee or elects
to cease acting as Trustee and does not designate,
within ten (10) days of a written request by the City
or Tenant, a substitute or successor Trustee, the City
and Tenant shall promptly designate by agreement a
bank, savings bank or savings and loan association
having an office in East Chicago, Indiana, to act as
Trustee. If the City and Tenant cannot reach agreement
on such designation within thirty (30) days, the
determination shall be made by random selection among
the Trustees proposed by the City and Tenant;
provided, that the City and Tenant shall not submit
more than two (2) proposed Trustees each for purposes
of such selection.
(c) In the event that any financing documents then in
force do not make provisions as to the duties of the
Trustee, the City and Tenant shall enter into an
agreement with the Trustee appropriately covering the
duties of the Trustee hereunder, upon such terms and
conditions as may be reasonably necessary to allow the
Trustee to perform its functions as required under
this Lease and on such other terms and conditions as
such Trustee shall reasonably require; provided, that
the City shall not be required to assume any
obligations or liabilities other than as provided in
this Lease; and provided further, that the Trustee
shall be required to turn over any funds held by it to
a successor Trustee in the event any successor
Trustee is designated pursuant to paragraph (d) of
this Article.
(d) In the event that any Trustee or substitute or
successor Trustee fails or refuses to act as required
by the provisions of this Lease or the agreement
identified in the preceding paragraph, the City and
Tenant shall promptly designated by agreement a
successor Trustee meeting the requirements of
paragraph (b) of this Article and shall enter into an
agreement with such successor Trustee as required by
paragraph (c) of this Article. If the City and tenant
cannot agree on a successor Trustee within fifteen
(15) days after both receive notice of the Trustee's
failure or refusal to act, the determination shall be
made by random selection among the Trustees proposed
by the City and Tenant, provided that the City and
Tenant shall not submit more than two (2) proposed
Trustees each for purposes of such selection.
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(e) The fees and charges of every Trustee, substitute
Trustee and successor Trustee acting hereunder shall
be borne solely by Tenant and shall be paid in such
manner and frequency as required by any such Trustee.
(f) If the Provider shall elect not to act as Trustee,
such Provider shall nevertheless be entitled to be a
party to any agreement between the City, Tenant and
the Trustee.
ARTICLE XXIII.
Miscellaneous Provisions
Section 23.01. Severability. If any term or provision of
this Lease or the application thereof to any person or
circumstances shall, to any extent, be invalid or unenforceable,
the remainder of this Lease, or the application of such term or
provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected
thereby, and each and every term and provision of this Lease
shall be valid and be enforced to the fullest extent permitted by
law.
Section 23.02. Attorneys' Fees. In the event that either
Party should default under any of the provisions of this Lease
and the nondefaulting party should employ attorneys or incur
other expenses for the collection of rent or the enforcement of
performance or observance of any obligation or agreement on the
part of the defaulting party herein contained, the defaulting
party hereby agrees that it will on demand therefor pay to the
nondefaulting party all reasonable attorneys' fees (including
paraprofessional fees) and such other expenses incurred by the
nondefaulting party.
Section 23.03. Force Majeure. In case by reason of force
majeure either party hereto shall be rendered unable wholly or in
part to carry out its obligations under this Lease other than the
obligation of Tenant to make the rental payments required under
the terms hereof, then except as otherwise provided in this
Lease, if such party shall give notice and full particulars of
such force majeure in writing to the other party within a
reasonable time after the occurrence of the event or a cause
relied on, the obligations of the party giving such notice, so
far as they are affected by such force majeure, shall be
suspended during the continuance of the inability then claimed,
but for no longer period, and such party shall endeavor to remove
or overcome such inability with all reasonable dispatch.
Section 23.04. No Oral Modification. All prior
understandings and agreements between the parties are merged
within this Lease, which alone fully and completely sets forth
the understanding of the parties, and this Lease may not be
changed orally or in any manner other than by an agreement in
writing and signed by the party against whom enforcement of the
change is sought.
32
<PAGE>
Section 23.05. Remote Vesting. This Lease and all rights
and interests created hereby are intended to comply in all
respects with applicable common or statutory law, including the
common law Rule Against Perpetuities or analogous statutory
restrictions.
Section 23.06. Covenants to Bind and Benefit Respective
Parties. The covenants and agreements herein contained shall
bind and inure to the benefit of the City, its successor and
assigns, and Tenant, its successors and assigns, but this Section
shall not be construed as a consent to any assignment made
otherwise then permitted by Article VIII of this Lease.
Section 23.07. Recordation. The parties hereto, on the
request of either of them, shall enter into a memorandum of this
Lease, in recordable form, setting forth the identities of the
City and Tenant, the date of the expiration of the Term, and such
other information as the City and Tenant shall agree upon. Upon
any extension hereof, an amendment to such agreement shall be
executed and recorded reflecting such renewal and the expiration
date thereof.
Section 23.08. Captions and Table of Contents. The
captions of this Lease are for convenience and reference only and
in no way define, limit or describe the scope of intent of this
Lease nor in any way affect this Lease. The table of contents
preceding this Lease but under the same cover is for the purpose
of convenience and reference only and is not to be deemed or
construed in any way as part of this Lease, nor supplemental
thereto or amendatory thereof.
Section 23.09. Disclaimer of Relationship. Nothing
contained in this Lease, nor any act of the City or Tenant, shall
be deemed or construed by any person to create any relationship
of limited or general partnership, joint venture or agency
relationship between the City and Tenant, nor any third party
beneficiary in favor of any person, either with respect to this
Lease or with respect to any financing undertaken in connection
herewith.
Section 23.10. Governing Law. This Lease and the
performance thereof shall be governed, interpreted, construed and
regulated by the laws of the State of Indiana.
Section 23.11. Amendments to Accommodate Financing. The
City agrees to make all reasonable amendments to this Lease in
order to accommodate the requirements of any Provider providing
financing to Tenant.
Section 23.12. Street Vacations and Zoning Matters. The
City covenants to use all good faith efforts to remedy any
deficiencies in zoning of the Leased Premises which would prevent
the development of the Redevelopment Project. The City agrees to
undertake, at Tenant's cost and expense, all vacations of
streets, highways, alleys, easements or other public ways
requested by Tenant to permit the development of the
Redevelopment Project and the full realization of its benefits
under this Lease.
33
<PAGE>
IN WITNESS WHEREOF, the City and Tenant have executed this
Lease as of the date first above written.
CITY OF EAST CHICAGO SHOWBOAT MARINA PARTNERSHIP
DEPARTMENT OF REDEVELOPMENT
By: /s/ Walter M. Matusell By: /s/ T.C. Bonner
President, East Chicago
Redevelopment Commission Title: President
Attest: Attest:
/s/ Deidrei J. Bugg(?) /s/ Paul W. Sykes
Secretary, East Chicago Paul W. Sykes
Redevelopment Commission Assistant Secretary
34
<PAGE>
PROMISSORY NOTE
$9,316,367.05 January 1, 1996
FOR VALUE RECEIVED, Showboat Indiana Investment
Limited Partnership, a limited partnership organized and existing
under the laws of the State of Nevada ("Maker"), promises to
pay to Showboat, Inc., a corporation organized and existing under
the laws of the State of Nevada, or order ("Holder"), at 3720
Howard Hughes Parkway, Ste. 200, Las Vegas, NV 89109, or at such
other place as Holder may designate in writing, up to the
principal balance of Nine Million Three Hundred Sixteen Thousand,
Three Hundred Sixty-Seven and 05/One Hundredths Dollars
($9,316,367.05), plus interest as hereinafter provided. Interest
shall be calculated on a daily basis (based on a 365-day year),
at 14% ("Base Rate"). Principal and interest shall be payable
upon the earlier to occur of (i) demand or (ii) December 31, 1996
(the "Maturity Date").
All payments on this Promissory Note shall be applied
first to discharge all accrued but unpaid interest on the unpaid
principal balance hereof, and the remainder to be applied to the
principal balance. The Holder's acceptance of any payment less
than the amount then due shall not, in any manner, effect or
prejudice the rights of the Holder to receive the unpaid balance
then due and payable.
The failure to pay the unpaid principal sum on the
Maturity Date or the failure to pay any other sum when the same
shall become due and payable shall constitute an event of default
("Event of Default") hereunder, and upon the occurrence of an
Event of Default, all sums evidenced hereby, including the entire
principal balance, all accrued and unpaid interest and all other
amounts due hereunder shall, at the election of the Holder, and
without demand or notice to maker, become immediately due and
payable and the Holder may exercise its rights under this Note,
and other rights under applicable law.
Upon the occurrence of an Event of Default by Maker,
the unpaid principal balance, and all accrued and unpaid interest
due hereunder and all other costs shall together be treated as
the principal balance of this Promissory Note and shall bear
interest at the rate of three (3) percentage points per annum
greater than the Base Rate (the "Default Rate"), from the date of
the Event of Default until the entire principal sum and such
interest and costs have been paid in full.
<PAGE>
Maker shall have the right to prepay at any time all or
any portion of this Promissory Note without penalty.
It is not the intent of Holder to collect interest or
other loan charges in excess of the maximum amount permitted by
Nevada law. If interest or other loan charges collected or to be
collected by the Holder exceed any applicable permitted limits
then (i) any such interest or other loan charges shall be reduced
by the amount necessary to reduce the interest or other loan
charges to the permitted limits, and (ii) any sums already
collected from the Maker which exceeded permitted limits will be
refunded to the Maker. The Holder may choose to make such refund
by reducing the principal balance of the indebtedness hereunder
or by making a direct payment to the Maker.
Maker agrees to waiver demand, diligence, presentment
for payment and protest, notice of acceleration, extension,
dishonor, maturity, protest, and default hereunder. The Holder
may accept late or partial payments even though they are marked
"payment in full," without losing, prejudicing or waiving any
rights hereunder.
Maker agrees to pay all costs of collection, and all
costs of suit and preparation for such suit (whether at trial or
appellate level), in the event the unpaid principal sum of this
Promissory Note, or any payment of principal or interest is not
paid when due.
No amendment, modification, change, waiver or discharge
shall be effective unless evidenced by an instrument in writing
and signed by the party against whom enforcement of any waiver,
amendment, change, modification or discharge is sought. If any
provision hereof is invalid, or unenforceable, the other
provisions hereof shall remain in full force and effect and shall
be construed to effectuate the provisions hereof. The provisions
of this Promissory Note shall be binding and inure to the benefit
of the successors and assigns of the parties hereto.
A waiver by Holder of failure to enforce any covenant
or condition of this Promissory Note, or to declare any default
hereunder, shall not operate as a waiver of any subsequent
default or affect the right of Holder to exercise any right or
remedy not expressly waived in writing.
This Promissory Note shall be construed in accordance
with and governed by Nevada law.
All payments of principal and interest are hereby
required to be made in the form of lawful money of the United
States of America.
<PAGE>
Time is of the essence with respect to this Promissory
Note and each and every covenant, condition, term and provision
hereof.
Whenever the context requires or permits, the singular
shall include the plural, plural shall include the singular and
the masculine, feminine and neuter shall be freely
interchangeable.
IN WITNESS WHEREOF, Maker has executed this Promissory
Note at Las Vegas, Nevada as of the day first above written.
Maker:
SHOWBOAT INDIANA INVESTMENT
LIMITED PARTNERSHIP, a
Nevada limited partnership
ITS GENERAL PARTNER:
SHOWBOAT INDIANA, INC.
By:
Its:
<PAGE>
EXHIBIT 10.35
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
SHOWBOAT ROCKINGHAM COMPANY, LLC,
A NEW HAMPSHIRE LIMITED LIABILITY COMPANY
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
SHOWBOAT ROCKINGHAM COMPANY, L.L.C.,
A NEW HAMPSHIRE LIMITED LIABILITY COMPANY
TABLE OF CONTENTS
PAGE
ARTICLE I. RECITALS AND DEFINITIONS 2
1.1 Recitals 2
ARTICLE II. OFFICES 6
2.1 Principal Office 6
ARTICLE III. PURPOSE 6
3.1 Purpose 6
ARTICLE IV. CAPITAL 6
4.1 Capital Contributions 6
4.2 Capital Accounts 10
4.3 Federal Income Tax Elections 11
4.4 Members Invested Capital 12
4.5 Development Financing 12
4.6 Excess Interest 12
4.7 Interest 13
ARTICLE V. MEMBERS 13
5.1 Powers 13
5.2 Compensation to Members 13
5.3 Other Ventures 14
5.4 Meetings of Members 14
5.5 Action By Written Consent 14
5.6 Place of Meetings of Members 15
5.7 Annual Meetings 15
5.8 Annual Meetings: Notice 15
ii
<PAGE>
5.9 Special Meetings 15
5.10 Waiver of Notice 15
5.11 Adjourned Meetings And Notice Thereof 15
5.12 Delegation of Authority To Members and Managers 16
5.13 Admission of New Members 16
5.14 Cooperation of the Member 16
5.15 Company Action by Members 16
ARTICLE VI. MANAGERS 17
6.1 Election 17
6.2 Removal, Resignation and Vacancies 17
6.3 Managers' Power 18
6.4 Company Action by Managers 18
6.5 Bank Accounts 19
6.6 Meetings of Managers 19
6.7 Action by Written Consent 20
6.8. Place of Meetings of Managers 20
6.9 First Meeting 20
6.10 Special Meetings 20
6.11 Notice 20
6.12 Remuneration of Managers 20
6.13 Deadlock 20
ARTICLE VII. TRANSFER OF MEMBERS' INTERESTS 20
7.1 Transfer of Members' Interests 20
7.2 No Transfer Permitted Under Certain Circumstances 21
7.3 Permitted Transferees 21
ARTICLE VIII. COMPULSORY BUY-SELL PROVISION 22
8.1 Offer to Purchase 22
8.2 Acceptance 22
8.3 Purchase Price 23
8.4 Payment of Purchase Price 23
8.5 Closing 23
8.6 Government Approval 23
ARTICLE IX. DEFAULTING MEMBER 23
9.1 Option to Purchase Member's Interest 23
iii
<PAGE>
9.2 Offer to Purchase Shares of Rockingham Shareholders 24
9.3 Determination of Purchase Price 25
9.4 Payment of Purchase Price 25
9.5 Closing 25
ARTICLE X. RIGHT OF FIRST REFUSAL 26
10.1 Third Party Offer 26
10.2 Acceptance of Offer 26
10.3 Third Party Sale 27
10.4 Re-Application of Provisions 27
10.5 An Offer to Purchase Showboat's Interest 27
ARTICLE XI. APPRAISAL 28
11.1 Appraisal 28
ARTICLE XII. GENERAL SALE PROVISIONS 28
12.1 Application of Sale Provisions 28
12.2 Defined Terms 28
12.3 Obligations of Vendor 28
12.4 Release of Guarantees etc. 29
12.5 Deliveries to Vendor 29
12.6 Repayment of Debts 30
12.7 Non-Completion by Vendor 30
12.8 Non-Completion by Purchaser 30
12.9 Restrictions on Business 31
12.10 No Joint Liability 31
12.11 Consents 31
ARTICLE XIII. PROFITS AND LOSSES 31
13.1 Net Profits and Losses 31
13.2 Allocations of Deductions 31
13.3 Special Allocations 31
13.4 Curative Allocations 33
13.5 Federal Income Tax 33
ARTICLE XIV. DISTRIBUTIONS 33
14.1 Operating Distributions 33
14.2 Payment of Member Loans 33
iv
<PAGE>
14.3 Distribution on Dissolution and Liquidation 34
ARTICLE XV. ACCOUNTING AND RECORDS 34
15.1 Records and Accounting 34
15.2 Access to Accounting Records 34
15.3 Annual Tax Information 34
15.4 Interim Statements and Reports 34
ARTICLE XVI. TERM 35
16.1 Term 35
ARTICLE XVII. DISSOLUTION OF THE COMPANY AND TERMINATION OF A
MEMBER'S INTEREST 35
17.1 Dissolution 35
17.2 Bankruptcy, Insolvency or Dissolution 35
ARTICLE XVIII. INDEMNIFICATION 35
18.1 Indemnity 35
18.2 Indemnity for Actions By or In the Right of The Company 36
18.3 Indemnity If Successful 36
18.4 Expenses 36
18.5 Advance Payment of Expenses 37
18.6 Other Arrangements Not Excluded 37
ARTICLE XIX. MISCELLANEOUS PROVISIONS 38
19.1 Time is of the Essence 38
19.2 Default Interest Rate 38
19.3 Counterparts 38
19.4 Execution by Facsimile 38
19.5 Force Majeure 38
19.6 Complete Agreement 38
19.7 Amendments 39
19.8 Governing Law 39
19.9 Headings 39
19.10 Severability 39
19.11 Expenses 39
19.12 Heirs, Successors and Assigns 39
19.13 Power of Attorney 39
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<PAGE>
19.15 Compliance with Laws 40
19.16 Background Investigations 40
19.17 Compliance with Other Agreements 41
19.18 Governmental Approval 41
19.19 Licensing Requirements 41
19.20 Foreign Gaming Licenses 42
19.21 Press Releases 42
19.22 Uncertainties 42
ARTICLE XX. CONFIDENTIALITY AND NON-USE 43
20.1 Disclosure of Propriety Information 43
20.2 Use of Proprietary Information 44
20.3 Destruction or Return of Confidential Information 44
20.4 Exception 44
20.5 Survival 44
ARTICLE XXI. ARBITRATION 44
21.1 Appointment of Arbitrators 44
21.2 Inability to Act 45
ARTICLE XXII. FORCE MAJEURE 45
22.1 Force Majeure Defined 45
22.2 Actions to Resolve Force Majeure Events 46
ARTICLE XXIII. TERMINATION 46
23.1 Termination Events 46
23.2 Notice of Termination 47
23.3 Remedies Upon Termination 47
ARTICLE XXIV. NOTICES 48
EXHIBIT 3. THE COMMON AREA 50
1.01 The Common Area Defined 50
1.02 The Company's Easement to Use the Common Area 50
1.03 Operation and Maintenance of Common Area 51
1.04 Common Area Maintenance Cost 52
1.05 Accounting 53
1.06 Plans and Budgets 53
vi
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
SHOWBOAT ROCKINGHAM COMPANY, L.L.C.,
A NEW HAMPSHIRE LIMITED LIABILITY COMPANY
THIS LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement")
is made and entered into as of July 27, 1995, by and among
Rockingham Venture, Inc., a New Hampshire corporation,
("Rockingham"), and Showboat New Hampshire, Inc., a Nevada
corporation ("Showboat"), (Rockingham and Showboat are
hereinafter collectively referred to as the "Members" and
individually as the "Member") and Showboat Rockingham Company,
L.L.C., a New Hampshire limited liability company (the
"Company").
RECITALS
A. An affiliate of Showboat lent $8.85 million to
Rockingham in consideration of, among other things, the formation
of an entity to own a private non-racing gaming business at
Rockingham Park , a racetrack owned and operated by Rockingham.
B. Rockingham and Showboat have agreed to form, as of the
date hereof, the Company.
C. The Members will be the registered and beneficial owners
of 100% of the total Interest (as defined below) in the Company.
D. The Members desire to enter into a limited liability
company agreement to govern the affairs of the Company and the
conduct of its business, including, without limitation, the
rights and restrictions on the transfer of shares of a Member's
Interest in the Company owned by the current and future Members
of the Company.
E. The Members desire to set forth their agreements as to
the development and management of the Project (defined hereafter)
and the proposed gaming operations of the Company at Rockingham
Park in the event and with the expectation that (i) the State of
New Hampshire enacts legislation which permits a gaming business
to be operated at a racetrack facility such as the Rockingham
Park and (ii) the gaming licensing authority specified in the
legislation permitting gaming selects and licenses the Members.
F. The Members acknowledge their mutual desire to enter
into this Agreement despite the numerous uncertainties which must
be resolved or clarified to each party's satisfaction. Both
parties undertake to negotiate in good faith in a timely fashion
such addenda to this Agreement as are necessary to continue the
effectiveness of this Agreement and to revise the assumptions and
underlying facts upon which this Agreement is based.
<PAGE>
NOW, THEREFORE, in consideration of the mutual promises
contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, and with the intention of being bound by this
Agreement, the Members agree as follows:
ARTICLE I. RECITALS AND DEFINITIONS
1.1 RECITALS
The foregoing Recitals are true and correct.
1.2 DEFINITIONS
The following defined terms are used in this Agreement:
"Act" shall mean the New Hampshire Limited Liability Company
Act as set forth in the New Hampshire Revised Statutes Annotated
304-C:1 to 304-C:85, inclusive, as amended from time to time.
"Affiliate" shall mean a Person who directly or indirectly
or through one or more intermediaries (i) controls, is controlled
by, or is under common control with the Person in question; (ii)
is an officer, director or 5% shareholder, partner in or trustee
of any Person referred to in the preceding clause; or (iii) is a
spouse, father, mother, son, daughter, brother, sister,
grandchild, uncle, aunt, nephew or niece of any Person described
in clauses (i) and (ii).
"Agreement" shall mean this Limited Liability Company
Agreement as originally executed and as amended, modified,
supplemented, or restated from time to time, as the context may
require.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Company" shall mean Showboat Rockingham Company, L.L.C. and
includes any successor entity resulting from any merger,
amalgamation, reorganization, arrangement or other combination of
the Showboat Rockingham Company, L.L.C. and any other Person.
"Control" shall mean, in relation to a Person that is a
corporation, the ownership, directly or indirectly, of voting
securities of such Person carrying more than 50% of the voting
rights attaching to all voting securities of such Person and
which are sufficient, if exercised, to elect a majority of its
board of directors; "Controls" and "Controlled" shall have
similar meanings.
"Debt" shall mean, in relation to any Person (i) all
indebtedness of such Person for borrowed money, including
obligations with respect to bankers' acceptances; (ii) all
indebtedness of such Person for the deferred purchase price of
property or services represented by a note or other security;
(iii) all indebtedness created or arising under any conditional
sale or other title retention agreement with respect to property
acquired by such Person; (iv) all obligations under leases which
shall have been or should be, in accordance with GAAP
consistently applied, recorded as capital leases in respect of
which such Person is liable as lessee; (v) all reimbursement
2
<PAGE>
obligations in respect of letters of credit issued at the request
of such Person; and (vi) all Debt Guaranteed by such Person.
"Debt Guaranteed" by any Person shall mean all Debt of the
kinds referred in (i) through (v) of the definition of Debt which
is directly or indirectly guaranteed by such Person, or which
such Person has agreed (contingently or otherwise) to purchase or
otherwise acquire, or in respect of which such Person has
otherwise assured or agreed to indemnify a creditor against loss.
"Defaulting Member" shall have the meaning assigned to that
term in Section 9.1.
"Development Financing" is defined in Section 4.5.
"Effective Date" shall mean the date upon which the Members
sign this Agreement.
"Excess Interest" shall mean the difference between the
interest rate of the Development Financing or replacement
Development Financing specified in Section 4.6(b) obtained
pursuant to Section 4.5 and 14% per annum. In no event shall the
Excess Interest exceed 4.5% per annum, even if the interest rate
exceeds 18.5% per annum.
"Extraordinary Resolution":
(a) of the Managers shall mean a resolution that is:
(i) approved at a properly constituted meeting of the
Managers for the purpose of considering the proposed resolution
by at least 80.0% of the Managers ; or
(ii) consented to by all of the Managers by an
instrument or instruments in writing.
(b) of the Members shall mean a resolution that is:
(i) approved at a properly constituted meeting of
Members convened for the purpose of considering the proposed
resolution by Members holding at least 80% of the Percentage
Interests ; or
(ii) consented to by all of the Members by an
instrument or instruments in writing.
"Full Gaming" shall mean that the enabling legislation for
privately owned non-racing gaming permits gaming of (i) more than
500 electronic games of chance or skill or (ii) any combination
of games which includes table games. During Full Gaming the
Percentage Interest of Rockingham shall be 50% and the
Percentage Interest of Showboat shall be 50%. Notwithstanding
the foregoing, the Company shall not conduct simulcasting, inter-
track wagering and pari-mutuel activities.
"GAAP" shall mean, at any time, accounting principles
generally accepted in the United States of America at such time.
"Gaming Area" shall mean those areas reserved for the
operation of electronic games of chance or skill, table games or
any other legal forms of gaming permitted under applicable law,
3
<PAGE>
and ancillary service areas, including reservations and
admissions, cage, vault, count room, surveillance room and any
other room or area or activities therein regulated or taxed by
the Gaming Authority by reason of gaming operations.
"Gaming Authority" shall mean the New Hampshire gaming
authority set forth in the enabling legislation or regulations
promulgated thereunder.
"Governmental Authorities" shall mean the Gaming Authority,
the Nevada Gaming Control Board, the Nevada Gaming Commission,
the New Jersey Casino Control Commission, the New South Wales
Casino Control Authority, the Casino Authority, the New Hampshire
Pari-Mutuel Commission and such other authority governing gaming
in states or countries in which the Company or any of the Members
currently conduct or in the future may conduct gaming operations.
"Gross Gaming Revenues" shall mean all of the revenue from
the operation of the Gaming Area, including, but not limited to,
table games, electronic games of chance, electronic games of
skill and admission fees.
"Invested Capital" is defined in Section 4.4 of this
Agreement.
"Limited Gaming" shall mean gaming where the enabling
legislation limits the Project to no more than 500 electronic
games of chance and prohibits other games (e.g., a prohibition
against any variety of table games).
"Limited Gaming Adjustment" shall mean an adjustment in the
scope of the Project, reduction of fees, adjustment in income
sharing and the like in the event the enabling legislation
provides only for Limited Gaming, and such Limited Gaming
Adjustment shall be in effect until the enabling legislation
permits Full Gaming unless otherwise agreed in writing by the
Members. During Limited Gaming the Percentage Interests shall be
70% for Rockingham and 30% for Showboat.
"Management Agreement" shall mean that certain Management
Agreement of even date herewith, entered into between the Company
and an affiliate of Showboat for the management of the Project.
"Manager(s)" shall mean the person(s) elected by the Members
to manage the Company.
"Members" shall mean Rockingham and Showboat and any of
their Permitted Transferees or other Person who acquires, with
the unanimous written consent of the other Members, and directly
or beneficially owns an Interest in accordance with the
provisions of this Agreement.
"Member's Interest" or "Interest" shall mean a Member's
ownership interest in the Company, including the Member's share
of the profits and losses of the Company and the right to receive
distributions of the Company's assets.
4
<PAGE>
"Member Loan" shall mean any loan by a Member to the Company
other than the Capital Loan (defined in Section 4.1(b)
"Parties" shall mean the parties to this Agreement, and
"Party" shall mean any of them.
"Percentage Interest" shall mean each Member's Invested
Capital as a percentage of all Members' Invested Capital. The
Members' initial percentage interests therefore are as follows:
Showboat 50%
Rockingham 50%
"Permitted Rockingham Transferee" shall mean, in the
case of a particular Rockingham Shareholder, (i) an entity, all
of the voting securities or other ownership interests of which
are owned by the Rockingham Shareholder, free and clear of any
agreement or any option or right capable of becoming an agreement
entitling any other Person (other than a Permitted Rockingham
Transferee)to acquire such voting securities or other ownership
interests in whole or in part; (ii) an inter vivos family or
testamentary trust for the benefit of the Rockingham Shareholder
or for the benefit of the Rockingham Shareholder, his spouse,
children or grandchildren; (iii) the Rockingham Shareholder's
parent, spouse, child or grandchild; (iv) a voting trust or
similar agreement comprised of Rockingham Shareholders or
Permitted Rockingham Transferees; and/or (v) another Rockingham
Shareholder.
"Permitted Transferee" shall mean, in the case of a
particular Member, an entity, all of the voting securities or
other ownership interests of which are owned by the Member (or
parent corporation of the Member) free and clear of all liens,
charges, claims and encumbrances of any nature whatsoever
(including any agreement or any option or right capable of
becoming an agreement entitling any other Person to acquire such
voting securities or other ownership interests in whole or in
part).
"Person" shall mean any individual, partnership, limited
partnership, limited liability company, corporation,
unincorporated association, joint venture, trust, governmental
entity or other entity.
"Project" shall mean a gaming establishment and related
improvements which may include restaurants, entertainment
facilities, retail outlets and other ancillary facilities,
including shared facilities, administrative offices, parking and
easements, ordinarily accompanying a privately owned non-racing
gaming establishment to be located at Rockingham Park. The
Project shall not include the Race Track Operations.
"Promissory Note" shall mean that certain promissory note
made by Rockingham to the benefit of Showboat Development Company
in the principal amount of $8.85 million dated December 28, 1994.
"Race Track Operations" shall mean any permissable activity
permitted by applicable statutes or regulations to be conducted
at Rockingham Park, Rockingham County, Salem, New
5
<PAGE>
Hampshire excluding all gaming activities, other than
simulcasting, inter-track wagering, sale of lottery tickets and
pari-mutuel activities, permitted by Limited and Full Gaming.
"Regulations" shall mean rulings issued by the US Treasury
as interpretations of the Code.
"Rockingham" shall mean Rockingham Venture, Inc., a New
Hampshire corporation, or its Permitted Transferees and its
successors and assigns.
"Rockingham Shareholders" shall mean Joseph E. Carney, Jr.,
Thomas F. Carney, Max Hugel and Edward J. Keelan, or any of the
Permitted Rockingham Transferees and their successors and
assigns.
"Rockingham Shares" shall mean the shares of capital stock
of Rockingham.
"Sale Transaction" shall mean a purchase and sale of a
Member's Interest between or among parties hereto pursuant to the
provisions of Articles 8, 9, 10, 11 or 12 as the case may be.
"Showboat" shall mean Showboat New Hampshire, Inc., a Nevada
corporation, or its Permitted Transferees and its successors and
assigns.
"Vendor" shall mean any Party who elects or is required to
sell its Interest pursuant to a Sale Transaction.
ARTICLE II. OFFICES
2.1 PRINCIPAL OFFICE
The principal office of the Company in the state of New
Hampshire shall be at Rockingham Park, Rockingham Park Boulevard,
Salem, New Hampshire 03079. The Members may change said
principal office at any time from one location to another in the
state of New Hampshire.
ARTICLE III. PURPOSE
3.1 PURPOSE
The purpose of the Company shall be to engage in the
development, ownership and operation of the Project. Any
business beyond the business described herein shall require the
unanimous written consent of the Members.
ARTICLE IV. CAPITAL
4.1 CAPITAL CONTRIBUTIONS
(a) Initial Capital Contributions. Immediately after the
Effective Date, the Members shall contemporaneously each make the
following initial capital contributions (each Member's
contribution shall be conditioned on the other making its
contribution):
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(i) Rockingham $1,000.00
(ii) Showboat $1,000.00
(b) Additional Capital Contributions. The Members shall
make additional capital contributions to the Company under the
following circumstances, which amounts shall be credited to their
respective capital accounts:
(i) Upon the enactment of legislation which authorizes
Limited Gaming at Rockingham Park on or before December 31, 1999
(except, however, Showboat may extend such period in its sole
discretion for two successive twelve-month periods in the event
that progress towards gaming legislature is evident) then:
(1) Rockingham shall contribute such space as is
necessary for the operation of the Project in the
existing facility of Rockingham Park and all
necessary easements, rights-of-way, licenses,
common areas, customer and employee parking
facilities. At the time of enactment of Limited
Gaming the Members agree to attach as Exhibit 1
to this Agreement which exhibit shall specify the
location of the space at the existing Rockingham
Park facility which will be utilized for the
Limited Gaming space.
(2) Showboat shall contribute the principal
balance of the Promissory Note exclusive of any
unpaid due balances. Upon contribution of the
Promissory Note by Showboat, Rockingham's
obligations to make principal and interest
payments shall cease and shall be forgiven by the
Company in accordance with Section 4.1(b)(iii)
below. In the event that the Company is
liquidated during Limited Gaming, all
distributions paid to Showboat pursuant to this
Agreement shall be aggregated. If the aggregated
distributions do not exceed the principal balance
of the Promissory Note as of the date of
contributing same to the Company, Rockingham shall
execute a new promissory note in the principal
amount which is equal to the difference between
the balance of the Promissory Note at the time of
contribution to the Company and the aggregate of
the distributions to Showboat. The new promissory
note shall accrue interest from the date of
liquidation of the Company at the same rate as
interest accrued under the Promissory Note and
principal and interest shall be paid in quarterly
installments of no less than $259,000 until said
promissory note is fully amortized. All monies
paid, whether by the Company or Rockingham shall
be applied first to interest then to principal.
(3) The capital contributions detailed in
4.1(b)(i)(1) and (2), whether cash or assets, when
added to the initial contribution, shall be deemed
to result in a 70% contribution by Rockingham and
a 30% contribution by Showboat.
(ii) Upon the passage of enabling legislation which
authorizes a privately owned non-racing gaming business
(operating Full Gaming or pursuant to the mutual agreement of the
Members) at Rockingham Park on or before December 31, 1999
(except, however,
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Showboat may extend such period in its sole and absolute
discretion for two successive twelve month periods in the event
that progress towards gaming legislation is evident) or
thereafter if the enabling legislation first authorizes Limited
Gaming and thereafter Full Gaming is authorized then:
(1) Rockingham shall contribute approximately
fifteen (15) acres of land at the Rockingham Park
premises plus related easements, licenses (excluding
any Rockingham Park pari-mutuel license) and rights of
way, etc., use of common areas and existing clubhouse
space for the Project. In the event such legislation
enables development of a hotel in connection with the
Project, Rockingham shall additionally contribute
approximately ten (10) acres of land for a hotel to be
constructed, owned, and managed by the Company. Unless
otherwise repaid by Rockingham, all land contributed
shall be subject to the existing 13.5% Senior New
Hampshire Development Authority Bonds (the "13.5%
Bonds") or any other bonds or other indebtedness
secured by the real estate resulting from a refinancing
of the 13.5% Bonds so long as the total amount of such
refinancing does not exceed the then current balance of
the 13.5% Bonds plus any debt service reserve
requirements which in no case shall exceed $7,000,000.
Attached hereto as Exhibit 2 is a drawing of the
Rockingham Park premises generally specifying the
location of the 15 and 10 acre parcels of land.
(2) Showboat shall contribute (i) the principal
balance of the Promissory Note (if not previously
contributed) exclusive of any unpaid due balances and
said Promissory Note shall be deemed paid in full as
provided in Section 4.1(b)(iii) below and (ii) cash
sufficient to obtain the Development Financing in an
amount to fund the Project, not to exceed 30% of cash
funds required for the Project. To the extent that
Showboat's contribution exceeds 20% of cash funds
required for the Project, the excess shall become a
loan (the "Capital Loan") from Showboat to the Company
and shall be repaid to Showboat by the Company over a
four (4) year amortization period which repayment shall
commence on the third anniversary date of commencement
of operations at the Project. Such excess shall accrue
interest at the same rate as the Development Financing.
Attached hereto as Schedule 1 is an exemplar of the
calculation of funds to be repaid to Showboat pursuant
to the Capital Loan should Showboat make cash
contributions in excess of 20% of cash funds
(3) The capital contributions detailed in
4.1(b)(ii)(1) and (2), whether cash or assets, when
added to any previous contributions, including the
contributions made by the Members for Limited Gaming,
shall be deemed to be equal in value.
(iii) The Promissory Note shall be forgiven by the
Company in equal portions over 4 years commencing on the date of
contribution of the Promissory Note to the Company and upon the
anniversary of the date of the contribution to the Company
thereafter. Payment of interest on the principal of the
Promissory Note by Rockingham shall be suspended from the date
the Promissory Note is contributed to the Company by Showboat.
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(iv) Attached hereto as Exhibit 3 and incorporated
herein by reference are the agreements regarding the use of
common areas by the businesses owned and operated by the Company
and Rockingham.
(v) The Company acknowledges that Rockingham is
currently conducting Race Track Operations and that such
operations may require Rockingham to make structural and other
changes to the Rockingham Park facility from time to time. Such
changes may adversely affect the placement of the gaming area of
the Company at the Rockingham Park facility. The Company and
Rockingham agree to discuss all such changes in advance of
Rockingham making the change to the Rockingham Park facility and,
in the event such structural change would affect the Project or
the proposed location for the Project, that Rockingham shall not
make such structural or other change unless the Company has
approved the change in writing. The Company shall not
unreasonably withhold its consent to the proposed structural or
other change requested by Rockingham. Moreover, Rockingham and
Showboat shall enter into a Cooperation Agreement to coordinate
construction and operational activities of the Project with the
Race Track Operations.
(vi) In either Limited Gaming or Full Gaming, the
Project shall be operated in and near Rockingham's Race Track
Operations. The Company and Rockingham shall agree to conduct
their respective operations in such a manner so has to minimize
any adverse impact of their respective operations on the other.
(c) The capital of the Company shall be the sums of cash or
the agreed fair market value of the property or services (or
combination of cash, property and services) contributed to the
Company by the Members in such amounts or value as are set out
opposite the name of each of the Members on Schedule A-1 attached
hereto and incorporated herein by this reference which shall be
amended from time to time by the Managers to reflect a current
list of the names and addresses of each current Member. In the
event that property is contributed by a Member as its capital
contribution, such property shall be contributed to the Company
free and clear of all liens and other interests except as may
otherwise be agreed in writing by all Members. A transfer of any
membership Interest shall not be effective until it has been
recorded in the records of the Company.
(d) At such time as the Members unanimously determine that
additional capital is required by the Company, such additional
capital contributions shall be made by the Members in proportion
to the Members' Percentage Interest. If any Member should fail
to make any additional capital contribution on or before the date
such contribution is due, the Members who had contributed the
additional contribution shall advance to the Company an amount
equal to the noncontributing Member's additional capital
contribution, and the amount so advanced by the contributing
Members shall be considered a loan to the Company ("Additional
Contribution Loan"). Said Additional Contribution Loan shall
accrue interest at the then prevailing interest rates charged by
banks in the Boston, Massachusetts metropolitan area plus a 1%
origination fee on the principal of the Additional Contribution
Loan. Additionally, the Additional Contribution Loan shall be
entitled to the noncontributing Member's distributions until the
Additional Capital Loan is repaid. Notwithstanding the foregoing
the noncontributing Member shall continue to receive
distributions in an amount equal to the noncontributing Member's
portion of federal and
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state income tax liability of the Company as if the Company was a
taxable entity in the State of New Hampshire.
(e) Showboat shall plan and implement necessary
predevelopment, development and preopening activities. Showboat
and Rockingham each agree to fund 50% of any funds required as
preapproval, start-up expenses of the Project, principally for
lobbying for the enactment of gaming legislation, consulting,
advertising and such other services as is necessary for the start-
up of operations including the enactment of gaming legislation
authorizing privately-owned non-racing gaming at facilities such
as Rockingham Park. Showboat agrees to advance up to the first
$1 million of such expenses, if necessary, with Rockingham
funding the next $1 million of such expenses, if necessary. All
funds so expended will become preopening expense and will be
reimbursed to Showboat and Rockingham, as appropriate, upon
obtaining the Development Financing. No funds shall be
distributed for a pre-opening activity unless such distribution
is specified in a pre-opening budget. For each 6 month period,
Rockingham and Showboat shall develop a budget for such pre-
opening activities. Neither Rockingham nor Showboat shall
deviate from the budget except as otherwise approved in writing
by both Members. Only expenses specified by the budget or
otherwise approved in writing by the Members shall be reimbursed
by the Company. Additionally, the Member seeking reimbursement
shall provide the other Member a detailed accounting, with
supporting documentation, of such expenses on a monthly basis.
The Member seeking reimbursement shall be reimbursed within 15
days of receipt of the detailed accounting.
4.2 CAPITAL ACCOUNTS
Capital Accounts shall be established on the Company's books
representing the Members' respective capital contributions to the
Company. The term "Capital Account" shall mean the capital
account maintained for such Member in accordance with the
following provisions:
(a) Each Member's Capital Account shall be increased by:
(i) The amount of the Member's cash or agreed value in-
kind capital contributions to the Company pursuant to Section 4.1
hereof;
(ii) The fair market value of any property contributed
by the Member to the Company (net of liabilities secured by any
such contributed property that the Company is considered to
assume or take subject to for purposes of Section 752 of the
"Code");
(iii) The amount of Net Profits (or items thereof)
allocated to the Member pursuant to Article XIII hereof; and
(iv) Any other increases required by Regulations
issued pursuant to the Code. If Section 704(c) of the Code
applies to property contributed by a Member to the Company, then
the Members' Capital Accounts shall be adjusted in accordance
with Regulations Section 1.704-1(b)(2)(iv)(g).
(b) Each Member's Capital Account shall be decreased by:
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(i) The amount of Net Losses allocated to the Member
pursuant to Article XIII hereof;
(ii) All amounts paid or distributed to the Member
pursuant to Article XIV hereof, other than amounts required to be
treated as a payment for property or services under the Code;
(iii) The fair market value of any property
distributed in-kind to the Member (net of any liabilities secured
by such distributed property that such Member is considered to
assume or take subject to for purposes of Section 752 of the
Code); and
(iv) Any other decreases required by the Regulations.
Before decreasing a Member's Capital Account (as
described above) with respect to the distribution of any property
to such Member, all Members' accounts shall be adjusted to
reflect the manner in which the unrealized income, gain, loss,
and deduction inherent in such property (that has not been
previously reflected in the Members' Capital Accounts) would be
allocated among the Members if there were a taxable disposition
of such property by the Company on the date of distribution, in
accordance with Regulations Section 1.704-1(b)(2)(iv)(e).
(c) In determining the amount of any liability for purposes
of Sections 4.2(a) and 4.2(b) hereof, there shall be taken into
account Code Section 752(c) and any other applicable provisions
of the Code and any Regulations promulgated thereunder.
(d) Members' Capital Accounts shall be adjusted in
accordance with, and upon the occurrence of an event described in
Regulations Section 1.704-1(b)(2)(iv)(f), including the addition
of new Members pursuant to Section 5.13 hereof or the receipt of
additional capital contributions pursuant to Section 4.6 hereof,
to reflect a revaluation of the Company's assets on the Company's
books. Such adjustments to the Members' Capital Accounts shall
be made in accordance with Regulations Section 1.704-
1(b)(2)(iv)(g) for allocations of depreciation, depletion,
amortization and gain or loss with respect to such revalued
property.
(e) All provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be interpreted and
applied in a manner consistent with such Regulations. The
Members shall make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to
comply with Regulations Section 1.704-1(b).
4.3 FEDERAL INCOME TAX ELECTIONS
(i) The Managers, acting at a meeting of Managers or
by written consent, shall make all elections for federal income
tax purposes, including but not limited to an election, pursuant
to Code Section 754, to adjust the basis of the Company's assets
under Code Sections 734 or 743. In the event an election
pursuant to Code Section 754
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is made by the Managers, upon the adjustment to the basis of
the Company's assets, the Members' Capital Accounts shall be
adjusted in accordance with the requirements of Regulation
Section 1.704-1(b)(2)(iv)(m).
4.4 MEMBERS INVESTED CAPITAL
The "Invested Capital" of a Member shall be the sum of any
cash contributed by said Member to the Company, and the deemed
fair market value of any property contributed by said Member to
the Company, less the amount of any liabilities of such Member
assumed by the Company or which are secured by property
contributed by such Member to the Company. In the event the
Company's assets are revalued pursuant to Section 4.2(d) hereof
resulting in an adjustment to the Members' Capital Accounts, the
Members' "Invested Capital" shall, for purposes of this
Agreement, be deemed to be each Member's respective Capital
Account balance immediately after such revaluation.
4.5 DEVELOPMENT FINANCING
Showboat shall use its best efforts to obtain on behalf of
the Company third-party debt financing in amount sufficient to
fund the initial development of the Project pursuant to plans
approved by the Members (the "Development Financing") following
the enactment of legislation permitting Full Gaming in the State
of New Hampshire. The Development Financing shall be non-
recourse to Rockingham and its shareholders. The Development
Financing may be secured by the Company's assets or cash flows
only. In the event the third party lender requires the Company
to issue equity warrants or any participation in permanent
equity, such equity shall be charged against Showboat's interest
in the Company.
4.6 EXCESS INTEREST
In the event the Development Financing (defined in Section
4.5) or any renewal or replacement thereof obtained by the
Company, whether or not from a Member, has an interest rate,
inclusive of non-permanent participating interests (such non-
permanent participating interests shall terminate
contemporaneously with the satisfaction of the Development
Financing) and other payments and fees paid for the use of the
financing not applied towards the reduction of principal or in
payment of actual costs and expenses incurred and actually paid
by lender, for the financing which exceeds fourteen percent (14%)
per annum, then the following provisions shall apply:
(a) Notwithstanding Showboat's fifty percent (50%)
Interest, Showboat shall be responsible for the payment of all of
the Excess Interest on such loan;
(b) In recognition of Showboat's bearing the responsibility
for payment of all of the Excess Interest that is
disproportionate to its Interest, Showboat and Rockingham agree
that at Showboat's request, the Company shall agree to refinance
such outstanding debt if such replacement financing is available
on terms otherwise no less favorable than the then current
financing, including such financing being nonrecourse to
Rockingham, and can be completed at an effective interest rate
below the Development Financing rate currently in place, where
all proposed refinancing expenses are amortized into the
replacement interest rate. If the effective replacement
financing rate exceeds fourteen percent (14%), Showboat shall be
responsible for the payment of all of the Excess Interest on such
loan. Excess Interest, if any, shall be funded from
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Showboat's share of the Distributable Cash or other cash to be
distributed to Showboat. If there is insufficient cash to
satisfy Showboat's obligations, the Manager shall notify
Showboat. Showboat shall immediately provide additional cash to
the Company by way of an additional Capital Contribution to
satisfy such obligation.
4.7 INTEREST
Except as may otherwise be provided for herein, no interest
shall be paid or credited to the Members on their Capital
Accounts or upon any undistributed profits left on deposit with
the Company.
ARTICLE V. MEMBERS
5.1 POWERS
Subject to the provisions of the Certificate of
Organization, this Limited Liability Company Agreement and the
provisions of the Act, all powers shall be exercised by or under
the authority of, and the business and affairs of the Company
shall be controlled by, the Members. Without prejudice to such
general powers, but subject to the same limitations, it is hereby
expressly declared that the Members shall have the following
powers:
(a) Subject to the provisions of Section 6.1, to select and
remove all Managers, agents and employees of the Company,
prescribe such powers and duties for them as may be consistent
with the Act, with the Certificate of Organization or this
Limited Liability Company Agreement, fix their compensation, and
require from them security for faithful service.
(b) To change the principal office of this Company from one
location to another within New Hampshire; to fix and locate from
time to time one or more subsidiary offices of the Company; and
to designate any place within or without the state of New
Hampshire for the holding of any Members' meeting or meetings.
Each of the Members covenants and agrees to exercise the
rights and votes attaching to the Member's Interest at all times
and to use its best efforts to cause its nominees for Manager to
act at all times so that the provisions of this Agreement shall
govern the affairs of the Company to the maximum extent permitted
by law. In the event of any conflict between the provisions of
this Agreement and the provisions of the Certificate of
Organization, each of the Members covenants and agrees to take or
cause to be taken such steps and proceedings as may be required
under New Hampshire law or otherwise to amend such Certificate of
Organization to resolve such conflict so that the provisions of
this Agreement shall, to the maximum extent permitted by law, at
all times prevail.
5.2 COMPENSATION TO MEMBERS
By Extraordinary Resolution of the Members, the Company
shall have authority to pay to any Member reasonable compensation
for said Member's services to the Company. It is understood that
the salary paid to any Member under the provisions of this
Section shall be determined without regard to the income of the
Company and shall be considered as an operating
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expense of the Company and shall be deducted as an expense item
in determining the net profits and losses of the Company.
5.3 OTHER VENTURES
Except as may otherwise be provided for herein, nothing
contained in this Agreement shall be construed to restrict or
prevent, in any manner, any Member from engaging in any other
businesses or investments, including, without limitation, any
similar or competitive gaming operation; provided, however, a
Member shall obtain the prior written consent of the other
Members to engage in any similar or competitive activities
without the express written consent of all other Members within
an area having a radius of thirty (30) miles from the existing
boundaries of Rockingham Park, Salem, New Hampshire, except that
Showboat or its Affiliates and/or any other Rockingham Permitted
Transferee may pursue any gaming opportunity/activity with Yankee
Greyhound Racing, Inc., or its successors or assigns, at
Seabrook, a New Hampshire greyhound racing facility. The Members
acknowledge that Showboat and/or its Affiliates and Rockingham
and/or its Affiliates operate other gaming facilities and may in
the future operate additional gaming facilities in different
areas of the world, and that marketing efforts may cross over in
the same markets and with respect to the same potential customer
base. The Members agree that the Parties may refer customers of
the Project to other facilities operated by Showboat and/or its
Affiliates or Rockingham and/or its Affiliates to utilize gaming,
entertainment and other amenities, without payment of any fees to
any Member or the Company. Notwithstanding the foregoing, in the
event that Showboat or one of its Affiliates invests in or
manages a gaming facility in New England Showboat or its
Affiliate shall keep all information regarding the operations of
such gaming business and the business of the Project confidential
in accordance with Article XX.
5.4 MEETINGS OF MEMBERS
Management of the Company is vested in, and all actions of
the Members are taken by the Members in proportion to their
Percentage Interest at the time of the action taken. Except as
specifically otherwise provided herein, the Members' votes to
approve a matter or to take any action shall be by the vote of
Members at a meeting, which meeting may be held by telephone, in
person or by proxy or without a meeting by unanimous written
consent. For any meeting of Members, the presence in person or
by proxy of Members owning 80% of the Percentage Interest at the
time of the action taken constitutes a quorum for the transaction
of business. Members vote in proportion to their Percentage
Interest and, except for an action that requires an Extraordinary
Resolution, an action approved at a meeting by Members owning
more than 50% of the Percentage Interest ("Majority") of that
quorum shall be the action of the Members. From and after the
date a Member becomes a Defaulting Member the votes of such
Member, or its nominee Managers, or both of them, as the case may
be, shall be excluded for purposes of determining whether a
decision, action or matter has been approved by the Members or
Managers, respectively.
5.5 ACTION BY WRITTEN CONSENT
Any action may be taken by the Members without a meeting if
authorized by the unanimous written consent of Members.
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5.6 PLACE OF MEETINGS OF MEMBERS
All annual meetings and special meetings of the Members
shall be held at any place designated by the Members, or, if no
such place is designated, then at the principal office of the
Company. Annual meetings and special meetings may be held by
telephone if designated in the notice of the meeting.
5.7 ANNUAL MEETINGS
The annual meeting of the Members shall be held on the 1st
day of May of each year at the hour of 10:00 a.m., beginning with
the year 1996 or on such other date and time as the Members shall
specify in writing. Should said day fall upon a legal holiday,
then any such annual meeting of Members shall be held at the same
time and place on the next day which is not a legal holiday.
5.8 ANNUAL MEETINGS: NOTICE
Written notice of each annual meeting signed by a Manager or
by such other person or persons as the Members shall designate,
shall be given to each Member, either personally or by mail or
other means of written communication, charges prepaid, addressed
to such Member at his address appearing on the books of the
Company or given by him to the Company for the purpose of notice.
If a Member gives no address, notice shall be deemed to have been
given him if sent by mail or other means of written communication
addressed to the place where the principal office of the Company
is situated. All such notices shall be sent to each Member
entitled thereto not less than seven (7) nor more than sixty (60)
calendar days before each annual meeting, and shall specify the
place, the day and the hour of such meeting.
5.9 SPECIAL MEETINGS
Special meetings of the Members, for any purpose or purposes
whatsoever, may be called at any time by a Manager or by any
Member. Except in special cases where other express provision is
made by statute, notice of such special meetings shall be given
in the same manner as for annual meetings of Members. Notices of
any special meeting shall specify, in addition to the place, day
and hour of such meetings the purpose or purposes for which the
meeting is called.
5.10 WAIVER OF NOTICE
The transactions of any meeting of the Members, however
called and noticed or wherever held, shall be as valid as though
had at a meeting duly held after regular call and notice, if a
quorum be present, and if, either before or after the meeting,
each of the Members not present sign a written waiver of notice
or a consent to holding such meeting or an approval of the
minutes thereof. All such waivers, consents or approvals shall
be filed with the records or made a part of the minutes of the
meeting.
5.11 ADJOURNED MEETINGS AND NOTICE THEREOF
Any Members' meeting, annual or special, whether or not a
quorum is present, may be adjourned from time to time by the vote
of a majority of the Percentage Interests present in person or
represented by proxy at the meeting. In the absence of a quorum
no business other than the adjournment thereof may be transacted
at the meeting. Other than by announcement at the
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meeting at which such adjournment is taken, it shall not be
necessary to give any notice of an adjournment or of the business
to be transacted at an adjourned meeting. However, when any
Members' meeting, either annual or special, is adjourned for
thirty (30) days or more, notice of the adjourned meeting shall
be given as in the case of an original meeting.
5.12 DELEGATION OF AUTHORITY TO MEMBERS AND MANAGERS
By Extraordinary Resolution, the Members or Managers may at
any time or times, and for such period as the Members shall
determine, delegate their authority to determine questions
relating to specific areas of the conduct, operation, and
management of the Company. Until such direction or delegation of
authority is made, however, the Members and Managers shall have
the authority set forth in this Article V and Article VI below.
5.13 ADMISSION OF NEW MEMBERS
New Members may be admitted to membership in the Company
only with the unanimous consent of the existing Members. A new
Member must agree in writing to be bound by the terms and
provisions of the Certificate of Organization and this Limited
Liability Company Agreement, as amended, and upon admission the
new Member shall have all rights and duties of a Member of this
Company.
5.14 COOPERATION OF THE MEMBER
One of the reasons for entering into this Agreement is to
create and recognize the fiduciary rights/obligations between
Members delineated in this Agreement. In that regard, the
Members shall cooperate fully with each other during the term of
this Agreement to facilitate the performance by the Company of
the Company's obligations and responsibilities set forth in this
Agreement and to procure and maintain all construction, operating
and gaming licenses and permits related to the Project.
5.15 COMPANY ACTION BY MEMBERS
The taking of any of the following decisions or actions or
the implementation of any of the following matters by the Company
shall require Extraordinary Resolution of the Members:
(a) sale of all or substantially all of the assets of the
Company;
(b) incurring indebtedness in excess of $10,000,000;
(c) approval of the initial development and business plans
and budgets for the Project;
(d) amendments to the Management Agreement, Certificate of
Organization or Limited Liability Company Agreement of the
Company or termination of the Management Agreement;
(e) material changes in the nature of the Company's
business;
(f) application for additional gaming licenses by the
Company;
(g) a change in the auditor of the Company.
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ARTICLE VI. MANAGERS
6.1 ELECTION
(a) The Members agree that the business of the Company
shall be managed by six (6) Managers. So long as Showboat has a
membership interest in the Company, Showboat and any of its
Permitted Transferees shall have the right to nominate at least
one-half (1/2) of all of the Managers, and a Showboat nominated
Manager shall be the General Manager of the Company. The General
Manager shall be the chief executive officer of the Company and
shall be active in the management of the business of the
Company. All of the Members other than Showboat and their
Permitted Transferees shall have the right to nominate the
remaining number of Managers. Each Manager of this Company shall
be chosen annually by the Members and each shall hold office
until such Manager shall resign or shall be removed or otherwise
disqualified to serve, or the Manager's successor shall be
elected and qualified.
(b) Each Member shall vote at all meetings of Members,
unless they are a Defaulting Member, and shall use its best
efforts to cause its nominee Managers to act, in such a manner as
to ensure that the nominees for Manager designated pursuant to
Section 6.1(a) are elected or appointed and maintained in office
as Managers.
(c) In the event a Member transfers only a portion of its
Interest to a Permitted Transferee, the right of such Member, if
any, to nominate any Manager under Subsection 6.1(a) shall be
exercised by such Member and the Permitted Transferee jointly or,
in the event the Member and Permitted Transferee are unable to
agree as to the exercise of such powers, by the original Member
alone as attorney-in-fact for each of them.
(d) If a Member acquires all of the Interest of another
Member, the Member acquiring such Interest shall be entitled to
nominate the Managers, if any, which the other Member was
formerly entitled to nominate.
(e) In the event that a nominee Manager of any Member
resigns from the office of Manager, such Member shall forthwith
deliver or cause to be delivered to the Company a resignation and
release of such nominee Manager in a form satisfactory to the
Company.
(f) From and after the date that a Member becomes a
Defaulting Member, the right of such Member to nominate any
Managers shall be suspended and the nominee Managers of such
Defaulting Member shall immediately resign. In the event of the
failure of the Defaulting Member to obtain such resignations, the
remaining Managers shall be entitled to remove such nominee
Managers from office and replace them with nominees designated by
the remaining Members.
6.2 REMOVAL, RESIGNATION AND VACANCIES
(a) Subject to Section 6.1 above, a Member may remove any
of its nominee Managers, either with or without cause in
accordance with the terms of this Agreement. Any Manager may
resign at any time by giving written notice to the Members. Any
such resignation shall take effect at the date of the receipt of
such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
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(b) In the event that a vacancy in the office of any
Manager arises for any reason whatsoever, and provided that the
Member entitled to nominate a replacement Manager is not a
Defaulting Member, such vacancy shall be filled by the election
or appointment of a Manager nominated by the same procedure as
that by which its predecessor was nominated in accordance with
the provisions of Section 6.1, Until such vacancy is filled, the
Managers shall not transact any business or exercise any of its
powers or functions, save and except as may be necessary to elect
or appoint such new Manager and preserve the business and assets
of the Company.
(c) If a replacement Manager is not elected within ten (10)
days of such vacancy occurring because of the failure of the
Member who is entitled to nominate such replacement Manager to
designate a nominee, thereafter the Managers then in office shall
be entitled to transact business and exercise all of the powers
and functions of the Managers. A decision or action of the
majority of the Managers then in office shall be deemed to be the
decision or action by Extraordinary Resolution of the Managers,
and a decision or action of all of the Managers then in office
shall be deemed to be the unanimous decision or action of the
Managers.
6.3 MANAGERS' POWER
The Managers shall have the right to make the following
decisions or actions at a properly constituted meeting of
Managers by at least a majority of the Managers:
(a) To select and remove all employees, agents and
representatives of the Company, prescribe such powers and duties
for them as may be consistent with law, with the Certificate of
Organization or this Limited Liability Company Agreement, fix
their compensation, and require from them security for faithful
service.
(b) To conduct, manage and control the affairs and business
of the Company, and to make such rules and regulations therefor
consistent with the Act, with the Certificate of Organization or
this Limited Liability Company Agreement.
(c) To change the principal office of this Company from one
location to another within New Hampshire; to fix and locate from
time to time one or more subsidiary offices of the Company; and
to designate any place within or without the State of New
Hampshire for the holding of any Members' meeting or meetings.
6.4 COMPANY ACTION BY MANAGERS
The taking of any of the following decisions or actions or
the implementation of any of the following matters by the Company
shall require an Extraordinary Resolution of the Managers;
(a) Except as otherwise provided for herein, construct,
improve, buy, own, sell, convey, exchange, assign, rent, or lease
any property (real, personal or mixed), or any interest therein
totaling, during any one calendar year, more than $500,000 unless
in an approved budget;
(b) Borrow money, issue evidence of indebtedness, secure
any such indebtedness by mortgage, deed of trust, pledge, or
other lien, or execute agreements, notes, mortgages, deeds of
trust, assignments, security agreements, financing statements or
other documents relating thereto
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which involve a credit facility to carry out the same totaling,
during any one calendar year, more than $500,000 in a single or
related transactions;
(c) Abandon any of the assets of the Company in excess of
$50,000 in a single or related transactions;
(d) Perform any act in violation of the terms and
conditions of this Agreement;
(e) Make, execute, or deliver any general assignment for
the benefit of creditors or any bond, confession of judgment,
guaranty, indemnity bond or surety bond;
(f) Initiate or settle any litigation by or against the
Company or any proceeding before any governmental or regulatory
body for more than $100,000;
(g) Disburse funds that exceed an approved budget by more
than 5%. Any such variance in excess of 5% shall be promptly
reported to the Managers with reasonable explanations.
(h) Sell, lease or otherwise dispose of substantially all
of the assets of the Project;
(i) Approve annual business plans and budgets with respect
to operations and capital expenditures.
(j) Appoint an executive committee and other committees,
and to delegate to the executive committee any of the power and
authority of the Managers in the management of the business
affairs of the Company. A Manager, in its discretion, may or may
not be a member of an executive committee.
(k) Amend the Management Agreement or the Limited Liability
Company Agreement.
6.5 BANK ACCOUNTS
From time to time, the General Manager may designate a
person or persons to open and maintain one or more bank accounts;
rent safety deposit boxes or vaults; sign checks, written
directions, or other instruments to withdraw all or any part of
the funds belonging to the Company and on deposit in any savings
account or checking account; negotiate and purchase certificates
of deposit, obtain access to the Company's safety deposit box or
boxes, and, generally, sign such forms on behalf of the Company
as may be required to conduct the banking activities of the
Company.
6.6 MEETINGS OF MANAGERS
The quorum for a meeting of the Managers shall be four (4)
Managers, of whom at least two (2) Managers shall be nominees of
Showboat and two (2) Managers shall be nominees of Rockingham.
At least seven (7) days' prior written notice of any meeting of
the Managers must be given unless all of the Managers waive such
notice.
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6.7 ACTION BY WRITTEN CONSENT
Any action may be taken by the Managers without a meeting if
authorized by the unanimous written consent of the Managers.
6.8. PLACE OF MEETINGS OF MANAGERS
All regular and special meetings of the Managers shall be
held at any place within or without the state of New Hampshire
which has been designated from time to time by resolution of the
Managers or by written consent of all of the Managers. In the
absence of such designation, regular or special meetings shall be
held at the principal office of the Company.
6.9 FIRST MEETING
The first meeting of the newly elected Managers shall be
held immediately following the adjournment of the meeting of the
Members and at the place thereof.
6.10 SPECIAL MEETINGS
Special meetings of the Managers, for any purpose or
purposes whatsoever, may be called at any time by a Manager.
6.11 NOTICE
Except in special cases where other express provision is
made by statute, notice of any meeting of the Managers shall be
given in the same manner as for meetings of the Members,
including waiver of notice of such meetings.
6.12 REMUNERATION OF MANAGERS
Unless otherwise determined by an Extraordinary Resolution
of the Members, no amount shall be payable by way of salary,
bonus or other remuneration to any Manager for acting as such.
Each Manager shall be entitled to be reimbursed for reasonable
out-of-pocket traveling and subsistence expenses incurred while
attending meetings of, or otherwise being engaged in the business
of, the Company.
6.13 DEADLOCK
In the event of a deadlock in the Managers, each of
Rockingham and Showboat shall select one representative to
negotiate a resolution of such deadlock.
ARTICLE VII. TRANSFER OF MEMBERS' INTERESTS
7.1 TRANSFER OF MEMBERS' INTERESTS
The Interest of each Member of this Company is personal
property. Except as otherwise provided in this Limited Liability
Company Agreement, the transfer, directly or indirectly, of a
Member's Interest is restricted. The transfer of a Member's
interest shall include a gift, sale, transfer, assignment,
hypothecation, pledge, encumbrance or any other disposition,
whether voluntary or involuntary, by operation of law or
otherwise, including, without limitation, any transfer occurring
upon or by virtue of the bankruptcy, insolvency or dissolution of
a Member; the
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appointment of a receiver, trustee, conservator or guardian for a
Member or his property; pursuant to any loan or security
agreement under which any of the Member's Interests are pledged
or otherwise serve as collateral, as well as the transfer of any
such Interest in the event recourse is made to such collateral;
or the transfer, directly or indirectly, of any voting securities
or other ownership interest in a Member.
Unless the proposed transferee of a transfer or assignment
of a Member's Interest receives the unanimous written consent of
the Members (excluding the proposed transferee), which consent
may be unreasonably withheld by any Member, the transferee of the
Member's Interest has no right to participate in the management
of the business and affairs of the Company or to become a Member.
The transferee is only entitled to receive the share of profits
or other compensation by way of income and the return of
contributions, to which the transferring Member would otherwise
be entitled. If the transfer is approved by all of the other
Members of the Company by unanimous written consent, the
transferee has all the rights and powers and is subject to all
the restrictions and liabilities of his assignor, has the right
to participate in the management of the business and affairs of
the Company and becomes a substituted Member.
7.2 NO TRANSFER PERMITTED UNDER CERTAIN CIRCUMSTANCES
Notwithstanding any other provision of this Agreement, a
Member shall not transfer all or any part of its Interest if such
transfer would cause the termination of the Company for federal
income tax purposes, would jeopardize any gaming license or would
violate any applicable federal or state securities laws, unless
unanimously agreed by all Parties.
7.3 PERMITTED TRANSFEREES
Each Member shall be entitled, upon prior written notice to
the Company and the other Members, with explanation for the
transfer and a representation and warranty that the transferee is
a Permitted Transferee as defined herein, to transfer the whole
or any part of its Interest to any Permitted Transferee of the
Member. No such transfer shall be or become effective, however,
until such Permitted Transferee executes and delivers to the
Company a counterpart copy of this Agreement or a written
agreement in form and substance satisfactory to the other Members
agreeing to be bound by the terms and conditions hereof formerly
applicable to the transferor of such Interest. No such transfer
shall release or discharge the transferor from any of its
liabilities or obligations under this Agreement until it becomes
effective and, then, only to the extent provided herein. In
addition, Rockingham agrees not to record in its books or
register any attempted transfer of shares of capital stock of
Rockingham in violation of this Agreement.
Each Rockingham Shareholder shall be entitled, upon prior
written notice to the Company and the other Members, with
adequate explanation for the transfer and a representation and
warranty that the transferee is a Permitted Rockingham Transferee
as defined herein, to transfer the whole or any part of its
voting securities or ownership interest in Rockingham (the
"Rockingham Shares") to any Permitted Rockingham Transferee of
the Rockingham Shareholder. No such transfer shall become
effective, however, until such Permitted Rockingham Transferee
executes and delivers to the Company a counterpart copy of this
Agreement or a written agreement in form and substance
satisfactory to the Members agreeing to be bound by the terms and
conditions hereof formerly applicable to the transferor of such
Shares. No such transfer shall
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release or discharge the transferor from any liabilities or
obligations under this Agreement until it becomes effective, and,
then, only to the extent provided herein. In addition,
Rockingham agrees not to record in its books or registers any
attempted transfer of shares of capital stock of Rockingham by
the Rockingham Shareholders in violation or contrary to the terms
of this Agreement.
ARTICLE VIII. COMPULSORY BUY-SELL PROVISION
8.1 OFFER TO PURCHASE
In the event that any Member fails to fully and finally
perform and fulfill its material obligations pursuant to this
Agreement, except in the event of a Force Majeure Event or the
events identified in Articles IX and XXIII, then in such event a
"Buyout Event" shall be deemed to have occurred. At any time
after the occurrence of a Buyout Event, the non-performing
Member(s) or its Permitted Transferee shall have the right to
take the actions set out in this Section 8.1. The non-performing
Member(s) or its Permitted Transferee which first takes such
action is referred to in this Article as the "Offering Members".
The Offering Members may notify the remaining Members (the
"Remaining Member") in writing that it will offer to purchase
all, but not less than all, of the Interest owned by the
Remaining Member. The Remaining Member shall have a period of
thirty (30) days to cure the Buyout Event. If the Buyout Event
is not cured within said period the Offering Members may offer to
purchase all, but not less than all, of the Interest owned by the
Remaining Member which notice shall specify in the offer the
terms of the purchase and sale including the price (the
"Designated Price") to be paid for the Interest owned by the
Remaining Member.
8.2 ACCEPTANCE
(a) Within forty-five (45) days after the receipt by the
Remaining Member(s) of the offer from the Offering Members
pursuant to Section 8.1, the Remaining Member(s) shall advise the
Offering Member(s) in writing either:
(i) that the Remaining Member(s) accept the offer made
by the Offering Member(s) to purchase the Interest owned by it on
the terms and conditions set out in the offer; or
(ii) that the Remaining Member(s) elect to purchase
all the Interest owned by the Offering Member(s) on the terms and
conditions set forth in the offer. During such forty-five (45)
day period, the Remaining Member(s) may not make an offer under
Section 8.1.
(b) If the Remaining Member(s) elect to purchase the
Interest of the Offering Member(s), (i) they shall thereupon be
conclusively deemed to have made an offer to purchase the
Interest of the Offering Member(s) on the terms and conditions,
including the Designated Price, set out in the offer referred to
in Section 8.1, and the Offering Member(s) shall be conclusively
deemed to have accepted such offer of the Remaining Member(s);
and (ii) each Remaining Member(s) shall purchase from each
Offering Member(s) the proportionate share of such Offering
Member's Interest that the Percentage Interests of the Remaining
Member(s) is of the total Percentage Interest held by Remaining
Member(s), but such Remaining Member(s) may agree among
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themselves to purchase the Interest of the Offering Member(s) in
different proportions and such purchase may be made by any of the
Remaining Member(s) jointly or by any one of them alone.
(c) If the Remaining Member(s) accept the offer of the
Offering Member(s) or fail to advise the Offering Member(s) in
writing within the period specified in Subsection 8.2(a) of their
intention to purchase the Interest of the Offering Member(s),
(i) the Remaining Member(s) shall be conclusively deemed to have
accepted the offer made by the Offering Member(s) to purchase the
Interest owned by the Remaining Member(s) on the terms and
conditions set out in the offer; and (ii) each Offering Member
shall purchase from each Remaining Member the proportionate share
of such Remaining Member's Interest that the Percentage Interest
of the Offering Member is of the total Percentage Interests held
by the Offering Member(s), but such Offering Member(s) may agree
to purchase the Interest of the Remaining Member(s) in different
proportions and such purchase may be made by any of the Offering
Member(s) jointly or by any one of them alone.
(d) The Member(s) who have accepted or been deemed to have
accepted an offer under this Section 8.2 shall be the "Vendor"
and the Member(s) who have elected or are required to purchase
the Interest under this Section 8.2 shall be the "Purchaser."
8.3 PURCHASE PRICE
The purchase price for the Interest of the Vendor shall be
the Designated Price (the "Purchase Price").
8.4 PAYMENT OF PURCHASE PRICE
The Purchase Price shall be paid by the Purchaser in full by
cash, wire transfer of immediately available funds or certified
check at the Time of Closing.
8.5 CLOSING
The purchase and sale of the Purchased Shares resulting from
the acceptance or deemed acceptance of the offer pursuant to
Section 8.2 (a "Sale Transaction") shall be completed at the Time
of Closing and the Place of Closing on the date which is one
hundred twenty (120) days following the date of such acceptance
or deemed acceptance or such longer or shorter time required by
the Gaming Authority (the "Date of Closing") subject to the
receipt of regulatory approvals pursuant to Section 8.6 hereof.
The Sale Transaction shall be effected in accordance with the
general sale provisions set forth in Article XII.
8.6 GOVERNMENT APPROVAL
No transfer of an Interest pursuant to the provisions of
this Article VIII shall occur, except with the prior written
approval of any relevant Gaming Authority, if the same is
required.
ARTICLE IX. DEFAULTING MEMBER
9.1 OPTION TO PURCHASE MEMBER'S INTEREST
If a Member shall become a "Defaulting Member" as a result
of the occurrence of any of the following events or is otherwise
deemed pursuant to this Agreement to be a Defaulting
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Member, the non-defaulting Members or their Permitted Transferees
shall have the option to purchase all of the Defaulting Member's
Interest (the "Purchased Interest") at the fair market value of
such Purchased Interest (the "Purchase Price") as determined in
accordance with this Agreement at the time of the exercise of the
option:
(a) If a Member is declared bankrupt or makes a proposal in
bankruptcy or otherwise becomes the subject of bankruptcy,
insolvency, liquidation, dissolution, winding up or similar
proceeding;
(b) If a Member makes an assignment for the benefit of
creditors or otherwise acknowledges its insolvency;
(c) If a Member allows its shares to be foreclosed upon by
a third party;
(d) If a Member ceases paying its debts as they mature
(other than those being contested in good faith and by
appropriate proceedings);
(e) If a Member, directly or indirectly, transfers its
Interest or any portion thereof in the Company to any Person
other than a Permitted Transferee or a Rockingham Permitted
Transferee, as the case may be, without the unanimous written
consent of the Members (excluding the proposed transferee); or
(f) If a Member adversely affects the gaming license of the
Company due to concerns of any aspect of the suitability of such
Member or any of its shareholders.
(g) If a Member fails to obtain all appropriate licenses.
(h) If a Member fails to make its equity investment in the
Company at such time or times as required.
(i) If, in the discretion of Showboat, any of Showboat's
gaming licenses may be adversely affected due to its interest in
the Company, Showboat can elect to become a Defaulting Member.
(j) Any Member is deemed not suitable under the New
Hampshire statute, significantly delays the licensing process or
materially adversely affects the pari-mutuel license of
Rockingham if a pari-mutuel license is required to obtain or
maintain the Full Gaming or Limited Gaming license.
9.2 OFFER TO PURCHASE SHARES OF ROCKINGHAM SHAREHOLDERS
In the event that (i) the gaming license of the Company is
materially adversely affected due to concerns of any aspect of
the suitability of a particular Rockingham Shareholder or (ii) a
Rockingham Shareholder transfers or attempts to transfer his
Rockingham Shares other than as provided in Article VII (in
either event under subsections (i) or (ii) above, the Rockingham
Shareholder shall be referred to hereinafter as the "Defaulting
Rockingham Shareholder"), and the continuation of such adverse
impact or violation for a period of thirty (30) days after
receipt by the Defaulting Rockingham Shareholder of written
notice from the non-Defaulting Rockingham Shareholders or a
Member specifying the same (the "curative period"), then the non-
Defaulting
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Rockingham Shareholders shall have the option to purchase the
Defaulting Shareholders' Rockingham Shares for a mutually agreed
purchase price. In the event that the non-Defaulting Rockingham
Shareholders fail to purchase all of the Rockingham Shares of the
Defaulting Rockingham Shareholder within forty-five (45) days
following the curative period, Showboat may lend the purchase
price to Rockingham to purchase the Rockingham Shares held by the
Defaulting Rockingham Shareholder.. Upon receipt of the purchase
price from Showboat, Rockingham shall immediately use such funds
to redeem the Rockingham Shares held by the Defaulting Rockingham
Shareholder. The loan of the purchase price by Showboat to
Rockingham shall be pursuant to the then prevailing interest
rates in the Boston, Massachusetts metropolitan area plus a 1%
origination fee on the purchase price. Rockingham shall execute
a promissory note and all distributions payable to Rockingham in
accordance with this Agreement, except except for such sum which
is equal to Rockingham's portion of federal and state income tax
liability of the Company as if the Company was a taxable entity
in the state of New Hampshire, shall be paid to Showboat until
the promissory note shall have been paid in full.
9.3 DETERMINATION OF PURCHASE PRICE
Except as otherwise provided in Section 9.2, the non-
defaulting Member or its Permitted Transferee exercising an
option under Section 9.1 (the "Buyer") and the Defaulting Member
(the "Vendor" in this Article IX) shall mutually arrive at an
agreeable Purchase Price within ten (10) days of the occurrence
of an event giving rise to the existence of an option under
Section 9.1 (a "Triggering Event"). The Purchase Price shall be
the greater of the fair market value of the Purchased Interest or
the value of unreturned Equity Contribution of the Defaulting
Member. If the parties cannot agree upon the Purchase Price
within such ten (10) day period, the Purchase Price shall be
value as determined by the appraisal provisions of Article XI.
9.4 PAYMENT OF PURCHASE PRICE
The Purchase Price shall be paid by the Purchaser in full by
cash or certified check on the Date of Closing as determined
pursuant to Section 9.5.
9.5 CLOSING
(a) The closing of the transaction of purchase and sale
contemplated by this Article IX (a "Sale Transaction") shall take
place at the Place of Closing at the Time of Closing on the date
(in this Article IX the "Date of Closing") that, unless the
Vendor and Buyer otherwise agree, is the latest of:
(i) the date which is one hundred twenty (120) days
after the relevant Triggering Event:
(ii) the date which is seven (7) days following the
receipt of all necessary governmental releases or approvals
required to be obtained in order to effect a valid transfer of
the Purchased Shares (and the Parties covenant and agree to use
their best efforts to obtain such consents, releases or
approvals); and
(iii) the date which is thirty (30) days after the
Purchase Price is finally determined in accordance with the
provisions of Section 9.3.
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(b) The Sale Transaction shall be effected in accordance
with the general sale provisions of Article XII.
ARTICLE X. RIGHT OF FIRST REFUSAL
10.1 THIRD PARTY OFFER
(a) No transfer by any Member of any Interest to any Person
other than a Permitted Transferee of such Member or another
Member shall be effected except in compliance with this Article
X. Any transfer effected in compliance with this Article X shall
also be in compliance with Article VII.
(b) If any Member or Members (the "Offeror") receives a
bona fide written offer (a "Third Party Offer") from any Person
dealing at arm's length with the Parties (the "Buyer") to
purchase all or less than all of the Interest owned by the
Offeror (the "Purchased Interest"), which Third Party Offer is
acceptable to the Offeror, the Offeror shall, by notice in
writing to the other Members (the "Offerees"), offer to sell the
Purchased Interest to the Offerees at the same price and upon the
same terms and conditions as are contained in the Third Party
Offer (the "Offer").
(c) The Offer (i) shall identify in reasonable detail the
Buyer and, if the Buyer is not an individual, identify those
Persons who, together with their Affiliates, control the Buyer;
(ii) shall be accompanied by a true and complete copy of the
Third Party Offer setting forth all of the terms and conditions
of the Third Party Offer; and (iii) shall provide such
information concerning the business experience and expertise of
the Buyer and its financial condition as is reasonably available
to the Offeror. The Offer shall not be revocable except with the
consent of the Offerees and shall be open for acceptance by the
Offerees for a period of ten (10) days from the date received by
them (the "Offer Period").
10.2 ACCEPTANCE OF OFFER
(a) If the Offer is accepted by any of the Offerees within
the Offer Period, then the Offeror (the "Vendor") shall sell and
the Offerees accepting the Offer (the "Purchaser") shall purchase
the Purchased Interest upon the terms and conditions contained in
the Offer.
(b) If there is more than one Purchaser, the Purchasers
shall purchase the Purchased Interest from the Offeror in the
same proportions that the Percentage Interest of each Purchaser
is to the total Percentage Interests held by all Purchasers, but
such Purchasers may agree to purchase the Purchased Interest in
different proportions and such purchase may be made by any of the
Purchasers jointly or by any one of them alone.
(c) The closing of the transaction of purchase and sale
pursuant to the Offer (a "Sale Transaction") shall take place at
the Place of Closing at the Time of Closing on the date which is
thirty (30) days after the expiration of the Offer Period (the
"Date of Closing"). The Sale Transaction shall be effected in
accordance with the general sale provisions of Article XII.
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10.3 THIRD PARTY SALE
(a) If the Offerees do not accept the Offer during the
Offer Period, then, subject to the provisions of this Section
10.3, the Offeror shall be entitled, within a period of sixty
(60) days after the expiration of the Offer Period, to sell the
Purchased Interest to the Buyer in accordance with the Third
Party Offer.
(b) The Managers before consenting to the transfer of the
Purchased Interest to the Buyer shall be entitled to require
proof that the sale to the Buyer took place in accordance with
the Third Party Offer and the Managers shall refuse to permit the
recording of the transfer of the Purchased Interest if, in the
opinion of the Managers, the Purchased Interest were sold
otherwise than in accordance with the provisions of the Third
Party Offer.
(c) No disposition to any Buyer pursuant to any Third Party
Offer shall be valid or effective until the Buyer shall have
executed a counterpart copy of this Agreement or a written
agreement in form and substance satisfactory to the Company and
the other Members agreeing to be bound by the terms and
conditions hereof.
(d) Contemporaneously with the completion of the
transaction of purchase and sale under the Third Party Offer the
Offeror shall (i) repay any indebtedness owing by the Offeror to
the Company; and (ii) deliver to the Company and the remaining
Members the documents referred to in Sections 12.3(a), (d) and
(f). At such time, the remaining Members shall deliver to the
Offeror the documents referred to in Section 12.5.
10.4 RE-APPLICATION OF PROVISIONS
If a sale of the Purchased Interest to the Buyer pursuant to
the Third Party Offer is not completed within the sixty (60) day
period referred to in Subsection 10.3(a), no sale of the
Purchased Interest shall be made without the Offeror again
complying with the terms of this Article X.
10.5 AN OFFER TO PURCHASE SHOWBOAT'S INTEREST
With respect to any proposed transfer of any of Showboat's
Interest other than a transfer to an Affiliate of Showboat whose
capital stock or interests are beneficially owned 100% by
Showboat, Inc. or as otherwise permitted in writing by
Rockingham, Showboat and its Affiliates shall have the obligation
to require the proposed transferee to purchase the same
percentage of Rockingham's Interest as the proposed transferee
intends to purchase from Showboat pursuant to the same terms and
conditions that the proposed transferee intends to purchase
Showboat's Interest or portion thereof. The purchase price for
Rockingham's Interest shall be at the same price per percentage
Interest as the percentage price per share of Showboat's
Interest. Showboat shall give Rockingham twenty (20) days
notice of the proposed transfer of Interests and Rockingham shall
accept or decline its participation in the proposed transfer in
said twenty (20) day period. If the proposed transferee fails or
refuses to purchase Rockingham's Interest if Rockingham timely
exercised its participation in the proposed transfer in
accordance with the terms hereof, or if Showboat fails to give
any notice specified herein, then Showboat and its Affiliates
shall not be permitted to make the proposed transfer, and any
such attempted transfer shall be void and of no effect.
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ARTICLE XI. APPRAISAL
11.1 APPRAISAL
In the event that the value of the Company must be
determined, each Member will choose an employ, at its sole
expense, an appraiser qualified to appraise gaming operations.
Within twenty-one (21) calendar days, each appraiser will deliver
to the Member and the Member shall exchange the written
appraisals of value of the Company. The appraisers, shall
calculate the appraised value of the Company to be the greater of
(i) the Company's book value; (ii) the income capitalization
approach to value which analyzes net operating income of the
subject property which is then capitalized into an indication of
value; or (iii) some other appropriate method which an appraiser
uses to make a valuation of a gaming business as of the time of
the appraisal. Based upon such appraisals, if the Members cannot
agree on a value, the appraisers shall, in accordance with
Section 17.3, choose a third appraiser. Such third appraiser
shall be paid by the Members and, within twenty-one (21) days of
engagement, shall deliver the third appraisal of the property.
The third appraisal, if within 5% (+) of either of the two
appraisals, shall be deemed to be the correct appraisal. In the
event that the discrepancy is in excess of 5% (+) of either of
the original appraisals, the value shall be computed as the
average of the three (3) appraisals.
ARTICLE XII. GENERAL SALE PROVISIONS
12.1 APPLICATION OF SALE PROVISIONS
Except as may otherwise be provided in this Agreement, the
provisions of this Article XII shall apply to any sale of the
Interest between or among the Members or, to the extent
applicable, between Members and the Company, pursuant to the
provisions of Articles VIII, IX, X and XII or Section 12.8 of
this Article XII as the case may be.
12.2 DEFINED TERMS
For the purpose of this Article XII, the terms "Vendor",
"Purchaser", "Date of Closing", "Purchase Price" and "Purchased
Interest" with respect to any Sale Transaction shall have the
meanings attributed thereto in Article VIII, IX, X or XI, as the
case may be. As used in this Article and in Articles VIII, IX and
X. "Time of Closing" shall be 2 p.m. eastern time on the Date of
Closing.
12.3 OBLIGATIONS OF VENDOR
At or prior to the Time of Closing, each Vendor shall:
(a) deliver to the Company signed resignations of the
Vendor and its nominees, if any, as Managers, officers and
employees of the Company, as the case may be;
(b) assign and transfer to the Purchaser the Purchased
Interest and deliver the membership certificate(s), if any,
representing the Purchased Interest duly endorsed for transfer to
the Purchaser or as directed by it;
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(c) do all other things required in order to deliver good
and marketable title to the Purchased Interest to the Purchaser
free and clear of any claims, liens and encumbrances whatsoever
including, without limitation, the delivery of any governmental
releases and declarations of transmission (provided that, if at
the Time of Closing the Purchased Interest is not free and clear
of all claims, liens and encumbrances whatsoever, the Purchaser
may, without prejudice to any other rights which it may have,
purchase the Purchased Interest subject to such claims, liens and
encumbrances and, in that event, the Purchaser shall, at the Time
of Closing, assume all obligations and liabilities with respect
to such claims, liens and encumbrances and the Purchase Price
payable by the Purchaser for the Purchased Interest shall be
satisfied, in whole or in part, as the case may be, by such
assumption and the amount so assumed by the Purchaser shall be
deducted from the Purchase Price payable at the Time of Closing);
(d) deliver to the Company a release by each of the Vendor
and its nominees, if any, of all claims against the Company with
respect to any matter or thing up to and including the Time of
Closing in their capacities as a Manager, officer, Member,
employee or creditor of the Company, as the case may be, except
for (i) any claims which might arise out of the Sale Transaction,
or (ii) any claims which might arise out of the intentional
misconduct, gross negligence or fraud of the Purchaser, in a form
satisfactory to the Company acting reasonably;
(e) deliver to the remaining Members a release by the
Vendor and its nominees in their capacity as a Manager, officer
and Member of the Company of all of their claims against each
remaining Member and their respective nominees, if any, in their
capacities as a Member, Manager or officer of the Company, except
for (i) any claims which might arise out of the Sale Transaction,
or (ii) any claims which might arise out of the intentional
misconduct, gross negligence or fraud of the Purchaser, in a form
satisfactory to the remaining Members acting reasonably.
12.4 RELEASE OF GUARANTEES ETC.
If, at the Time of Closing, the Vendor, any principal of the
Vendor or any other Person for and on behalf of the Vendor, shall
have any guarantees, securities or covenants lodged with any
Person to secure any indebtedness, liability or obligation of the
Company and/or the remaining Members, then the remaining Members
shall use their reasonable best efforts to deliver or cause to be
delivered to the Vendor or cancel or cause to be canceled all of
such guarantees, securities and covenants at the Time of Closing.
If, notwithstanding such reasonable best efforts, the delivery or
cancellation of any such guarantee, security or covenant is not
obtained, the remaining Members shall deliver to the Vendor an
indemnity of such Vendor, principal or other Person in writing,
in form reasonably satisfactory to counsel for the Vendor,
indemnifying them against any and all claims, demands, costs,
expenses, damages, liabilities and suits which may be or which
shall have been paid, suffered or incurred by them with respect
to the said guarantee, security or covenant.
12.5 DELIVERIES TO VENDOR
At or prior to the Time of Closing, each of the remaining
Members shall:
(a) deliver to each of the Vendor and its nominees, if any,
a release by it, in its capacity as a Manager, officer and Member
of the Company, of all of its claims against the Vendor and its
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nominees in its capacity as a Member, Manager or officer of the
Company, except for (i) any claims which may arise out of the
Sale Transaction, or (ii) any claims which might arise out of the
intentional misconduct, gross negligence or fraud of the Vendor,
in a form satisfactory to the Vendor acting reasonably; and
(b) cause the Company to deliver to each of the Vendor and
its nominees a release by the Company of all its claims against
each of the Vendor and its nominees with respect to any matter or
thing arising as a result of the Vendor or its nominees being a
Member, Manager or officer of the Company, as the case may be,
except for (i) any claims which might arise out of the Sale
Transactions, or (ii) any claims which might arise out of the
intentional misconduct, gross negligence or fraud of the Vendor,
in a form satisfactory to the Vendor acting reasonably.
12.6 REPAYMENT OF DEBTS
If, at the Time of Closing, the Company is indebted to the
Vendor in an amount recorded on the books of the Company and
verified by the Auditor, the Company shall repay such amount to
the Vendor at the Time of Closing. If, at the Time of Closing,
the Vendor is indebted to the Company in an amount recorded on
the books of the Company and verified by the Auditors, the Vendor
shall repay such amount to the Company at the Time of Closing
and, if the Vendor fails to make such repayment, the Purchaser
shall be entitled to pay the amount of such indebtedness to the
Company from the Purchase Price and the amount of the Purchase
Price payable to the Vendor shall be reduced accordingly.
12.7 NON-COMPLETION BY VENDOR
If, at the Time of Closing, the Vendor fails to complete the
Sale Transaction for any reason other than Purchaser's default,
the Purchaser shall have the right, if not in default under this
Agreement, without prejudice to any other rights which it may
have, upon payment of the Purchase Price payable to the Vendor at
the Time of Closing to the credit of the Vendor in the main
branch of the Company's bankers in the City of Boston, to execute
and deliver, on behalf of and in the name of the Vendor, such
deeds, transfers, share certificates, resignations or other
documents that may be necessary to complete the Sale Transaction
and each Member, to the extent it may be a Vendor hereunder,
hereby irrevocably appoints any Member who becomes a Purchaser in
a Sale Transaction its attorney-in-fact on its behalf, with no
restriction or limitation in that regard and declaring that this
power of attorney may be exercised during any subsequent legal
incapacity on its part.
12.8 NON-COMPLETION BY PURCHASER
If, at the Time of Closing, the Purchaser fails to complete
a Sale Transaction for any reason other than Vendor's default,
the Vendor shall have the right (without prejudice to any other
rights which it may have), at its option, exercisable within a
period of thirty (30) days following the Date of Closing of such
Sale Transaction upon notice to the Purchaser, to purchase from
the Purchaser all the Interest owned by the Purchaser for an
amount equal to 75% of the Purchase Price payable pursuant to the
Sale Transaction which the Purchaser has neglected or refused to
perform, less all costs incurred by the Vendor in connection with
the failure by the Purchaser to complete the Sale Transaction,
and the provisions of this Article XII shall apply to the
purchase by the Vendor of the Purchaser's Interest pursuant to
this Section 12.8.
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12.9 RESTRICTIONS ON BUSINESS
If the provisions of any of Articles VIII, IX, X or XI,
Section 12.8 of this Article XII hereof become applicable, then
from such date until the Time of Closing, the Members shall not
do, nor cause, nor permit to be done anything except that which
is in the ordinary course of business of the Company.
12.10 NO JOINT LIABILITY
For greater certainty, the Parties hereto acknowledge and
agree that where a Sale Transaction involves more than one
Purchaser, the Purchasers in such Sale Transaction are not
jointly liable for the payment of the Purchase Price for the
Purchased Interest and any indebtedness purchased hereunder, but
are only liable for their proportionate share thereof.
12.11 CONSENTS
The Parties acknowledge that the completion of any Sale
Transaction shall be subject, in any event, to the receipt of all
necessary government, regulatory and lender consents and
approvals to the transfer of Interest contemplated thereby,
including the Gaming Authorities.
ARTICLE XIII. PROFITS AND LOSSES
13.1 NET PROFITS AND LOSSES
Except as otherwise provided in Section 13.2, 13.3 and 13.4
hereof, all Company income, gains, losses, deductions and credit
for each Company taxable year shall be allocated among the
Members in proportion to their Percentage Interests on the last
day of such taxable year.
13.2 ALLOCATIONS OF DEDUCTIONS
(a) COMPANY NONRECOURSE DEDUCTIONS. Except as otherwise
required by Section 13.3 and 13.4 hereof, all Nonrecourse
Deductions of the Company for any taxable year shall be shared by
the Members in proportion to their Percentage Interests on the
last day of such taxable year. The amount of Nonrecourse
Deductions of the Company shall be determined in accordance with
Regulations Section 1.704-2(c).
(b) MEMBER NONRECOURSE DEDUCTIONS. Except as otherwise
required by Section 13.3 and 13.4 hereof, all Member Nonrecourse
Deductions of the Company for any taxable year shall be allocated
in accordance with Regulations Section 1.704-2(i)(1). The amount
of Member Nonrecourse Deductions shall be determined in
accordance with Regulations Section 1.704-2(i)(2).
13.3 SPECIAL ALLOCATIONS
(a) QUALIFIED INCOME OFFSET. Except as otherwise provided
in Section 13.3(b) hereof, in the event any Member unexpectedly
receives any adjustments, allocations or distributions described
in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items
of Company income and gain shall be specially allocated to each
such Member in an amount and manner sufficient to
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eliminate, to the extent required by the Regulations, the
adjusted capital account deficit of such Member as quickly as
possible.
(b) MINIMUM GAIN CHARGEBACK. Notwithstanding any other
provision of this Section 13.3, if there is a net decrease in
Company Minimum Gain during any Company fiscal year, each Member
who would otherwise have an adjusted capital account deficit at
the end of such year shall be specially allocated items of
Company income and gain for such year (and, if necessary,
subsequent years) in an amount and manner sufficient to eliminate
such Member's adjusted capital account deficits as quickly as
possible. The items to be so allocated shall be determined in
accordance with Regulations Section 1.704-1(b)(4)(iv)(e).
Notwithstanding any other provision of this Section 13.3, if
there is a net decrease in Minimum Gain attributable to Member
Nonrecourse debt during a Company Taxable Year, each Member with
a share of the Minimum Gain attributable to such member
Nonrecourse Debt shall be allocated items of income and gains for
such year (and, if necessary, subsequent years) in accordance
with Regulations Section 1.704-(i)(4). The items to be so
allocated shall be determined in accordance with Regulations
Section 1.704-2(i). This Section 13.3(b) is intended to comply
with the minimum gain chargeback requirements in such sections of
the Regulations and shall be interpreted consistently therewith.
(c) ALLOCATION OF REMAINING INCOME AND GAINS ON SALE OR
OTHER DISPOSITION. Except as otherwise required by this Section
13.3, income and gains arising from the sale, exchange, transfer
or disposition or condemnation of all or substantially all of the
Company's property shall be allocated, for Federal income tax
purposes, among those who shall be Members on the date of such
transaction or transactions as follows:
(i) If one or more Members has a negative Capital
Account after such Member's Capital Account is adjusted to
reflect any allocation of gains under Section 13.2(b) but before
such Member's Capital Account is adjusted to reflect any
distribution under Section 14.3 with respect to the disposition
to which this Section 13.3(c) is being applied, such income and
gains shall be allocated to such Members in proportion to their
negative Capital Accounts until each such Member's Capital
Account equals zero.
(ii) To the extent one or more Member's Capital
Account balance is less than (A) the total of all Members'
Capital Account balances times (B) such Member's Percentage
Interest in the Company (a "Capital Disparity"), such income and
gains shall be allocated among such Members in proportion to
Capital Disparities until all of the Members' Capital Accounts
are, as nearly as possible, in proportion to their Percentage
Interests.
(iii) The balance of such income and gains shall be
allocated to the Members in proportion to their Percentage
Interests.
(d) ASSIGNMENTS. In the event of an assignment of an
interest in the Company (other than an assignment by reason of
the death of a Member), the assignor's distributive share of
Company income, gains, loss, deductions and credits and
expenditures not deductible in computing its taxable income (in
respect of the interest so assigned) shall be the share of such
items attributable to such interest accruing prior to such
assignment (based on an interim closing of the books of the
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Company), and the Assignee's share shall be the share of such
items attributable to such interest after such assignment (based
on such interim closing).
(e) MANDATORY SECTION 704(C) ALLOCATIONS. Notwithstanding
the foregoing, to the extent that Code Section 704(c),
Regulations Section 1.704-3, 1.704-1(b)(2)(iv), or any other
regulations which may be proposed or promulgated under Code
Section 704(c), require allocations of Company income, gains,
losses or deductions in a manner which is different than that set
forth above, the provisions of Section 704(c) and the regulations
thereunder shall control such allocations among the Members. In
the absence of a contrary agreement among the Members, such items
shall be allocated in accordance with the "Traditional method
with curative allocations" set forth in Regulations Section 1.704-
3(c) or any successor regulation.
13.4 CURATIVE ALLOCATIONS
The allocations set forth in Section 13.2 and 13.3 (the
"Regulatory Allocations") are intended to comply with Regulations
Section 1.704-1(b), Regulations Section 1.704-2 and Regulations
Section 1.704-3, and shall be interpreted and applied in a manner
consistent therewith. Notwithstanding any other provisions of
this Section (other than the Regulatory Allocations), the
Regulatory Allocations shall be taken into account in allocating
other profits, losses and items of income, gain, loss and
deduction among the Members so that, to the extent possible, the
net amount of such allocations of other profits, losses and other
items in the Regulatory Allocations to each Member shall be equal
to the net amount that would have been allocated to each such
Member if the Regulatory Allocations had not occurred.
13.5 FEDERAL INCOME TAX
It is the intent of this Company and its Members that this
Company will be governed by the applicable provisions of
Subchapter K, of Chapter 1, of the Code.
ARTICLE XIV. DISTRIBUTIONS
14.1 OPERATING DISTRIBUTIONS
The Company's Cash Available For Distribution shall, at such
times as the Managers of the Company deem advisable, be
distributed among the Members in proportion to their respective
balances of Percentage Interest, as of the date of any such
distribution. The term "Cash Available For Distribution" shall
mean the total cash revenues generated by the Company's
operations (including proceeds from the sale or refinancing of
Company assets), less all cash expenditures of the Company for
debt service and operating expenses, and less a reasonable amount
determined by the Company to be set aside for reserves. In no
event shall Cash Availible For Distributions be less than the
amount equal to the Member's portion of federal and state income
tax liablilty of the Company as if the Company was a taxable
entity in the State of New Hampshire.
14.2 PAYMENT OF MEMBER LOANS
Under all circumstances, Member Loans shall be repaid first
out of any Cash Available for Distribution after payment of taxes
as provided in Section 14.1. If a difference exists between the
Members in the amount of Member Loans made to the Company, any
Member with more
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Member Loans outstanding (in value) than another Member shall
receive the first distributions of any available cash until that
Member's Loan is in parity with the other Member Loans, if any,
unless otherwise provided herein. Thereafter, the Member Loans
will be repaid ratably to the Members with Loans. It is the
intention of the Members that Member Loans will be repaid as cash
is available for distribution and may result in revolving
payments to the Members as additional Member Loans are advanced
to the Company.
14.3 DISTRIBUTION ON DISSOLUTION AND LIQUIDATION
In the event of the dissolution and liquidation of the
Company for any reason, after the payment of or provision for
creditors pursuant to the Act and other applicable law, the
Company's assets shall be distributed among the Members in
accordance with their respective positive Capital Account
balances, in accordance with Regulations Section 1.704-
1(b)(2)(ii)(b)(2).
ARTICLE XV. ACCOUNTING AND RECORDS
15.1 RECORDS AND ACCOUNTING
The Company shall cause an accurate, current and complete
accounting system in connection with its operation of the
Project. The books and records shall be kept in accordance with
GAAP consistently applied and in accordance with federal tax law.
Such books and records shall be kept on a calendar year basis.
Books and accounts shall be maintained at the principal office of
the Company and at the Project, or at other locations as
determined from time to time by the Company. The Members, or any
of them, shall have the right to inspect the books and records of
the Company at any time during normal business hours with
reasonable notice of such inspection.
15.2 ACCESS TO ACCOUNTING RECORDS
Each Member, and his duly authorized representative, shall
have access to the accounting records at the principal office of
the Company and the right to inspect and copy the books and
records at reasonable times. The Company shall keep all records
required to be kept at the registered office of the Company.
15.3 ANNUAL TAX INFORMATION
The Managers shall use their best efforts to cause the
Company to deliver to each Member within ninety (90) days after
the end of each fiscal year all information necessary for the
preparation of such Member's federal income tax return.
15.4 INTERIM STATEMENTS AND REPORTS
On or before the thirtieth (30th) day of each month, the
Company shall furnish the Managers with an unaudited operating
statement for the preceding calendar month detailing the Gross
Gaming Revenues received from the Project and ancillary services
and expenses incurred. The Gross Gaming Revenues detail shall
specify drop figure accounts on all gaming revenues.
Additionally, the Managers shall meet in person or by telephone
at least once each month to discuss the Company's operations.
The Company shall provide written, oral or videotaped reports on
the operations of the Project on a monthly basis to the Managers.
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ARTICLE XVI. TERM
16.1 TERM
The term of this Company shall begin on the date the
Certificate of Organization is filed with the New Hampshire
Secretary of State and shall continue for a period not to exceed
fifty (50) years, unless terminated prior thereto in accordance
with the provisions hereof, by unanimous agreement of the Members
or pursuant to the Act.
ARTICLE XVII. DISSOLUTION OF THE COMPANY AND
TERMINATION OF A MEMBER'S INTEREST
17.1 DISSOLUTION
This Company must be dissolved on the death, retirement,
resignation, expulsion, bankruptcy or dissolution of a Member or
occurrence of any other event which terminates a Member's
continued membership in the Company, unless the business of the
Company is continued by the consent of all the remaining Members
of the Company.
17.2 BANKRUPTCY, INSOLVENCY OR DISSOLUTION
In the event a Member (the "Bankrupt Member") institutes or
consents to any proceeding under the federal bankruptcy laws
relating to the Member or to all or any part of its property; or
is unable or admits in writing to its inability to pay its debts
as they mature, or makes an assignment for the benefit of
creditors; or applies for or consents to the appointment of any
receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any part of
its property; or applies for or consents to the liquidation or
dissolution of such Member or all or substantially all of its
property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without
the application or consent of the Member and the appointment
continues undischarged or unstayed for thirty (30) calendar days;
or any proceeding under the federal bankruptcy laws or any other
applicable laws relating to such Member or to all or any part of
its property is instituted without the consent of such Member and
continues undischarged or unstayed for sixty (60) calendar days,
if all the remaining Members consent to the continuation of the
business of the Company, the remaining Members shall have the
right to purchase the entire Interest of the Bankrupt Member in
the manner set forth in Article IX.
ARTICLE XVIII. INDEMNIFICATION
18.1 INDEMNITY
This Company does hereby indemnify any person who was or is
a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, except an action by or
in the right of the Company, by reason of the fact that he is or
was a Manager, Member, employee or agent of this Company, or is
or was serving at the request of this Company as manager,
director, officer, employee or agent of another limited liability
company or corporation, against expenses, subject to the
provisions of Section 18.4 hereof, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with the action, suit or
proceeding if he
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acted in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of this Company,
and, with respect to a criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, does not, of itself, create a presumption that the
person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest
of this Company, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct
was unlawful.
18.2 INDEMNITY FOR ACTIONS BY OR IN THE RIGHT OF THE COMPANY
This Company does hereby indemnify any person who was or is
a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of this
Company to procure a judgment in its favor by reason of the fact
that he is or was a Member, Manager, employee or agent of this
Company, or is or was serving at the request of this Company as a
Member, Manager, director, officer, employee or agent of another
limited-liability company, corporation, partnership, joint
venture, trust or other enterprise against expenses, subject to
the provisions of Section 18.4 hereof, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred
by him in connection with the defense or settlement of the
actions or suit if he acted in good faith and in a manner which
he reasonably believed to be in or not opposed to the best
interests of this Company. Indemnification may not be made for
any claim, issue or matter as to which such a person has been
adjudged by a court of competent jurisdiction, after exhaustion
of all appeals therefrom, to be liable to this Company or for
amounts paid in settlement to this Company, unless and only to
the extent that the court in which the action or suit was brought
or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnity for
such expenses as the court deems proper.
18.3 INDEMNITY IF SUCCESSFUL
To the extent that a Member, Manager, employee or agent of
this Company has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Sections
18.1 and 18.2, or in defense of any claim, issue or matter
therein, this Company does hereby indemnify such person or entity
against expenses, subject to the provisions of Section 18.4
hereof, including attorneys' fees, actually and reasonably
incurred by him in connection with the defense.
18.4 EXPENSES
Any indemnification under Sections 18.1 and 18.2, unless
ordered by a court or advanced pursuant to Section 19.5 below,
must be made by this Company only as authorized in the specific
case upon a determination that indemnification of the Member,
Manager, employee or agent is proper in the circumstances. The
determination must be made:
(a) By a majority vote of a quorum of Members who were not
parties to the act, suit or proceeding; or
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(b) By a majority vote of Managers who were not parties to
the act, suit or proceeding; or
(c) If a quorum consisting of Members or Managers who were
not parties to the act, suit or proceeding cannot be obtained, by
independent legal counsel pursuant to a written opinion.
18.5 ADVANCE PAYMENT OF EXPENSES
The expenses of Members and Managers incurred in defending a
civil or criminal action, suit or proceeding shall be paid by
this Company as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the Member or Manager to repay the
amount if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by this
Company. The provisions of this subsection do not affect any
rights to advancement of expenses to which personnel other than
Members or Managers may be entitled under any contract or
otherwise by law.
18.6 OTHER ARRANGEMENTS NOT EXCLUDED
The indemnification and advancement of expenses authorized
in or ordered by a court pursuant to this Article XVIII:
(a) Does not exclude any other rights to which a person
seeking indemnification or advancement of expenses may be
entitled under the Certificate of Organization or any agreement,
vote of Members or otherwise, for either an action in his
official capacity or an action in another capacity while holding
his office, except that indemnification, unless ordered by a
court pursuant to Section 18.2 above or for the advancement of
expenses made pursuant to Section 18.5 above, may not be made to
or on behalf of any Member or Manager if a final adjudication
establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was
material to the cause of action.
(b) Continues for a person who has ceased to be a Member,
Manager, employee or agent and inures to the benefit of the
heirs, executors and administrators of such a person.
(c) ROCKINGHAM'S INDEMNITY. Rockingham hereby agrees to
indemnify, defend and hold the Company harmless from and against
and in respect of any losses incurred by the Company arising
from:
(i) Any debts, liabilities, penalties, fines,
sanctions, assessments and obligations relating to its business
and operations of the Rockingham Park;
(ii) All reasonable costs and expenses, including
reasonable attorney's fees, incurred by the Company in connection
with any action, suit, proceeding, demand, assessment or judgment
incident to any of the matters pursuant to which Rockingham has
agreed to indemnify the Company.
(d) THE COMPANY'S INDEMNITY. Company hereby agrees to
indemnify, defend and hold Rockingham harmless from and against
and in respect of any losses incurred by Rockingham in the
operation of Rockingham Park arising from:
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(i) Any debts, liabilities, penalties, fines,
sanctions, assessments and obligations relating to its business
and operations of the Project ;
(ii) All reasonable costs and expenses, including
reasonable attorney's fees, incurred by Rockingham in connection
with any action, suit, proceeding, demand, assessment or judgment
incident to any of the matters pursuant to which the Company has
agreed to indemnify Rockingham.
ARTICLE XIX. MISCELLANEOUS PROVISIONS
19.1 TIME IS OF THE ESSENCE
Time is of the essence with respect to all time periods set
forth in this Agreement.
19.2 DEFAULT INTEREST RATE
Any sum accruing to any Party under this Agreement which
shall not be paid when due shall bear interest at a rate per
annum equal to the Wall Street Journal prime rate plus 5% from
the date such payment becomes due and payable until it is paid in
full with said interest.
19.3 COUNTERPARTS
This Agreement may be executed in two or more counterparts
and shall be deemed to have become effective when and only when
all parties hereto have executed this Agreement, although it
shall not be necessary that any single counterpart be signed by
or on behalf of each of the parties hereto, and all such
counterparts shall be deemed to constitute but one and the same
instrument.
19.4 EXECUTION BY FACSIMILE
This Agreement may be executed by facsimile and if so
executed shall be legal, valid and binding on any Party executing
in such manner.
19.5 FORCE MAJEURE
Whenever this Agreement requires an act to be performed
within a specified time period or to be completed diligently,
such periods are subject to "unavoidable delays." Unavoidable
delays include delays caused by acts of God, acts of war, civil
commotions, riots, strikes, lockouts, acts of government in
either its sovereign or contractual capacity, perturbation in
telecommunications transmissions, inability to obtain suitable
labor or materials, accident, fire, water damages, flood,
earthquake, or other natural catastrophes.
19.6 COMPLETE AGREEMENT
This Limited Liability Company Agreement, and the
Certificate of Organization, constitute the complete and
exclusive statement of the Agreement among the Members with
respect to the subject matter contained therein. This Agreement
and the Articles replace and supersede all prior agreements by
and among the Members or any of them. This Agreement and the
Articles supersede all prior written and oral statements and no
representation, statement, or condition or
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warranty not contained in this Agreement or the Articles will be
binding on the Members or be of any force and effect whatsoever.
19.7 AMENDMENTS
This Limited Liability Company Agreement may be amended by
the Members but only at a special or annual meeting of the
Members, not by written consent, and only if the notice of the
intention to amend the Limited Liability Company Agreement was
contained in the notice of the meeting, or such notice of a
meeting is waived by all Members.
19.8 GOVERNING LAW
This Limited Liability Company Agreement, and its
application, shall be governed exclusively by its terms and by
the laws of the State of New Hampshire without reference to its
choice of law provisions.
19.9 HEADINGS
The headings in this Limited Liability Company Agreement are
inserted for convenience only and are in no way intended to
describe, interpret, define, or limit the scope, extent or intent
of this Limited Liability Company Agreement or any provisions
contained herein.
19.10 SEVERABILITY
If any provision of this Limited Liability Company Agreement
or the application thereof to any person or circumstance shall be
deemed invalid, illegal or unenforceable to any extent, the
remainder of this Limited Liability Company Agreement and the
application thereof shall not be affected and shall be
enforceable to the fullest extent permitted by law.
19.11 EXPENSES
If any litigation or other proceeding is commenced in
connection with or related to this Agreement, the prevailing
party shall be entitled to recover from the losing party all of
the incidental costs and reasonable attorneys' fees, whether or
not a final judgment is rendered.
19.12 HEIRS, SUCCESSORS AND ASSIGNS
Each and all of the covenants, terms, provisions and
agreements contained in this Limited Liability Company Agreement
shall be binding upon and inure to the benefit of the existing
Members, all new and substituted Members, and their respective
assignees (whether permitted by this Agreement or not), heirs,
legal representatives, successors and assigns.
19.13 POWER OF ATTORNEY
Each Member, in accepting this Agreement, makes, constitutes
and appoints the Managers and each of them, with full power of
substitution, as his, her, or its attorney-in-fact and personal
representative to sign, execute, certify, acknowledge, file and
record the Certificate of Organization, and to sign, execute,
certify, acknowledge, file and record all appropriate instruments
amending the Certificate of Organization and this Limited
Liability Company Agreement on behalf of each such Member. In
particular, the Manager as attorney-in-fact may
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sign, acknowledge, certify, file and record on behalf of each
Member such instruments, agreements and documents which: (1)
reflect any amendments to the Certificate of Organization or
Limited Liability Company Agreement; (2) reflect the admission or
withdrawal of a Member; and (3) may otherwise be required of the
Company, a Member or by law. The Power of Attorney herein given
by each Member is a durable power and will survive the disability
or incapacity of the principal.
19.15 COMPLIANCE WITH LAWS
(a) At all times during the term of this Agreement, each
Member agrees that its actions, and those of its representatives,
agents, and consultants, will be entirely in accordance with all
applicable laws, rules, ordinances and regulations of all states,
counties, districts and municipalities in which such Member
conducts business on behalf of the Company, and also will follow
applicable federal laws, rules and regulations.
(b) In connection with this Agreement, the Members each
acknowledge that certain casino gaming licenses are currently
issued to and held by Showboat or its Affiliates the states of
Nevada, New Hampshire and New Jersey, and the state of New South
Wales, Australia, and that Showboat or its Affiliates may in the
future apply for gaming licenses in additional states or foreign
countries. The laws of such jurisdictions may require Showboat
to disclose private or otherwise confidential information about
the other Members and their respective principals, lenders and
affiliates. The Members each agree to refrain from all conduct
that may negatively affect Showboat's licenses or license
applications. If any representative, agent, Affiliate, of
Rockingham is required to be licensed, qualified or found
suitable by the Gaming Authorities and is denied such status by
such Gaming Authority, Showboat shall immediately sell its
interest in the Company in the manner specified in Article IX.
19.16 BACKGROUND INVESTIGATIONS
(a) The Members each acknowledge that Showboat or its
Affiliates currently conduct gaming operations in Nevada, New
Jersey, and will conduct gaming operations in New South Wales,
Australia. Such gaming operations are highly regulated by Gaming
Authorities of these states and that such regulations impose upon
Showboat an affirmative duty to investigate the backgrounds of
entities or individuals with whom Showboat does business.
Furthermore, such regulations require that Showboat and its
Affiliates, which includes the Company and the Rockingham,
subject themselves to rigorous investigation. Furthermore,
Showboat or its Affiliates may in the future apply for licensure
in other jurisdictions, including states of the United States or
foreign countries which may have similar regulations. Gaming
authorities in other jurisdictions may request information
regarding entities and persons with whom Showboat does business.
Accordingly, the Members each agree, if requested by Showboat, to
use their best efforts to supply and to cause its principals,
directors, officers, major shareholders, owners and any other key
individuals, to supply such information and execute such
affidavits and documents, including personal history disclosure
documents and personal financial disclosure documents as Showboat
may reasonably request. Showboat shall reimburse Rockingham or
Rockingham's shareholders, officers, or directors, as the case
may be, for such shareholder's officer's, or director's expenses
incurred due to supplying such information to the Gaming
Authorities. Furthermore, gaming regulations require that
Showboat and its Affiliates be of good repute.
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Rockingham and its principals, directors, officers,
stockholders, owners and Affiliates represent that they are of
good repute.
(b) The Members each acknowledge that Rockingham or its
Affiliates currently conduct pari-mutuel operations in New
Hampshire. Such operations are regulated by Gaming Authorities
of New Hampshire and that such regulations impose upon the
Rockingham an affirmative duty to investigate the backgrounds of
entities or individuals with whom Rockingham does business.
Furthermore, such regulations require that Rockingham and its
Affiliates subject themselves to investigation. Accordingly, the
Members each agree, if requested by Rockingham, to use their best
efforts to cause their principals, directors, officers, major
shareholders, owners and any other key individuals, to supply
such information and execute such affidavits and documents,
including personal history disclosure documents and personal
financial disclosure documents as Rockingham may reasonably
request. Rockingham shall reimburse Showboat or Showboat's
shareholders, officers or directors, as the case may be, for such
shareholder's, officer's, or director's expenses incurred due to
supplying such information to the Gaming Authority except for
such disclosure which is required to obtain or maintain a license
for the Project. Showboat and its principals, directors, and
officers represent that they are of good repute.
19.17 COMPLIANCE WITH OTHER AGREEMENTS
Each Member shall use its best efforts to perform, or cause
to be performed, all obligations of the Company under any
agreement negotiated in connection herewith or pursuant hereto,
including, without limitation, the Management Agreement of even
date herewith between the Company and an Affiliate of Showboat.
19.18 GOVERNMENTAL APPROVAL
Each Members shall use their best efforts to cause the
Company to obtain all necessary licenses, permits and approvals
from all applicable governmental authorities with respect to the
construction and development of the Project.
19.19 LICENSING REQUIREMENTS
Each Member covenants to use its best efforts to diligently
obtain all state and local licenses, including gaming licenses,
necessary to conduct gaming operations at the Project. The
Members agree to provide the other Members with copies of all
applications, reports, letters, and other documents filed or
provided to the state or local licensing authorities. In the
event that any Member as a result of a communication or action by
the Gaming Authority (including, without limitation, the New
Hampshire Racing Commission) or on the basis of consultations
with its gaming counsel and/or other professional advisors,
reasonably believes in good faith, with the concurrence of the
Managers, that the Gaming Authority are likely to: (i) fail to
license and/or approve the Company or its Affiliates to own and
operate any gaming related businesses; (ii) grant required gaming
licensing and/or approval only upon terms and conditions which
are unacceptable to the Company; (iii) significantly delay the
licensing and/or approval contemplated under this Agreement; or
(iv) revoke any existing license or gaming operating contract of
the Company or its Affiliates, in each case due to concerns of
any aspect of the suitability of a particular Member or its
shareholders, then the Company shall cause such Member to divest
itself of such Interest by sale to the other Members in the
manner set forth in Article IX.
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19.20 FOREIGN GAMING LICENSES
If Showboat determines, at its sole discretion, that any
gaming licenses held by Showboat or its Affiliates in other
jurisdictions may be adversely affected or in jeopardy because of
its status as a Member, Showboat shall have the option at any
such time to sell its Interest, subject to the right of first
refusal pursuant to Article X. If this occurs prior to or within
the first six (6) months after commencement of operations at the
Project and Rockingham elects its right of first refusal,
Showboat shall receive as sole compensation for Rockingham's
purchase of its Interest, the capital contribution Showboat has
made to the Company. In case of a sale by Showboat of all of its
Interest under this Section, the Management Agreement shall
terminate upon the consummation of such sale.
19.21 PRESS RELEASES
The Company shall establish policies and procedures
regarding the issuance of any press release. No press release
shall be issued except as prepared in accordance with such
policies and procedures. Press releases of any Member or its
Affiliates concerning the Project or the Company shall be
submitted to the Company in accordance with the policies and
procedures for the Company's approval, with the exception of any
press releases required to be made by any Member or its
Affiliates pursuant to various securities laws applicable to such
Member or its affiliates.
19.22 UNCERTAINTIES
Due to the fact that, among other things: (i) gaming
legislation has not been enacted in New Hampshire; (ii) gaming
regulations have not been adopted; and (iii) gaming licenses have
not been issued (each of the foregoing are collectively referred
to herein as "Uncertainties"), Showboat and Rockingham agree to
cooperate with each other and respect each other's opinions in
resolving issues which may arise after the date hereof. The
Parties acknowledge that legislation which has been considered by
the New Hampshire Legislature requires that gaming licenses be
limited to the holders of pari-mutuel licensees or entities in
which they have an interest. In the event that such legislation,
or similar legislation, is enacted, certain remedies set forth in
this Limited Liability Company Agreement may not be available to
Showboat.
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19.23 ADDITIONAL UNDERSTANDINGS
(a) The Parties acknowledge and agree that under no
circumstances shall any of the remedies or rights set forth in
this Limited Liability Company Agreement be exercised in any way
which would adversely affect the operation of pari-mutuel
wagering, simulcasting and inter-track wagering conducted by
Rockingham at Rockingham Park, including, without limitation, any
requirement that Rockingham sell all or any portion of its
interest in Rockingham Park or Rockingham Venture Inc.
(b) Notwithstanding any other provision of this Limited
Liability Company Agreement to the contrary, all remedies of
Showboat, whether under this Limited Liability Company Agreement,
under law, or at equity against Rockingham, shall be limited in
recourse to Rockingham's Interest and the profits and
distributions resulting therefrom. Under no circumstances shall
Showboat have recourse against the Rockingham Shareholders or
assets of Rockingham other than Rockingham's Interest.
(c) Notwithstanding any other provision of this Limited
Liability Company Agreement, the Parties acknowledge and agree
that the performance of any of the obligations set forth herein
by Rockingham may be subject to (i) restrictions contained in the
Loan and Trust Agreement dated as of December 1, 1983 and as
amended (the "Senior LTA"), by and among the Business Development
Authority of the State of New Hampshire (the "Authority"),
Rockingham, and the First National Bank of Boston, as Trustee
(the "Trustee"); and (ii) provisions of RSA 284 and the
regulations promulgated by the New Hampshire Pari-Mutuel
Commission. Based upon the foregoing, any obligations to be
performed by Rockingham pursuant to this Limited Liability
Company Agreement may be subject to enactment of laws authorizing
Limited Gaming or Full Gaming, consent of the Trustee and the
Authority, approval of the New Hampshire Pari-Mutuel Commission,
and compliance with all applicable regulations of the New
Hampshire Pari-Mutuel Commission.
ARTICLE XX. CONFIDENTIALITY AND NON-USE
20.1 DISCLOSURE OF PROPRIETY INFORMATION
Unless otherwise provided for herein, each Party hereto
agrees for itself and its respective Affiliates, agents,
representatives and consultants that it shall not disclose,
reveal or make available to any third party, and that it shall
take all steps necessary or desirable to prevent the Company from
disclosing, revealing or making available to any third party, any
confidential or proprietary information, whether of a technical,
financial, commercial or other nature ("Confidential
Information"), received directly or indirectly from or in respect
of any other Party or in respect of the Company, except as
authorized in writing by such other Party (or in the case of the
Company by all parties) and except that either Party may disclose
such information:
(a) to its employees, agents, representatives and
consultants or employees of the Company to whom, and to the
extent that, such disclosure is necessary in furtherance of the
purposes of this Agreement, provided, however, that the
disclosing Party shall be responsible for ensuring that such
persons comply with the confidentiality and non-use provisions of
this Article
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XX, and shall take the steps necessary to ensure such compliance,
whether by agreement, establishment of internal regulations, or
otherwise; or
(b) to the extent required by applicable law, judicial or
administrative process or by any Governmental Authority.
20.2 USE OF PROPRIETARY INFORMATION
Each Party hereto agrees that it shall not use and that it
shall take all steps necessary or desirable to prevent the
Company from using, any Confidential Information received from
another Party or from the Company except as specifically provided
in this Agreement or as otherwise expressly authorized in writing
by the relevant Party (or in the case of the Company by all
Parties).
20.3 DESTRUCTION OR RETURN OF CONFIDENTIAL INFORMATION
All documents received by a Party (the "Receiving Party")
containing Confidential Information of another Party or the
Company and all documents derived or prepared from such documents
and all copies thereof shall be inventoried by the Receiving
Party, marked with a suitable label to indicate their
confidential status (to the extent such documents are not already
so marked) and segregated from all other papers of the Receiving
Party. Upon termination of this Agreement for any reason, such
documents and all copies thereof in the possession or control of
the Receiving Party or its present or former employees, agents,
representatives, or consultants relating to the Confidential
Information of the other Party (the "Disclosing Party") shall be
destroyed under the supervision of the Disclosing Party or
returned to the Disclosing Party, at the Disclosing Party's
discretion, and the receiving Party shall immediately cease using
the Confidential Information of the disclosing Party.
20.4 EXCEPTION
A Party (in this Section 20.4, the "Disclosing Party") shall
not be obligated to keep confidential or shall not incur any
liability for the use or disclosure to a third party of any
information that (i) has fallen into the public domain through no
unauthorized act of the Disclosing Party; (ii) was received from
a third party not under any obligation to refrain from revealing
such information; or (iii) was in the Disclosing Party's
possession prior to the receipt from another Party or the
Company.
20.5 SURVIVAL
Notwithstanding anything to the contrary herein, the
provisions of this Article XX shall survive and inure to the
benefit of and be binding upon the Parties for a period of five
(5) years subsequent to the date of termination of this
Agreement.
ARTICLE XXI. ARBITRATION
21.1 APPOINTMENT OF ARBITRATORS
If any dispute shall arise or if any issue left open
hereunder cannot be resolved between the Parties hereto after
negotiating in good faith to reach a just and equitable solution
satisfactory to
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the Parties within fifteen (15) days, such dispute is to be
referred first to a committee of four persons who shall meet in
an attempt to resolve said dispute or open issue. The committee
shall consist of two persons appointed by Rockingham and two
persons appointed by Showboat. If an agreement cannot be reached
to resolve the dispute by the committee within fifteen (15) days,
the dispute or open issue will be resolved by binding arbitration
before arbitrators having not less than 10 years experience in
the gaming industry. In the event an appraisal of the Project or
other assets needs to be performed, such appraisal is to be
settled by binding arbitration before arbitrators having not less
than 10 years experience in the gaming industry. Any award of the
arbitrators may be filed in a court of law as a final judgment.
Any such arbitration shall be in accordance with the rules and
regulations adopted by the American Arbitration Association or as
the Parties otherwise agree. Either Party may serve upon the
other Party a written notice of the demand that the dispute or
appraisal is to be resolved pursuant to this Article. Within
thirty (30) days after the giving of such notice, each of the
Parties hereto shall nominate and appoint an arbitrator (or
appraiser, as the case may be) and shall notify the other Party
in writing of the name and address of the arbitrator so chosen.
Upon the appointment of the two arbitrators as HEREINABOVE
provided, said two arbitrators shall forthwith, within fifteen
(15) days after the appointment of the second arbitrator, and
before exchanging views as to the question at issue, appoint in
writing a third arbitrator ("Selected Arbitrator") and give
written notice of such appointment to each of the Parties hereto.
In the event that the two arbitrators shall fail to appoint or
agree upon the Selected Arbitrator within said fifteen (15) day
period, the Selected Arbitrator shall be selected by the Parties
themselves if they so agree upon such Selected Arbitrator within
a further period of ten (10) days. If a Selected Arbitrator shall
not be appointed or agreed upon within the time herein provided,
then either Party on behalf of both may request such appointment
in accordance with the American Arbitration Association.
Rockingham and Showboat shall share equally the cost of the
Selected Arbitrator. Said arbitrators shall be sworn faithfully
and fairly to determine the question at issue. The arbitrators
shall afford to Rockingham and Showboat a hearing and the right
to submit evidence, with the privilege of cross-examination, on
the question at issue, and shall with all possible speed make
their determination in writing and shall give notice to the
Parties hereto of such determination. The concurring
determination of any two of said three arbitrators shall be
binding upon the Parties, or, in case no two of the arbitrators
shall render a concurring determination, then the determination
of the Selected Arbitrator shall be binding upon the Parties
hereto. Each Party shall pay the fees of the arbitrator appointed
by it, and the fees of the Selected Arbitrator shall be divided
equally between Rockingham and Showboat.
21.2 INABILITY TO ACT
In the event that an arbitrator appointed as aforesaid shall
thereafter die or become unable or unwilling to act, his
successor shall be appointed in the same manner provided in this
Article for the appointment of the arbitrator so dying or
becoming unable or unwilling to act.
ARTICLE XXII. FORCE MAJEURE
22.1 FORCE MAJEURE DEFINED
The following events are beyond the control of either
Partner (a "Force Majeure Event"):
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(a) The unavailability of financing in the marketplace
except at rates in excess of eighteen and one/half (18 1/2%) per
annum, inclusive of cash flow participation interests.
(b) A delay in the opening of the Project for more than one
hundred eighty (180) days after the opening date is established
by the Company or a closure of the Project after Opening for more
than one hundred eighty (180) days.
(c) Any other event which materially alters the assumptions
and underlying facts upon which this Agreement is based and which
is reasonably expected by both Members pursuant to a projection
prepared within 90 days of the commencement of Gaming Activities
to reduce the projected internal rate of return to Showboat by
more than thirty percent (30%) compared to such projection.
22.2 ACTIONS TO RESOLVE FORCE MAJEURE EVENTS
In the event of a Force Majeure Event the Members agree to
first meet in a good faith effort to mutually agree on
appropriate courses of action to be taken in connection with a
Force Majeure Event, including the economic effect thereof. In
the event that the Members fail to agree on a course of action
then either Member may terminate this Agreement on thirty
days (30) written notice to the other Member. In the event of
such termination, Showboat shall recover its total equity
contributions to the date of termination in the following manner:
(i) as a subordinated obligation of Rockingham's new
"replacement" gaming venture if Rockingham is successful in
commencing non-racing gaming operation; (ii) repayments of the
equity contributions shall commence five years after the
"replacement" gaming venture commences operations; and (iii) no
interest shall accrue on Showboat's equity contribution until the
repayment of the debt commences in accordance with
subparagraph (ii) above. Interest shall accrue at 18% per annum.
ARTICLE XXIII. TERMINATION
23.1 TERMINATION EVENTS
This Agreement shall terminate upon the occurrence of the
following:
(a) on December 31, 1999, in the event that the New
Hampshire legislature has not enacted legislation permitting
Gaming Activities at a facility such as the Rockingham Park ,
provided, however, Showboat in its sole and absolute discretion
may extend the time period for two successive twelve month
periods in the event such legislation is believed to be imminent;
(b) upon the effective date of passage of legislation
making it unlawful to operate Gaming Activities in the state of
New Hampshire or the entry of an order or judgment from a court
of appropriate jurisdiction declaring such legislation
unconstitutional or invalid under the laws of the state of New
Hampshire (the termination shall be delayed if any court order is
duly appealed and its effectiveness is suspended);
(c) thirty (30) days after the New Hampshire Gaming
Authority denies Rockingham or Showboat any gaming license
necessary to conduct gaming at the Project;
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(d) upon Showboat's failure to secure and maintain all
approvals from Governmental Authorities governing or regulating
Showboat or its Affiliates to conduct gaming in the state of New
Hampshire.
(e) Showboat fails, after making good faith efforts to meet
its financing obligations.
(f) upon a change in the ownership of Showboat, Inc. or
its Affiliates resulting in a change in the control of Showboat,
unless Rockingham consents within thirty (30) days prior to the
change in control of Showboat, which consent may not be
unreasonably withheld, in writing to such change in control. For
purposes of this section, "control" means the possession,
directly of indirectly, of the power to direct or cause the
direction of the management and policies of a person or entity,
whether through the ownership of voting securities, by contract
or otherwise. Control shall have deemed to occur where a Person
owns more than 35% or more of a publicly traded corporation, or
more than 50% of a non-publicly traded corporation.
(g) upon mutual agreement of the parties.
23.2 NOTICE OF TERMINATION
In the event of an occurrence specified in Section 23.1 (a)
through (f), either Showboat or Rockingham, as appropriate, shall
terminate this Agreement by giving five (5) day's written notice,
and the Term of this Agreement shall expire by limitation at the
expiration of said last day specified in the notice as if said
date was the date herein originally fixed for the expiration of
the Term hereof.
23.3 REMEDIES UPON TERMINATION
(a) Prior to Commencing Gaming Operations.
(i) In the event of an occurrence specified in Section
23.1(a) or (b) or in the event of an occurrence specified in
Section 23.1(c), (d) or (f) and neither Member continues in the
development of the Project the Company shall be liquidated and
each Member shall receive its pro rata share of the liquidation
proceeds.
(ii) In the event of an occurrence specified in
Section 23.1(c), (d), (e) or (f) which terminates this Agreement
but the other party continues to participate in the development
of the Project, then the withdrawing Member shall be paid by the
non-withdrawing Member the value of the withdrawing Member's
equity contributions to the date of termination as specified in
Section 4.1 in the following manner: (i) as a subordinated
obligation of the non-withdrawing Member's new "replacement"
gaming venture; (ii) repayments of the equity contributions,
including, if the withdrawing Member is Showboat, the then
principal balance and accrued but unpaid interest on the Capital
Loan, shall commence five years after the "replacement" gaming
venture commences operations; and (iii) no interest shall accrue
on the equity contributions until the repayment of the debt
commences in accordance with subparagraph (ii) above. Interest
shall accrue on the equity contributions at 18% per annum.
(b) After Commencing Gaming Operations.
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(i) In the event of the occurrence specified in
Section 23.1(b), each Member agrees to work with the other to
minimize each Member's loss.
(ii) In the event of an occurrence specified in
Section 23.1(c), (d) or (f), the non-defaulting Member shall
purchase the defaulting Member's interest in this Agreement
pursuant to Article IX. The purchase price shall be reduced by
the damage suffered by the non-defaulting Member.
ARTICLE XXIV. NOTICES
All notices provided for in this Agreement or related to
this Agreement, which any Member desires to serve on the other,
shall be in writing, and any and all notices or other papers or
instruments related to this Agreement shall be deemed
sufficiently served or delivered on the date of mailing if sent
(i) by United States registered or certified mail (return receipt
requested), postage prepaid, in an envelope properly sealed, (ii)
by a facsimile transmission where written acknowledgment of
receipt of such transmission is received and a copy of the notice
is mailed with postage prepaid, or (iii) by a nationally
recognized overnight carrier service providing for receipted
delivery, addressed as follows:
Showboat: with a copy to:
J.K. Houssels, III John N. Brewer, Esq.
President Kummer Kaempfer Bonner &
Showboat New Hampshire Renshaw
Inc. 3800 Howard Hughes
6601 Ventnor Avenue Parkway
Ventnor, NJ 08046 Seventh Floor
Las Vegas, NV 89109
Rockingham: with a copy to:
Joseph E. Carney, Jr. Thomas Carney
President Suite 200
Rockingham Venture, Inc. 1101 North Congress
Rockingham Park Avenue
Rockingham Park Boulevard Boynton Beach, Florida
Salem, NH 03079 33426
Either Rockingham or Showboat may change the address or name
of addressee applicable to subsequent notices (including copies
of said notices as hereinafter provided) or instruments or other
papers to be served upon or delivered to the other party, by
giving notice to the other party as aforesaid, provided that
notice of such change shall not be effective until the fifth day
after mailing or facsimile transmission.
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IN WITNESS WHEREOF, this Limited Liability Company Agreement
was adopted by a unanimous vote of all the Members of this
Company at the organizational meeting thereof held on
___________________, 1995.
Members:
ROCKINGHAM VENTURE, INC.,
a New Hampshire corporation
By:________________________________
Joseph E. Carney, Jr.
President
SHOWBOAT NEW HAMPSHIRE, INC.,
a Nevada corporation
By: /s/ J.K. Houssels, III
J.K. Houssels, III
President
ACKNOWLEDGED AND AGREED TO
WITH RESPECT TO ARTICLES VII AND
IX ONLY:
Rockingham Shareholders:
___________________________________
___________________________________
___________________________________
___________________________________
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EXHIBIT 3. THE COMMON AREA
1.01 THE COMMON AREA DEFINED
Rockingham shall continue to separately operate its racing
business at Rockingham Park. Accordingly, portions of Rockingham
Park will be available to the patrons, invitees, employees and
licensees of the Company and Rockingham as a Common Area. The
Common Area shall be all areas within Rockingham Park which are
made available as hereinafter provided for the general use,
convenience and benefit of the Company, Rockingham and their
respective patrons, invitees, employees, and licensees. The
Common Area includes, but is not limited to, common entrances,
lobbies, malls, restrooms (not located within the areas
exclusively controlled by the Company or Rockingham), elevators,
stairways and accessways, loading docks, ramps, drives, platforms
and any passageways and serviceways thereto, parking areas,
roadways, sidewalks, walkways, driveways and utility lines and
systems, employee locker rooms, employee lunch rooms, employee
parking, executive offices, boiler room, delivery areas and
loading docks, storage areas, trash receptacles, and other areas
specified for the joint use of Rockingham and the Company, or
their agents, employees or affiliates.
1.02 THE COMPANY'S EASEMENT TO USE THE COMMON AREA
(a)(i) Rockingham grants the Company a nonexclusive
easement to use the Common Area and to permit the Company's
patrons, employees and invitees, as appropriate, to use the
Common Area. The easement may be enjoyed in common with
Rockingham and its employees and invitees.
(a)(ii) Rockingham may grant utility easements over and
under portions of the Common Area to utility companies and
governmental entities and to their employees and contractors as
long as such easements do not materially interfere with the use
thereof.
(b)(i) Any use of, or construction in the Common Area
pursuant to this Section shall be conducted with due regard for
the businesses operated by the Company and Rockingham at
Rockingham Park. The use of or construction in the Common Area
shall also be conducted with due regard for the convenience and
comfort of the customers of Rockingham and the Company to use the
Common Area for parking, passage, maneuvering, egress, ingress,
loading and unloading. Accordingly, during any period in which
the Company is conducting business, Rockingham shall endeavor to
avoid, to the extent possible and economically reasonable,
unreasonable noise levels as a result of construction or
excavation in the Common Area, and Rockingham shall take
reasonable steps to prevent any obstructions, as well as dust and
debris from the areas of construction and excavation from coming
onto other portions of the Common Area or the Premises.
Additionally, any construction work shall be conducted in a
manner so as to not materially interfere with the business of
Rockingham. Rockingham and the Company shall consult with each
other as to the scheduling of and sequence of construction work
and shall conduct such work at times which will not materially
interfere with their respective operations.
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1.03 OPERATION AND MAINTENANCE OF COMMON AREA
(a) STANDARDS. From and after the date upon which the
Project is open for business, Rockingham shall operate, or cause
to be operated, the Common Area in good order, condition and
repair. Rockingham shall have the right to select from time to
time, a person or persons, other than Rockingham to operate and
maintain the Common Area, provided, however, that such selection
shall not diminish Rockingham's responsibility for such operation
and maintenance.
Without limiting the generality of the foregoing,
Rockingham, in the operation and maintenance of the Common Area,
shall do all things necessary and appropriate in a manner
consistent with the operation of a first-class gaming facility,
including but not limited to:
(i) Maintain the floor of the Common Area smooth and
evenly covered with the type of flooring material originally
installed thereon, or such substitute thereof as shall be in all
respects equal in quality, appearance and durability.
(ii) Remove all papers, debris, filth and refuse from
the Common Area and wash or thoroughly sweep the surface of the
Common Area with frequency sufficient to maintain a clean,
attractive appearance.
(iii) Clean lighting fixtures within the Common Area
and relamp and reballast as needed.
(iv) Maintain and replace the landscaping within the
Common Area in a first-class manner, with plants and materials in
good thriving condition, which create an attractive appearance.
(v) Maintain all signs and lighting fixtures of the
Common Area in a clean and orderly condition, including relamping
and repairing as may be required, and all such signs and lighting
fixtures must provide appropriate illumination.
(vi) Employ courteous and well-trained personnel to
patrol the Common Area to maintain a safe and secure atmosphere
during business hours, and thereafter, during such other hours as
may be deemed necessary.
(vii) Maintain and keep in a clean and sanitary
condition public restrooms and all other common use facilities
within the Common Area including any drainage systems.
(viii) Clean, repair and maintain all utility systems
that are a part of the Common Area.
(ix) Clean and maintain the structure of the Clubhouse
of Rockingham Park, the roof, skylights, wall surfaces, doors and
other appurtenances to the Clubhouse.
(x) Maintain the heating, ventilating and cooling
system of the Common Area, if applicable, in good order,
condition and repair, so that at all times the same shall operate
at least during the same hours of the same days that the heating,
ventilating and cooling system are serving the Project or the
Rockingham Race Track.
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(xi) Maintain such appropriate automobile parking area
entrance, exit and directional signs, markers and lights in
Rockingham Park as shall be reasonably required.
(xii) Repaint striping, markers, directional signs,
etc., as necessary to maintain in first-class condition the
parking area.
(xiii) Comply with all laws, including zoning laws and
the Americans With Disabilities Act, in the management and
operation of the Common Area.
1.04 COMMON AREA MAINTENANCE COST
The term "Common Area Maintenance Cost" refers to and means
the total of all monies paid out during a fiscal year by
Rockingham for reasonable costs and expenses directly relating to
the maintenance, repair, operation and management of the Common
Area. All costs shall be prorated in a mutually agreeable basis
between Rockingham and the Company based upon the relationship
which the Common Area contributed to the Company bears to total
Common Areas in Rockingham Park. Such costs shall include, but
not be limited to:
(i) All rental charges for equipment and costs of
small tools and supplies;
(ii) All acquisition costs of maintenance equipment
which cannot be capitalized;
(iii) Policing, security protection, traffic
direction, control and regulation of the parking areas and areas
of ingress and egress;
(iv) The cost of cleaning and removal of rubbish, dirt
and debris from the Common Area;
(v) The cost of landscape maintenance and supplies for
the Common Area;
(vi) All charges for utilities services utilized in
connection with the Common Area together with all costs of
maintaining lighting fixtures and the cost of repairing and
maintaining common utility lines in the Common Area (in the event
that utility services are not separately metered, utilities shall
be prorated on a mutually agreeable basis between Rockingham and
the Company based upon the relationship which the Common Area
controlled by the Company bears to the total Common Areas of
Rockingham Park);
(vii) Premiums for all fire and extended coverage,
public liability and property damage insurance carried by
Rockingham on the Rockingham Park under the provisions of this
Agreement, or by law or regulation;
(viii) All real property taxes and assessments on the
Common Area required to be paid by Rockingham;
(ix) All accounting and salary costs for the
management of the Common Area.
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1.05 ACCOUNTING
Rockingham shall keep complete and accurate books and
records, in accordance with generally accepted accounting
principles consistently applied, of the Common Area Maintenance
Cost and shall retain those books and records at its principal
office at Rockingham Park. Rockingham shall preserve for a
period of five (5) years following the date of the payments by
the Company of its respective portion of the Common Area
Maintenance Cost all such books and records, including any
payroll and time records, vouchers, receipts, correspondence and
memos pertaining to the Common Area Maintenance Cost. The
Company has the right, during the performance of the Common Area
maintenance by Rockingham and for the aforesaid period of
five (5) years following its respective payments of the Common
Area Maintenance Cost, to examine and audit such books and
records, including the right to copy a portion or portions
thereof, at reasonable times during business hours, upon notice
to Rockingham given not less than five (5) days in advance of any
such examination. In the event that any audit shall disclose any
error in the determination of the amount of Common Area
Maintenance Cost, an appropriate adjustment shall promptly be
made to correct the Common Area Maintenance Cost and the
Company's share of Common Area Maintenance Cost. If the Common
Area Maintenance Cost or any party's share shall have been
overstated by more than three percent (3%), Rockingham shall pay,
at its sole cost and expense, all of the reasonable costs and
expenses connected with such audit.
1.06 PLANS AND BUDGETS
(a) Rockingham shall furnish the Company with a Common Area
Budget, a preliminary budget within one hundred twenty (120) days
following the enabling legislation and a definitive Common Area
Budget, on or before ninety (90) calendar days prior to the
opening of the Project which budget shall be for the period
commencing on the first business day on which the Project begins
gaming operations until December 31. On or before October 1 of
each year Rockingham shall furnish the Company with a Common Area
Budget for the next calendar year. Rockingham shall use its best
efforts to comply with the Common Area Budget.
(b) The Company shall approve or disapprove the Common Area
Budget within twenty (20) days of receipt of the budget, provided
that if Company does not give written notice to Rockingham of its
approval or disapproval within such time period, the Common Area
Budget shall be deemed approved. In the event that the Company
disagrees with any line item contained in the Common Area Budget,
the Company shall discuss its disagreement with Rockingham.
Rockingham will, within ten (10) days of notice of the Company's
disagreement, offer constructive corrections to resolve the
Company's concerns. During any period that Owner disapproved of
the Common Area Budget, Rockingham will continue to maintain the
Common Area in accordance with the Common Area Budget for the
preceding year as the same may be adjusted for increases year-to-
year in the Consumer Price Index applicable to the Salem, New
Hampshire area.
(c) The Common Area Budget may be amended from time to time
with the Company's approval, which approval shall not be
unreasonably withheld or delayed, after submission by Rockingham
or the Company, as applicable, of the amendments to such budget
and the rationale for such amendments.
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MANAGEMENT AGREEMENT
BY AND AMONG
SHOWBOAT ROCKINGHAM COMPANY, LLC,
SHOWBOAT OPERATING COMPANY
AND
ROCKINGHAM VENTURE, INC.
<PAGE>
MANAGEMENT AGREEMENT
TABLE OF CONTENTS
PAGE
ARTICLE 1. RECITALS AND DEFINITIONS 2
ARTICLE 2. PRE-ENACTMENT PERIOD 7
Section 2.01 No Current Legislation 7
Section 2.02 Duties During Pre-enactment Period 7
ARTICLE 3. APPOINTMENT/TERM/OPTION TO EXTEND TERM 7
Section 3.01 Appointment 7
Section 3.02 Term 7
Section 3.03 Opening the Project 7
ARTICLE 4. OWNER AND MANAGER DEVELOPMENT OBLIGATIONS DURING
DEVELOPMENT TERM 8
Section 4.01 Construction of Project/Compliance with Law 8
Section 4.02 Engagement of Manager As Consultant 8
Section 4.03 Preliminary Plans and Specifications 8
Section 4.04 Pre-Opening Committee 8
Section 4.05 Obligations during Development Term. 9
Section 4.06 Construction 9
Section 4.07 Pre-Opening Services by Manager. 9
Section 4.08 Payment of Pre-Opening Expenses 9
ARTICLE 5. OPERATIONS 9
Section 5.01 Accounting Procedures and Services Books and
Records 9
Section 5.02 Manager's Access to Gaming Financial Records 10
Section 5.03 Audits 10
Section 5.04 Monthly Financial Statements 10
Section 5.05 Expenses 11
Section 5.06 Standards. 11
Section 5.07 Plans and Budgets. 12
Section 5.08 Management 13
Section 5.09 Bank Accounts 14
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Section 5.10 Owner's Advances 14
Section 5.11 Cooperation of Owner and Manager 15
Section 5.12 Financing Matters. 15
Section 5.13 Conflict of Interest/Non-Competition 16
ARTICLE 6. MANAGEMENT FEE 16
Section 6.01 Payments to Manager. 16
ARTICLE 7. MANAGER'S RIGHT OF FIRST REFUSAL FOR CONCESSIONS 17
ARTICLE 8. REAL PROPERTY TAXES AND ASSESSMENTS, AND PAYMENTS
TO THE GAMING AUTHORITY 17
Section 8.01 Payment of Real Estate Taxes and Assessments 17
Section 8.02 Exceptions 17
ARTICLE 9. USE AND OCCUPANCY OF THE PROJECT 18
Section 9.01 Uses 18
Section 9.02 Showboat Marks 18
Section 9.03 Rockingham Marks 18
ARTICLE 10. MAINTENANCE AND REPAIRS 18
Section 10.01 Owner's Maintenance and Repairs 18
ARTICLE 11. INSURANCE AND INDEMNITY 19
Section 11.01 Owner Insurance Obligations 19
Section 11.02 Parties Insured 20
Section 11.03 Approved Insurance Companies 20
Section 11.04 Approval of Insurance Coverage 21
Section 11.05 Failure to Obtain Required Insurance 21
Section 11.06 Waiver of Subrogation 21
Section 11.07 Mutual Cooperation 21
Section 11.08 Delivery of Insurance Policies 21
Section 11.09 Indemnification by Manager 21
Section 11.10 Indemnification by Owner 22
Section 11.11 Selection of Counsel/Conduct of Litigation 22
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<PAGE>
ARTICLE 12. CASUALTY 23
ARTICLE 13. TAKING OF THE PROJECT 23
Section 13.01 Definitions. 23
Section 13.02 Entire Taking of the Support Areas 23
Section 13.03 Duty to Restore 24
ARTICLE 14. DISPOSITION OF INSURANCE PROCEEDS AND AWARDS 24
Section 14.01 Trustee 24
Section 14.02 Deposits of Insurance Proceeds and Awards 24
Section 14.03 Procedure for Distribution of Insurance
Proceeds and Awards 24
ARTICLE 15. ASSIGNMENT AND SUBLETTING 26
ARTICLE 16. AFFIRMATIVE COVENANTS OF MANAGER 26
Section 16.01 Corporate Status 26
Section 16.02 Compliance with Laws 26
Section 16.03 Gaming Approvals 27
Section 16.04 Confidential Information 27
Section 16.05 Gaming Applications 27
Section 16.06 Compliance With Other Agreement 27
ARTICLE 17. AFFIRMATIVE COVENANTS OF OWNER 27
Section 17.01 Corporate Status 27
Section 17.02 Maintenance of Insurance 28
Section 17.03 Compliance with Laws 28
Section 17.04 Cooperation with Gaming Authorities 28
Section 17.05 Confidential Information 28
Section 17.06 Compliance with Loan Covenants 29
Section 17.07 Non-Interference 29
Section 17.08 Gaming Applications 29
Section 17.09 Title/Quiet Enjoyment 29
ARTICLE 18. REPRESENTATIONS AND WARRANTIES 29
Section 18.01 Owner Corporate Status 29
Section 18.02 Manager Corporate Status 29
Section 18.03 Authorization/No Conflict 30
Section 18.04 Permits/Approvals 30
Section 18.05 Accuracy of Representations 30
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Section 18.06 Maintenance of Gaming and Other Licenses 30
Section 18.07 Condition of Project During Term 30
Section 18.09 Impair Reputation 31
ARTICLE 19. ARBITRATION 31
SECTION 19.01 APPOINTMENT OF ARBITRATORS 31
SECTION 19.02 INABILITY TO ACT 32
ARTICLE 20. DEFAULT/STEP-IN RIGHTS 32
Section 20.01 Definition 32
Section 20.02 Manager's Defaults 32
Section 20.03 Step-In Rights 33
Section 20.04 Owner's Default 33
Section 20.05 Bankruptcy 34
Section 20.06 Reorganization/Receiver 34
Section 20.07 Delays and Omissions 34
Section 20.08 Disputes in Arbitration 34
ARTICLE 21. TERMINATION 34
Section 21.01 Terminating Events 34
Section 21.02 Notice of Termination 35
Section 21.03 Remedies Upon Termination. 35
Section 21.04 Delivery of Project 35
ARTICLE 22. HAZARDOUS MATERIALS 36
Section 22.01 No Hazardous Materials 36
Section 22.02 Compliance With Laws 36
Section 22.03 Indemnification By Owner 36
Section 22.05 Hazardous Material Defined 37
ARTICLE 23. NOTICES 37
ARTICLE 24. MISCELLANEOUS 38
Section 24.01 Time of the Essence 38
Section 24.02 Heirs, Successors, Assigns 38
Section 24.03 Construction 38
Section 24.04 Governing Law 38
Section 24.05 Severability 38
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Section 24.06 Relation of the Parties 38
Section 24.07 No Broker or Finder 38
Section 24.08 Attorneys' Fees 39
Section 24.09 Entire Agreement 39
Section 24.10 Counterparts 39
Section 24.11 Force Majeure 39
Section 24.12 No Warranties 39
Section 24.13 Headings 39
Section 24.14 Waiver 40
v
<PAGE>
MANAGEMENT AGREEMENT
This Management Agreement ("Agreement") is dated as of
July 27, 1995, and is made and entered into by and among Showboat
Rockingham Company, L.L.C., a New Hampshire limited liability
company or its successors and assigns ("Owner"), whose address is
Rockingham Park Boulevard, Salem, New Hampshire 03079, Showboat
Operating Company, a Nevada corporation, or its successors and
assigns ("Manager"), whose address is 2800 Fremont Street, Las
Vegas, Nevada 89104, and Rockingham Venture, Inc., a New
Hampshire corporation, whose address is Rockingham Park
Boulevard, Salem, New Hampshire 03079.
RECITALS
A. An affiliate of Manager lent $8.85 million to Rockingham
Venture, Inc., a New Hampshire corporation ("Rockingham") and a
member of Owner, in consideration of, among other things, the
ownership of and management of a non-racing gaming business at
Rockingham Park ("Rockingham Park").
B. Rockingham and an Affiliate of Manager have formed, as
of the date hereof, Owner.
C. Upon the enactment of legislation permitting a gaming
business Owner shall design and develop the Project (defined in
Article 1) in order to conduct a gaming business at Rockingham
Park.
D. Manager has experience in designing gaming premises, and
in starting up and conducting a gaming business.
E. Owner desires to engage Manager as a consultant to Owner
in designing the gaming area, training staff and installing
gaming equipment for public use, and, upon completion of the
construction of the Project and/or rehabilitation of the area
designated for the Project and all ancillary facilities,
including the receipt of all gaming and other approvals, to
manage and operate the Project.
F. Manager desires to be engaged as a consultant to assist
in the design of the gaming area of the Project and, upon
completion of the construction of the Project and/or
rehabilitation of the area designated for the Project , to manage
and operate the Project.
G. Owner and Manager desire to set forth their agreements
as to the development and management of the Project and the
proposed non-racing gaming operations at Rockingham Park in the
event and with the expectation that (i) the State of New
Hampshire enacts legislation which permits a privately owned non-
racing gaming business to operate at a racetrack such as
Rockingham Park and (ii) the gaming licensing authority specified
in the legislation permitting gaming selects and licenses both
Owner and Manager.
<PAGE>
H. Owner and Manager acknowledge their mutual desire to
enter into this Agreement despite the numerous uncertainties
which must be resolved or clarified to each party's satisfaction.
Both parties undertake to negotiate in good faith in a timely
fashion such addenda to this Agreement as are necessary to
continue the effectiveness of this Agreement and to revise the
assumptions and underlying facts upon which this Agreement is
based.
NOW, THEREFORE, in consideration of the mutual promises
contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, and with the intention of being bound by this
Agreement, the parties stipulate and agree as follows:
ARTICLE 1. RECITALS AND DEFINITIONS
The foregoing Recitals are true and correct.
The following defined terms are used in this Agreement:
"Affiliate" shall mean a person who, directly or indirectly,
or through one or more intermediaries, (i) controls, is
controlled by, or is under common control with the Person in
question; (ii) is an officer, director, 5% stockholder, partner
in or trustee of any Person referred to in the preceding clause;
or (iii) is a spouse, father, mother, son, daughter, brother,
sister, uncle, aunt, nephew, niece or grandchild of any Person
described in clauses (i) and (ii).
"Agreement" shall mean this Management Agreement as
originally executed and as amended, modified, supplemented, or
restated from time to time, as the context may require.
"Audit Day" is defined in Section 5.03.
"Audited Statements" is defined in Section 5.03.
"Award" is defined in Section 13.01.
"Bad Debts" shall mean the amount equal to gaming accounts
receivables which have not been collected for more than 120 days.
"Bank Accounts" is defined in Section 5.09.
"Bankroll" shall mean an amount reasonably determined by
Manager as funding required to bankroll Gaming Activities, but in
no case less than the amount required by New Hampshire gaming
law. In no event shall such Bankroll include amounts necessary
to cover Operating Expenses or Operating Capital. Bankroll shall
include the funds located on the tables, if permitted, in the
gaming devices, cages, vault, counting rooms, or in any other
location in the Gaming Area where funds may be found and funds in
a bank account identified by Owner for any additional amount
required by New Hampshire gaming law or such other amount as is
reasonably determined by Manager.
2
<PAGE>
"Business Days" shall mean all weekdays except those that
are official holidays of the state of New Hampshire or the US
government. Unless specifically stated as "Business Days," a
reference in this Agreement to "days" means calendar days.
"Commencement Date" shall mean the first day on which a
revenue-paying customer is admitted to the Project.
"Construction" shall mean the construction of new stand-
alone facilities, construction of additions to existing
facilities and/or rehabilitation of existing facilities as each,
any or all relate to the Project.
"Control" shall mean, in relation to a Person that is a
corporation, the ownership, directly or indirectly, of voting
securities of such Person carrying more than 50% of the voting
rights attaching to all voting securities of such Person and
which are sufficient, if exercised, to elect a majority of its
board of directors; "Controls" and "Controlled" shall have
similar meanings.
"Cooperation Agreement" shall mean that certain agreement
between Rockingham Venture, Inc. and Owner dated ________, 1995.
"Default" or "Event of Default" is defined in Section 20.01.
"Default Interest Rate" shall mean prime rate published in
the WALL STREET JOURNAL, Money Rate Section, plus 4% per annum.
"Development Term" shall mean the period beginning on the
date of this Agreement and ending on the Commencement Date.
"Earnings" shall mean Gross Revenues less Operating
Expenses.
"Effective Date" is defined in Section 3.02.
"FF&E" shall mean all furniture, furnishings, equipment, and
fixtures, including gaming equipment, computers, housekeeping and
maintenance equipment, necessary or convenient to the operations
of the Project in conformity with this Agreement and in
accordance with applicable law.
"Full Gaming" shall mean that the enabling legislation
permits privately owned non-racing gaming to (i) more than 500
electronic games of chance or skill at the Project or (ii) any
combination of games, which includes table games.
"Gaming Activities" shall mean the cage, table games, slot
machines, video machines, electronic games of chance, electronic
games of skill, or any other form of gaming managed by Manager in
the Gaming Area.
"Gaming Area" shall mean those areas reserved for the
operation of electronic games of chance or skill, table games or
any other legal forms of gaming permitted under applicable law,
which may include reservations and admissions, cage, vault, count
room, surveillance room and
3
<PAGE>
any other room or area or activities therein regulated or taxed
by the Gaming Authority by reason of gaming operations.
"Gaming Authority" shall mean the New Hampshire gaming
commission or other such body or bodies set forth in the enabling
legislation or regulations promulgated thereunder.
"Gaming Taxes" shall mean any tax imposed by the
Governmental Authorities on Gross Gaming Revenue.
"Governmental Authorities" shall mean the United States, the
state of New Hampshire, county of Rockingham, Town of Salem, any
other political subdivision in which the Project is located or
does business, and any court or political subdivision agency,
commission, board or instrumentality or officer thereof, whether
federal, state or local, having or exercising jurisdiction over
Owner, Manager or the Project.
"Gross Gaming Revenue" shall mean all of the revenue from
the operation of the Gaming Area including, but not limited to,
table games, if permitted, electronic games of chance, and
electronic games of skill and admission fees.
"Gross Revenue" shall mean Gross Gaming Revenues plus all
other revenues resulting from the operation of the Project.
"Hazardous Material" is defined in Section 22.04.
"Impositions" is defined in Section 8.01.
"Incentive Management Fee" shall mean Three Percent (3%) of
Earnings before any interest expense, income taxes, capital lease
rentals, depreciation and amortization.
"Initial Inventory" shall mean the list of operating
supplies required for the operation of the Project for the
initial 30-day period following the Commencement Date.
"Initial Inventory Price" shall mean the cost of purchasing
the Initial Inventory.
"Institution" is defined in Section 14.01.
"Institutional Mortgage" is defined in Section 14.01.
"Limited Gaming" shall mean gaming where the enabling
legislation limits the Project to no more than 500 electronic
games of chance and prohibits other games (e.g. a prohibition
against any variety of table game).
"Limited Gaming Adjustment" shall mean an adjustment in the
scope of the Project, reduction in fees, adjustment in income
sharing and the like, in the event the enabling legislation
provides only for Limited Gaming, and such Limited Gaming
Adjustment shall be in effect until the enabling legislation
permits Full Gaming unless otherwise agreed in writing by the
equity holders of Owner.
4
<PAGE>
"Limited Liability Company Agreement" shall mean the
Limited Liability Company Agreement dated _______________, 1995
by and between Rockingham and an Affiliate of Manager governing
the operations of Owner.
"Loan Documents" shall mean all of the documents evidencing,
securing and relating to any indebtedness owing by Owner to any
person, including, without limitation, all promissory notes, loan
agreements, mortgages, pledges, assignments, certificates,
indemnities and other instruments or agreements.
"Management Fee" shall mean that sum which is equal to 1.5%
of Gross Gaming Revenue up to One Million and no/100ths Dollars
($1,000,000.00) per year, plus the Incentive Management Fee.
"Management Fee Account" shall be the bank account
established by Manager into which the Management Fee shall be
deposited.
"Manager Pre-Opening Expenses" are those expenses incurred
during the Development Term including, but not limited to, travel
by Manager employees, officers and directors, rent, regulatory
fees, salaries, wages and benefits, and other costs of Manager
employees which are operational in nature.
"Manager's Management Team" is defined in Section 5.06(d).
"Nevada Gaming Authorities" shall mean the Nevada Gaming
Commission and the Nevada Gaming Control Board.
"New Hampshire Gaming Act" shall mean such statutes enacted
by the State of New Hampshire which permit Gaming Activities.
"Operating Budget" shall mean the budget for the Operating
Expenses of the Project.
"Operating Capital" shall mean such amount in the Bank
Accounts as will be reasonably sufficient to assure the timely
payment of all current liabilities of the Project, including its
operations, during the term of this Agreement, and to permit
Manager to perform its management responsibilities and
obligations hereunder, with reasonable reserves for unanticipated
contingencies and for short term business fluctuations resulting
from monthly variations from the Operating Budget.
"Operating Expenses" shall mean actual expenses incurred
following the Commencement Date in operating the Project,
including, but not limited to, the Management Fee, gaming
supplies, maintenance of the Gaming Area, marketing and
promotions, uniforms, complimentaries, employee training,
employee compensation and entitlements, restaurant equipment and
supplies, gift shop fixtures and stock, and Gaming Taxes,
employee compensation and entitlements, including Manager's
employees assigned to the Project, Operating Supplies, common
area expenses, maintenance costs, fuel costs, utilities and
taxes.
5
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"Operating Supplies" shall mean gaming supplies, paper
supplies, cleaning materials, marketing materials, maintenance
supplies, uniforms and all other materials used in the operation
of the Project.
"Owner's Advances" is defined in Section 5.11.
"Person" shall mean any individual, partnership, limited
partnership, limited liability company, corporation,
unincorporated association, joint venture, trust generated entity
or other entity.
"Pre-enactment Period" shall mean the period commencing as
of the Effective Date and ending upon the date upon which either
Full Gaming or Limited Gaming is permitted by the state of New
Hampshire.
"Pre-Opening Budget" shall mean the budget of anticipated
Pre-Opening Expenses.
"Pre-Opening Expenses" shall mean all costs and expenses
incurred by Owner and Owner's Affiliates and Manager and/or
Manager's Affiliates in implementing the Pre-Opening Plan,
including, without limitation, the Manager's Pre-Opening
Expenses, the costs of recruitment and training for all employees
of the Project, costs of licensing or other qualification of
employees prior to the Commencement Date, the cost of pre-opening
sales, marketing, advertising, promotion and publicity, the cost
of obtaining all operating permits, and permits for employees,
and the fees and expenses of lawyers and other professionals and
consultants retained by Owner and Manager in connection
therewith.
"Pre-Opening Plan" shall mean the plan and schedule for
implementing and performing the Pre-Opening Services.
"Pre-Opening Services" is defined in Section 4.07.
"Project" shall mean a gaming establishment and related
improvements which may include restaurants, entertainment
facilities, retail outlets and other ancillary facilities,
including shared facilities, administrative offices, parking and
easements, ordinarily accompanying a privately owned non-racing
gaming establishment to be located at Rockingham Park. The
Project shall not include the Race Track Operations
"Race Track Operations" shall mean any permissable activity
permitted by applicable statutes or regulations to be conducted
at Rockingham Park, Salem, New Hampshire, excluding all Gaming
Activities other than simulcasting, inter-track wagering, sale of
lottery tickets and pari-mutuel activities, permitted by Limited
Gaming or Full Gaming.
"Taking" is defined in Section 13.01.
"Taking Date" is defined in Section 13.01.
"Term" is defined in Section 3.02.
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"Trustee" is defined in Section 14.01.
ARTICLE 2. PRE-ENACTMENT PERIOD
SECTION 2.01 NO CURRENT LEGISLATION
Manager and Owner acknowledge that the State of New
Hampshire has not enacted any legislation as of the date hereof
which permits any Person to conduct Gaming Activities.
SECTION 2.02 DUTIES DURING PRE-ENACTMENT PERIOD
Until such time as legislation is enacted by the New
Hampshire State Legislature and such legislation becomes
effective Manager agrees to provide to Owner such services as may
be necessary, appropriate and legally permissible for lobbying
for the passage of such legislation which would authorize Gaming
Activities at Rockingham Park as may be reasonably requested by
Owner.
ARTICLE 3. APPOINTMENT/TERM/OPTION TO EXTEND TERM
SECTION 3.01 APPOINTMENT
Owner hereby appoints and employs Manager to act as its
agent for the supervision and control of the management of the
Project on Owner's behalf, upon the terms and conditions set
forth herein. Manager hereby accepts such appointment and
undertakes to manage the Project upon the terms and conditions
hereinafter set forth.
SECTION 3.02 TERM
This Agreement shall be effective upon execution ("Effective
Date"). The terms of this Agreement (the "Term") shall commence
upon the date on which all of the conditions specified in Article
2 have been satisfied and shall continue for a period which is
coterminous to the Limited Liability Company Agreement or for
such period that an Affiliate of Manager owns an equity interest
in Owner. Notwithstanding the foregoing, Owner and Manager
acknowledge that enabling legislation for Gaming Activities has
not been enacted in the state of New Hampshire. Owner and
Manager agree to make any necessary changes to this Agreement
upon enactment of such enabling legislation so that this
Agreement fully complies with the enabling legislation.
SECTION 3.03 OPENING THE PROJECT
The Commencement Date shall be a date established by Owner
upon giving written notice thereof to Manager and shall be a date
no earlier than 10 days after, and no later than 15 days after,
the satisfaction of all the following conditions: (i) the Project
architect has issued to Owner a certificate of substantial
completion confirming that the Project has been substantially
completed in accordance with the plans and specifications, (ii)
the Project interior designer has issued to Owner a certificate
of substantial completion confirming that the FF&E has been
substantially installed in the Project in accordance with the
FF&E specifications contained in the plans and specifications,
(iii) all operating permits for the Project and its operations
(including, without limitation, a certificate of occupancy or
local equivalent, gaming, liquor and restaurant licenses)
7
<PAGE>
have been obtained, (iv) the Operating Capital and the Bankroll
for the Gaming Area has been furnished by Owner, (v) Manager
shall have given written notice to Owner that all operational
systems have been tested on a "dry-run" basis to the satisfaction
of Manager and, to the extent required by applicable law, the
Gaming Authority, and (vi) all other material state and federal
governmental requirements necessary to open, occupy and operate
the Project, have been satisfied. Manager shall use its best
efforts in the performance of its duties under this Agreement to
assist Owner in achieving the satisfaction of all of the
foregoing requirements.
ARTICLE 4. OWNER AND MANAGER DEVELOPMENT OBLIGATIONS
DURING DEVELOPMENT TERM
SECTION 4.01 CONSTRUCTION OF PROJECT/COMPLIANCE WITH LAW
Owner, at its sole cost and expense, shall construct the
Project and install the FF&E. The Project and its systems
(including but not limited to plumbing, heating, air
conditioning, electrical, and life safety systems, if applicable)
shall comply with the New Hampshire Gaming Act, and all
regulations promulgated thereunder, all appropriate building,
fire and zoning codes and the Americans With Disabilities Act.
SECTION 4.02 ENGAGEMENT OF MANAGER AS CONSULTANT
Owner engages Manager to be Owner's consultant in the
Construction, configuration, layout, interior design and
landscape design associated with the Project. Additionally,
Manager shall recommend to Owner and advise Owner as to the
suggested placement of all gaming equipment and ancillary
furnishings and the configuration of ancillary areas within the
Project.
SECTION 4.03 PRELIMINARY PLANS AND SPECIFICATIONS
Owner shall prepare preliminary design plans, working
drawings, and specifications of the Project. Manager shall
evaluate the preliminary design plans, working drawings and
assist Owner in designing the Project including the plans
prepared pursuant to the Consulting Services Agreement. Owner
shall have the sole and exclusive right to manage, direct,
control, coordinate and prosecute the Construction and the
installation of the FF&E.
SECTION 4.04 PRE-OPENING COMMITTEE
Owner and Manager shall form a Pre-Opening Committee which
shall consist of four persons, two persons appointed by
Rockingham and two persons appointed by Manager immediately upon
passage of enabling legislation permitting Gaming Activities.
Within six (6) weeks of the date thereof, Manager shall prepare
and submit to the Pre-Opening Committee the Pre-Opening Budget
for the Pre-Opening Committee's approval. The Pre-Opening
Committee shall also prepare promptly the Pre-Opening Plan
detailing each party's responsibilities (including those set
forth in Section 4.07) and the time frame for the performance of
such responsibilities during the Development Term. Each party
agrees to use its best efforts to timely complete each task, in
accordance with the Pre-Opening Plan and the Pre-Opening Budget.
Manager agrees not to exceed the Pre-Opening Budget without the
prior approval of Owner.
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SECTION 4.05 OBLIGATIONS DURING DEVELOPMENT TERM.
(a) Owner represents that it will commence Construction
and agrees to diligently complete same following the passage of
the enabling legislation permitting Gaming Activities.
(b) Owner and Manager shall file all applications necessary
to obtain all required permits and other approvals necessary to
operate the Project as contemplated by this Agreement.
SECTION 4.06 CONSTRUCTION
The construction of the Project shall be in accordance with
appropriate laws, regulations and ordinances of any kind and
nature.
SECTION 4.07 PRE-OPENING SERVICES BY MANAGER.
(a) Prior to the Commencement Date, Manager, as agent of
Owner, shall perform or arrange for others to perform the
following services on behalf of and for the account of Owner
pursuant to the Pre-Opening Plan and Pre-Opening Budget (the
"Pre-Opening Services").
(b) Manager shall implement the marketing portion of
the approved Pre-Opening Plan, including, but not limited to,
direct sales, media and direct mail advertising, promotion,
publicity and public relations designed to attract customers to
the Project from and after the Commencement Date.
(c) Manager shall recruit, hire, provide orientation to
and train all executive and general staff of the Project,
including all personnel to be utilized during the period from
the date hereof until the Commencement Date in accordance with
the Pre-Opening Plan.
(d) Manager shall prepare and deliver to Owner a list of
all Operating Supplies necessary to operate the Project no later
than 10 days prior to the anticipated Commencement Date and
Owner shall purchase the initial inventories for the Project no
later than 10 days prior to the Commencement Date.
SECTION 4.08 PAYMENT OF PRE-OPENING EXPENSES
The cost of the Pre-Opening Expenses shall be paid by Owner.
Pre-Opening Expenses and the time schedule for incurring such
expense shall be established in the Pre-Opening Budget and Pre-
Opening Plan. Owner shall deposit such sums to fund the Pre-
Opening Expenses in accordance with the schedules as shall be
established by the parties in the Pre-Opening Plan and Pre-
Opening Budget and Owner shall maintain sufficient funds therein
to timely provide for any and all Pre-Opening Expenses.
ARTICLE 5. OPERATIONS
SECTION 5.01 ACCOUNTING PROCEDURES AND SERVICES BOOKS AND
RECORDS
Manager shall cause Owner's employees to maintain a complete
accounting system in connection with the operation of the
Project. The books and records shall be kept in accordance with
generally accepted accounting principles consistently applied and
in accordance with federal
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tax laws. Such books and records shall be kept on a calendar
year basis. Books and accounts shall be maintained at the
Project. Manager shall use its best efforts to cause Owner to
comply with all requirements with respect to internal controls in
accounting and Owner shall prepare and provide all required
reports under the rules and regulations of the Gaming Authority
regarding the operations of the Project. The cost of preparing
such reports shall be an Operating Expense. All operating bank
accounts shall be maintained in the state of New Hampshire.
SECTION 5.02 MANAGER'S ACCESS TO GAMING FINANCIAL RECORDS
Manager, at its option and at its sole cost and expense, may
engage and appoint a representative to review, examine, and copy
the gaming books and records, including all daily reports,
prepared by Owner detailing the results of operations of Owner's
business conducted from the Project during regular business
hours. Any representative's review, examination and copying
shall be conducted in such a manner so as to not be disruptive to
Owner's operations. Such representative shall at all times be
bound by Manager's confidentiality covenant contained in Section
17.05 hereof.
SECTION 5.03 AUDITS
Owner shall engage a certified public accountant to audit
the operations of the Project as of and at the end of each
calendar year (or portion thereof) occurring after the date of
this Agreement (the "Audited Statements") by a nationally
recognized reputable accounting firm ("Regular Auditor"), and a
sufficient number of copies of the Audited Statements shall be
furnished to Owner and Manager as soon as available to permit
Owner and Manager to meet any public reporting requirements as
may be applicable to them, but in no event later than seventy-
five (75) days following the end of such fiscal period (such 75th
day to be the "Audit Day"). All costs and expenses incurred in
connection with the preparation of the Audited Statements shall
be an Operating Expense. Nothing herein contained shall prevent
either party from designating an additional reputable accounting
firm ("Special Auditor") to conduct an audit of the Project as of
the end of the calendar year during regular business hours at the
requesting party's expense; provided, however, that if the
additional audit shall reveal a discrepancy within the control of
Manager in the computation of Gross Gaming Revenue of more than
5% from the audit performed by the Regular Auditor, then the
special audit shall be paid for by Manager. In the event of any
dispute between the Regular Auditor and the Special Auditor as to
any item subject to audit, the Regular Auditor and the Special
Auditor shall select a third national, reputable accounting firm
whose resolution of such dispute shall bind the parties.
SECTION 5.04 MONTHLY FINANCIAL STATEMENTS
On or before the last day of each month, Owner shall prepare
under the supervision of Manager an unaudited operating statement
for the preceding calendar month detailing the Gross Revenue and
expenses incurred in the operation of the Project and an
unaudited balance sheet (the "Monthly Financial Statements").
The Monthly Financial Statements shall include a statement
detailing drop figure accounts on all Gross Gaming Revenue.
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SECTION 5.05 EXPENSES
All costs, expenses, funding or operating deficits and
Operating Capital, real property and personal property taxes,
insurance premiums and other liabilities incurred due to the
gaming and nongaming operations of the Project shall be the sole
and exclusive financial responsibility of Owner, except for those
instances herein where it is expressly and specifically stated
that such costs and expenses shall be the responsibility of
Manager. It is understood that statements herein indicating that
Manager shall furnish, provide or otherwise supply, present or
contribute items or services hereunder shall not be interpreted
or construed to mean that Manager is liable or responsible to
fund or pay for such items or services, except in those instances
specifically mentioned herein.
SECTION 5.06 STANDARDS.
(a) Manager shall exclusively manage and maintain the
Project in a manner utilizing standards and procedures which is
comparable to the management of privately-owned non-racing gaming
businesses of the same or similar type, class and quality,
located in New Hampshire subject to such adjustments as Manager
in its reasonable discretion deems necessary to adjust to the
Salem, New Hampshire gaming market. Manager shall establish such
standards and procedures in its sole discretion, subject only to
standards and procedures required by law.
(b) Owner hereby agrees that Manager shall have
uninterrupted control of and the exclusive responsibility for the
operation of the Project during the Term of this Agreement.
Owner will not interfere or involve itself with the day-to-day
operation of the Project, and Manager shall operate the Project
free of eviction or disturbance by Owner or any third party
claiming by, through or under Owner. Manager acknowledges that
it is a fiduciary with respect to Owner, and agrees that it will
discharge its fiduciary duties and responsibilities in the
control and operation of the Project in good faith and for the
purposes of maximizing Gross Revenue; provided, however, that in
no event shall Owner make any claim against Manager on account of
any alleged errors of judgment made in good faith in connection
with the operation of the Project. Manager agrees that,
notwithstanding the foregoing, it shall not alter the interior
and exterior design and architecture, including color schemes of
the Project, nor make any structural engineering modifications
without the prior written consent of Owner.
(c) All persons employed in connection with the operations
of the Project, including the Gaming Area located therein, shall
be employees of Owner or a subsidiary of Owner, except for
Manager's Management Team. Manager shall determine the fitness
and qualifications of all employees, whether Owner employees or
Manager's Management Team, subject only to New Hampshire gaming
licensing standards. Manager shall hire, supervise, direct the
work of, and discharge all personnel working in the Project.
Manager shall determine the wages and conditions of employment of
all employees, all of which shall be comparable to the existing
standards therefor in New Hampshire for employees of gaming
operations. Manager and Owner shall consult, and if Owner
approves, Manager may hire at Owner's expense consultants or
independent contractors for surveillance, security and other
matters. All wages, bonuses, compensation and entitlements of
employees of the Project and the Manager's Management Team
(although not employees of the Project), shall be an expense of
Owner.
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(d) Manager shall assign experienced gaming executives to
direct and supervise the management of the Project on a full time
basis (the "Manager's Management Team"). Manager shall solely
select individuals who shall collectively represent Manager's
Management Team.
(e) Manager shall formulate, coordinate and implement
promotions and sales programs for Project operations and Owner
shall cause the Project to participate in such sales and
promotional campaigns and, as appropriate, activities involving
complimentary food, beverages and other items or services to
patrons of the Project in Manager's sole discretion in the
exercise of good management practice. All such promotion and
sales programs shall be an expense of Owner.
SECTION 5.07 PLANS AND BUDGETS.
(a) Manager shall furnish Owner with the Operating Budget
on or before ninety (90) calendar days prior to the opening of
the Project and 60 days prior to the end of each calendar year
thereafter.. Manager shall use its best efforts to comply with
the Operating Budget to meet or exceed the goals set forth
therein.
(b) Owner shall consider the Operating Budget within thirty
(30) days of receipt of the budget, provided that if Owner does
not give written notice to Manager of its approval or failure to
approve within such time period, the Operating Budget shall be
deemed approved. Owner's approval of the Operating Budget cannot
be unreasonably withheld or delayed. Owner may hire a consultant
to evaluate the Operating Budget. In the event that Owner
disagrees with any line item contained in the Operating Budget,
Owner shall discuss its disagreement with Manager. Manager will,
within 10 days of notice of Owner's disagreement, offer
constructive corrections to resolve Owner's concerns. A
representative of Owner and Manager shall meet within five (5)
business days thereafter to discuss the constructive corrections,
if necessary. If the representatives are unable to resolve
Owner's concerns the matter(s) shall be resolved in an
arbitration pursuant to Article 19. During any period that Owner
disapproves or fails to approve of the Operating Budget, Manager
will continue to manage the Project in accordance with the
Operating Budget for the preceding year as the same may be
adjusted for increases year-to-year in the Consumer Price Index
applicable to the Salem, New Hampshire area and as long as the
assumptions underlying the preceding year's Operating Budget
remain substantially true.
(c) The Operating Budget may be amended from time to time
with Owner's and Manager's approval, which approvals shall not be
unreasonably withheld or delayed, after submission by Manager or
Owner, as applicable, of the amendments to such budget and the
rationale for such amendments.
(d) Manager and Owner make no guaranty, warranty or
representation whatsoever in regard to the Operating Budget, same
being intended as reasonable estimates only.
(e) Manager shall use its best efforts to not underperform
the Operating Budget, as amended and supplemented, by 15% of the
budgeted earnings before taxes, interest, depreciation and
amortization.. Additionally, Manager shall prepare a capital
expenditure budget. The budget shall set forth the assumptions
and qualifications underlying its preparation. In the event that
Manager's operation of the Project underperforms budgeted
earnings before taxes, interest, depreciation and amortization by
more than 15% of the agreed to Operating Budget for three
consecutive years commencing with the fourth full calendar year
of operations then Owner
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may terminate this Agreement. Owner shall, in addition to all
other amounts due and payable hereunder, pay to Manager the
Termination Fee provided below, as liquidated damages for the
early termination of the Agreement. Owner's obligation to pay
for all indemnification and defense claims, to maintain insurance
after termination (with respect to occurrences before
termination) and to pay for all costs of operating the Project
prior to termination shall be in addition to and shall survive
termination of this Agreement and payment of the Termination Fee.
The Termination Fee that shall be payable by Owner to Manager in
the event of, and at the time of, termination of this Agreement
due to the above described failure to meet Operating Budget is an
amount equal to three (3) times the average amount of annual
management fees earned in the twelve months preceding the
termination.
OWNER RECOGNIZES AND AGREES THAT, IF THIS AGREEMENT IS
TERMINATED FOR THE REASONS SPECIFIED ABOVE AS ENTITLING MANAGER
TO RECEIVE THE TERMINATION FEE, MANAGER WOULD SUFFER AN ECONOMIC
LOSS BY VIRTUE OF THE RESULTING LOSS OF THE MANAGEMENT FEES WHICH
WOULD OTHERWISE HAVE BEEN EARNED UNDER THIS AGREEMENT. BECAUSE
SUCH FEES VARY IN AMOUNT DEPENDING ON THE REVENUES AND EXPENSES
OF THE PROJECT AND ACCORDINGLY WOULD BE EXTREMELY DIFFICULT AND
IMPRACTICABLE TO ASCERTAIN WITH CERTAINTY, THE PARTIES AGREE THAT
THE TERMINATION FEE PROVIDED IN THIS AGREEMENT HAS BEEN
DETERMINED TO CONSTITUTE A REASONABLE ESTIMATE OF LIQUIDATED
DAMAGES TO MANAGER. IT IS AGREED THAT MANAGER SHALL NOT BE
ENTITLED TO MAINTAIN A CAUSE OF ACTION AGAINST OWNER FOR SPECIFIC
PERFORMANCE OF THIS AGREEMENT OR ACTUAL DAMAGES IN EXCESS OF THE
TERMINATION FEE IN ANY CONTEXT WHERE THE TERMINATION FEE IS TO BE
MANAGER'S REMEDY, AND RECEIPT OF SUCH FEE (TOGETHER WITH ALL
OTHER AMOUNTS DUE AND PAYABLE BY OWNER TO MANAGER WITH RESPECT TO
EVENTS OCCURRING PRIOR TO OR IN CONNECTION WITH THE TERMINATION
OF THIS AGREEMENT AND MANAGER'S CONTINUING RIGHT TO INSURANCE
COVERAGE, INDEMNIFICATION FOR PRE AND POST TERMINATION
OCCURRENCES, AND PROTECTION OF THE SHOWBOAT TRADEMARKS BY
INJUNCTIVE AND OTHER APPROPRIATE RELIEF) SHALL BE MANAGER'S SOLE
REMEDY AGAINST OWNER IN SUCH CASE.
SECTION 5.08 MANAGEMENT
Manager shall have the discretion and authority to determine
operating policies and procedures, standards of operating,
staffing levels and organization, win-payment arrangements,
standards of service and maintenance, food and beverage quality
and service, pricing, and other policies affecting the Project,
or the operation thereof, including but not limited to admissions
and parking, to implement all such policies and procedures, and
to perform any act on behalf of Owner which Manager deems
necessary or desirable in its reasonable business judgment for
the operation and maintenance of the Project on behalf of, for
the account of, and at the expense of Owner.
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SECTION 5.09 BANK ACCOUNTS
Immediately upon giving written notice to Manager of the
Commencement Date, Owner shall have established bank accounts
that are necessary for the operation of the Project, including an
account for the Bankroll, and to effect the Pre-Opening Plan at
various banking institutions chosen by Owner and reasonably
acceptable to Manager (such accounts are hereinafter collectively
referred to as the "Bank Accounts"). The Bank Accounts shall be
in Owner's name. Checks drawn on the Bank Accounts shall be
signed only by representatives of Manager who are covered by the
fidelity insurance described in Section 11.01 and Manager may be
the only signatures on checks drawn on the Bank Accounts which
are not payable to Affiliates of Manager or do not exceed Fifty
Thousand and no/100ths Dollars ($50,000). Any checks payable to
an Affiliate of Manager or checks exceeding Fifty Thousand and
no/100ths Dollars ($50,000) shall be executed by a
representative of Owner and a representative of Manager. The
Bank Accounts shall be interest bearing accounts if such accounts
are reasonably available and all interest thereon shall be
credited to the Bank Accounts. All Gross Revenue shall be
deposited in the Bank Accounts and Manager shall use its best
efforts to cause Owner to pay out of the Bank Accounts, to the
extent of the funds therein, from time to time, all Operating
Expenses and other amounts required by Manager to perform its
obligations under this Agreement. All funds in the Bank Accounts
shall be separate from any other funds of any of Owner's
Affiliates and Owner may not commingle any of Owner's funds with
the funds of any of Owner's Affiliates in the Bank Accounts.
Owner shall bear the risk of the insolvency of any financial
institutions holding such Bank Accounts.
SECTION 5.10 OWNER'S ADVANCES
Owner shall advance to Manager on a timely and prompt basis
immediately available funds to conduct the affairs of the Project
and maintain the Gaming Area (hereinafter referred to as "Owner's
Advances") as set forth in this Agreement and as otherwise
provided hereunder.
(a) Pre-Opening Budget. Owner shall timely deposit in the
Bank Accounts the amounts set forth in the Pre-Opening Plan and
Pre-Opening Budget or any revisions thereof approved by Owner in
accordance with such Plan or budget.
(b) Initial Cash Needs. Two (2) weeks prior to the
Commencement Date, Owner shall fund the Operating Capital
necessary to commence operating the Project, in an amount not to
exceed the estimated operating expenses for eight (8) weeks, as
set forth in the Operating Budget, and an amount equal to the
Bankroll.
(c) Operating Capital. During the Term of this Agreement,
within five (5) Business Days after receipt of written notice
from Manager, Owner shall fund Owner's Advances in such a fashion
so as to adequately insure that the Operating Capital set forth
in the Operating Budget as revised is sufficient to support the
uninterrupted and efficient ongoing operation of the Project.
The written request for any additional Operating Capital shall be
submitted by Manager to Owner on a monthly basis based on the
interim statements and the Operating Budget as revised.
(d) Payment of Expenses. Owner shall pay from the Gross
Revenue the following items in the order of priority listed
below, subject to the laws of the state of New Hampshire, on or
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before their applicable due date: (i) Operating Expenses
(including taxes and Management Fee), (ii) emergency expenditures
to correct a condition of an emergency nature, including
structural repairs, which require immediate repairs to preserve
and protect the Project, (iii) required payments to the state of
New Hampshire, or the Town of Salem, and (iv) principal, interest
and other payments due the holder of any Institutional Mortgage.
In the event that funds are not available for payment of the
Operating Expenses in their entirety all state and local taxes
shall be paid first from the available funds.
SECTION 5.11 COOPERATION OF OWNER AND MANAGER
Owner and Manager shall cooperate fully with each other
during the Term of this Agreement to facilitate the performance
by Manager of Manager's obligations and responsibilities set
forth in this Agreement and to procure and maintain all
construction and operating permits. Owner shall provide Manager
with such information pertaining to the Project necessary to the
performance by Manager of its obligations hereunder as may be
reasonably and specifically requested by Manager from time to
time.
SECTION 5.12 FINANCING MATTERS.
(a) If Owner, or any Affiliate of Owner shall, at any time,
sell or offer to sell any securities issued by Owner or any
Affiliate of Owner through the medium of any prospectus or
otherwise and which relates to the Project or its operation, it
shall do so only in compliance with all applicable laws, and
shall clearly disclose to all purchasers and offerees that,
except to the extent of Manager or its Affiliates' interest in
Owner, (i) neither Manager nor any of its Affiliates, officers,
directors, agents or employees shall in any way be deemed to be
an issuer or underwriter of such securities, and (ii) Manager and
its Affiliates, officers, directors, agents and employees have
not assumed and shall not have any liability arising out of or
related to the sale or offer of such securities, including
without limitation, any liability or responsibility for any
financial statements, projections or other information contained
in any prospectus or similar written or oral communication.
Manager shall have the right to approve any description of
Manager or its Affiliates, or any description of this Agreement
or of Owner's relationship with Manager hereunder, which may be
contained in any prospectus or other communications, and Owner
agrees to furnish copies of all such materials to Manager for
such purposes not less than twenty (20) days prior to the
delivery thereof to any prospective purchaser or offeree. Owner
agrees to indemnify, defend or hold Manager and its Affiliates,
officers, directors, agents and employees, free and harmless from
any and all liabilities, costs, damages, claims or expenses
arising out of or related to the breach of Owner's obligations
under this Section 5.12. Manager agrees to reasonably cooperate
with Owner in the preparation of such agreements and offerings.
(b) Notwithstanding the above restrictions, subject to
Manager's right of review set forth in Section 5.12(a), Owner may
represent that the Project shall be managed by Manager and
Manager may represent that it manages the Project and both may
describe the terms of this Agreement and the physical
characteristics of the Project in regulatory filings and public
or private offerings. Moreover, nothing in this Section shall
preclude the disclosure of (i) already public information, or
(ii) audited or unaudited financial statements from the Project
required by the terms of this Agreement or (iii) any information
or documents required to be disclosed to or filed with the
Governmental Authorities, or (iv) the amount of the Management
Fees earned in any period. Both parties shall use their best
efforts to consult with the other concerning disclosures as to
the Project. Owner and
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Manager shall cooperate with each other in providing financial
information concerning the Project and Manager that may be
required by any lender or required by any Governmental Authority.
(c) In the event that the holder of any Institutional
Mortgage requires the collateral assignment of this Agreement as
further security for its loan, Manager shall consent to such
assignment; provided, however, that such collateral assignment
shall contain non-disturbance provisions satisfactory to Manager
and provided further that in no event shall Manager be required
to accept any reduction or subordination of its Management Fee or
to diminish any right which it may have under this Agreement.
SECTION 5.13 CONFLICT OF INTEREST/NON-COMPETITION
Owner acknowledges that Manager and/or its Affiliates
operate other casinos and may in the future operate additional
casinos in different areas of the world, and that marketing
efforts may cross over in the same markets and with respect to
the same potential customer base. Manager, in the course of
managing the Project, may refer customers of the Project and
other parties to other facilities operated by Affiliates of
Manager to utilize gaming, entertainment and other amenities,
without payment of any fees to Owner. Owner consents to such
activities and agrees that such activities will not constitute a
conflict of interest. Owner acknowledges and agrees that Manager
may distribute promotional materials for Manager's Affiliates and
facilities, including casinos, at the Project. Either Manager or
Owner and/or their Affiliates in the future may acquire an
interest or operate other casinos, including, without limitation,
any similar or competitive gaming operation, so long as such
operation is not within a thirty (30) mile radius of the
boundaries of Rockingham Park, Salem, New Hampshire, surrounding
Salem, New Hampshire, without the written approval of the members
of Owner, except for activities by the Manager and/or its
Affiliates at Seabrook, a New Hampshire greyhound racing facility
with Yankee Greyhound Racing, Inc. or its successors or assigns
which requires no further approval of Owner or any of its
Affiliates.
ARTICLE 6. MANAGEMENT FEE
SECTION 6.01 PAYMENTS TO MANAGER.
(a) The Management Fee shall be paid monthly. Manager
shall deposit the Management Fee into the Management Fee Account
for any calendar month in which the Project conducts gaming
operations by the twentieth (20th) day of the following month.
The Management Fee shall be deemed paid upon deposit in the
Management Fee Account. Contemporaneously with the payment of
the Management Fee Manager shall deliver to Owner the
calculation of the Management Fee to Owner.
(b) In the event of Limited Gaming, pursuant to the Limited
Gaming Adjustment, the Management Fee shall be suspended. Upon
commencement of Full Gaming, the payment of the Management Fee
shall recommence. Notwithstanding the foregoing, in the event of
Limited Gaming and if Rockingham and Manager agree to build a
gaming facility outside of the existing facility at Rockingham
Park, the payment of the Management Fee shall recommence even
though Full Gaming is not permitted in the operation of the
Project.
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ARTICLE 7. CONCESSIONS AT ROCKINGHAM PARK
After licensing and during the term of this Agreement, in
the event that Rockingham obtains the right to provide concession
services at Rockingham Park, and Rockingham elects not to
provide such concession services, Rockingham will provide to
Manager the non-exclusive opportunity to bid to manage the
concessions at Rockingham Park. Notwithstanding the foregoing,
Showboat shall manage the concessions of the Project to the
extent possible. Upon such occurrence, Rockingham shall notify
Manager of Manager's opportunity to bid on the concessions at
Rockingham Park. Manager shall have a period of thirty (30) days
to submit to Rockingham, as applicable, its offer to manage the
concessions. If Rockingham accepts such offer of Manager,
Manager and Rockingham shall immediately prepare a management
agreement for such concessions. Manager acknowledges that
concession services at Rockingham Park are currently provided
pursuant to a contract with Servomation Corporation, Rockingham
and Rockingham Ventures dated August 22,1983, as amended by that
First Amendment Concession Agreement among Service Corporation,
Rockingham and Rockingham Ventures, dated January 11, 1989 and
said contract includes such portions of the Project which are
common with Rockingham Park. Rockingham covenants and agrees
that the Concession Agreement shall not be amended, modified or
extended as it applies, if at all, to the Project without the
written approval of Manager.
ARTICLE 8. REAL PROPERTY TAXES AND ASSESSMENTS, AND
PAYMENTS TO THE GAMING AUTHORITY
SECTION 8.01 PAYMENT OF REAL ESTATE TAXES AND ASSESSMENTS
Owner shall be responsible for the payment when due, if any,
of all property taxes and assessments, including, without
limitation, assessments for benefits from public works or
improvements, levies, fees, and all other governmental charges,
general or special, ordinary or extraordinary, foreseen or
unforeseen, together with interest and penalties thereon, which
may heretofore or hereafter be levied upon or assessed against
the Project. All charges set forth in this Section 8.01 are
herein called "Impositions." If any Impositions are levied or
assessed against the Project which may be legally paid in
installments, Owner shall have the option to pay such Impositions
in installments except that each installment thereof, and any
interest thereon, must be paid by the final date fixed for the
payment thereof.
In the event of the enactment, adoption or enforcement by
any governmental authority (including the United States, any
state and any political or governmental subdivision) of any
assessment, levy or tax, whether sales, use or otherwise, on or
in respect of the Management Fee and charges set forth herein,
Manager shall pay such assessment, levy or tax.
SECTION 8.02 EXCEPTIONS
Nothing contained in this Agreement shall be construed to
require Owner to pay any estate, inheritance or succession tax,
any capital levy, corporate franchise tax, business enterprise
tax, business profits tax, any net income or excess profits tax
or other similar tax of Manager.
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ARTICLE 9. USE AND OCCUPANCY OF THE PROJECT
SECTION 9.01 USES
Manager agrees to manage the Project continuously during the
Term hereof only for the purpose of legally operating a gaming
establishment and related ancillary services. Manager and Owner
shall not use or allow the Project or any part thereof to be used
or occupied for any unlawful purpose or for any dangerous or
other trade or business not customarily deemed acceptable to
relevant gaming or pari-mutuel operations. In no event may
Manager or Owner conduct ancillary uses which violate the New
Hampshire Gaming Act. In addition, Manager shall not knowingly
permit any unlawful occupation, business or trade to be conducted
on the Project or any use to be made of the Project contrary to
any law, ordinance or regulation as aforesaid with respect
thereto.
SECTION 9.02 SHOWBOAT MARKS
Manager or its Affiliates (excluding Owner) are the owners
of the trademark "Showboat," its logos, trademarks, tradenames,
service marks, and any variation or extension of such name
(collectively "Showboat Trademark.") Manager shall operate the
Project under the Showboat Trademark, and shall grant to Owner a
non-exclusive personal and non-transferable right to use the
Showboat Trademark at the Rockingham Race Track, Salem, New
Hampshire in connection with the operation of the Project,
pursuant to a trademark license agreement satisfactory to
Manager. Notwithstanding the foregoing, Owner acknowledges that
its use of the Showboat Trademark shall not create in Owner's
favor any right, title, or interest in or to the Showboat
Trademark, but all rights of ownership and control of the
Showboat Trademark shall reside solely in Manager.
SECTION 9.03 ROCKINGHAM MARKS
Rockingham or its Affiliates (excluding Owner) are the
owners of the trademark "Rockingham," its logos, trademarks,
tradenames, service marks, and any variation or extension of such
name (collectively "Rockingham Trademark"). Rockingham shall
permit the Project to use the Rockingham Trademark, and shall
grant to Owner a non-exclusive personal and non-transferable
right to use the Rockingham Trademark at the Rockingham Race
Track, Salem, New Hampshire in connection with the operation of
the Project, pursuant to a trademark license agreement
satisfactory to Rockingham. Notwithstanding the foregoing, Owner
acknowledges that its use of the Rockingham Trademark shall not
create in Owner's favor any right, title, or interest in or to
the Rockingham Trademark, but all rights of ownership and control
of the Rockingham Trademark shall reside solely in Rockingham.
ARTICLE 10. MAINTENANCE AND REPAIRS
SECTION 10.01 OWNER'S MAINTENANCE AND REPAIRS
Owner, at its cost, shall maintain, in good condition and
repair, the following:
(a) The structural parts of the Project;
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(b) The electrical, plumbing, and sewage systems of the
Project;
(c) Heating, ventilating, and air conditioning systems
servicing the Project.
Owner shall have ten (10) days after notice pursuant to
Article 22 from Manager to commence to perform its obligations
under Section 10.01, except that (i) Owner shall perform its
obligations immediately upon receipt of oral notice from Manager
if the nature of the problem presents a hazard or emergency; or
(ii) Owner shall perform and complete its obligations within
twelve (12) hours after receipt of written or oral notice from
Manager if the nature of the problem interferes with gaming
operations in the Project. If Owner does not perform its
obligations within the time limitations in this Section, Manager
may perform the obligations of Owner and have the right to be
reimbursed for the sum it actually expends in the performance of
Owner's obligations. Any amounts paid by Manager shall be due
from Owner on the first (1st) day of the month occurring after
any such payment, with interest paid at the Default Rate of
Interest from the date of payment thereof by Manager until
repayment thereof by Owner.
ARTICLE 11. INSURANCE AND INDEMNITY
SECTION 11.01 OWNER INSURANCE OBLIGATIONS
Owner covenants and agrees that it will at all times stated
herein, at its sole cost and expense, of this Agreement, keep the
Project insured, with:
(a) full repair and replacement coverage endorsements,
against all risks including, but not limited to, fire, ice,
floods and earthquakes, and against loss or damage by such other,
further and additional risks as now are or hereafter may be
available by standard extended coverage forms or endorsements in
an amount sufficient to prevent Manager or Owner from becoming a
co-insurer of any loss, but in no event in an amount less than
one hundred percent (100%) of the full insurable replacement
value of the Project. So long as Owner is not in default under
this Agreement, all proceeds of insurance not otherwise applied
for the purpose of repairing, replacing or restoring the damage
insured against or applied to an Institutional Mortgage shall be
paid over to Owner. Owner shall obtain such insurance coverage
at the time that it obtains possession of the Project, and Owner
shall maintain such insurance thereafter until the termination of
this Agreement.
(b) general comprehensive public liability insurance
including Broad Form Liability coverage (including coverage for
false arrest, wrongful detention and invasion of privacy, and
coverage for elevators, if any, on the Project) against claims
for bodily injury, death or property damage occurring on, in or
about the Project, the ancillary facilities and the adjoining
streets, sidewalks and passageways, such insurance to afford
protection, with respect to any one occurrence, of not less than
$1,000,000 and no less than $5,000,000 in the aggregate or such
higher amount as Owner and Manager may from time to time
reasonably agree to be maintained, which insurance shall also
cover Owner's liability under any indemnity contained herein, it
being understood that the standard of reasonableness shall be
that amount of insurance which a prudent owner of a comparable
property would maintain. Owner shall also obtain and maintain a
$40,000,000 umbrella liability policy in excess of the general
comprehensive public liability policy. Owner shall obtain such
general comprehensive
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public liability insurance at the time that Owner employs its
first employee, and Owner shall maintain such insurance until the
termination of this Agreement.
(c) adequate boiler and pressure vessel insurance on all
equipment, parts thereof and appurtenances attached or connected
to the Project which by reason of their use or existence are
capable of bursting, erupting, collapsing or exploding.
(d) such other insurance as Owner and Manager may from time
to time reasonably agree to be maintained or as may be required
by lenders of Owner in such amounts and against such insurable
hazards which at the time is customary in the case of businesses
similarly situated.
(e) for the mutual benefit of Owner and Manager, maintain
liquor liability insurance in an amount to be determined by
Owner, covering Manager and Owner under any liquor liability laws
which may currently be in existence or which may hereafter be
enacted as they would be applicable to Manager's operations of
the Project. Owner shall obtain such insurance on or before the
Commencement Date, and Owner shall maintain such insurance until
the termination of the Agreement.
(f) all required workmen's compensation insurance or
equivalent New Hampshire industrial accident coverage. Owner
shall obtain such insurance at the time that Owner employs its
first employee, and Owner shall maintain such insurance until the
termination of this Agreement.
(g) business interruption resulting from losses covered
under policies covering buildings will be required in an amount
sufficient to protect losses for a period of six (6) months.
Owner shall obtain such insurance on or before the Commencement
Date, and Owner shall maintain such insurance until the
termination of this Agreement.
(h) crime insurance which includes fidelity and such other
crime coverages as may be desired in the amount of $5,000,000.
Owner shall obtain such insurance at the time that Owner employs
its first employee, and Owner shall maintain such insurance until
the termination of this Agreement.
SECTION 11.02 PARTIES INSURED
The policies with respect to such insurance as described in
Section 11.01 shall name Owner and Manager as parties insured
thereby and such policies shall require all insurance proceeds
except for liability and third party insurance to be paid to a
Trustee as designated pursuant to Article 14. Such policies
shall also contain, when requested by Owner or Manager, a
mortgagee clause or clauses naming the mortgagee or mortgagees
involved and/or the holder or such mortgage or mortgages as
parties insured thereby (in the form required by such mortgagee
or mortgagees) all as their respective interests may appear and
with loss payable provisions accordingly.
SECTION 11.03 APPROVED INSURANCE COMPANIES
Insurance procured under this Article 11 shall be placed
with reputable, financially sound insurance companies, with a
Best guide rating of A-10 admitted in the state of New Hampshire,
acceptable to Owner and Manager, as the parties may mutually
agree.
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SECTION 11.04 APPROVAL OF INSURANCE COVERAGE
Each year, Owner shall submit to Manager a summary of the
insurance coverage maintained by Owner (including deductibles)
with respect to the Project and each party shall have thirty (30)
days thereafter to give its comments thereon to the other. If a
submitting party receives no written comments from the other
party within said period, the insurance program shall be deemed
approved for that year.
SECTION 11.05 FAILURE TO OBTAIN REQUIRED INSURANCE
In the event Owner fails, neglects, or refuses to maintain
any of the insurance required under the provisions of this
Article 11, then Manager may procure or renew such insurance, and
any amounts paid therefor by Manager shall be due from Owner on
the first day of the month occurring after any such payment, with
interest at the Default Interest Rate from the date of payment
thereof by Manager until repayment thereof to Manager by Owner.
SECTION 11.06 WAIVER OF SUBROGATION
As long as the insurer of a party is willing to include a
waiver of subrogation in the policies insuring against the loss
or damages referred to in this Article 11 without an extra
charge, the parties shall cause the waiver of subrogation to be
included in the policies. If an insurer of a party is willing to
include a waiver of subrogation in an insurance policy only if an
extra charge is paid, the party carrying the insurance shall be
required to cause the waiver of subrogation to be included in the
policy only if the other party pays the extra charge.
SECTION 11.07 MUTUAL COOPERATION
Owner shall cooperate with Manager to the extent Manager may
reasonably require, and Manager shall cooperate with Owner to the
extent Owner may reasonably require in connection with the
prosecution or defense of any action or proceeding arising out
of, or for the collection of any insurance proceeds and will
execute and deliver to Owner or Manager, as the case may be, such
instruments as may be properly required to facilitate the
recovery of any insurance proceeds (including the endorsement by
Owner or Manager over to the Trustee of all checks evidencing
said insurance proceeds).
SECTION 11.08 DELIVERY OF INSURANCE POLICIES
Owner shall deliver promptly the original or duplicate
policies or certificates of insurers satisfactory to Manager
evidencing all the insurance which is then required to be
maintained by Owner hereunder. Owner shall, within thirty (30)
days prior to the expiration of any such insurance, deliver to
Manager original or duplicate policies or other certificates of
the insurers evidencing the renewal of such insurance.
SECTION 11.09 INDEMNIFICATION BY MANAGER
Manager covenants and agrees that it will protect, keep and
defend Owner forever harmless and indemnified against and from
any penalty or damage or charges imposed for any violation of any
laws or ordinances including, but not limited to, gaming statutes
and regulations, whether occasioned by the neglect of Manager or
those holding under Manager, and that
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Manager will at all times protect, indemnify and save and keep
Owner harmless against and from any and all claims and against
and from any and all loss, cost, damage or expense, including
reasonable attorneys' fees, arising out of any failure of Manager
in any respect to comply with and perform all the requirements
and provisions hereof except where any penalty, damage, charges,
loss, cost or expense is caused by the sole or negligent or the
wanton or willful acts of Owner's directors, officers, employees,
agents or stockholders. Without limiting the generality of the
foregoing and with the inclusion of the same exceptions as set
forth above, Manager covenants and agrees that it will protect,
keep and defend Owner forever harmless and indemnified against
any and all debt, claim, demand, suit or obligation of every
kind, character and description which may be asserted, claimed,
filed or brought against Owner where such claim arises out of or
is asserted in connection with Manager's management of the
Project, including any claim by any subtenant, guest, licensee or
invitee of Manager. This indemnity does not apply to loss or
damage occasioned by defects in the Project.
SECTION 11.10 INDEMNIFICATION BY OWNER
Owner covenants and agrees that it will protect, keep and
defend Manager forever harmless and indemnified against and from
any penalty or damage or charges imposed for any violation of any
laws or ordinances including, but not limited to, gaming statutes
and regulations, whether occasioned by the neglect of Owner or
those holding under Owner, and that Owner will at all times
protect, indemnify, defend and save and keep harmless Manager
against and from any and all claims and against and from any and
all loss, cost, damage or expense, including reasonable
attorneys' fees, arising out of any failure of Owner in any
respect to comply with and perform all of the requirements and
provisions hereof except where any penalty, damage, charges,
loss, cost or expense is caused by the negligent or the wanton or
willful acts of Manager's officers, agents, employees or
stockholders. Without limiting the generality of the foregoing,
and with the inclusion of the same exceptions as set forth above,
Owner covenants and agrees it will protect, keep and defend
Manager forever harmless and indemnified against any and all
debt, claim, demand, suit or obligation of every kind, character
and description which may be asserted, claimed, filed or brought
against Manager where such claim arises out of or is asserted in
connection with Owner's ownership of the Project. This indemnity
does not apply to loss or damage occasioned by defects in the
Project.
SECTION 11.11 SELECTION OF COUNSEL/CONDUCT OF LITIGATION
Defense counsel engaged by Manager or Owner, as indemnitor,
shall be reasonably acceptable to Manager and Owner, as
indemnitee. Without limiting the generality of the foregoing,
indemnitee shall be promptly provided with copies of all claims
and pleadings (as well as correspondence, memos, documents and
discovery with respect thereto, unless within the scope of any
applicable privilege) relating to any such matters. Indemnitee
shall be given prior written notice of all meetings, conferences
and judicial proceedings and shall be afforded an opportunity to
attend and participate in same. Indemnitee shall have the right
to engage independent counsel, at its sole expense, to represent
indemnitee as additional and/or co-counsel in all such
proceedings, trials, appeals and meetings with respect thereto.
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ARTICLE 12. CASUALTY
In case of any damage or loss to the Project by reason of
fire or otherwise, Manager shall give immediate notice thereof to
Owner. If the Project shall at any time be damaged or destroyed
by fire or otherwise, Owner shall at its sole option promptly
repair or rebuild same at Owner's expense, so as to make the
Project at least equal to the Project existing immediately prior
to such occurrence and as nearly similar to it in quality and
character as shall be practicable and reasonable. Owner shall
submit for Manager's approval, which approval Manager shall not
unreasonably withhold or delay, complete detailed plans and
specifications for such rebuilding or construction. Promptly
after receiving Manager's approval of said plans and
specifications, Owner shall begin such repairs and rebuilding and
shall prosecute the same to completion with diligence, subject,
however, to strikes, lockouts, acts of God, embargoes,
governmental restrictions, and other foreseeable causes beyond
the reasonable control of Owner. Insofar as a certificate of
occupancy may be necessary with respect to such repairs or
construction, Owner shall obtain a temporary or final certificate
of occupancy or similar certificate before the Project shall be
occupied by Manager. Such repairs, rebuilding or construction
shall be completed free and clear of mechanics' or other liens,
in accordance with the building code and all applicable laws,
ordinances, regulations or orders of any state, municipal or
other public authority affecting the same.
ARTICLE 13. TAKING OF THE PROJECT
SECTION 13.01 DEFINITIONS.
(a) "Permanent Taking" means the permanent taking (more
than one year) of, or permanent damage to, property as a result
of the exercise of a power of eminent domain or purchase under
the threat of the exercise where such taking cannot be corrected
by contribution of additional land for relocation of the Project.
(b) "Temporary Taking" means the temporary taking (one year
or less) of, or temporary damage to, property as a result of the
exercise of a power of eminent domain or purchase under the
threat of the exercise.
(c) "Taking Date" means the date on which a condemning
authority shall have the right of possession of property pursuant
to a Permanent Taking or a Temporary Taking.
(d) "Award" means the award for, or proceeds of, a taking
less all fees and expenses incurred in connection with collecting
the award or proceeds including the reasonable fees and
disbursements of attorneys, appraisers, and expert witnesses.
SECTION 13.02 ENTIRE TAKING OF THE SUPPORT AREAS
The following shall apply if all or a part of the Project
are taken pursuant to a Permanent Taking or a Temporary Taking:
(a) Owner shall be entitled to any Award.
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(b) If all of the Project is taken pursuant to a Permanent
Taking, this Agreement shall be terminated as of the Taking Date.
(c) If a portion of the Project is taken pursuant to a
Permanent Taking which renders it uneconomic to continue
operation of the Project in Manager's reasonable judgment,
Manager shall have the option to terminate this Agreement by
giving Owner notice of termination within ten (10) days after
Owner gives Manager notice of the Permanent Taking. This
Agreement will terminate five (5) days after Manager delivers its
written termination notice to Owner.
SECTION 13.03 DUTY TO RESTORE
If part of the Project is taken pursuant to a Permanent
Taking and this Agreement is not terminated, then Owner shall
restore the Project to an architectural unit as near as possible
to its function and condition immediately prior to the Permanent
Taking. The restoration shall begin promptly after the Taking
Date and shall be prosecuted diligently. If a party shall have
an option to terminate with respect to the Permanent Taking, then
Owner may delay the beginning of the restoration until the option
is waived or until the time within which the option may be
exercised expires.
ARTICLE 14. DISPOSITION OF INSURANCE PROCEEDS AND AWARDS
SECTION 14.01 TRUSTEE
Other than the lien created by the 13.5% Senior New
Hampshire Development Authority Bonds or permitted replacement
financing, if the Project is encumbered by an Institutional
Mortgage, the "Trustee" shall be the Institutional Mortgagee or a
national bank designated by such mortgagee. If the Project is
not encumbered by a Mortgage, the "Trustee" shall be a commercial
bank which maintains an office in New Hampshire and the total
assets of which exceed $1 billion, and the Trustee shall be
selected by Owner subject to the reasonable approval of Manager.
An "Institutional Mortgage" is a Mortgage granted to an
Institution. An "Institution" is a bank, insurance company,
trust company, savings and loan association, real estate
investment trust, pension trust, governmental entity or similar
institution. An "Institutional Mortgagee" is the holder of
Mortgage of Owner's interest in the Project.
SECTION 14.02 DEPOSITS OF INSURANCE PROCEEDS AND AWARDS
In the event this Agreement is not terminated all insurance
proceeds and Awards shall be paid to the Trustee. If this
Agreement is terminated, all Insurance Proceeds and Awards shall
be paid to Owner and Manager as their interests may apply. All
funds paid to the Trustee shall be held by the Trustee, and the
Trustee shall disburse them solely in accordance with this
Article.
SECTION 14.03 PROCEDURE FOR DISTRIBUTION OF INSURANCE PROCEEDS
AND AWARDS
The following shall apply unless this Agreement is
terminated and the termination is not nullified.
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(a) The Trustee shall make payments to Owner or Manager, as
appropriate, out of the insurance proceeds or Awards to be
applied to the cost of repair or restoration. The payments shall
be made as the repair or restoration progresses.
(b) The Trustee shall comply with the following
requirements which shall be contained in escrow instructions, if
required by the Trustee, with respect to the payments:
(i) The Trustee shall not make payments more
frequently than once each month.
(ii) Until the repair or restoration is complete, the
Trustee shall make no payment unless the sum of the payment
requested and all previous payments shall be less than ninety
percent (90%) of the cost of the repair or restoration to date.
(iii) The Trustee shall make no payment unless the
balance of the insurance proceeds or Awards shall be at least
sufficient to complete the repair or restoration.
(iv) The Trustee shall make no payment unless it
receives a certificate of Owner or Manager, as appropriate, and a
certificate of Owner's or Manager's architect or engineer, as
appropriate, in accordance with part (c) of this subsection.
(v) The Trustee shall receive, prior to any payment, a
certificate from the Title Insurance Company stating that there
are no liens filed of record.
(c) The certificate of Owner or Manager shall be certified
as true and correct by an officer of Owner or Manager and shall
set forth the following information:
(i) The estimated cost of the repair or restoration.
(ii) The nature of the work to be done and the
materials furnished which form the basis for the requested
payments.
(iii) That the requested payment does not exceed the
reasonable cost of the work and materials.
(iv) That none of the work or materials has been made
the basis for any previous payment.
(v) That, insofar as the work has been completed, the
work complies with the requirements of this Agreement, applicable
legal requirements, and insurance requirements.
(vi) That all contractors, laborers, suppliers and
subcontractors that have performed work shall have been paid any
amount then payable to them.
(d) The architect's or engineer's certificates shall be
certified by an architect or engineer familiar with the work.
The certificate shall be certified as true and correct to the
best of the knowledge, information and belief of the architect or
engineer and shall be based upon periodic on-site
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inspections of, and testing by, the architect or engineer. The
architect or engineer selected by one party shall be reasonably
satisfactory to the other party. The architect or engineer shall
certify that, in the opinion of the architect or engineer, the
Trustee shall have complied with the requirements of clauses (ii)
and (iii) of part (b) of this subsection; shall verify that the
statements set forth in clauses (iii), (iv) and (v) of part (c)
of this subsection are true; and shall set forth the information
required by clauses (i) and (ii) of part (c) of this subsection.
(e) Any balance of insurance proceeds or Awards after the
cost of any repair or restoration shall have been paid in full
shall be paid to Owner or Manager, as their interests appear, and
shall be the sole property of such party.
ARTICLE 15. ASSIGNMENT AND SUBLETTING
Except as provided in Section 5.12(c), neither Owner or
Manager shall assign this Agreement or any interest therein
without the express prior written consent of the other party,
which consent shall not be unreasonably withheld. However,
Manager may assign or transfer this Agreement to any Affiliate
which Affiliate is beneficially owned entirely by Showboat, Inc.,
provided, that a counterpart original of such assignment is
delivered to Owner on or before the effective date of such
assignment, and provided further that such Affiliate expressly
assumes and agrees to be bound by all of the terms and conditions
of this Agreement.
ARTICLE 16. AFFIRMATIVE COVENANTS OF MANAGER
Manager hereby covenants and agrees that so long as this
Agreement remains in effect:
SECTION 16.01 CORPORATE STATUS
Manager shall preserve and maintain its corporate
rights, franchises and privileges in Nevada and New Hampshire.
SECTION 16.02 COMPLIANCE WITH LAWS
Manager shall comply in all material respects with all
applicable laws, rules, regulations and orders of all states,
counties, and municipalities in which such party conducts
business related to the Project, including, without limitation,
any laws, rules, regulations, orders and requests for information
of the Gaming Authority, the Nevada Gaming Authorities, the New
Jersey Casino Control Commission, and the New South Wales Casino
Control Authority. Manager shall also follow applicable federal
laws, rules, and regulations.
In connection with this Agreement, Manager acknowledges that
certain casino gaming licenses are currently issued to and held
by Owner's Affiliates, and Owner's Affiliates may in the future
apply for gaming licenses in additional states or foreign
countries. The laws of such jurisdictions may require Owner's
Affiliates to disclose private or otherwise confidential
information about Manager and its respective principals, lenders
and Affiliates. Manager agrees to refrain from all conduct that
may negatively affect such licenses or license applications.
Manager further agrees that this Agreement shall terminate
immediately at Owner's option if any representative, agent or
Affiliate of Manager is required to be licensed, qualified or
found suitable
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by any gaming authority where it is currently licensed and is
denied such status by such gaming authority; provided, however,
that upon the termination of any such agreement, Owner shall be
obligated to reimburse Manager immediately for any Management
Fees and all other amounts due to Manager under this Agreement.
SECTION 16.03 GAMING APPROVALS
Manager shall use its best efforts to obtain the approval of
the Nevada Gaming Authorities, the New Jersey Casino Control
Commission, and the New South Wales Casino Control Authority to
permit it to conduct gaming operations in the state of New
Hampshire and shall use its best efforts to secure and maintain
such approvals necessary for the conduct of gaming operations at
the Project.
SECTION 16.04 CONFIDENTIAL INFORMATION
Manager agrees for itself and its Affiliates, agents,
representatives and consultants to hold in the strictest
confidence and not to disclose to any person, entity, party, firm
or corporation (other than agents or representatives of Manager
who are also bound by this section) without the prior express
written consent of Owner (except as such disclosures are required
in applications or by applicable securities or gaming laws) any
of Owner's confidential data, whether related to the Project or
to general business matters, which shall come into their
possession or knowledge. In addition, Manager agrees that it
shall cause all documents, drawings, plans or other materials
developed by Owner in connection with the Project to be returned
to the Owner in the event of termination of this Agreement and
that Manager shall not make use of such information in connection
with the Project or any other undertaking by Manager without the
prior express written consent of Owner.
SECTION 16.05 GAMING APPLICATIONS
Manager agrees to use its best efforts to expeditiously
prepare and file all gaming license applications necessary for it
to perform its obligations under this Agreement.
SECTION 16.06 COMPLIANCE WITH OTHER AGREEMENT
Manager agrees to comply with all terms of the Agreement
between Owner and Rockingham, the Administrative Agreement
Between Owner and Manager, and the Trademark Services Agreement
between Showboat, Inc., and Owner, each dated as of the date
hereof.
ARTICLE 17. AFFIRMATIVE COVENANTS OF OWNER
Owner hereby covenants and agrees that so long as this
Agreement remains in effect:
SECTION 17.01 CORPORATE STATUS
Owner shall preserve and maintain its corporate rights,
franchises and privileges as a limited liability company in New
Hampshire, including without limitation its right to own a gaming
establishment.
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SECTION 17.02 MAINTENANCE OF INSURANCE
Owner shall, in accordance with the provisions of Article 11
of this Agreement, maintain insurance with responsible and
reputable insurance companies or associations in such amounts and
covering such risks as are usually carried by companies engaged
in similar business and owning similar properties in the same
general area in which Owner operates, and which may be necessary
to satisfy the requirements of Owner's lenders, as well as the
mutual approvals and agreements of the parties hereto as is
specified in Article 11 hereof.
SECTION 17.03 COMPLIANCE WITH LAWS
Owner shall comply in all material respects with all
applicable laws, rules, regulations and orders of all states,
counties, and municipalities in which such party conducts
business related to the Project, including, without limitation,
any laws, rules, regulations, orders and requests for information
of the Gaming Authority, the Nevada Gaming Authorities, Gaming
Authorities, the New Jersey Casino Control Commission, and the
New South Wales Casino Control Authority. Owner shall also
follow applicable federal laws, rules, and regulations.
In connection with this Agreement, Owner acknowledges that
certain casino gaming licenses are currently issued to and held
by Manager's Affiliates by the States of Nevada and New Jersey,
and the State of New South Wales, Australia, and Manager or its
Affiliates may in the future apply for gaming licenses in
additional states or foreign countries. The laws of such
jurisdictions may require Manager to disclose private or
otherwise confidential information about Owner and its respective
principals, lenders and Affiliates. Owner agrees to refrain from
all conduct that may negatively affect such licenses or license
applications. Owner further agrees that this Agreement shall
terminate immediately at Manager's option if any representative,
agent or Affiliate of Owner is required to be licensed, qualified
or found suitable by Nevada, New Jersey, New South Wales or other
gaming authority and is denied such status by such gaming
authority; provided, however, that upon the termination of any
such agreement, Owner shall be obligated to reimburse Manager
immediately for any Management Fees and all other amounts due to
Manager under this Agreement.
SECTION 17.04 COOPERATION WITH GAMING AUTHORITIES
Owner shall use its best efforts to cause its officers,
directors, employees and stockholders to provide any gaming
authority which governs or may govern gaming facilities of
Affiliates of Manager with necessary documents and information.
SECTION 17.05 CONFIDENTIAL INFORMATION
Owner agrees for itself and its Affiliates, agents,
representatives and consultants to hold in the strictest
confidence and not to disclose to any person, entity, party, firm
or corporation (other than agents or representatives of Owner who
are also bound by this section) without the prior express written
consent of Manager (except as such disclosures are required in
applications or by applicable securities or gaming laws) any of
Manager's confidential data, whether related to the Project or to
general business matters, which shall come into their possession
or knowledge. In addition, Owner agrees that it shall cause all
documents, drawings, plans or other materials developed by
Manager in connection with the Project to be returned to the
Manager in the event
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of termination of this Agreement and that Owner shall not make
use of such information in connection with the Project or any
other undertaking by Owner without the prior express written
consent of Manager.
SECTION 17.06 COMPLIANCE WITH LOAN COVENANTS
Owner shall comply with and be bound by and shall not breach
or default under any of the terms, covenants or provisions of any
mortgage, loan, financing or debt covenant applicable to it.
SECTION 17.07 NON-INTERFERENCE
Owner agrees and shall use its best efforts to cause its
shareholders, directors, officers, and employees to not interfere
with or attempt to influence day-to-day operations of the Project
(except in accordance with this Agreement).
SECTION 17.08 GAMING APPLICATIONS
Owner agrees to use its best efforts to expeditiously
prepare and file all gaming license applications necessary for it
to perform its obligations under this Agreement.
SECTION 17.09 TITLE/QUIET ENJOYMENT
Owner represents and covenants that it has acquired, or will
acquire before the commencement of any construction of the
Project and thereafter, and will maintain a valid and continuing
fee estate for the Project subject to the Cooperation Agreement
and the exceptions permitted in the Limited Liability Company
Agreement. Owner covenants, during the Term that Manger shall
and may peaceably possess and quietly enjoy the Project in
accordance with the terms of this Agreement, free from
molestation, eviction and disturbance by Owner or by any other
Person. Owner shall, at Owner's expense, undertake and prosecute
all actions, judicially or otherwise, required to assure such
quiet enjoyment and peaceable possession by Manager.
ARTICLE 18. REPRESENTATIONS AND WARRANTIES
SECTION 18.01 OWNER CORPORATE STATUS
Owner represents and warrants that it is a limited liability
company duly organized, validly existing and in good standing
under the laws of the state of New Hampshire, that Owner has full
corporate power and authority to enter into this Agreement and
perform its obligations hereunder, and that the officers of Owner
who executed this Agreement on behalf of Owner are in fact
officers of Owner and have been duly authorized by Owner to
execute this Agreement on its behalf.
SECTION 18.02 MANAGER CORPORATE STATUS
Manager represents and warrants that it is a corporation
duly organized, validly existing and in good standing under the
laws of the state of Nevada, and qualified to do business in the
State of New Hampshire, that Manager has full corporate power and
authority to enter into this Agreement and perform its
obligations hereunder, and that the officers of Manager who
executed
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this Agreement on behalf of Manager are in fact officers of
Manager and have been duly authorized by Manager to execute this
Agreement on its behalf.
SECTION 18.03 AUTHORIZATION/NO CONFLICT
The execution, delivery and performance by Owner and
Manager, as applicable, of this Agreement has been duly
authorized by all necessary corporate action (including any
necessary stockholder action) on the part of Owner and Manager,
as applicable, and no further action or approval is required in
order to constitute this Agreement as the valid and binding
obligations of Owner and Manager, enforceable in accordance with
its terms. The execution, delivery and performance of this
Agreement by Owner and Manager, as applicable, does not and will
not (a) violate or conflict with any provisions of their
respective articles of incorporation or bylaws, or of any law,
rule, regulation of the Gaming Authorities, or any order, writ,
judgment, decree, determination, or award presently in effect
having applicability to Owner or Manager; (b) result in a breach
of any condition or provision of, or constitute a default under,
any indenture, loan or credit agreement or any other agreement or
instrument to which Owner or Manager is a party or by which Owner
or Manager may be bound or affected; or (c) result in, or
require, the creation or imposition of any lien, claim, charge or
encumbrance of any nature upon or with respect to any of the
properties now owned or hereafter acquired by Owner or Manager.
SECTION 18.04 PERMITS/APPROVALS
Owner and Manager possess adequate franchises, licenses,
permits, orders and approvals of all federal, state and local
governmental or regulatory bodies required for them to carry on
their businesses as presently conducted; all of such franchises,
licenses, permits, orders and approvals are in full force and
effect, and no suspension or cancellation of any of them is
threatened; and none of such franchises, licenses, permits,
orders or approvals will be adversely affected by the
consummation of the transactions contemplated by this Agreement.
SECTION 18.05 ACCURACY OF REPRESENTATIONS
No representation or warranty of Owner or Manager in this
Agreement nor any information, exhibit, memorandum, schedule or
report furnished by Owner or Manager in connection with this
Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements
of fact contained therein not misleading.
SECTION 18.06 MAINTENANCE OF GAMING AND OTHER LICENSES
Owner and Manager agree to provide the other party with
copies of all applications, reports, letters, and other documents
filed or provided to the Gaming Authorities. Both parties agree
to use their best efforts to secure and maintain any license
needed for the operation of the Project.
SECTION 18.07 CONDITION OF PROJECT DURING TERM
During the Term of this Agreement, Owner shall maintain the
Project in first-class condition and repair. All areas of the
Project shall be adequately illuminated and adequately patrolled
by security guards.
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SECTION 18.09 IMPAIR REPUTATION
Owner will do nothing to embarrass or impair Manager's good
name and reputation. Manager will do nothing to embarrass or
impair Owner's good name and reputation.
ARTICLE 19. ARBITRATION
SECTION 19.01 APPOINTMENT OF ARBITRATORS
IF ANY DISPUTE SHALL ARISE OR IF ANY ISSUE LEFT OPEN
HEREUNDER CANNOT BE RESOLVED BETWEEN THE PARTIES HERETO, SUCH
DISPUTE IS TO BE REFERRED FIRST TO A COMMITTEE OF FOUR PERSONS
WHO SHALL MEET IN AN ATTEMPT TO RESOLVE SAID DISPUTE OR OPEN
ISSUE. THE COMMITTEE SHALL CONSIST OF TWO PERSONS APPOINTED BY
ROCKINGHAM AND TWO PERSONS APPOINTED BY MANAGER. IF AN AGREEMENT
CANNOT BE REACHED TO RESOLVE THE DISPUTE BY THE COMMITTEE, THE
DISPUTE OR OPEN ISSUE WILL BE RESOLVED BY BINDING ARBITRATION
BEFORE ARBITRATORS HAVING NOT LESS THAN 10 YEARS EXPERIENCE IN
THE GAMING INDUSTRY. ANY AWARD OF THE ARBITRATORS MAY BE FILED
IN A COURT OF LAW AS A FINAL JUDGMENT. ANY SUCH ARBITRATION
SHALL BE IN ACCORDANCE WITH THE RULES AND REGULATIONS ADOPTED BY
THE AMERICAN ARBITRATION ASSOCIATION OR AS THE PARTIES OTHERWISE
AGREE. EITHER PARTY MAY SERVE UPON THE OTHER PARTY A WRITTEN
NOTICE OF THE DEMAND DISPUTE OR APPRAISAL TO BE RESOLVED PURSUANT
TO THIS ARTICLE. WITHIN THIRTY (30) DAYS AFTER THE GIVING OF SUCH
NOTICE, EACH OF THE PARTIES HERETO SHALL NOMINATE AND APPOINT AN
ARBITRATOR (OR APPRAISER, AS THE CASE MAY BE) AND SHALL NOTIFY
THE OTHER PARTY IN WRITING OF THE NAME AND ADDRESS OF THE
ARBITRATOR SO CHOSEN. UPON THE APPOINTMENT OF THE TWO
ARBITRATORS AS HEREINABOVE PROVIDED, SAID TWO ARBITRATORS SHALL
FORTHWITH, WITHIN FIFTEEN (15) DAYS AFTER THE APPOINTMENT OF THE
SECOND ARBITRATOR, AND BEFORE EXCHANGING VIEWS AS TO THE QUESTION
AT ISSUE, APPOINT IN WRITING A THIRD ARBITRATOR ("SELECTED
ARBITRATOR") AND GIVE WRITTEN NOTICE OF SUCH APPOINTMENT TO EACH
OF THE PARTIES HERETO. IN THE EVENT THAT THE TWO ARBITRATORS
SHALL FAIL TO APPOINT OR AGREE UPON THE SELECTED ARBITRATOR
WITHIN SAID FIFTEEN (15) DAY PERIOD, THE SELECTED ARBITRATOR
SHALL BE SELECTED BY THE PARTIES THEMSELVES IF THEY SO AGREE UPON
SUCH SELECTED ARBITRATOR WITHIN A FURTHER PERIOD OF TEN (10)
DAYS. IF A SELECTED ARBITRATOR SHALL NOT BE APPOINTED OR AGREED
UPON WITHIN THE TIME HEREIN PROVIDED, THEN EITHER PARTY ON BEHALF
OF BOTH MAY REQUEST SUCH APPOINTMENT BY THE AMERICAN ARBITRATION
ASSOCIATION (OR ITS SUCCESSOR OR SIMILAR ORGANIZATION IF THE
AMERICAN ARBITRATION ASSOCIATION IS NO LONGER IN EXISTENCE).
OWNER AND MANAGER SHALL SHARE EQUALLY THE COST OF THE SELECTED
ARBITRATOR. SAID ARBITRATORS SHALL BE
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SWORN FAITHFULLY AND FAIRLY TO DETERMINE THE QUESTION AT ISSUE.
THE ARBITRATORS SHALL AFFORD TO OWNER AND MANAGER A HEARING AND
THE RIGHT TO SUBMIT EVIDENCE, WITH THE PRIVILEGE OF CROSS-
EXAMINATION, ON THE QUESTION AT ISSUE, AND SHALL WITH ALL
POSSIBLE SPEED MAKE THEIR DETERMINATION IN WRITING AND SHALL GIVE
NOTICE TO THE PARTIES HERETO OF SUCH DETERMINATION. THE
CONCURRING DETERMINATION OF ANY TWO OF SAID THREE ARBITRATORS
SHALL BE BINDING UPON THE PARTIES, OR, IN CASE OF NO TWO OF THE
ARBITRATORS SHALL RENDER A CONCURRING DETERMINATION, THEN THE
DETERMINATION OF THE SELECTED ARBITRATOR SHALL BE BINDING UPON
THE PARTIES HERETO. EACH PARTY SHALL PAY THE FEES OF THE
ARBITRATOR APPOINTED BY IT, AND THE FEES OF THE SELECTED
ARBITRATOR SHALL BE DIVIDED EQUALLY BETWEEN OWNER AND MANAGER.
SECTION 19.02 INABILITY TO ACT
IN THE EVENT THAT AN ARBITRATOR APPOINTED AS AFORESAID SHALL
THEREAFTER DIE OR BECOME UNABLE OR UNWILLING TO ACT, HIS
SUCCESSOR SHALL BE APPOINTED IN THE SAME MANNER PROVIDED IN THIS
ARTICLE FOR THE APPOINTMENT OF THE ARBITRATOR SO DYING OR
BECOMING UNABLE OR UNWILLING TO ACT.
ARTICLE 20. DEFAULT/STEP-IN RIGHTS
SECTION 20.01 DEFINITION
The occurrence of any one or more of the following events
which is not cured within the time permitted shall constitute a
default under this Agreement (hereinafter referred to as a
"Default" or an "Event of Default") as to the party failing in
the performance or effecting the breaching act.
SECTION 20.02 MANAGER'S DEFAULTS
If Manager shall (a) fail to perform or materially comply
with any of the covenants, agreements, terms or conditions
contained in this Agreement applicable to Manager (other than
monetary payments) and such failure shall continue for a period
of thirty (30) days after written notice thereof from Owner to
Manager specifying in detail the nature of such failure, or, in
the case such failure is of a nature that it cannot, with due
diligence and good faith, be cured within thirty (30) days, if
Manager fails to proceed promptly and with all due diligence and
in good faith to cure the same and thereafter to prosecute the
curing of such failure to completion with all due diligence
within ninety (90) days thereafter, or (b) take or fail to take
any action to the extent required of Manager under this Agreement
that creates a default under or breach of any loan document, any
related contract or any requirement of the Gaming Authorities,
unless Manager cures such default or breach prior to the
expiration of applicable notice, grace and cure periods, if any;
provided, however, that Manager shall only be required to cure
any defaults with respect to which Manager has a duty hereunder.
If the only result of the failure by Manager to act is a monetary
loss to Owner which is not otherwise capable of being cured by
Manager, then Manager
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shall not be in Default if Manager reimburses Owner for such
losses within ten (10) Business Days of incurring such loss or
otherwise protects Owner against such loss in a manner reasonably
acceptable to Owner.
SECTION 20.03 STEP-IN RIGHTS
(a) If Owner funds are available, and Manager fails to pay
when due any amount which it is Manager's responsibility to pay
pursuant to this Agreement, then Owner, after five (5) Business
Days written notice to Manager with respect to any Operating
Expense, and with respect to non-Operating Expense with such
notice, if any, as may be reasonable under the circumstances
(except in the event that Manager has exposure to potential
liability in connection with making such payments in which case
Owner shall give Manager two (2) days written notice), and
without waiving or releasing Manager from any responsibility of
Manager hereunder, Owner may (but shall not be required to) pay
such amounts (including fines, penalty, interest and late payment
fees) and take all such action as may be necessary in respect
thereof. Manager shall, following such payments by Owner,
promptly reimburse Owner from the Bank Accounts to the extent
funds are available the amount which Manager failed to pay when
due. In addition, unless Manager has not acted with reasonable
diligence in failing to make such payments then, to the extent
that Manager's lack of reasonable diligence in this connection
has resulted in fines, penalty, interest or late payment fees in
excess of Twenty-Five Thousand and no/100ths Dollars ($25,000.00)
in any twelve (12) month period, then Manager shall immediately
disburse to Owner from Gross Revenue, following such payments by
Owner, such amounts as may be necessary to reimburse Owner for
such payments and Manager shall promptly deposit into the
appropriate Bank Accounts, from Manager's own funds, the full
amount of any fines, penalty, interest or late payment fees paid
in connection therewith.
(b) If Manager fails to take any action which it is
Manager's responsibility under this Agreement to take and the
result is to expose the Project to a material loss or patrons to
a material risk of physical safety, then Owner, upon five (5)
days written notice to Manager (except in any emergency in which
case Owner shall give Manager such notice, if any, as is
reasonable under the circumstances), without saving or releasing
Manager from any obligation of Manager hereunder, may (but shall
not be required to) take such actions as may be necessary to
preserve Owner's assets from such a material loss and/or to
protect the patrons. Manager shall, following any payments by
Owner made with respect to such actions, promptly reimburse Owner
from the Bank Accounts, to the extent funds are available, the
amount which Owner has expended. In addition, unless Manager has
acted with reasonable diligence in failing to take such action
then, to the extent that Manager's lack of reasonable diligence
in this connection has resulted in fines or late payment fees in
excess of Twenty-Five Thousand and no/100ths Dollars ($25,000.00)
in any twelve month period, then Manager shall immediately
disburse to Owner from Gross Revenue, following payment of such
amounts by Owner, such amounts as are necessary to reimburse
Owner for any fines or late payment fees by Owner in connection
with taking such action on Manager's behalf and Manager shall
also deposit into the appropriate Bank Account, from Manager's
own funds, the full amount of such payment made to Owner.
SECTION 20.04 OWNER'S DEFAULT
If Owner shall (a) fail to make any monetary payment
required under this Agreement, including, but not limited to,
debt service, Incentive Management Fee or Owner's Advances, on or
before the due date recited herein and said failure continues for
five (5) Business Days after
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written notice from Manager specifying such failure, (b) fail to
pay the entire Management Fee for a period of six (6) months, or
(c) fail to perform or materially comply with any of the other
covenants, agreements, terms or conditions contained in this
Agreement applicable to Owner (other than monetary payments) and
such failure shall continue for a period of thirty (30) days
after written notice thereof from Manager to Owner specifying in
detail the nature of such failure, or, in the case such failure
is of a nature that it cannot, with due diligence and good faith,
cure within thirty (30) days, if Owner fails to proceed promptly
and with all due diligence and in good faith to cure the same and
thereafter to prosecute the curing of such failure to completion
with all due diligence within ninety (90) days thereafter.
SECTION 20.05 BANKRUPTCY
If either party (i) applies for or consents to the
appointment of a receiver, trustee or liquidator of itself or any
of its property, (ii) makes a general assignment for the benefit
of creditors, (iii) is adjudicated a bankrupt or insolvent, or
(iv) files a voluntary petition in bankruptcy or a petition or an
answer seeking reorganization or an arrangement with creditors,
takes advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation Law, or admits
the material allegations of a petition filed against it in any
proceedings under any such law.
SECTION 20.06 REORGANIZATION/RECEIVER
If an order, judgment or decree is entered by any court of
competent jurisdiction approving a petition seeking
reorganization of Manager or Owner, as the case may be, or
appointing a receiver, trustee or liquidator of Manager or Owner,
as the case may be, or of all or a substantial part of any of the
assets of Manager or Owner, as the case may be, and such order,
judgment or decree continues unstayed and in effect for a period
of sixty (60) days from the date of entry thereof.
SECTION 20.07 DELAYS AND OMISSIONS
No delay or omission as to the exercise of any right or
power accruing upon any Event of Default shall impair the non-
defaulting party's exercise of any right or power or shall be
construed to be a waiver of any Event of Default or acquiescence
therein.
SECTION 20.08 DISPUTES IN ARBITRATION
Notwithstanding the provisions of this Article 19, any
occurrence which would otherwise constitute an Event of Default
hereunder shall not constitute an Event of Default for so long as
such dispute is subject to arbitration pursuant to the
arbitration provisions of Article 19.
ARTICLE 21. TERMINATION
SECTION 21.01 TERMINATING EVENTS
This Agreement shall terminate upon the occurrence of the
following:
(a) in the event of a terminating event specified in the
Limited Liability Company Agreement or the date on which an
Affiliate of Manager no longer owns an equity interest in Owner;
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(b) upon the occurrence of an Event of Default under this
Agreement and the time to cure has lapsed; or
(c) upon a change in the ownership of the Manager or its
Affiliates resulting in a change in the control of the Manager,
unless Owner consents within thirty (30) days prior to the change
in control of Manager or its Affiliates, which consent may not be
unreasonably withheld, in writing to such change in control. For
purposes of this section, "control" means the possession,
directly of indirectly, of the power to direct or cause the
direction of the management and policies of a person or entity,
whether through the ownership of voting securities, by contract
or otherwise. Control shall have deemed to occur where a Person
owns more than 35% or more of a publicly traded corporation, or
more than 50% of a non-publicly traded corporation .
(d) upon the occurrence of a taking as specified in Article
13.
SECTION 21.02 NOTICE OF TERMINATION
In the event of an occurrence specified in Section 21.01(a)-
(b), either Manager or Owner, as appropriate, shall terminate
this Agreement by giving five (5) days written notice, and the
Term of this Agreement shall expire by limitation at the
expiration of said last day specified in the notice as if said
date was the date herein originally fixed for the expiration of
the Term.
SECTION 21.03 REMEDIES UPON TERMINATION.
(a) Prior to Commencing Gaming Operations. In the event
that this Agreement is terminated prior to commencing gaming
operations and if the termination is not the result of an Event
of Default caused by Manager, Owner shall reimburse Manager all
Manager's Pre-Opening Expenses.
(b) After Commencement of Gaming Operations. Owner shall
pay to Manager all earned Management Fees.
SECTION 21.04 DELIVERY OF PROJECT
Upon termination of this Agreement for any reason, Manager
shall assign and transfer to Owner all of Manager's rights,
title, and interest in and to all transferable licenses and
permits with respect to the operation of the Project, save and
except the "Showboat Trademark" which will and shall remain the
property of Manager. Manager shall peacefully vacate the
Project. No signs or personalized property bearing the "Showboat
Trademark" shall be purchased or used by Owner without prior
written arrangements between Owner and Manager, which may need a
license from its parent company, Showboat, Inc. Upon surrender,
any exterior signs inscribed with the "Showboat Trademark" shall
be removed as soon as is practicable, and in any event within
fifteen (15) days of the date of termination. Additionally, any
personalized property bearing a "Showboat Trademark" (including
without limitation, ashtrays, office supplies, linen, glassware,
paper goods, promotional items, guest checks, uniforms, carpets,
and upholstery) shall also be removed as soon as practicable, and
in any event within thirty (30) days of the date of termination.
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ARTICLE 22. HAZARDOUS MATERIALS
SECTION 22.01 NO HAZARDOUS MATERIALS
Prior to Construction, Owner will provide Manager with an
Environmental Site Assessment Phase I Investigation relating to
the Project. Owner will represent and warrant after inquiry and
investigation prior to the completion of Construction, that: (i)
any handling, removing, transportation, storage, treatment or
usage of Hazardous Materials or toxic substances that has
occurred in the Project to date has been in compliance with all
applicable federal, state and local laws, regulations and
ordinances; (ii) no leak, spill, release, discharge, emission or
disposal of Hazardous Materials or toxic substances has occurred
in the Project to date; and (iii) the Project is free of
asbestos, toxic or Hazardous Materials as of the date that the
term of this Agreement commences.
SECTION 22.02 COMPLIANCE WITH LAWS
Owner agrees to comply with all federal, state and local
environmental and real estate laws, including the Americans With
Disabilities Act relating to Owner's construction, ownership,
management and operation of the Project. Manager agrees to
comply with all federal, state and local environmental and real
estate laws, including the Americans With Disabilities Act
relating to Manager's management and operation of the Project.
All expenses incurred in such compliance shall be Operating
Expenses.
SECTION 22.03 INDEMNIFICATION BY OWNER
Owner agrees to indemnify, defend and hold Manager and its
officers, employees and agents harmless from any claims,
judgments, damages, penalties, fines, costs, liabilities
(including sums paid in settlements of claims) or loss including
reasonable attorneys' fees, consultant fees, and expert fees
(consultants and experts to be selected by Manager) which arise
during or after the Term as a result of any breach of Owner's
representation and warranty contained in Section 22.01 or as a
result of Owner's failure to perform its covenant contained in
Section 22.02. Without limiting the generality of the foregoing,
the indemnification provided by this Section shall specifically
cover costs incurred in connection with any investigation of site
conditions or any clean-up, remedial, removal or restoration work
required by any federal, state or local governmental agency or
political subdivision because of the presence or suspected
presence of asbestos, other toxic or Hazardous Material in the
Project, or the soil, groundwater or soil vapor on or under the
Project, unless the Hazardous Materials are present solely as a
result of the actions of Manager, its officers, shareholders,
employees or agents. The foregoing indemnity shall survive the
expiration or earlier termination of this Agreement.
Section 22.04 Indemnification by Manager
Manager agrees to indemnify, defend and hold Owner and its
officers, employees and agents harmless from any claims,
judgments, damages, penalties, fines, costs, liabilities
(including sums paid in settlements of claims) or loss including
reasonable attorneys' fees, consultant fees, and expert fees
(consultants and experts to be selected by Owner) which arise
during or after the Term as a result of any breach of Manager's
representation and warranty contained in Section 22.02. Without
limiting the generality of the foregoing, the indemnification
provided by this
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Section shall specifically cover costs incurred in connection
with any investigation of site conditions or any clean-up,
remedial, removal or restoration work required by any federal,
state or local governmental agency or political subdivision
because of the presence or suspected presence of asbestos, other
toxic or Hazardous Material in the Project, or the soil,
groundwater or soil vapor on or under the Project, unless the
Hazardous Materials are present solely as a result of the actions
of Owner, its officers, shareholders, employees or agents. The
foregoing indemnity shall survive the expiration or earlier
termination of this Agreement.
SECTION 22.05 HAZARDOUS MATERIAL DEFINED
"Hazardous Material," as used in this Agreement, shall be
any substance or material if defined or designated as a hazardous
or toxic substance, or other similar term, by any federal, state
or local law, statute, regulation, or ordinance affecting the
Project.
ARTICLE 23. NOTICES
All notices provided for in this Agreement or related to
this Agreement, which either party desires to serve on the other,
shall be in writing, and any and all notices or other papers or
instruments related to this Agreement shall be deemed
sufficiently served or delivered on the date of mailing if sent
(i) by United States registered or certified mail (return receipt
requested), postage prepaid, in an envelope properly sealed, (ii)
by a facsimile transmission where written acknowledgment of
receipt of such transmission is received and a copy of the
transmission is mailed with postage prepaid, or (iii) by a
nationally recognized overnight delivery service provided for
receipted delivery, addressed as follows:
Owner: Manager:
Showboat Rockingham Company, Showboat Operating Company
L.L.C. Vice President Finance and
c/o President and Chief Chief Financial Officer
Executive Officer 2800 Fremont Street
Showboat New Hampshire Inc. Las Vegas, NV 89104
6601 Ventnor Avenue
Ventnor, NJ 08046
Rockingham: with a copy to:
Joseph E. Carney, Jr. John N. Brewer, Esq.
President Kummer Kaempfer Bonner &
Rockingham Venture, Inc. Renshaw
Rockingham Park 3800 Howard Hughes Parkway
Rockingham Park Boulevard Seventh Floor
Salem, NH 03079 Las Vegas, NV 89109
Either Owner or Manager may change the address or name of
addressee applicable to subsequent notices (including copies of
said notices as hereinafter provided) or instruments or other
papers to be served upon or delivered to the other party, by
giving notice to the other party as aforesaid, provided that
notice of such change shall not be effective until the fifth
(5th) day after mailing or facsimile transmission.
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ARTICLE 24. MISCELLANEOUS
SECTION 24.01 TIME OF THE ESSENCE
Time is of the essence with respect to all time periods set
forth in this Agreement.
SECTION 24.02 HEIRS, SUCCESSORS, ASSIGNS
Except as otherwise provided herein, each provision hereof
shall extend to and shall, as the case may require, bind and
inure to the benefit of the parties' heirs, executors,
administrators, permitted successors, permitted assigns and legal
representatives.
SECTION 24.03 CONSTRUCTION
All of the provisions of this Agreement shall be deemed and
construed to be conditions as well as covenants as though in
words specifically expressing or importing covenants and
conditions for use in each separate provision hereof. The
language in all parts of this Agreement shall be in all cases
construed simply according to its fair meaning, and not strictly
for or against Owner or Manager. This Agreement shall be
construed without regard to any presumption or other rule
requiring construction against the party causing the same to be
drafted.
SECTION 24.04 GOVERNING LAW
This Agreement shall be governed by, construed and enforced
in accordance with the laws of the State of New Hampshire without
reference to its choice of law provisions.
SECTION 24.05 SEVERABILITY
Should any portion of this Agreement be declared invalid or
unenforceable, then such portion shall be deemed to be severed
from this Agreement and shall not affect the remainder thereof.
SECTION 24.06 RELATION OF THE PARTIES
Nothing in this Agreement shall be construed as creating a
tenancy, ownership, limited partnership, joint venture, or any
other relationship between the parties hereto other than as
principal and agent. All debts and liabilities incurred by
Manager within the scope of the authority granted and permitted
hereunder in the course of its management and operation of the
Project shall be the debts and liabilities of Owner only, and
Manager shall not be liable for such debts and liabilities except
as specifically stated to the contrary herein.
SECTION 24.07 NO BROKER OR FINDER
Each party represents to the other that it has not engaged
any finder, broker or agent for whose commission or fee the other
party could be liable. Each party covenants and agrees to
indemnify and hold the other party free and harmless at all times
in respect of any and all liabilities, actions, suits,
proceedings, demands, assessments, judgments, costs and expenses,
including attorneys fees, arising from, by reason of, or in
connection with any fees, commissions or other compensation which
shall be alleged to be due to any finder, broker, agent or other
similar representative in connection with this transaction, if
the person is found to have been
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engaged by either party or if such services are found to have
been provided at the request of either party.
SECTION 24.08 ATTORNEYS' FEES
Should either party institute an arbitration, action or
proceeding to enforce any provisions hereof or for other relief
due to an alleged breach of any provision of this Agreement, the
prevailing party shall be entitled to receive from the other
party all costs of the action or proceeding and reasonable
attorneys fees.
SECTION 24.09 ENTIRE AGREEMENT
This Agreement covers in full each and every agreement of
every kind or nature whatsoever between the parties hereto
concerning this Agreement, and all preliminary negotiations and
agreements, whether verbal or written, of whatsoever kind or
nature are merged herein. No oral agreement or implied covenant
shall be held to vary the provisions hereof, any statute, law or
custom to the contrary notwithstanding.
SECTION 24.10 COUNTERPARTS
This Agreement may be executed in two or more counterparts
and shall be deemed to have become effective when and only when
all parties hereto have executed this Agreement, although it
shall not be necessary that any single counterpart be signed by
or on behalf of each of the parties hereto, and all such
counterparts shall be deemed to constitute but one and the same
instrument.
SECTION 24.11 FORCE MAJEURE
Whenever this Agreement requires an act to be performed
within a specified time period or to be completed diligently,
such periods are subject to "unavoidable delays." Unavoidable
delays include delays caused by acts of God, acts of war, civil
commotions, riots, strikes, lockouts, acts of government in
either its sovereign or contractual capacity, perturbation in
telecommunications transmissions, inability to obtain suitable
labor or materials, accident, fire, water damages, flood,
earthquake, or other natural catastrophes.
SECTION 24.12 NO WARRANTIES
Manager shall use its best efforts to render the services
contemplated by this Agreement in good faith to Owner, but hereby
explicitly disclaims any and all warranties, express or implied,
including but not limited to the success or profitability of the
Project.
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SECTION 24.13 HEADINGS
Headings or captions have been inserted for convenience of
reference only and are not to be construed or considered to be a
part hereof and shall not in an way modify, restrict or amend any
of the terms or provisions hereof.
SECTION 24.14 WAIVER
The waiver by one party of any default or breach of any of
the provisions, covenants or conditions hereof of the part of the
other party to be kept and performed shall not be a waiver of any
preceding or subsequent breach or any other provisions, covenants
or conditions contained herein.
DATED as of the day first above written.
"Manager" "Owner"
SHOWBOAT OPERATING COMPANY, SHOWBOAT ROCKINGHAM COMPANY,
a Nevada corporation L.L.C., a limited liability
company, by Showboat
New Hampshire, Inc., its Manager
By: /s/ Leann Schneider By:_____________________________
Treasurer
ACKNOWLEDGED AND AGREEDTO
WITH RESPECT TO ARTICLE 7 ONLY:
ROCKINGHAM VENTURE, INC.,
a New Hampshire corporation
By:_________________________
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ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement ("Agreement"), dated
as of the 27th day of July, 1995, between Showboat Operating
Company, a Nevada corporation whose principal office is located
at 2800 Fremont Street, Las Vegas, Nevada 89104 ("Showboat"), and
Showboat Rockingham Company, LLC, a New Hampshire limited
liability company whose principal office is located at Rockingham
Park Boulevard, Salem, New Hampshire 03079 ("Owner").
W I T N E S S E T H:
WHEREAS, Showboat and its management are experienced in
providing corporate administrative services to casinos and
restaurant operations; and
WHEREAS, Owner contemplates that the state of New Hampshire
may enact gaming legislation and, if permitted by such
legislation and licensed by the appropriate licensing authority,
construct a gaming facility at Rockingham Park (the "Project");
and
WHEREAS, Owner has appointed Showboat as the manager and
operator of the Project; and
WHEREAS, Owner desires to engage Showboat to render certain
corporate administrative services to Owner in order for Owner to
manage and operate the Project all as more fully described
herein; and
WHEREAS, Showboat desires to render such services to Owner;
and
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WHEREAS, the parties hereto are desirous of setting forth
the terms of compensation for the services to be rendered by
Showboat hereunder; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements of the parties herein contained, the parties agree as
follows:
ARTICLE 1.0 - SERVICES TO BE PROVIDED
1.1. THE SERVICES. Upon the terms and conditions described
herein, Showboat shall provide to Owner the corporate
administrative services (the "Services") set forth in Exhibit A,
which is attached hereto and made a part hereof.
1.2. CONTINUED OWNER PERFORMANCE. Any Services to be
performed by Showboat hereunder shall not be performed as a
substitute for Owner performance, but shall assist, support or
supplement the routine functions and responsibilities of the
employees, officers and Managers of Owner.
1.3. SHOWBOAT PERSONNEL. All Showboat personnel engaged to
render the Services shall remain the employees of Showboat, and
Showboat shall be responsible for their compensation and for
withholding federal or state income taxes. The costs and expenses
incurred by Showboat for consultants, agents and independent
contractors selected and engaged to perform Services for Owner
shall be engaged directly by Owner and paid directly by Owner or
reimbursed to Showboat upon demand. Any such consultants, agents
and independent subcontractors shall separately invoice and
account for Services to Owner. To the extent that Showboat itself
or any Showboat personnel, other than consultants, agents and
independent
2
<PAGE>
contractors, must be licensed or approved by the
authorized gaming authority in the State of New Hampshire,
however, Owner shall bear the expense of obtaining such
regulatory approvals and Showboat shall cooperate fully in order
to obtain all necessary regulatory approvals.
1.4. SHOWBOAT PERFORMANCE/RESPONSIBILITY. Showboat
undertakes to provide the Services hereunder with the same degree
of care and diligence it uses in providing such Services for its
own operations. In providing the Services hereunder, Showboat
shall not be liable to Owner for errors or omissions hereunder
except to the extent that such errors and omissions constitute
gross negligence or willful misconduct. Under no circumstances
shall any of Showboat's employees, officers, agents, directors,
or stockholders be liable to Owner for any errors or omissions by
Showboat hereunder.
ARTICLE 2.0 - PAYMENT OF COMPENSATION
2.1. FEES. Owner shall pay to Showboat fees for the
Services rendered hereunder equal to one percent (1%) of Owner's
Earnings before any interest expense, income taxes, capital lease
rentals, depreciation and amortization. Earnings shall have the
meaning specified in that certain Management Agreement among
Showboat, Owner and Rockingham Venture, Inc. dated as of the date
hereof (the "Management Agreement"). Showboat and owner agree
that the fees provided for by this Section 2.1 constitute their
good faith determination of the fair market value of such
services.
2.2. PARTIAL YEARS. Fees for partial fiscal years and
months hereunder shall be prorated.
3
<PAGE>
2.3. TAXES. Showboat and Owner agree that in the event any
tax or assessment (other than any such tax or assessment on
income) is required to be paid as a result of the performance of
the Services by Showboat hereunder, Owner shall be solely
responsible for the payment of such tax or assessment.
2.4. FISCAL YEAR: BOOKS AND RECORDS. Owner shall keep at
its usual place of business books and records relating to gross
revenues and the payment to be made hereunder containing such
true entries as may be necessary or proper to ascertain the
amount of payments to be made to Showboat hereunder. Owner shall
produce, during normal business hours, said books and records and
make them available for inspection or audit by duly authorized
agents of Showboat, shall permit such agents to make copies
thereof, and shall give such information as may be necessary or
proper to enable the amount of payment due hereunder to be
ascertained and verified.
ARTICLE 3.0 - TERM AND TERMINATION
3.1. TERM. The term of this Agreement shall begin as of
the date hereof and shall continue for a term of the earlier to
occur of (i) 50 years or (ii) the termination of the Management
Agreement.
3.2. FORCE MAJEURE. Neither party shall be liable in any
manner for failure or delay of performance of all or any part of
this Agreement, directly or indirectly, owing to an act of God,
governmental orders or restrictions, strikes or other labor
disturbances, riots, embargoes, revolutions, wars (declared or
undeclared), sabotage, fires, floods, or any other causes or
circumstances beyond the control of the parties. The party
suffering such delay or failure shall
4
<PAGE>
give prompt notice to the other party and shall exert its best
efforts to remove the causes or circumstances of nonperformance
with all possible dispatch. If any of the causes or
circumstances above continue for more than six (6) months,
either party hereto may elect to terminate this Agreement by
written notice to the other party.
3.3. ACCRUED PAYMENTS. Termination of the Agreement
pursuant to Section 3.2 hereof shall not affect the right of
Showboat to any fees accrued hereunder prior to the date of such
termination.
3.4. REMEDIES. In the event that either party commits a
material default of its obligations hereunder, the nondefaulting
party may notify the defaulting party of such default. In the
event that such default is not cured within thirty (30) days
thereafter, the nondefaulting party shall be entitled to pursue
any remedies available to it, including but not limited to, the
termination of the Agreement upon notice to the defaulting party.
ARTICLE 4.0 - GENERAL PROVISIONS
4.1. OTHER SERVICES. Nothing in this Agreement shall be
construed to prohibit Showboat from undertaking to provide
additional services to Owner not described in this Agreement or
in the exhibits hereto on terms and conditions (including the
fees therefore) satisfactory to each of Showboat and Owner.
5
<PAGE>
4.2. INDEPENDENT PARTIES. Nothing in this Agreement shall
be construed as creating a partnership or a joint venture between
Showboat and Owner, or making either party an agent or employee
of the other party, but in all of its operations hereunder
Showboat shall be an independent contractor for Owner. No
employee of Showboat who renders any service hereunder shall be
considered, construed, or deemed to be an employee of Owner as a
result thereof.
4.3. INTEGRATION, MODIFICATION AND WAIVER. This Agreement
constitutes the entire agreement between Showboat and Owner
pertaining to the subject matter hereof and supersedes all prior
understandings of the parties. No supplement, modifications or
amendment of this Agreement shall be binding upon either Showboat
or Owner unless executed in writing by each of them. No waiver of
any of the provisions of this Agreement shall be deemed to be or
shall constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
4.4. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the internal laws of the state
of New Hampshire without giving effect to the conflict of laws
principles thereof.
4.5. NOTICES. Any notice or other communication required
or permitted under this Agreement shall be deemed given when: (a)
it is personally delivered; (b) it is transmitted by telecopy,
telex, or telegram with confirmation of receipt and a copy of the
document transmitted is also mailed, to the recipient, postage
prepaid; (c) the day after it is sent by a nationally recognized
overnight courier service; or (d) five (5) days after it is sent
by United States mail with postage prepaid, addressed to the
respective party at its address set forth in the first paragraph
of
6
<PAGE>
this Agreement, attention: President if for Showboat or
General Manager if for Owner. Either party may change the address
or telecopy number to which notices or other communications are
to be given under this Agreement by furnishing the other party
with written notice of such change in accordance with this
Section 4.5.
4.6. BINDING EFFECT; ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns. Neither party may
assign this Agreement or any of its rights or obligations under
this Agreement without the prior written consent of the other
party.
4.7. HEADINGS. The headings used in this Agreement are for
convenience of reference only and are not intended to affect the
interpretation of this Agreement.
4.8. SEVERABILITY. If any provision of this Agreement or
the application of any provision to any party or circumstance
shall, to any extent, be adjudged invalid or unenforceable, the
application of the remainder of such provision to such party or
circumstance, the application of such provision to other parties
or circumstances, and the application of the remainder of this
Agreement shall not be affected thereby. Each provision of this
Agreement shall be valid and enforceable to the fullest extent
permitted by law.
4.9. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the
same instrument.
7
<PAGE>
4.10. NO THIRD PARTY BENEFICIARIES. Nothing expressed or
implied in this Agreement is intended, or shall be construed, to
confer upon or give any person or entity, other than the parties
hereto, any rights or remedies under or by the reason of the
Agreement.
4.11. NO WARRANTIES. Showboat shall use its best efforts
to provide the services in good faith to Owner, but disclaims any
and all warranties, express or implied, including, but not
limited to, the success or profitability of the business
conducted by Owner. Nothing contained herein shall be deemed to
confer on Showboat the right or ability to manage Owner's
business. Management of Owner's business shall solely be the
function and responsibility of Owner.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their representatives thereunto duly
authorized.
SHOWBOAT OPERATING COMPANY
a Nevada corporation
By: /s/ Leann Schneider
Name:
Title: Treasurer
SHOWBOAT ROCKINGHAM COMPANY, LLC,
By:______________________________
Name:
8
<PAGE>
EXHIBIT A
SERVICES TO BE PROVIDED
Pursuant to the Administrative Services Agreement entered
into by the Parties, Owner engages Showboat to render, or cause
to be rendered, the following corporate administrative services
in connection with Owner's operations.
1. Human Resource services, including: provision of policy
development and operating guidelines for standardization of
operation philosophy and principles for employee management; and
establishment of uniform controls for selection and licensing of
key management personnel, compensation and benefits.
2. Accounting and financial services, including:
development of standards and procedures for internal audits and
supervision; review and evaluation of internal audits; assistance
with the development of policies, standards and procedures for
accounting and supervision; and, provision of technical
accounting advisory services and review of financial statements
and other accounting records maintained by Owner.
3. Data processing services, including: development of
policies, standards and procedures governing data processing
operations: assistance in the acquisition of software programs;
coordination of hardware acquisitions; and, review and evaluation
of data processing systems and operations.
9
<PAGE>
4. Tax planning and compliance, including: review of
federal and state income tax returns; review of estimated tax
payments; and assistance in the coordination of Internal Revenue
Service and state agency examinations.
5. General administrative services, including: consultation
on selection of consultants for strategic planning efforts;
assistance in the evaluation and acquisition of insurance
policies and establishment of standards and policies related to
all insurance-related matters; assistance in the development of
standards and policies related to safety programs and supervision
of such programs; and such other administrative services as may
be appropriate.
10
<PAGE>
TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT (this "Agreement")
made as of July 27, 1995, by and between Showboat, Inc., a Nevada
corporation ("Licensor"), and Showboat Rockingham Company, LLC, a
New Hampshire limited liability company ("Licensee").
RECITALS
A. Licensor is the owner of the trademark "Showboat",
its logos, trademarks, tradenames, service marks, and any
variation or extension of such name ("Trademark").
B. Licensor and Licensee desire that the Licensee be
permitted to use the Trademark in connection with the operation
of a privately-owned non-racing gaming establishment (the
"Project") located at Rockingham Park, Salem, New Hampshire (the
"Territory").
OPERATIVE PROVISIONS
In consideration of the recitals, covenants and
conditions contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the Licensor and Licensee agree as follows:
1. LICENSE. The Licensor grants to the Licensee the
non-exclusive, personal and nontransferable right to use the
Trademark in the Territory in connection with the operation of
the Project.
2. OPERATION OF PROJECT. The Licensee shall operate
the Project in a first-rate manner, consistent with the quality
of other gaming operations on the eastern seaboard of the United
States, and shall use the Trademark only in connection with the
operations of the Project, and the quality of the operations of
the Project shall be satisfactory to the Licensor, as determined
in its sole discretion.
3. INSPECTION. The Licensee will permit only
authorized representatives of the Licensor to inspect, at all
reasonable times, the operations of the Project.
4. USE OF TRADEMARK. Whenever the Licensee uses the
Trademark in advertising or in any other manner in connection
with the Project, the Licensee shall clearly indicate the
Licensor's ownership of the Trademark. The Licensee shall
provide the Licensor with samples of all signs, advertising,
promotional material, literature, packages and labels prepared by
or for the Licensee and intended to be used by Licensee. When
using the Trademark under this Agreement, the Licensee undertakes
to comply with all laws pertaining to trademarks in force at any
time in the Territory.
<PAGE>
5. REGISTRATION OF LICENSEE. If the law requires, or
if requested by the Licensor or its duly authorized
representative, the Licensee shall execute any such documents and
to take such action as may be necessary to implement an
application to register the Licensee as a Permitted User or to
retain, enforce or defend the Trademark.
6. ASSIGNMENT OF LICENSEE. The right granted in
Paragraph 1 hereof shall not be transferable without the
Licensor's prior written consent, which consent may be granted or
withheld in Licensor's sole discretion, PROVIDED, HOWEVER, that
the Licensee shall have the right to use the Trademark in the
Territory for the purpose of exercising the rights granted
hereunder.
7. INDEMNITY. The Licensor assumes no liability to
the Licensee or to third parties with respect to the operations
of the Project or to the use of the Trademark in the Territory,
and the Licensee hereby defends, indemnifies and holds harmless
the Licensor against all losses, damages and expenses, including
attorneys' fees, incurred as a result of or related to claims of
third persons involving the operations of the Project or use of
the Trademark.
8. COMPENSATION. Licensee shall pay to Showboat
monthly fees for the Services rendered hereunder equal to three
percent (3%) of Licensee's Earnings before any interest expense,
income taxes, capital lease rentals, depreciation and
amortization. Earnings shall have the meaning specified in that
certain Management Agreement among Showboat, Licensee and
Rockingham Venture, Inc. dated as of the date hereof (the
"Management Agreement"). Payment of the fee payable hereunder
shall be paid in the manner and at the times as the Management
Fee is paid to Showboat under the Mangement Agreement. Showboat
and Licensee agree that the fees provided for by this Section 2.1
constitute their good faith determination of the fair market
value of such services.
9. TERM.
(a) The term of this Agreement shall commence on
the enactment of privately owned non-racing gaming legislation
and shall continue in effect for a term of 50 years thereafter or
upon the earlier termination of the Management Agreement.
(b) If the Licensee or any sublicensee makes any
assignment of assets or business for the benefit of creditors, or
if a trustee or receiver is appointed to administer or conduct
its business or affairs, or if it is adjudged in any legal
proceeding to be either voluntary or involuntary bankrupt, then
all the rights granted herein shall forthwith cease and terminate
without prior notice or legal action by the Licensor and without
any further obligation or liability to Licensor.
(c) Should the Licensee fail to comply with any
provision of this Agreement, the Licensor may terminate this
Agreement without prior notice or legal action and without any
further obligation or liability to Licensor. The Licensor shall
have the right to determine unilaterally whether or not the
conditions envisioned by this subparagraph exist, and the
Licensor's determination shall be final.
2
<PAGE>
10. OWNERSHIP OF TRADEMARK. The Licensee acknowledges
the Licensor's exclusive right, title and interest in and to the
Trademark including its trademarks, logos, service marks, and any
variation or extensions thereof (collectively, "Showboat
Intellectual Property" and will not at any time do or cause to be
done any act or thing contesting or in any way impairing or
tending to impair any part of such right, title, and interest.
In connection with the use of the Trademark, the Licensee shall
not in connection with the use of the Trademark, the Licensee
shall not in any manner represent that it has any ownership in
the Trademark or registration hereof, and the Licensee
acknowledges that use of the Trademark shall not create in the
Licensee's favor any right, title, or interest in or to the
Trademark, but all uses of the Trademark by the Licensee shall
insure to the benefit of the Licensor. Upon termination of this
Agreement in any manner provided herein, the Licensee will cease
and desist from all use of the Trademark in any way (and will
deliver up to the Licensor, or its duly authorized
representatives, all material and papers upon which the Trademark
appears), and the Licensee shall at no time adopt or use, without
the Licensor's prior written consent, any word or mark which is
likely to be similar to or confusing with the Trademark.
11. NOTICES. Any notices required or permitted to be
given under this Agreement shall be deemed sufficiently given if
mailed by certified mail, postage prepaid, addressed to the party
to be notified at its address shown at the beginning of this
Agreement, or at such other address as may be furnished in
writing to the notifying party.
IN WITNESS WHEREOF this Agreement has been executed as
of the day and year first above written.
"Licensor" "Licensee"
SHOWBOAT, INC. SHOWBOAT ROCKINGHAM
COMPANY, LLC
By: /S/ J.K. Houssels III By:___________________________
3
<PAGE>
EXHIBIT 10.37
<PAGE>
PROMISSORY NOTE
$5,024,470.26 January 1, 1996
FOR VALUE RECEIVED, Showboat Missouri, a corporation
organized and existing under the laws of the State of Nevada
("Maker"), promises to pay to Showboat, Inc., a corporation
organized and existing under the laws of the State of Nevada, or
order ("Holder"), at 3720 Howard Hughes Parkway, Ste. 200, Las
Vegas, NV 89109, or at such other place as Holder may designate
in writing, up to the principal balance of Five Million Twenty-
Four Thousand Four Hundred Seventy and 26/One Hundredths Dollars
($5,024,470.26), plus interest as hereinafter provided. Interest
shall be calculated on a daily basis (based on a 365-day year),
at 14% ("Base Rate"). Principal and interest shall be payable
upon the earlier to occur of (i) demand or (ii) December 31, 1996
(the "Maturity Date").
All payments on this Promissory Note shall be applied
first to discharge all accrued but unpaid interest on the unpaid
principal balance hereof, and the remainder to be applied to the
principal balance. The Holder's acceptance of any payment less
than the amount then due shall not, in any manner, effect or
prejudice the rights of the Holder to receive the unpaid balance
then due and payable.
The failure to pay the unpaid principal sum on the
Maturity Date or the failure to pay any other sum when the same
shall become due and payable shall constitute an event of default
("Event of Default") hereunder, and upon the occurrence of an
Event of Default, all sums evidenced hereby, including the entire
principal balance, all accrued and unpaid interest and all other
amounts due hereunder shall, at the election of the Holder, and
without demand or notice to maker, become immediately due and
payable and the Holder may exercise its rights under this Note,
and other rights under applicable law.
Upon the occurrence of an Event of Default by Maker,
the unpaid principal balance, and all accrued and unpaid interest
due hereunder and all other costs shall together be treated as
the principal balance of this Promissory Note and shall bear
interest at the rate of three (3) percentage points per annum
greater than the Base Rate (the "Default Rate"), from the date of
the Event of Default until the entire principal sum and such
interest and costs have been paid in full.
<PAGE>
Maker shall have the right to prepay at any time all or
any portion of this Promissory Note without penalty.
It is not the intent of Holder to collect interest or
other loan charges in excess of the maximum amount permitted by
Nevada law. If interest or other loan charges collected or to be
collected by the Holder exceed any applicable permitted limits
then (i) any such interest or other loan charges shall be reduced
by the amount necessary to reduce the interest or other loan
charges to the permitted limits, and (ii) any sums already
collected from the Maker which exceeded permitted limits will be
refunded to the Maker. The Holder may choose to make such refund
by reducing the principal balance of the indebtedness hereunder
or by making a direct payment to the Maker.
Maker agrees to waiver demand, diligence, presentment
for payment and protest, notice of acceleration, extension,
dishonor, maturity, protest, and default hereunder. The Holder
may accept late or partial payments even though they are marked
"payment in full," without losing, prejudicing or waiving any
rights hereunder.
Maker agrees to pay all costs of collection, and all
costs of suit and preparation for such suit (whether at trial or
appellate level), in the event the unpaid principal sum of this
Promissory Note, or any payment of principal or interest is not
paid when due.
No amendment, modification, change, waiver or discharge
shall be effective unless evidenced by an instrument in writing
and signed by the party against whom enforcement of any waiver,
amendment, change, modification or discharge is sought. If any
provision hereof is invalid, or unenforceable, the other
provisions hereof shall remain in full force and effect and shall
be construed to effectuate the provisions hereof. The provisions
of this Promissory Note shall be binding and inure to the benefit
of the successors and assigns of the parties hereto.
A waiver by Holder of failure to enforce any covenant
or condition of this Promissory Note, or to declare any default
hereunder, shall not operate as a waiver of any subsequent
default or affect the right of Holder to exercise any right or
remedy not expressly waived in writing.
This Promissory Note shall be construed in accordance
with and governed by Nevada law.
All payments of principal and interest are hereby
required to be made in the form of lawful money of the United
States of America.
<PAGE>
Time is of the essence with respect to this Promissory
Note and each and every covenant, condition, term and provision
hereof.
Whenever the context requires or permits, the singular
shall include the plural, plural shall include the singular and
the masculine, feminine and neuter shall be freely
interchangeable.
IN WITNESS WHEREOF, Maker has executed this Promissory
Note at Las Vegas, Nevada as of the day first above written.
Maker:
SHOWBOAT MISSOURI, a
Nevada corporation
By: /s/
Its:
<PAGE>
EXHIBIT 10.38
<PAGE>
LOAN AND GUARANTY AGREEMENT
DATED AS OF JULY 14, 1995
AMONG
SHOWBOAT, INC.
AS BORROWER
AND
SHOWBOAT OPERATING COMPANY,
OCEAN SHOWBOAT, INC.
AND
ATLANTIC CITY SHOWBOAT, INC.
AS GUARANTORS
AND
NATWEST BANK, N.A.
AS LENDER
<PAGE>
1. DEFINITIONS 1
2. THE LOANS 12
SECTION 2.01. REVOLVING CREDIT FACILITY LOANS. 12
SECTION 2.02. TERM LOAN FACILITY. 12
SECTION 2.03. MAKING OF LOANS. 12
SECTION 2.04. NOTES. 13
SECTION 2.05. INTEREST ON NOTES 13
SECTION 2.06. FEES 14
SECTION 2.07. PREPAYMENT OF LOANS 14
3. REPRESENTATIONS AND WARRANTIES 14
SECTION 3.01. CORPORATE EXISTENCE AND POWER 15
SECTION 3.02. CORPORATE AUTHORITY AND NO 15
VIOLATION
SECTION 3.03. GOVERNMENTAL APPROVAL 15
SECTION 3.04. FINANCIAL CONDITION 16
SECTION 3.05. NO MATERIAL ADVERSE CHANGE 16
SECTION 3.06. SUBSIDIARIES 16
SECTION 3.07. TRADEMARKS, PATENTS AND OTHER 16
RIGHTS
SECTION 3.08. FICTITIOUS NAME 17
SECTION 3.09. TITLE TO PROPERTIES 17
SECTION 3.10. UCC FILING INFORMATION 17
SECTION 3.11. LITIGATION 17
SECTION 3.12. FEDERAL RESERVE REGULATIONS 18
SECTION 3.13. INVESTMENT COMPANY ACT 18
SECTION 3.14. ENFORCEABILITY 18
SECTION 3.15. TAXES 18
SECTION 3.16. COMPLIANCE WITH ERISA 18
SECTION 3.17. AGREEMENTS 19
SECTION 3.18. DISCLOSURE 19
SECTION 3.19. ENVIRONMENTAL LIABILITIES 19
SECTION 3.20. LABOR MATTERS 20
4. CONDITION OF LENDING 20
SECTION 4.01. CONDITIONS PRECEDENT TO THE LOANS 20
SECTION 4.02. CONDITIONS PRECEDENT TO EACH 24
BORROWING
SECTION 4.03. CONDITIONS TO CONVERSION 25
5. AFFIRMATIVE COVENANTS 25
SECTION 5.01. FINANCIAL STATEMENTS, REPORTS, 25
ETC.
i
<PAGE>
SECTION 5.02. CORPORATE EXISTENCE; COMPLIANCE 27
WITH STATUTES
SECTION 5.03. INSURANCE 27
SECTION 5.04. TAXES AND CHARGES; INDEBTEDNESS
IN ORDINARY COURSE OF BUSINESS. 28
SECTION 5.05. CORPORATE NAME; CHIEF EXECUTIVE 29
OFFICE
SECTION 5.06. ERISA COMPLIANCE AND REPORTS 29
SECTION 5.07. USE OF PROCEEDS 30
SECTION 5.08. ACCESS TO BOOKS AND RECORDS; 30
EXAMINATIONS
SECTION 5.09. MAINTENANCE OF PROPERTIES 30
SECTION 5.10. MATERIAL CHANGES 30
SECTION 5.11. ENVIRONMENTAL LAWS 31
SECTION 5.12. FURTHER ASSURANCES; SECURITY 31
INTERESTS
SECTION 5.13. PROJECT EXPANSIONS 32
SECTION 5.14. ANNUAL CLEANUP PERIOD 32
6. NEGATIVE COVENANTS 33
SECTION 6.01. LIMITATION OF INDEBTEDNESS 33
SECTION 6.02. LIMITATION OF GUARANTIES 33
SECTION 6.03. CHANGE IN BUSINESS 33
SECTION 6.04. CONSOLIDATION, MERGER, SALE 34
OR PURCHASE OF ASSETS,ETC.
SECTION 6.05. LIMITATION ON LIENS 34
SECTION 6.06. EXECUTIVE OFFICES 35
SECTION 6.07. SALE AND LEASEBACK 35
SECTION 6.08. ERISA COMPLIANCE 35
SECTION 6.09. TRANSACTIONS WITH AFFILIATES 36
SECTION 6.10. AMENDMENTS TO EXISTING DOCUMENTS 36
SECTION 6.11. HAZARDOUS MATERIALS 36
SECTION 6.12. NO FURTHER NEGATIVE PLEDGES 36
SECTION 6.13. CAPITAL FUNDS 37
SECTION 6.14. LEVERAGE RATIO 37
SECTION 6.15. DEBT SERVICE COVERAGE RATIO 37
SECTION 6.16. ACCOUNTING PRACTICES 37
SECTION 6.17. LIMITATION ON RESTRICTIONS ON 37
SUBSIDIARY DIVIDENDS AND OTHER
DISTRIBUTIONS, ETC.
7. EVENTS OF DEFAULT 38
8. GUARANTY 40
SECTION 8.01. AGREEMENT OF GUARANTY 40
SECTION 8.02. NO IMPAIRMENT OF GUARANTY 41
SECTION 8.03. CONTINUATION AND REINSTATEMENT, 42
ETC.
ii
<PAGE>
SECTION 8.04. LIMITATION ON GUARANTEED AMOUNT 42
9. MISCELLANEOUS 42
SECTION 9.01. NOTICES 42
SECTION 9.02. SURVIVAL OF AGREEMENT, 43
REPRESENTATIONS AND WARRANTIES,
ETC.
SECTION 9.03. SUCCESSORS AND ASSIGNS; 43
SYNDICATIONS; LOAN SALES;
PARTICIPATIONS.
SECTION 9.04. EXPENSES; DOCUMENTARY TAXES 44
SECTION 9.05. INDEMNITY 44
SECTION 9.06. CHOICE OF LAW 45
SECTION 9.07. NO WAIVER 45
SECTION 9.08. EXTENSION OF MATURITY 45
SECTION 9.09. AMENDMENTS, ETC 46
SECTION 9.10. SEVERABILITY 46
SECTION 9.11. SERVICE OF PROCESS 46
SECTION 9.12. HEADINGS 47
SECTION 9.13. EXECUTION IN COUNTERPARTS 47
SECTION 9.14. ENTIRE AGREEMENT 47
EXHIBITS:
Exhibit 2.04(a) Revolving Note
Exhibit 2.04(b)-1 Note Amendment Agreement
(Floating Rate)
Exhibit 2.04(b)-2 Note Amendment Agreement
(Fixed Rate)
Exhibit 4.01(p) Officers' Certificate
SCHEDULES:
Schedule 3.06 List of Showboat, Inc. Subsidiaries
Schedule 3.07 Proprietary Rights Needed to Conduct
Business Which Showboat, Inc. and/or
its Subsidiaries Neither Possess Nor
Have License to Use
Schedule 3.08 Fictitious or Trade Names
Schedule 3.09 List of Real Property Owned or
Leased by Showboat, Inc. and/or its
Subsidiaries
Schedule 3.10 Principal Executive Office and
Location of Records
Schedule 3.11 List of Pending Lawsuits/Proceedings
Schedule 3.17 List of Agreements
of Showboat, Inc. and its Subsidiaries
For Which Loss or Termination May Have
Material Adverse Effect
Schedule 3.19 Environmental Liabilities
Schedule 6.05 Existing Liens
iii
<PAGE>
LOAN AND GUARANTY AGREEMENT
THIS LOAN AND GUARANTY AGREEMENT (the "Agreement") is
entered into on July 14, 1995, between and among NATWEST BANK,
N.A. a national banking association (hereinafter called
"Lender"), with a business office at 10 Exchange Place, Jersey
City, New Jersey 07322, and SHOWBOAT, INC., a Nevada corporation
with a business address at 2800 Fremont Street, Las Vegas, Nevada
89104 (hereinafter called "Borrower"), and Showboat Operating
Company, a Nevada corporation, Ocean Showboat, Inc., a New Jersey
corporation and Atlantic City Showboat, Inc., a New Jersey
corporation (the "Guarantors") having the addresses set forth on
the signature pages hereof.
W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lender make
available a committed revolving credit facility in the amount of
$25,000,000 for a term of 2 years, after which time the facility
may, at the discretion of the Borrower, be converted to a term
loan having a remaining term of 3 years; and
WHEREAS, subject to the terms and conditions set forth
herein, the Lender is willing to make the credit facilities
available to the Borrower; and
WHEREAS, the Loan is to be secured by a first lien and
security interest in the Atlantic City Showboat and the Las Vegas
Showboat, which mortgages and liens are to be in pari passu with
the liens and security interests held by the Trustee, and by the
guaranty of the Guarantors.
NOW THEREFORE, in consideration of the mutual promises and
covenants set forth below, the parties hereto hereby agree as
follows:
1. DEFINITIONS
For the purposes hereof unless the context otherwise
requires, the following terms shall have the meanings indicated,
all accounting terms not otherwise defined herein will have the
respective meanings accorded to them under GAAP and all terms
defined in the New Jersey Uniform Commercial Code and not
otherwise defined herein shall have the respective meanings
accorded to them therein. Unless the context otherwise requires,
any of the following terms may be used in the singular or plural,
depending on the reference:
"ACSI" means Atlantic City Showboat, Inc.
<PAGE>
"AFFILIATE" means any Person which, directly or indirectly,
is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, a Person
shall be deemed to be "controlled by" another Person if such
Person possesses, directly or indirectly, power either to (i)
vote 10% or more of the securities having ordinary voting power
for the election of directors of such Person or (ii) direct or
cause the direction of the management and policies of such Person
whether by contract or otherwise.
"AGREEMENT" means this Loan Agreement, together with all
modifications and amendments thereto.
"APPLICABLE LAW" means all provisions of statutes, rules,
regulations and orders of governmental bodies or regulatory
agencies applicable to a Person, and all orders and decrees of
all courts and arbitrators in proceedings or actions in which the
Person in question is a party.
"ATLANTIC CITY SHOWBOAT" means (i) all of ACSI's interest in
its hotel casino and related properties located at 801 Boardwalk,
Atlantic City, New Jersey and any Project Expansion relating
thereto and (ii) any contiguous property acquired by the Borrower
or any of its Subsidiaries and any Project Expansion relating
thereto.
"AUSTRALIAN JOINT VENTURE" means Sydney Harbour Casino
Holdings, Ltd., the holding company for the Sydney Harbour
Casino, Sydney, New South Wales, Australia, or Sydney Harbour
Casino Pty, Ltd. or any other Affiliate of the Borrower holding
an interest in the proposed casino in New South Wales, Australia.
"BOND INDENTURE" means that certain Indenture executed by
the Borrower dated as of May 18, 1993 in connection with the
issuance by the Borrower of its 9 1/4% First Mortgage Bonds due
2008.
"BONDS" means the 9 1/4% First Mortgage Bonds due 2008
issued by the Borrower under the Bond Indenture.
"BORROWER" means Showboat, Inc.
"BORROWING" means a borrowing of funds by the Borrower being
either a Floating Rate or a LIBOR Based Rate Borrowing advanced
by the Lender hereunder on any given day under the Revolving Loan
Facility.
"BUSINESS DAY" means any day other than a Saturday, Sunday
or other day on which banks in the State of New York or the State
of New Jersey are permitted to close; provided, however, that
when used in connection with a LIBOR Borrowing, the term Business
Day shall also exclude any day on which banks are not open for
dealings in dollar deposits on the London Interbank Market.
2
<PAGE>
"CAPITAL FUNDS" means the Consolidated Tangible Net Worth of
the Borrower less on a consolidated basis the value on the
Borrower's books of (i) unamortized debt issuance costs and (ii)
loans by the Borrower directly or indirectly to or its
investments, directly or indirectly, in Non-Recourse Subsidiaries
and Unconsolidated Subsidiaries, plus (iii) Subordinated Debt.
"CAPITAL LEASE" as applied to any Person, means any lease of
any property (whether real, personal or mixed) by that Person as
lessee which, in accordance with GAAP, is or should be accounted
for as a capital lease on the balance sheet of that Person.
"CHANGE OF CONTROL" means any of the following events: (i)
the sale, lease, transfer, conveyance or other disposition of all
or substantially all of the assets of the Borrower and its
Subsidiaries; (ii) the liquidation or dissolution of the
Borrower, (iii) the Borrower becomes aware of (by way of a report
or any other filing pursuant to Section 13(d) of the Securities
and Exchange Act (the "Exchange Act"), proxy vote, written notice
or otherwise) the acquisition by any "Person" or related group
(within the meaning of Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act, or any successor provision to either of the
foregoing, including any "group" acting for the purpose of
acquiring, holding or disposing of securities within the meaning
of Rule 13d-5(b)(1) under the Exchange Act), other than the
Existing Management, in a single transaction or in a related
series of transactions, by way of merger, consolidation or other
business combination or purchase of beneficial ownership (within
the meaning of Rule 13d-3 under the Exchange Act, or any
successor provision) of 30% or more of the total voting power
entitled to vote in the election of the Board of Directors of the
Borrower or such other Person surviving the transaction; (iv)
during any period of two consecutive years, individuals who at
the beginning of such period constituted the Borrower's Board of
Directors (together with any new directors whose election or
appointment by such board or whose nomination for election by the
shareholders of the Borrower was approved by a vote of a majority
of the directors then still in office who were either directors
at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to
constitute a majority of the Borrower's Board of Directors then
in office; or (v) the Borrower fails to own, directly or
indirectly, 100% of the Las Vegas Showboat or the Atlantic City
Showboat or 100% of any Person holding a gaming license to
operate either the Las Vegas Showboat or the Atlantic City
Showboat.
"CLOSING DATE" means the date on which the conditions
precedent to the making of the Loans as set forth in Section 4.01
have been satisfied or waived, which shall in no event be later
than July 15, 1995.
"CODE" means the Internal Revenue Code of 1986 and the rules
and regulations issued thereunder, as now and hereafter in
effect, or any successor provision thereto.
"COLLATERAL" means any assets of the Borrower or of the
Guarantors defined as Collateral in any of the Loan Documents.
3
<PAGE>
"CONSOLIDATED EBITDA" means, without duplication, for any
period for which such amount is being determined, the sum of the
amounts for such period of (i) net income, (exclusive of (a)
interest income, (b) extraordinary items, and (c) the Borrower's
equity in income of any Non-Recourse Subsidiaries or
Unconsolidated Subsidiaries but including cash distributions of
Consolidated EBITDA of Non-Recourse Subsidiaries or
Unconsolidated Subsidiaries received from Non-Recourse
Subsidiaries or Unconsolidated Subsidiaries), (ii) provision for
income taxes, (iii) depreciation expense, (iv) Consolidated
Interest Expense, (v) amortization expense, and (vi) any other
non-cash items reducing net income, but each of the above (ii)
through (v) only to the extent reducing net income less (vii) any
non-cash items increasing net income. All of the foregoing items
(i) through (vii) are otherwise to be determined on a
consolidated basis for Borrower and its consolidated subsidiaries
in accordance with GAAP. However, notwithstanding the foregoing,
the financial information as to items (ii) through (vii) of any
Non-Recourse Subsidiaries shall be excluded from the calculation
of Consolidated EBITDA hereunder.
"CONSOLIDATED INTEREST EXPENSE" means for any period for
which such amount is being determined, gross interest expense
(including that properly attributable to Capital Leases in
accordance with GAAP) of the Borrower and its Subsidiaries on a
consolidated basis; including, without limitation, all
capitalized interest, all commissions, discounts and other fees
and charges under interest rate protection agreements (including
amortization of discount), but excluding interest expense of any
Non-Recourse Subsidiary.
"CONSOLIDATED TANGIBLE NET WORTH" means as at any date of
determination, the sum of the capital stock and additional paid-
in capital plus retained earnings (or minus accumulated deficit)
of the Borrower and its Subsidiaries on a consolidated after-tax
basis determined in accordance with GAAP less the value on the
Borrower's books of all intangible assets, on a consolidated
basis. However, the equity of the Borrower or its Subsidiaries
in any Non-Recourse Subsidiaries and the debt held by the
Borrower or its Subsidiaries of any Non-Recourse Subsidiaries
shall be excluded in the calculation of Consolidated Tangible Net
Worth.
"CONSOLIDATED TOTAL LIABILITIES" means the amount of
liabilities (excluding liabilities of Non-Recourse Subsidiaries)
which would appear on a consolidated balance sheet of the
Borrower and its Subsidiaries prepared in accordance with GAAP.
Consolidated Total Liabilities shall also include without
duplication the amount of all Guaranties, except that
Consolidated Total Liabilities shall include guaranties insuring
the completion of any construction or development projects only
if performance thereon has been demanded, and if performance has
been demanded such guaranties shall be included to the extent of
the maximum reasonably anticipated liability of the Borrower and
its Subsidiaries under such guaranties.
"CONTRIBUTION AGREEMENT" means the Contribution Agreement
substantially in the form of Exhibit 4.01(q) hereto to be entered
into by the Borrower and the Guarantors.
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<PAGE>
"CONVERSION DATE" means July 14, 1997.
"CPLTD" means current portion of long term debt (excluding
CPLTD of Non-Recourse Subsidiaries) as determined in accordance
with GAAP.
"DEBT SERVICE COVERAGE RATIO" means, for any period, the
ratio of the Consolidated EBITDA for such period to the sum of
the following: (a) the CPLTD for such period, plus (b)
Consolidated Interest Expense for such period plus (c) the
current portion of amounts payable under Capital Leases for such
period and (d) dividends paid or declared for such period. Non-
Recourse Subsidiaries are to be excluded in such calculation.
"DEBT" means any liability on a Claim. For purposes of this
definition, "Claim" means any (i) right to payment whether or not
such right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured, or (ii) right to an
equitable remedy for breach of performance if such breach gives
rise to a payment, whether or not such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, legal, equitable, secured or unsecured.
"DEFAULT" means any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of
Default.
"ENVIRONMENTAL ACTIONS" refers to any complaint, summons,
citation, notice, directive, order, claim, litigation,
investigation, proceeding, judgment, letter or other
communication from any federal, state, local, or municipal
agency, department, bureau, office or other authority, or any
third party involving a violation of any Environmental Laws or a
Hazardous Discharge (i) from or onto any of the real properties
or assets owned or leased by the Borrower or any of its
Subsidiaries or any tenant, subtenant, prior tenant or prior
subtenant of such real properties or (ii) from or onto any
facilities which received solid wastes or Hazardous Materials
from the Borrower, or any of its Subsidiaries or any tenant,
subtenant, prior tenant or prior subtenant of the real
properties.
"ENVIRONMENTAL LAW" means any and all applicable federal,
state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decrees or requirements of any
Governmental Authority regulating, relating to or imposing
liability or standards of conduct concerning any Hazardous
Material or environmental protection or health and safety, as now
or may at any time hereafter be in effect, including without
limitation, the Clean Water Act also known as the Federal Water
Pollution Control Act ("FWPCA"), 33 U.S.C. Sec. 1251 et seq.,
the Clean Air Act ("CAA"), 42 U.S.C. Sec. 7401 et seq., the
Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"),
7 U.S.C. Sec. 300f et seq., the Surface Mining Control and
Reclamation Act Sec. 1201 et seq., ("SMCRA"), 30 U.S.C. Sec.
1201 et seq., the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. Sec. 9601
et seq., as amended by the Superfunded Amendment and
Reauthorization Act of 1986 ("SARA"), the Resource Conservation
and Recovery Act ("RCRA"), 42 U.S.C. Sec.
5
<PAGE>
6901 et seq., the Occupational Safety and Health Act as amended
("OSHA), 29 U.S.C. Sec. 655 and Sec. 657, relevant state laws,
together, in each case, with any amendment thereto, and the
regulations adopted thereunder and all substitutions thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as such Act may be amended, and the regulations promulgated
thereunder.
"EVENT OF DEFAULT" shall have the meaning given such term in
Article 7 hereof.
"EXISTING MANAGEMENT" means J. K. Houssels, members of his
family and his estate.
"FIXED RATE OPTION" means the option of the Borrower to
elect to pay a fixed rate on the Term Loan Facility pursuant to
Section 2.05(c) below.
"FLOATING RATE BORROWING" means a Borrowing under the
Revolving Loan Facility as to which Borrower has elected the
Floating Rate Option.
"FLOATING RATE OPTION" means Borrower's option, as
applicable, to pay interest on Borrowings under the Revolving
Loan Facility at the Revolving Loan Floating Rate pursuant to
Section 2.03(a) or at the Term Loan Floating Rate on the Term
Loan pursuant to Section 2.05(c) below.
"GAAP" means generally accepted accounting principles
applied in a manner consistent with the most recent accountant-
prepared financial statements of the Borrower furnished and
acceptable to the Lender pursuant to Section 3.04 of this
Agreement, subject, however to such changes in accounting
policies and procedures as shall be in accordance with generally
accepted accounting principles.
"GAMING AUTHORITY" means any agency, authority, board,
bureau, commission, department, office or instrumentality of any
nature whatsoever of the United States federal or foreign
government, any state, province or any city or other political
subdivision or otherwise and whether now or hereafter in
existence, or any officer or official thereof, including, without
limitation, the Nevada Gaming Commission, the Nevada State Gaming
Control Board, the City Council of the City of Las Vegas, and the
New Jersey Casino Control Commission with authority to regulate
any gaming operation (or proposed gaming operation) owned,
managed or operated by the Borrower or any of its Subsidiaries.
"GAMING CONTROL ACTS" means the Nevada Gaming Control Act
and the New Jersey Casino Control Act, as from time to time
amended, or any successor provision of law, and the regulations
promulgated thereunder.
"GAMING PERMITS" means every license, franchise, permit or
other authorization on the Closing Date or thereafter required to
own, lease, operate or otherwise conduct casino gaming at the Las
Vegas Showboat and the Atlantic City Showboat, including, without
limitation, all such licenses granted under the Gaming Control
Acts, the regulations of the Gaming Authorities and other
applicable laws.
6
<PAGE>
"GOVERNMENTAL AUTHORITY" means any federal, state, municipal
or other governmental department, commission, board, bureau,
agency or instrumentality, or any court, in each case whether of
the United States or foreign.
"GUARANTORS" means each of SBOC, OSI and ACSI.
"GUARANTY" means as to any Person, any direct or indirect
obligation of such Person guaranteeing or intended to guarantee
any Indebtedness, Capital Lease, dividend or other monetary
obligation ("primary obligation") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary
obligation or any property constituting direct or indirect
security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor
or otherwise to maintain the net worth or solvency of the primary
obligor, or (c) to purchase property, securities or services, in
each case, primarily for the purpose of assuring the owner of any
such primary obligation. The amount of any Guaranty shall be
deemed to be an amount equal to the stated or determinable amount
of the primary obligation in respect of which such Guaranty is
made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is
required to perform thereunder).
"HAZARDOUS DISCHARGE" means any releasing, spilling,
leaking, pumping, emitting, emptying, discharging, injecting,
escaping, leaching, disposing or dumping of Hazardous Materials
from or at any of the properties owned or leased by the Borrower,
its Subsidiaries or any tenant, subtenant, prior tenant or prior
subtenant of the real properties as well as any at or from any
facility which received solid waste or Hazardous Materials
generated by the Borrower, its Subsidiaries or any tenant,
subtenant, prior tenant or prior subtenant of the real
properties.
"HAZARDOUS MATERIALS" means any compound, element, chemical
or compound exhibiting a flammable, explosive, radioactive,
corrosive, reactive or toxic characteristic or which is defined
as a hazardous material, hazardous waste, hazardous or toxic
substance, or similar material under any Environmental Law. This
term shall also include raw materials used or stored by Borrower
building components, including but not limited to asbestos-
containing materials and manufactured products to the extent any
of these contain hazardous materials.
"INDEBTEDNESS" of any Person means, without duplication, (i)
the principal of and premium (if any) in respect of (A)
indebtedness of such Person for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is
responsible or liable; (ii) all Capitalized Lease obligations of
such Person; (iii) all obligations of such Person issued or
assumed as the deferred purchase price of property, all
conditional sale obligations of such Person and all obligations
of such Person under any title retention agreement (but excluding
trade accounts payable arising in the ordinary course of
business); (iv) all obligations of such Person for the
reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction (other than obligations
with respect to letters of credit securing obligations
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<PAGE>
(other than obligations described in clauses (i), (ii) and (iii)
above) entered into in the ordinary course of business of such
Person to the extent such letters of credit are not drawn upon
or, if and to the extent drawn upon, such drawing is reimbursed
no later than the third business day following receipt by such
Person of a demand for reimbursement following payment on the
letter of credit); (v) all obligations existing at the time under
hedging obligations, foreign currency hedges and similar
agreements; (vi) all obligations of the type referred to in
clauses (i) through (v) of other Persons and all dividends and
distributions of other Persons for the payment of which, in
either case, such Person is responsible or liable as obligor,
guarantor or otherwise; and (vii) all obligations of the type
referred to in clauses (i) through (vi) of other Persons secured
by any Lien on any property as asset of such Person (whether or
not such obligation is assumed by such Person), the amount of
such obligation being deemed to be the lesser of the value of
such property or assets or the amount of the obligation so
secured.
"INTEREST PERIOD" means as to any LIBOR Rate Borrowing, the
period commencing on the date of such Borrowing and ending on the
numerically corresponding day (or if there is no corresponding
day, the last day) in the calendar month that is 1,2,3, or 6
months thereafter as Borrower may elect; provided, however, that
(i) if any Interest Period would end on a day which shall not be
a Business Day, such interest period shall be extended to the
next succeeding Business Day, and (ii) no interest period with
respect to a LIBOR Rate Borrowing may be selected which would end
later than the Conversion Date.
"INVESTMENTS" means, with respect to any Person, all
investments by such Person in other Persons, including Affiliates
(in the form of loans, Guaranties, advances or capital
contributions (excluding commission, travel and similar advances
to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of
Indebtedness, equity interests or other securities and all other
items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP).
"LAS VEGAS SHOWBOAT" means (i) the Borrower's hotel casino
and related properties at 2800 Fremont Street, Las Vegas, Nevada
and any Project Expansion relating thereto and (ii) any
contiguous property acquired by the Borrower or any of its
Subsidiaries and any Project Expansion relating thereto.
"LENDER" means Natwest Bank, N.A., its successors and
assigns.
"LEVERAGE RATIO" means the ratio of (a) the sum of (i) Total
Liabilities less (ii) Subordinated Debt over (b) the sum of (i)
Consolidated Tangible Net Worth and (ii) total Subordinated Debt.
"LIBOR BASED RATE" means the interest rate payable on LIBOR
Rate Borrowings pursuant to the Revolving Note, being the sum of
the Adjusted LIBOR Rate as defined in the Note plus 250 basis
points (2.50%).
8
<PAGE>
"LIBOR RATE BORROWING" means a Borrowing under the Revolving
Loan Facility as to which Borrower has elected the LIBOR Based
Rate.
"LIEN" means any interest in property securing an obligation
owed to, or a claim, right or interest of, any Person, whether
created by agreement, statute or common law, including without
limitation security interest, lien, encumbrance, mortgage,
assignment, pledge, conditional sale, lease, consignment or
bailment.
"LOAN" means the Revolving Loan Facility and/or the Term
Loan.
"LOAN DOCUMENTS" means this Agreement and all other
agreements, documents or instruments, now or hereafter executed
and delivered to evidence or secure the Loan or any of the
Obligations.
"MATERIAL ADVERSE EFFECT" means any circumstances or
condition which either individually or when aggregated with other
circumstances or conditions has a material adverse effect upon
the business, assets or condition, financial or otherwise, of the
Borrower and its Subsidiaries taken as a whole.
"MORTGAGES" means that certain Leasehold Mortgage,
Assignment of Rents and Security Agreement issued by ACSI in
favor of the Lender (the "Leasehold Mortgage") and that certain
Deed of Trust, Assignment of Rents and Security Agreement issued
by the Borrower in favor of Lender (the "Deed of Trust"), as
amended, supplemented or modified from time to time.
"MULTI-EMPLOYER PLAN" means a plan described in Section
3(37) of ERISA.
"NON-RECOURSE SUBSIDIARY" means (i) a Subsidiary (other than
any Guarantor) or (ii) any entity in which the Borrower or any of
its Subsidiaries has an equity investment and pursuant to a
contract or otherwise has the right to direct the day-to-day
operation of such entity that, in each case, meets all of the
requirements of the definition of a "Non-Recourse Subsidiary"
contained in Section 1.01 of the Bond Indenture as such
definition is set forth in the Bond Indenture dated May 18, 1993.
The amendment, modification or termination of the Bond Indenture
shall not affect this definition of Non-Recourse Subsidiary
herein.
"NOTE INDENTURE" means that certain indenture executed by
the Borrower in connection with its 13% Senior Subordinated Notes
due 2009 dated August 10, 1994.
"NOTES" OR "NOTES" means the Revolving Note and/or the
Revolving Note as amended by the Term Note executed and delivered
by the Borrower to the Lender to secure the Loan.
"OBLIGATIONS" means and includes all loans, advances,
debts, liabilities, obligations, guaranties, covenants and
duties owing by the Borrower to the lender of any kind and
9
<PAGE>
description (whether or not evidenced by this Agreement, any note
or other instrument or any other agreement between the Lender and
the Borrower and whether or not for the payment of money), direct
or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, whether similar or dissimilar to
advances made under this Agreement, including without limitation
any debt, liability or obligation owing from the Borrower to
others which the Lender may obtain or has obtained as security by
assignment or otherwise.
"OBLIGOR" refers to the Borrower and the Guarantors or any
of them.
"OSI" means Ocean Showboat, Inc., a New Jersey corporation.
"PBGC" means the Pension Benefits Guaranty Corporation.
"PERMITTED LIENS" means (a) Liens in favor of the Borrower;
(b) Liens on property of a Person existing at the time such
Person is merged into or consolidated with the Borrower or any
Subsidiary of the Borrower; PROVIDED, that such Liens were in
existence prior to the contemplation of such merger or
consolidation and less than one year prior to such Person
becoming merged into or consolidated with the Borrower or any of
its Subsidiaries; (c) Liens on property existing at the time of
acquisition thereof by the Borrower or any Subsidiary of the
Borrower; PROVIDED, that such Liens were in existence prior to
the contemplation of such acquisition and less than one year
prior to such acquisition; (d) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds
or other obligations of a like nature incurred in the ordinary
course of business; (e) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings
promptly instituted and diligently concluded; PROVIDED, that any
reserve or other appropriate provisions as shall be required in
conformity with GAAP shall have been made therefor; (f) ground
leases in respect of the real property on which facilities owned
or leased by the Borrower or any of its Subsidiaries are located;
(g) Liens arising from UCC financing statements regarding
property leased by the Borrower or any of its Subsidiaries; (h)
easements, rights-of-way, navigational servitudes, restrictions,
minor defects or irregularities in title and other similar
charges or encumbrances which do not interfere in any material
respect with the ordinary conduct of business of the Borrower and
its Subsidiaries; and (i) Liens in favor of the Trustee under the
Bond Indenture.
"PERSON" means individual, corporation, partnership, trust,
unincorporated association or organization, joint venture,
governmental authority, or any other entity.
"PLAN" means an employee pension benefit plan described in
Section 3(2) of ERISA, other than a Multiemployer Plan.
"PRIME RATE" as used in this Agreement shall mean that rate
of interest defined as the Prime Rate in the Note.
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<PAGE>
"PROJECT EXPANSION" means any addition, improvement,
extension or capital repair to the Las Vegas Showboat or the
Atlantic City Showboat or any contiguous or adjacent property,
including the purchase of real estate or improvements thereon,
but excluding separable furniture.
"REPORTABLE EVENT" means any reportable event as defined in
Section 4043(b) of ERISA, other than a reportable event as to
which provision for 30-day notice to the PBGC would be waived
under applicable regulations had the regulations in effect on the
Closing Date been in effect on the date of occurrence of such
reportable event.
"REVOLVING LOAN FACILITY" means the Revolving Loan Facility
provided pursuant to Section 2.01 below.
"REVOLVING LOAN FLOATING RATE" means a floating rate equal
to the Lender's Prime Rate plus one-half of one percent (.50%).
"REVOLVING NOTE" means the Note referred to in Section
2.04(a)
"SBOC" means Showboat Operating Company.
"SENIOR SUBORDINATED NOTES" means 13% Senior Subordinated
Notes to 2009 issued by Borrower under Indenture dated August 10,
1994.
"SUBORDINATED DEBT" means indebtedness of the Borrower on a
consolidated basis (but excluding Subordinated Debt of Non-
Recourse Subsidiaries) which is subordinated in payment to all
other Indebtedness and to trade obligations of the Borrower.
"SUBSIDIARY" means (i) any corporation, association or other
business entity of which more than 50% of the total voting power
of shares of capital stock entitled (without regard to the
occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more
of the other Subsidiaries of that Person or a combination thereof
and (ii) any Non-Recourse Subsidiaries.
"TERM LOAN" means the term loan to be extended under Section
2.02 hereof.
"TERM LOAN FLOATING RATE" means a floating rate equal to the
Lender's Prime Rate plus one percent (1%).
"TERM NOTE" means the Note Amendment Agreement referred to
in Section 2.04(b).
"TRUSTEE" means IBJ Schroder Bank & Trust Company or its
successor as Indenture Trustee under the Bond Indenture.
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"UCC" refers to the New Jersey Uniform Commercial Code,
N.J.S.A. 12A:1-101 et seq., as it may be amended from time to
time.
"UNCONSOLIDATED SUBSIDIARIES" means Subsidiaries of a Person
or other entities in which such Person holds an equity interest
which are not consolidated for financial reporting purposes with
the financial statements of such Person under GAAP.
2. THE LOANS
SECTION 2.01. REVOLVING LOAN FACILITY.
Lender agrees, upon the terms and subject to the conditions
hereof, to make advances to the Borrower from time to time from
the Closing Date up to and including the Business Day prior to
the Conversion Date, in an aggregate amount at any one time
outstanding of no more than $25,000,000.
SECTION 2.02. TERM LOAN FACILITY.
On the Conversion Date, upon the terms and subject to the
conditions hereof, the principal amount outstanding under the
Revolving Loan Facility shall be converted to a term loan payable
under the terms described below. Once repaid, amounts
outstanding under the Term Loan may not be reborrowed.
SECTION 2.03. MAKING OF LOANS.
(a) Each Borrowing under the Revolving Loan Facility shall
be a Floating Rate Borrowing or a LIBOR Rate Borrowing as the
Borrower may request subject to and in accordance with this
Section and the Revolving Note. Subject to the other provisions
of this Section, Borrowings of more than one type may be
outstanding at the same time.
(b) The Borrower shall give the Lender at least three
Business Days' prior written, telecopier, facsimile or telephonic
(promptly confirmed in writing) notice of each LIBOR Rate
Borrowing and at least one Business Day's prior written,
telecopier, facsimile or telephonic (promptly confirmed in
writing) notice of each Floating Rate Borrowing. Each such
notice in order to be effective must be received by the Lender
not later than 2:00 p.m. Each such notice shall be irrevocable
and shall specify whether the Borrowing then being requested is a
LIBOR Rate or a Floating Rate Borrowing and in the case of LIBOR
Rate Borrowings, the Interest Period or Interest Periods with
respect thereto. If no election of Interest Period is specified
in such notice in the case of LIBOR Rate Borrowings, such notice
shall be deemed to be a request for an Interest Period of one
month. If no election is made as to the type of Borrowing, such
notice shall be deemed a request for a Floating Rate Borrowing.
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(c) The aggregate amount of any Borrowing of new funds
shall be in an aggregate principal amount of (x) with respect to
LIBOR Rate Borrowings, $500,000 (or such lesser amount as shall
equal the available but unused portion of the Revolving Credit
Facility) or such greater amount which is an integral multiple of
$100,000, and (y) with respect to Floating Rate Borrowings,
$500,000 (or such lesser amount as shall equal the available but
unused portion of the Revolving Credit Facility) or such greater
amount which is an integral multiple of $100,000.
SECTION 2.04. NOTES.
(a) The Revolving Credit Borrowings shall be evidenced by a
promissory note substantially in the form of Exhibit 2.04(a) in
the face of amount of $25,000,000 (the "Revolving Note"), payable
to the order of the Lender, duly executed on behalf of the
Borrower and dated the Closing Date. The outstanding principal
balance of the Revolving Note shall be payable on the Conversion
Date, subject to the provisions hereof regarding conversion to
the Term Loan.
(b) The Term Loan made hereunder shall be evidenced by the
Revolving Note as amended by the Note Amendment Agreement (the
"Term Note") substantially in the form of Exhibit 2.04(b)-1 if
the Borrower chooses the Floating Rate Option under Section 2.05
below, or 2.04(b)-2 if the Borrower chooses the Fixed Rate
Option, in the face amount of the Term Loan, payable to the order
of the Lender, duly executed on behalf of the Borrower and dated
the Conversion Date. If the Borrower chooses the Fixed Rate
Option, the Borrower shall make equal payments of principal and
interest in an amount sufficient to amortize the Term Loan over a
remaining term of three (3) years. If the Floating Rate Option
is elected, interest shall be paid monthly as accrued, along with
equal monthly payments of principal over the following three (3)
year period in amounts sufficient to fully repay the Term Loan.
The Term Note shall mature on July 14, 2000.
SECTION 2.05. INTEREST ON NOTES
(a) In the case of a LIBOR Rate Borrowing under the
Revolving Loan Facility, interest shall be payable at a rate per
annum (computed on the basis of the actual number of days elapsed
over a year of 360 days) equal to the LIBOR Based Rate. Interest
shall be payable as set forth in the Revolving Note.
(b) In the case of a Floating Rate Borrowing under the
Revolving Loan Facility, interest shall be payable at a rate per
annum (computed on the basis of the actual number of days elapsed
over a year of 360 days) equal to the Revolving Loan Floating
Rate. Interest shall be payable on each Floating Rate Borrowing
as set forth in the Revolving Note.
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(c) Interest on the Term Loan shall accrue at the
Borrower's option either (i) at the Term Loan Floating Rate or
(ii) at a fixed rate determined by the Lender three (3) Business
Days prior to the Conversion Date. The Lender shall notify the
Borrower four (4) Business Days prior to the Conversion Date of
the Fixed Rate which would be applicable if the Borrower chose
the Fixed Rate Option. The Borrower will notify the Lender three
(3) Business Days prior to the Conversion Date as to which rate
option it elects as to the Term Loan. If no rate option is
selected, the Borrower will be presumed to have chosen the
Floating Rate Option.
(d) Anything in this Agreement or the Notes to the contrary
notwithstanding, the interest rate on the Loans shall in no event
be in excess of the maximum permitted by Applicable Law.
SECTION 2.06. FEES
(a) The Borrower agrees to pay to the Lender an origination
fee of $250,000.00, $25,000.00 of which has been paid, and the
balance of which shall be paid at Closing.
(b) The Borrower agrees to pay to the Lender on the last
Business Day of each March, June, September and December in each
year (commencing on the last Business Day of September, 1995) and
(pro-rated for the period from June 30 through the Conversion
Date) on the Conversion Date, a commitment fee of 3/8 of one
percent per annum, computed on the basis of the actual number of
days elapsed over a year of 360 days, on the average daily unused
amount of the Lender's commitment under the Revolving Loan
Facility. Such commitment fee shall accrue from the Closing
Date.
(c) The Borrower agrees to pay additional loan fees for
certain Revolving Loan Facility Borrowings as set forth in
Section 5.07.
SECTION 2.07. PREPAYMENT OF LOANS
The Borrower's right to prepay principal under the Loans
and the right of the Lender to reimbursement for costs resulting
from such prepayment are governed by the terms of the Notes.
3. REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement
and to make the Loans provided for herein, Borrower makes the
following representations and warranties to, and agreements with,
the Lender, all of which shall survive the execution and delivery
of this Agreement, the issuance of the Notes and the making of
the Loans:
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SECTION 3.01. CORPORATE EXISTENCE AND POWER.
Each Obligor has been duly organized and is validly
existing and in good standing under the laws of its respective
jurisdiction of incorporation and is in good standing as a
foreign corporation in all jurisdictions where the nature of its
properties or business so requires it and where a failure to be
in good standing as a foreign corporation would have a Material
Adverse Effect. Each of the Obligors has the corporate power to
own its properties and carry on its businesses as now being
conducted, to execute, deliver and perform, as applicable, its
obligations under this Agreement, the Notes and the other Loan
Documents and other documents contemplated hereby to which it is
a party.
SECTION 3.02. CORPORATE AUTHORITY AND NO VIOLATION.
The execution, delivery and performance of this Agreement
and the other Loan Documents, the borrowings hereunder and the
execution and delivery of the Notes and the grant to the Lender
of a security interest in the Collateral as contemplated by this
Agreement and the mortgage lien contemplated by the Mortgages (a)
have been duly authorized by all necessary corporate action on
the part of each Obligor, (b) will not violate any provision of
any Applicable Law applicable to any party or any of their
respective properties or assets, (c) will not violate any
provision of the Certificate of Incorporation or By-Laws of any
Obligor, or any indenture, any agreement for borrowed money, any
bond, note or other similar instrument or any other material
agreement to which any Obligors are a party or by which any
Obligor or any of their respective properties or assets are
bound, (d) will not violate, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any
such indenture, agreement, bond, note, instrument or other
agreements of any Obligor and (e) will not result in the creation
or imposition of any Lien upon any property or assets of any
Obligor other than pursuant to this Agreement or any other Loan
Document.
SECTION 3.03. GOVERNMENTAL APPROVAL.
Except for approval from the New Jersey Casino Control
Commission and the requirement of providing a 30-day post-closing
notice to the Nevada Gaming Commission, no action, consent or
approval of, or registration or filing with, or any other action
by any Governmental Authority, is required in connection with the
execution, delivery and performance by the Obligors of this
Agreement or the other Loan Documents except for (i) filings of
UCC-1 financing statements in the appropriate offices and (ii)
the filing of the Mortgages with the real estate recording
offices in the counties in which the real property interest
described in such Mortgages are located. The New Jersey Casino
Control Commission has granted approval of the transaction
contemplated by this Agreement.
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SECTION 3.04. FINANCIAL CONDITION.
(a) The audited consolidated financial statements of
Borrower at December 31, 1994, in the form previously delivered
to the Lender, are complete and correct in all material respects
and have been prepared in accordance with GAAP. Such financial
statements fairly present the financial condition of the Borrower
at the date and for the period indicated and reflect all known
liabilities, contingent or otherwise, that GAAP requires, as of
such dates, to be shown, reserved against or disclosed in notes
to financial statements.
(b) The unaudited consolidated financial statements for the
period ending March 31, 1995, in the form previously delivered to
Lender are complete and correct in all material respects. Such
financial statements fairly present in all material respects the
financial condition of Borrower at the date and for the period
indicated and reflect all known liabilities, contingent or
otherwise, that GAAP requires as of such dates, to be shown,
reserved against or disclosed in notes to financial statements.
(c) The audited balance sheet and related statements of
income and cash flows of ACSI at December 31, 1994, and the
unaudited balance sheet and related financial statements for the
period ending March 31, 1995 in the form previously delivered to
the Lender are prepared in accordance with GAAP. Such financial
statements fairly present in all material respects the respective
financial condition of ACSI at the respective dates and for the
respective periods indicated and reflect all known liabilities,
contingent or otherwise that GAAP requires as of such dates, to
be shown, reserved against or disclosed in notes to financial
statements.
SECTION 3.05. NO MATERIAL ADVERSE CHANGE.
Except for the sale of the Showboat Star Partnership, there
has been no material adverse change in the business, assets,
condition (financial or otherwise) or results of operations of
Borrower since December 31, 1994.
SECTION 3.06. SUBSIDIARIES.
Annexed hereto as Schedule 3.06 is a correct and complete
list as of the date hereof of all Subsidiaries of the Borrower
showing, as to each Subsidiary, its name, the jurisdiction of its
incorporation and the ownership of the capital stock of such
Subsidiary.
SECTION 3.07. TRADEMARKS, PATENTS AND OTHER RIGHTS.
(a) Except as specifically noted on Schedule 3.07, the
Obligors possess or have a license to use all patents,
trademarks, tradenames, and any other material proprietary rights
(collectively the "Proprietary Rights") which are required to
conduct their respective businesses as conducted by Borrower and
its Subsidiaries.
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(b) Except as set forth on Schedule 3.07, (i) there is no
claim, suit, action or proceeding pending or to the Borrower's
knowledge threatened against Borrower that involves a claim of
infringement of any material Proprietary Right and (ii) neither
the Borrower nor any of its Subsidiaries has any knowledge of any
existing infringement by any other person of any of the material
Proprietary Rights.
SECTION 3.08. FICTITIOUS NAME.
None of the Obligors are doing business or intends to do
business other than under its full corporate name, including,
without limitation, under any trade name or other doing business
name, except as set forth on Schedule 3.08 hereto.
SECTION 3.09. TITLE TO PROPERTIES.
The Borrower and Subsidiaries will have at the Closing Date
good title or valid leasehold interests to each of the properties
and assets reflected on the balance sheets referred to in Section
3.04 other than properties or assets disposed of in the ordinary
course of business since the date of such balance sheets and all
such properties and assets are free and clear of Liens, except
Permitted Liens and existing Liens listed on Schedule 6.05.
Schedule 3.09 is a list of all real properties owned or leased by
the Borrower or a Subsidiary.
SECTION 3.10. UCC FILING INFORMATION.
The principal executive office of each Obligor is on the
date hereof as set forth on Schedule 3.10 hereto, which office is
the place where each Obligor is "located" for the purpose of
Section 9-103(3)(d) of the Uniform Commercial Code in effect in
the State of New Jersey and the State of Nevada, and the place
where each Obligor keeps the records concerning the Collateral on
the date hereof or regularly keep any goods included in the
Collateral on the date hereof are also listed on Schedule 3.10
hereto.
SECTION 3.11. LITIGATION.
Schedule 3.11 is a list of all lawsuits or other
proceedings pending or, to the knowledge of Borrower, threatened
against or affecting the Borrower, or any Subsidiary, or any
of the respective properties with potential liability in excess
of $500,000 or this Agreement or any of the transactions
contemplated thereby by or before any Governmental Authority or
arbitrator. None of the lawsuits set forth on Schedule 3.11
should reasonably be expected to have a Material Adverse Effect
on this Agreement or any of the transactions contemplated hereby.
Neither the Borrower nor any of the Subsidiaries is in default
with respect to any order, writ, injunction, decree, rule or
regulation of any Governmental Authority, which default would
have a Material Adverse Effect.
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SECTION 3.12. FEDERAL RESERVE REGULATIONS.
None of the Obligors are engaged principally, or as one of
its important activities, in the business of extending credit for
the purpose of purchasing or carrying any margin stock as defined
in Regulation U of the Board of Governors of the Federal Reserve
System. No part of the proceeds of the Loan will be used,
whether immediately, incidentally or ultimately, to purchase or
carry any such stock, to extend credit to others for the purpose
of purchasing or carrying any such stock or for any other purpose
violative of or inconsistent with any of the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System.
SECTION 3.13. INVESTMENT COMPANY ACT.
The Borrower is not, or will not during the term of this
Agreement be, (x) an "investment company", within the meaning of
the Investment Company Act of 1940, as amended or (y) subject to
regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act or any foreign, federal or local statute or
regulation limiting its ability to incur indebtedness for money
borrowed or guarantee such indebtedness as contemplated hereby or
by any other Loan Documents.
SECTION 3.14. ENFORCEABILITY.
Subject to applicable Gaming Control Acts, this Agreement,
the Notes and the other Loan Documents when executed will
constitute legal, valid and enforceable obligations of the
Borrower and the other Obligors, as applicable (subject, as to
enforcement, to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and to general
principles of equity.)
SECTION 3.15. TAXES.
The Borrower and each of its Subsidiaries have filed or
caused to be filed all federal, state and local tax returns which
are required to be filed, and have paid or have caused to be paid
all taxes as shown on said returns or on any assessment received
by them in writing, to the extent that such taxes have become
due, except as permitted by Section 5.04 hereof.
SECTION 3.16. COMPLIANCE WITH ERISA.
Each of the Borrower and its Subsidiaries, as applicable,
is in compliance in all material respects with the provisions of
ERISA and the Code applicable to Plans, and the regulations and
published interpretations thereunder, if any, which are
applicable to it. None of the Borrower or any of its
Subsidiaries have, with respect to any Plan established or
maintained by it, engaged in a prohibited transaction which
would subject it to a material tax or penalty on
prohibited transactions imposed by ERISA or Section 4975 of
the Code. No liability to the PBGC that is material to the
Borrower and its Subsidiaries taken as a
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whole has been or is expected to be incurred with respect to
any Plan and there has been no Reportable Event and no other
event or condition that presents a material risk of termination
of a Plan by the PBGC. None of the Borrower and its Subsidiaries
has engaged in a transaction which would result in the incurrence
of a material liability under Section 4069 of ERISA. As of the
Closing Date, none of the Borrower and Subsidiaries has incurred
any liability that would be material to the Borrower and its
Subsidiaries taken as a whole on account of a partial or complete
withdrawal (as defined in Sections 4203 and 4205 of ERISA,
respectively) with respect to any Multiemployer Plan.
SECTION 3.17. AGREEMENTS.
None of the Borrower and its Subsidiaries, is in default in
the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement
or instrument to which it is a party which could reasonably be
expected to have a Material Adverse Effect. Schedule 3.17 is a
list of all agreements of the Borrower and its Subsidiaries, the
loss or termination of which could reasonably be expected to have
a Material Adverse Effect.
SECTION 3.18. DISCLOSURE.
Neither this Agreement nor any other Loan Document nor any
other agreement, document, certificate or statement furnished to
the Lender by or on behalf of any Obligor in connection with the
transactions contemplated hereby, at the time it was furnished
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
to make the statements therein, under the circumstances under
which they were made not misleading.
SECTION 3.19. ENVIRONMENTAL LIABILITIES.
(a) To the knowledge of the Borrower and except as set
forth in Schedule 3.19, none of the Borrower or any of its
Subsidiaries has used, stored, treated, transported,
manufactured, refined, generated, handled, produced or disposed
of any Hazardous Materials on, under, at, from, or in any way
affecting any of their properties or assets, or otherwise, in any
manner in violation of any Environmental Law, except in each
instance such violations as in the aggregate would not have a
material adverse effect upon the Borrower and its Subsidiaries
taken as a whole.
(b) To the knowledge of the Borrower and except as set
forth in Schedule 3.19, none of the Borrower or its
Subsidiaries has any obligations or liabilities, known or
unknown, matured or not matured, absolute or contingent,
assessed or unassessed, where such would reasonably be expected
to have a Materially Adverse Effect and no Environmental
Actions have been filed against the Borrower or its Subsidiaries
or any of their respective employees, agents, representatives or
predecessors in interest in connection with or in any way
arising from or relating to the Borrower or its Subsidiaries
or any of their
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respective properties, or relating to or arising from or
attributable, in whole or in part, to the manufacturing,
processing, distributing, using, treating, storing, disposing,
transporting or handling of any Hazardous Materials, by any other
Person at or on or under any of the real properties owned or used
by the Borrower or its Subsidiaries or any other location where
any of the foregoing could reasonably be expected to have a
Materially Adverse Effect.
SECTION 3.20. LABOR MATTERS.
Neither Borrower nor any Subsidiary thereof has, in the
last five years, experienced any strike, lockout, slowdown or
work stoppage due to labor disagreements which has had or may
have a Materially Adverse Effect and, to the knowledge of the
Borrower or any of its Subsidiaries, there is no such strike,
lockout, slowdown or work stoppage threatened against the
Borrower or any of its Subsidiaries.
4. CONDITION OF LENDING
SECTION 4.01. CONDITIONS PRECEDENT TO THE LOANS.
The obligation of the Lender to complete closing hereunder
and make the Revolving Credit Facility available is subject to
the following conditions precedent:
(a) Corporate Documents of the Borrower. At the time of
the closing of the Revolving Loan Facility the Lender shall have
received:
(i) a copy of the Borrower's Certificate of
Incorporation, certified as of a recent date by the
Secretary of State of its state of incorporation;
(ii) certificates of such Secretary of State,
dated as of a recent date as to the good standing of
and payment of taxes by the Borrower which lists the
charter documents on file in the office of such
Secretary of State;
(iii) a certificate dated as of a recent date
as to the good standing of the Borrower issued by the
Secretary of State of each jurisdiction in which the
Borrower is qualified as a foreign corporation; and
(iv) a certificate of the Secretary of the
Borrower dated the Closing Date and certifying (A) that
attached thereto is a true and complete copy of the by-
laws of the Borrower as in effect on the date of such
certification, (B) that attached thereto is a true and
complete copy of resolutions adopted by the Board of
Directors of the Borrower authorizing the borrowings
hereunder, the execution, delivery and performance in
accordance with their respective terms of this
Agreement, the Notes, and any other documents required
or
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contemplated hereunder or thereunder, (C) that the
certificate of incorporation of the Borrower has not
been amended since the date of the last amendment
thereto indicated on the certificate of the Secretary
of State furnished pursuant to clause (i) above and (D)
as to the incumbency and specimen signature of each
officer of the Borrower executing this Agreement, the
Notes or any other document delivered by it in
connection herewith or therewith (such certificate to
contain a certification by another officer of the
Borrower as to the incumbency and signature of the
officer signing the certificate referred to in this
clause (iv)).
(b) Corporate Documents of Obligors (other than the
Borrower). At the time of the making of the Revolving Loan, the
Lender shall have received for each Obligor (other than the
Borrower):
(i) a copy of such entity's certificate of
incorporation, certified as of a recent date by the
Secretary of State of the state of incorporation;
(ii) a certificate of each such Secretary of
State, dated as of a recent date as to the good
standing of and payment of taxes by such entity which
lists the charter documents on file in the office of
such Secretary of State;
(iii) a certificate dated as of a recent date
as to the good standing of such entity issued by the
Secretary of State of each jurisdiction in which such
entity is qualified as a foreign corporation; and
(iv) a certificate of the Secretary of such entity
dated the Closing Date and certifying (A) that attached
thereto is a true and complete copy of the by-laws of
such entity as in effect on the date of such
certification, (B) that attached thereto is a true and
complete copy of resolutions adopted by the Board of
Directors of such entity authorizing the execution,
delivery and performance in accordance with their
respective terms of this Agreement, and any other
documents required or contemplated hereunder or
thereunder, (C) that the certificate of incorporation
of such entity has not been amended since the date of
the last amendment thereto indicated on the certificate
of the Secretary of State furnished pursuant to clause
(i) above and (D) as to the incumbency and specimen
signature of each officer of such entity executing this
Agreement or any other document delivered by it in
connection herewith or therewith (such certificate to
contain a certification by another officer of such
entity as to the incumbency and signature of the
officer signing the certificate referred to in this
clause (iv)).
(c) Revolving Note. On or before the Closing Date,
the Lender shall have received the Revolving Note,
executed on behalf of the Borrower, dated the date thereof,
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and payable to the order of the Lender in the principal amount
equal to the Revolving Loan Facility.
(d) Opinions of Counsel. The Lender shall have received
the favorable written opinion, dated the Closing Date and
addressed to the Lender of (i) Kummer, Kaempfer, Bonner &
Renshaw, counsel to the Obligors substantially in the form of
Exhibit 4.01(d) hereto, and (ii) such local counsel as the
Lender may request regarding perfection of the security
interests, validity of the Mortgages and other similar matters.
(e) Financial Information. The Lender shall have received
and be reasonably satisfied with an unaudited statement for
Borrower for each month subsequent to December 31, 1994 through
April 30, 1995.
(f) ERISA. The Lender shall have received copies of all
Plans of the Borrower and its Subsidiaries that are in existence
on the Closing Date, and confirmation satisfactory to the Lender
that (i) none of the Plans has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA and Section 412
of the Code), (ii) no Reportable Event has occurred as to any
Plan, and (iii) no termination of, or withdrawal from, any of the
Plans has occurred or is contemplated that would result in any
liability on the part of the Borrower or any of its Subsidiaries,
if the occurrence of any of the foregoing events could reasonably
be expected to have a Material Adverse Effect.
(g) Mortgages. The Loans will be secured by the Deed of
Trust executed by the Borrower in favor of the Lender creating a
first priority pari passu Lien on the Las Vegas Showboat
(including, without limitation, the fee and leasehold interests
as well as interests in all furniture, furnishings, fixtures,
equipment and other personal property, which are not subject to
any Lien permitted to be granted under Section 6.05 hereof in
favor of any third party lender providing financing for the
acquisition or the lease thereof). The obligations of ACSI
hereunder will be secured by its Mortgage and the Assignment of
Leases and Rents executed by ACSI in favor of the Lender creating
a first priority pari passu Lien on the Atlantic City Showboat
(including, without limitation, its fee and leasehold interests
as well as interests in all furniture, furnishings, fixtures,
equipment and other personal property, which are not subject to
any Lien permitted to be granted under Section 6.05 hereof in
favor of any third party lender providing financing for the
acquisition or the lease thereof). The Lender shall receive
evidence reasonably satisfactory to it that the Borrower and ACSI
have sufficient right, title and interest to mortgage the real
property interests covered under the Mortgages and that all
security and mortgage documents necessary to provide the Lender
with valid first mortgage liens on the real property interest
described in the Mortgages (in pari passu with the Trustee for
the benefit of the holders of the Bonds subject to Permitted
Liens) have been filed and/or recorded or delivered to the Lender
(or to the duly authorized agent of the title insurance company
issuing the mortgage title insurance policies in favor of the
Lender) in form satisfactory for filing. Lender shall have
further received an assignment of rents and leases as to each of
the mortgaged properties in the form agreed to by Lender and
Borrower.
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(h) Australian Joint Venture. The Lender shall have
received a statement prepared and signed by Borrower's counsel
summarizing the constituent documents for the Australian Joint
Venture and stating the opinion of Borrower's counsel to the
effect that (i) neither the Borrower nor any of the Guarantors
are, directly or indirectly, through a Subsidiary or otherwise,
by way of Guaranty or otherwise, contingent or not contingent,
liable for any obligations incurred by or arising out of the
Australian Joint Venture and (ii) neither the Borrower nor any
of the Guarantors have incurred, directly or indirectly, through
a Subsidiary or otherwise any liability under any agreements
or commitments to contribute capital to, maintain the net worth
of or extend loans or Guarantees for the benefit of the
Australian Joint Venture other than as to funds already
contributed and reported in writing to the Lender.
(i) Intercreditor Agreement. An Intercreditor Agreement
shall have been executed and delivered by each of Lender,
Borrower and the Trustee as to the Atlantic City Showboat and by
the Trustee and Lender as to the Las Vegas Showboat in form
acceptable to the Lender and in accordance with the Indenture.
(j) Title Insurance, etc. The Lender shall have received
as to the Atlantic City Showboat and the Las Vegas Showboat
legal, valid and binding commitments from a title insurance
company reasonably acceptable to the Lender, to issue a mortgage
title insurance policy in form and substance reasonably
satisfactory to the Lender in respect of the Mortgages showing
that such Mortgages are valid first liens subject only to
Permitted Liens and that such fee or leasehold interest in real
property subject to the Mortgages is owned by the Borrower or
ACSI, respectively, free of encumbrances other than Permitted
Liens.
(k) Surveys, etc. Lender shall have received a survey
(certified in form and by surveyors reasonably acceptable to
Lender) relating to the Las Vegas Showboat and the Atlantic City
Showboat prepared in accordance with ALTA standards indicating
the absence of any encroachments or other title defects and
sufficient to induce the Borrower's title insurance company to
remove the survey exception.
(l) Federal Reserve Regulations. The Lender shall be
reasonably satisfied that the provisions of Regulations G, T, U
and X of the Board of Governors of the Federal Reserve System
will not be violated by the transactions contemplated hereby.
(m) No Material Adverse Change. No change shall have
occurred with respect to the Borrower or any of its Subsidiaries
since the date of the most recent audited financial statement
delivered to the Lender of each such Person having or as could
reasonably be expected to have a Material Adverse Effect.
(n) Insurance. The Borrower shall have furnished the
Lender with a summary of all existing insurance coverage and
evidence reasonably acceptable to the Lender that the
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insurance policies required by Section 5.03 (a) and (b) hereof
have been obtained and are in full force and effect.
(o) UCC Financing Statements and UCC Searches, etc. The
Obligor shall have received, in each case in form satisfactory to
it, (i) UCC financing statements executed on behalf of the
Obligor for filing in all jurisdictions in which it shall be
necessary or desirable to make a filing in order to provide the
Lender with a perfected security interest in the Collateral and
(ii) UCC searches satisfactory to the Lender indicating that no
other filings with regard to the Collateral are of record in any
of such jurisdictions except in connection with Permitted Liens
and existing Liens listed on Schedule 6.05.
(p) Officers' Certificate. The Lender shall have received
a certificate executed by the Chief Executive Officer and Senior
Financial Officer of the Borrower substantially in the form of
Exhibit 4.01(p) hereto.
(q) Contribution Agreement. The Obligors shall have
executed and delivered the Contribution Agreement.
SECTION 4.02. CONDITIONS PRECEDENT TO EACH BORROWING.
The obligation of the Lender to advance each Borrowing,
including its initial advance (but excluding continuations and
conversions), is subject to the following conditions precedent:
(a) Notice. The Lender shall have received a notice with
respect to such borrowing as required by Article 2 hereof.
(b) Representations and Warranties. The representations
and warranties set forth in Article 3 hereof and in the other
Loan Documents shall be true and correct in all material respects
on and as of the date of each Borrowing hereunder (except to the
extent that such representations and warranties related solely to
an earlier date) with the same effect as if made on and as of
such date except as affected by subsequent transactions
contemplated by or permitted by the terms of this Agreement.
(c) No Event of Default. On the date of each Borrowing
hereunder, the Borrower shall be in material compliance with all
of the terms and provisions set forth herein to be observed or
performed and no Event of Default or Default shall have occurred
and be continuing.
(d) Additional Documents. The Lender shall have received
from the Borrower on the date of each Borrowing such documents
and information as it may reasonably request prior to such date
relating to the satisfaction of the conditions in this Section
4.02.
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Each Borrowing shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the
matters specified in paragraphs (b) and (c) of this Section.
SECTION 4.03. CONDITIONS TO CONVERSION.
The Conversion of the Revolving Loan Facility to the Term
Loan shall be subject to the following conditions:
(a) Representations and Warranties. The representations
and warranties set forth in Article 3 hereof and in the other
Loan Documents shall be true and correct in all material respects
on and as of the Conversion Date (except to the extent that such
representations and warranties related solely to an earlier date)
with the same effect as if made on and as of such date except as
affected by subsequent transactions contemplated by or permitted
by the terms of this Agreement.
(b) No Event of Default. On the Conversion Date, the
Borrower shall be in material compliance with all of the terms
and provisions set forth herein to be observed or performed and
no Event of Default or Default shall have occurred and be
continuing.
(c) No Violations. The Term Loan shall not violate or
constitute a breach under the Bond Indenture, the Note Indenture
or any other agreement binding upon the Borrower or its
Subsidiaries.
(d) Delivery of Term Note. The Borrower shall have
executed and delivered the Term Note.
(e) Additional Documents. The Lender shall have received
from the Borrower on or prior to the Conversion Date such
documents and information as it may reasonably request prior to
such date relating to the satisfaction of the conditions in this
Section 4.03.
5. AFFIRMATIVE COVENANTS
From the Closing Date and for so long as the Revolving Loan
Facility shall be in effect or any amount shall remain
outstanding under any Note or unpaid under this Agreement, the
Borrower agrees that, unless the Lender shall otherwise consent
in writing, it will, and will cause each of its Subsidiaries to:
SECTION 5.01. FINANCIAL STATEMENTS, REPORTS, ETC.
Deliver to Lender:
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(a) (i) As soon as is practicable, but in any event within
120 days after the end of each fiscal year of the Borrower, the
audited consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of, and the related consolidated
statements of income, shareholders' equity and cash flows for
such year, accompanied by an opinion of KPMG Peat Marwick or such
other independent certified public accountants of recognized
standing as shall be retained by the Borrower and as shall be
reasonably satisfactory to the Lender, which report and opinion
shall be prepared in accordance with generally accepted auditing
standards relating to reporting and which report and opinion must
(A) be unqualified as to going concern and scope of audit and
shall state that such financial statements fairly present in all
material respects the financial condition of the Borrower and its
Subsidiaries as at the dates indicated and the results of the
operations and cash flow for the periods indicated and (B)
contain no material exceptions or qualifications except for
qualifications relating to accounting changes (with which such
independent public accountants concur) in response to FASB
releases or other authoritative pronouncements and (ii) as soon
as practicable, but in any event within 150 days after the end of
each fiscal year of Borrower, the audited consolidating balance
sheet of the Borrower and its Subsidiaries as at the end of the
related fiscal year and the audited consolidating statements of
income, shareholders' equity and cash flow for such fiscal year,
along with a report and opinion of independent certified public
accountants as in (i) above;
(b) Annually, within 120 days of fiscal year end, a copy of
the Borrower's report on Form 10-K as filed with the Securities
and Exchange Commission, along with a copy of the Borrower's
annual report to shareholders;
(c) As soon as is practicable, but in any event sixty (60)
days after the end of each fiscal quarter of ACSI, a copy of the
quarterly statement of ACSI as filed with the New Jersey Casino
Control Commission.
(d) Promptly upon receipt thereof, copies of all reports,
if any, submitted by independent certified public accountants to
the Borrower or any Subsidiary in connection with each annual,
interim or special audit of the financial statements of the
Borrower or any Subsidiary, including, without limitation, the
comment letter submitted by such accountants to management in
connection with their annual audit;
(e) Promptly upon their becoming available, copies of all
regular and periodic reports and all registration statements and
prospectuses, if any, filed by any of them with any securities
exchange or with the Securities and Exchange Commission, or any
comparable foreign bodies, and of all press releases and other
statements made available generally by any of them to the public
concerning material developments in the business of the Borrower
or its Subsidiaries;
(f) Promptly upon any executive officer of an Obligor
obtaining actual knowledge (a) of any Default or
(b) that any Person has given any notice to any Obligor
or taken any other action with respect to a
claimed default or event or condition of the type referred to
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in paragraph (e) of Article 7 or any condition or event which
would be required to be disclosed in a current report required to
be filed by the Borrower with the Securities and Exchange
Commission on Form 8-K if the Borrower were required to file such
reports under the Securities Exchange Act of 1934, as amended, or
the rules and regulations thereunder (or any successor thereof),
a certificate of the president or Senior Financial Officer of the
Borrower specifying the nature and period of existence of any
such condition or event, or specifying the notice given or action
taken by such holder or Person and the nature of such claimed
Event of Default or condition and what action the applicable
Obligor has taken, is taking and proposes to take with respect
thereto;
(g) Promptly upon any executive officer of an Obligor
obtaining actual knowledge of (a) the institution of, or threat
of, any action, suit, proceeding, investigation or arbitration by
any Governmental Authority or other Person against the Borrower,
any of its Subsidiaries or any of their assets, which involves a
claim or amount in dispute in excess of $500,000 or (b) any
material development in such action, suit, proceeding,
investigation or arbitration (whether or not previously disclosed
to the Lender), which, in each case might reasonably be expected
to have a Material Adverse Effect, the Obligor shall promptly
give notice thereof to the Lender and provide such other
information as may be reasonably available to it (without waiver
of any applicable evidentiary privilege) to enable the Lender to
evaluate such matters; and, in addition to the requirements set
forth in clauses (a) and (b) of this Section 5.01, the Borrower
upon request shall promptly give notice of the status of any
action, suit, proceeding, investigation or arbitration covered by
a report delivered to the Lender pursuant to clause (a) or (b)
above to the Lender and provide such other information as may be
reasonably available to it to enable the Lender to evaluate such
matters; and
(h) With reasonable promptness, such other information and
data with respect to the Borrower and its Subsidiaries as from
time to time may be reasonably requested by Lender.
SECTION 5.02. CORPORATE EXISTENCE; COMPLIANCE WITH
STATUTES.
Do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its corporate existence,
other than with respect to actions permitted by this Agreement,
and use best efforts to preserve, renew and keep in full force
and effect all material rights, licenses, permits and franchises
and comply in all material respects with all applicable statutes,
regulations and orders of, and all applicable restrictions
imposed by, any Governmental Authority.
SECTION 5.03. INSURANCE.
(a) Keep its assets which are of an insurable character
insured (to the extent and for time periods consistent with
normal industry practices) by financially sound and reputable
insurers against loss or damage by fire, explosion, theft,
business interruption or
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other hazards with coverages which are currently referred to as
"basic", "special", "differences in conditions", "earthquake" and
"building maintenance" and with such coverages written on a
replacement cost basis and with such self-insured retention or
deductible levels, as are consistent with normal industry
practices and the Borrower's past practices.
(b) Maintain with financially sound and reputable insurers,
commercial general liability insurance and such other insurance
against all other hazards and risks and liability to persons and
property to the extent and in the manner customary for companies
in similar businesses; provided however, that workmen's
compensation insurance or similar coverage may be effected with
respect to its operations in any particular state or other
jurisdiction through an insurance fund operated by such state or
jurisdiction.
(c) Cause all such above-described insurance (excluding
worker's compensation insurance) to (1) provide for the benefit
of the Lender that 30 days' (10 days in the case of cancellation
for non-payment of premium) prior written notice of suspension,
cancellation, termination, modification, non-renewal or lapse or
material change of coverage shall be given to the Lender; (2)
name Lender as the loss payee (except for third-party liability
insurance), provided, however, that absent a Default or Event of
Default, the Lender shall, except to the extent otherwise
provided herein, instruct the insurer to direct that any
insurance proceeds be paid to the Borrower; and (3) to the extent
the Lender shall not be liable for premiums or calls, name the
Lender as additional assureds.
(d) The proceeds of any insurance resulting from any damage
to or loss or destruction of any Collateral shall be disposed of
in accordance with the Mortgages and shall be subject to the
Indenture and the Intercreditor Agreements.
SECTION 5.04. TAXES AND CHARGES; INDEBTEDNESS IN ORDINARY
COURSE OF BUSINESS.
Duly pay and discharge, or cause to be paid and discharged,
before the same shall become delinquent, all federal, state or
local taxes, assessments, levies and other governmental charges,
imposed upon the Borrower or its Subsidiaries or their respective
properties, sales and activities, or any part thereof, or upon
the income or profits therefrom, as well as all claims for labor,
materials, or supplies which if unpaid might by law become a Lien
upon any of the property of either the Borrower or its
Subsidiaries; provided, however, that any such tax, assessment,
charge, levy or claim need not be paid if the validity or amount
thereof shall currently be contested in good faith by appropriate
proceedings and if the Borrower shall have set aside on its books
reserves (the presentation of which is segregated to the extent
required by GAAP) adequate with respect thereto if reserves shall
be deemed necessary by the Borrower in accordance with GAAP; and
provided, further, that the Borrower will pay all such taxes,
assessments, levies or other governmental charges forthwith upon
the commencement of proceedings to foreclose any Lien which may
have attached as security therefor (unless the same is fully
bonded or otherwise effectively stayed). The Borrower and its
Subsidiaries will promptly pay when due, or in conformance
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with customary trade terms, all other material Indebtedness
incident to its operations; provided, however, that any such
Indebtedness need not be paid if the validity or amount thereof
shall currently be contested in good faith by appropriate
proceedings and if the Borrower shall have set aside on its books
reserves (the presentation of which is segregated to the extent
required by GAAP) adequate with respect thereto if reserves shall
be deemed necessary, and provided, further that the Borrower will
pay all such Indebtedness which, if unpaid, would result in a
Lien on its properties.
SECTION 5.05. CORPORATE NAME; CHIEF EXECUTIVE OFFICE.
None of the Obligors will change its corporate name or the
location of their respective chief executive offices or any of
the offices where any such entity keeps the books and records
with respect to the Collateral owned by it without (i) giving the
Lender 15 days' written notice of such change and (ii) filing any
additional UCC financing statements, mortgages, and such other
documents reasonably requested by the Lender or which are
otherwise necessary or desirable to continue the first perfected
security interest of the Lender.
SECTION 5.06. ERISA COMPLIANCE AND REPORTS.
Furnish to the Lender (a) as soon as practicable, and in
any event within 30 days after any executive officer (as defined
in Regulation C under the Securities Act of 1933) of the Borrower
or any Subsidiary knows that (A) any Reportable Event with
respect to any Plan has occurred, a statement of the Senior
Financial Officer of the Borrower, setting forth details as
to such Reportable Event and the action which it proposes to take
with respect thereto, together with a copy of the notice, if any,
required to be filed by the Borrower or any of its Subsidiaries
of such Reportable Event given to the PBGC or (B) an accumulated
funding deficiency has been incurred or an application has been
made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard or an extension of
any amortization period under Section 412 of the Code with
respect to a Plan, a Plan has been or is proposed to be
terminated in a "distress termination" (as defined in Section
4041(c) of ERISA) proceedings have been instituted to terminate a
Plan or a Multiemployer Plan, a proceeding has been instituted to
collect a delinquent contribution to a Plan or a Multiemployer
Plan, or either Borrower or any of its Subsidiaries will incur
any liability (including any contingent or secondary liability)
to or on account of the termination of or withdrawal from a Plan
under Sections 4062, 4063, 4064 of ERISA or the withdrawal or
partial withdrawal from a Multiemployer Plan under Sections 4201
or 4204 of ERISA, a statement of the Senior Financial Officer of
the Borrower, setting forth details as to such event and the
action it proposes of the Lender, copies of each annual and other
report with respect to each Plan and (c) promptly after receipt
thereof a copy of any notice the Borrower or any of its
Subsidiaries may receive from the PBGC relating to the PBGC's
intention to terminate any Plan or to appoint a trustee to
administer any Plan.
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SECTION 5.07. USE OF PROCEEDS.
Use the proceeds of the Revolving Credit Facility solely
for general corporate purposes, except that the Borrower may
utilize the proceeds of a Borrowing under the Revolving Loan
for Investments in or loans to Subsidiaries constituting new
projects or for the acquisition cost of new projects only if (i)
prior to the Lender's making of the advance for such purpose, the
Borrower shall provide to the Lender a written statement signed
and certified by its Chief Financial Officer describing the
utilization of the funds, and (ii) upon the making of such
advance, the Borrower shall pay to the Lender a fee equal to
three fourths of one percent (.75%) of the advance.
SECTION 5.08. ACCESS TO BOOKS AND RECORDS; EXAMINATIONS.
Maintain or cause to be maintained at all times books and
records of its financial operations (in accordance with GAAP)
which shall be true and complete in all material respects and
provide the Lender and its representatives access, upon not less
than 24 hours advance notice, to all such books and records and
to any of their properties or assets during regular business
hours, in order that the Lender and its representatives may make
such audits and examinations and make abstracts from such books,
accounts, records and other papers and may discuss the affairs,
finances and accounts with, and be advised as to the same by,
officers and independent accountants, all as the Lender and its
representatives may deem appropriate. Provided that no Event of
Default or Default exists, the Lender shall limit to one the
number of field examinations to be performed in each year by the
Lender or its representatives, and the cost of such field
examination shall be limited to $15,000 each.
SECTION 5.09. MAINTENANCE OF PROPERTIES.
Keep its properties which are material to its business in
good repair, working order and condition consistent with industry
practice and, from time to time (i) make all necessary and proper
repairs, renewals, replacements, additions and improvements
thereof and (ii) comply in all material respects at all times
with the provisions of all material leases and other material
agreements to which it is a party so as to prevent any material
loss or forfeiture thereof or thereunder.
SECTION 5.10. MATERIAL CHANGES.
Report to the Lender promptly after any executive officer
of the Borrower obtains actual knowledge of any Material Adverse
Change in the financial condition or business of the Borrower or
any Subsidiary thereof.
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SECTION 5.11. ENVIRONMENTAL LAWS.
(a) Promptly notify the Lender following receipt by an
officer of the Borrower or any Subsidiary thereof of any actual
or threatened Environmental Action or any violation or potential
violation of or non-compliance with, or liability or potential
liability under any Environmental Laws which, when taken together
with all other pending violations could reasonably be expected to
have a Material Adverse Effect on the Borrower and its
Subsidiaries taken as a whole, and promptly furnish to the Lender
all material notices of any nature which the Borrower or any
Subsidiary thereof may receive from the Governmental Authority or
other Person with respect to any Environmental Action, violation,
or potential violation of or non-compliance with, or liability or
potential liability under any Environmental Laws which, in any
case or when taken together with all such other notices, could
reasonably be expected to have a Material Adverse Effect.
(b) Comply in all material respects with and use reasonable
efforts to ensure compliance by all tenants and subtenants with
all Environmental Laws, and obtain and comply in all material
respects with and maintain and use reasonable best efforts to
ensure that all tenants and subtenants obtain and comply with all
licenses, approvals, registrations or permits required by
Environmental Laws.
(c) Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal, reporting and
other actions required under all Environmental Laws and promptly
comply in all material respects with all lawful orders and
directives of all Governmental Authorities subject to the
Borrower's or any Subsidiary's right to contest or negotiate any
such order or directive in good faith and in compliance with
Environmental Laws provided such contest or negotiation is
promptly commenced.
(d) Defend, indemnify and hold harmless the Lender and its
respective employees, agents, officers and directors, from and
against any claims, demands, penalties, fines, liabilities
(including strict liability), settlements, damages, costs and
expenses of whatever kind or nature, known or unknown, contingent
or otherwise, arising out of, or in any way related to the
violation of or non-compliance with any Environmental Laws, or
any orders, requirements or demands of Governmental Authorities
by the Borrower or any Subsidiary thereof, including, without
limitation, reasonable attorney and consultant fees,
investigation and laboratory fees, court costs and litigation
expenses, but excluding therefrom all claims, demands,
penalties, fines, liabilities, settlements, damages, costs and
expenses arising out of or resulting from (i) the gross
negligence or willful misconduct of any indemnified party or (ii)
any acts or omissions of any indemnified party occurring after
any indemnified party is in possession of, or controls the
operation of, any property or asset.
SECTION 5.12. FURTHER ASSURANCES; SECURITY INTERESTS.
(a) Upon the reasonable request of the Lender duly execute
and deliver, or cause to be duly executed and delivered, at the
cost and expense of the Borrower, such further
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instruments as may be necessary or proper, in the reasonable
judgment of the Lender, to provide the Lender with a perfected
Lien in the Collateral, and to carry out the provisions and
purposes of the Loan Documents.
(b) Upon the reasonable request of the Lender, promptly
perform or cause to be performed any and all acts and execute or
cause to be executed any and all documents (including, without
limitation, the execution, amendment or supplementation of any
financing statement and continuation statement or other
statement) for filing under the provisions of the UCC and the
rules and regulations thereunder, or any other statute, rule or
regulation of any applicable foreign, federal, state or local
jurisdiction, which are necessary or advisable, from time to
time, in order to grant and maintain in favor of the Lender the
security interest in the Collateral contemplated by the Loan
Documents, and Liens on real property owned by the Borrower or
its Subsidiaries, subject to no other Liens except as may be
expressly permitted hereunder.
(c) Promptly undertake to deliver or cause to be delivered
to the Lenders from time to time such other documentation,
consents, authorizations, approvals and orders in form and
substance reasonably satisfactory to the Lender, as the Lender
shall deem reasonably necessary or advisable to perfect or
maintain the Liens of the Lender for the benefit of the Lender.
SECTION 5.13. PROJECT EXPANSIONS.
Without affecting the obligations of the Borrower or any
Subsidiary under the Mortgage, in the event that the Borrower or
any Subsidiary thereof at any time after the date hereof acquires
any interest in any Project Expansion, including, without
limitation, any leasehold interest (each such interest an "After
Acquired Property"), the Borrower shall promptly provide written
notice thereof to the Lender, setting forth in reasonable detail
a description of the interest acquired, the location of the After
Acquired Property, any structures or improvements thereon and an
appraisal or its good-faith estimate of the current value of such
real property. The Borrower or its Subsidiary will grant and
record a mortgage to the Lender on such Project Expansion to the
extent not already encumbered in favor of the Lender. In such
event, the Borrower or its Subsidiary, as the case may be, shall
execute and deliver to the Lender a Mortgage substantially in the
form of the applicable Mortgage, together with such of the
documents or instruments described in Section 4.01 (j) as the
Lender shall reasonably require. The Borrower shall pay all fees
and expenses, including, without limitation, reasonable
attorneys' fees and expenses and all title insurance charges and
premiums, in connection with their obligations under this Section
5.13.
SECTION 5.14. ANNUAL CLEANUP PERIOD.
The Borrower shall ensure that during any 365 day period
during the term of the Revolving Loan Facility, there shall be a
period of at least thirty (30) consecutive days
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during which time there is no outstanding balance under the
Revolving Loan Facility hereunder.
6. NEGATIVE COVENANTS
From the date of the initial Loan and for so long as the
Revolving Loan Facility shall be in effect or any amount shall
remain outstanding under any Note or unpaid under this Agreement,
unless the Lender shall otherwise consent in writing, the
Borrower agrees that it will not, nor will it permit any
Subsidiary thereof (other than a Non-Recourse Subsidiary, it
being understood that the term "Subsidiaries" as used in this
Article refers to Subsidiaries other than Non-Recourse
Subsidiaries) to, directly or indirectly:
SECTION 6.01. LIMITATION OF INDEBTEDNESS.
Without the prior written consent of the Lender, incur,
assume or suffer to exist any Indebtedness:
(a) which is secured by a Lien on the Collateral
(except for Indebtedness secured by purchase money security
interests expressly permitted by Section 6.05 below and the
Mortgages and for refinancings of the Bond Indenture pursuant to
which (i) no additional funds are borrowed in excess of the
refinanced amount of principal, plus transaction costs, (ii) all
other terms, including interest rate, are not disadvantageous to
the Borrower, and (iii) the maturity of the debt is not thereby
shortened); or
(b) which would violate the terms of the Bond
Indenture or the Note Indenture as such terms currently provide
without regard to any waiver of the application of such terms or
modification of such terms.
SECTION 6.02. LIMITATION OF GUARANTIES.
Assume or incur any Guaranties:
(a) which are secured by a Lien on the Collateral; or
(b) which would violate the terms of the Bond
Indenture or the Note Indenture as such terms currently provide
without regard to any waiver of the application of such terms or
modification of such terms.
SECTION 6.03. CHANGE IN BUSINESS.
Engage in any business other than a gaming related
business, including without limitation, the gaming business and
other business necessary for, incident to, connected with or
arising out of the gaming business (including developing and
operating lodging facilities, sports or entertainment facilities,
transportation services or other related activities or
enterprises and any additions or improvements thereto).
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SECTION 6.04. CONSOLIDATION, MERGER, SALE OR PURCHASE OF
ASSETS, ETC.
Neither the Borrower nor any of its Subsidiaries (in one
transaction or series of transactions) will wind up, liquidate or
dissolve its affairs, or enter into any transaction of merger or
consolidation, or sell or otherwise dispose of all or
substantially all or any of the shares of a Guarantor or more
than 30% in value of its assets or agree to do or suffer any of
the foregoing, except:
(a) any Subsidiary of the Borrower may be wound up,
liquidated or dissolved, or all or any part of its property or
assets may be sold to any wholly-owned domestic Subsidiary of the
Borrower or to the Borrower, or merged or consolidated with or
into any wholly-owned domestic Subsidiary of the Borrower or into
the Borrower; or
(b) a merger in which the Borrower or one of its
Subsidiaries is the surviving corporation, provided there has
been no Change of Control and after giving effect to the
transaction there shall have been no Default or Event of Default.
The ability of the Borrower or ACSI to dispose of any of
the Collateral is further restricted by the Mortgages (Section
1.10 of the Deed of Trust and Section 1.16 of the Leasehold
Mortgage respectively).
SECTION 6.05. LIMITATION ON LIENS.
Suffer any Lien on its property, except:
(a) deposits under Worker's Compensation, unemployment
insurance and Social Security laws or to secure statutory
obligations or surety or appeal bonds or performance or other
similar bonds in the ordinary course of business, or statutory
Liens of landlords, carriers, warehousemen, mechanics and
material men and other similar Liens, in respect to liabilities
which are not yet due and payable or which are being contested in
good faith, Liens for taxes not yet due and payable, and Liens
for taxes due and payable, the validity or amount of which is
currently being contested in good faith by appropriate
proceedings (but provided in each case the foreclosure of such
Lien shall not have been commenced unless fully bonded or
otherwise effectively stayed);
(b) easements, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the
ordinary conduct of the business of such Person;
(c) Liens upon real and/or tangible personal property,
which property was acquired after the date of this Agreement (by
purchase, construction or otherwise) by the Borrower or any
Subsidiary, each of which Liens existed on such property before
the time of its acquisition and was not created in anticipation
thereof; provided, however, that no such Lien shall extend to or
cover any property so acquired and improvements thereon;
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(d) Liens arising out of attachments, judgments or
awards as to which an appeal or other appropriate proceedings for
contest or review are promptly commenced (provided that
foreclosure or other enforcement proceedings shall not have been
commenced unless fully bonded or otherwise effectively stayed);
(e) Liens created under any Loan Document;
(f) Existing Liens listed on Schedule 6.05;
(g) Permitted Liens;
(h) Liens on the assets acquired or leased with the
proceeds of Indebtedness permitted to be incurred pursuant to
Section 6.01 to acquire or to lease tangible assets, provided
that such Lien does not extend to any property or assets other
than the property or assets so acquired; and
(i) Liens securing a refinance of the Bond Indenture
meeting the requirements of Section 6.01(a) above.
SECTION 6.06. EXECUTIVE OFFICES.
Transfer executive offices, change the corporate name or
location of records for Receivables, or keep Inventory or
equipment at locations not presently kept or maintained without
compliance with Section 5.05.
SECTION 6.07. SALE AND LEASEBACK.
Enter into any arrangement with any Person or Persons,
whereby in contemporaneous transactions the Borrower sells
essentially all of its right, title and interest in a material
asset and the Borrower acquires or leases back the right to use
such property.
SECTION 6.08. ERISA COMPLIANCE.
Engage in a "prohibited transaction", as defined in Section
406 of ERISA or Section 4975 of the Code, with respect to any
Plan or Multiemployer Plan or knowingly consent to any other
"party in interest" or any "disqualified person", as such terms
are defined in Section 3(14) of ERISA and Section 4975(e)(2) of
the Code, respectively, engaging in any "prohibited transaction",
with respect to any Plan or Multiemployer Plan maintained by the
Borrower; or permit any Plan maintained by the Borrower to incur
any "accumulated funding deficiency", as defined in Section 302
of ERISA or Section 412 of the Code, unless such incurrence shall
have been waived in advance by the Internal Revenue Service; or
terminate any Plan in a manner which could result in the
imposition of a Lien on any property of the Borrower pursuant to
Section 4068 of ERISA; or breach or knowingly permit any employee
or officer or any trustee or administrator of any Plan maintained
by
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Borrower to breach any fiduciary responsibility imposed under
Title I of ERISA with respect to any Plan; engage in any
transaction which would result in the incurrence of a liability
under Section 5069 of ERISA; or fail to make contributions to a
Plan or Multiemployer Plan which results in the imposition of a
Lien on any property of the Borrower or any Subsidiary pursuant
to Section 302(f) of ERISA or Section 412(n) of the Code, if the
occurrence of any of the foregoing events would result in a
liability which is materially adverse to the financial condition
of the Borrower and its Subsidiaries taken as a whole or would
materially and adversely affect the ability of the Borrower to
perform its obligations under this Agreement or the Notes.
SECTION 6.09. TRANSACTIONS WITH AFFILIATES.
Directly or indirectly enter into any transaction with an
Affiliate on terms less favorable (including, but not limited to,
price and credit terms) to the Borrower and the Subsidiaries than
would be the case if such transaction had been effected by arms
length with a Person other than an Affiliate:
SECTION 6.10. AMENDMENTS TO EXISTING DOCUMENTS.
Amend, waive or in any manner alter the terms of the Bond
Indenture or the Note Indenture after the Closing Dates, if such
amendment, waiver or alteration would materially adversely affect
the Lender.
SECTION 6.11. HAZARDOUS MATERIALS.
Cause or permit any of its properties or assets to be used
to generate, manufacture, refine, transport, treat, store,
handle, dispose, transfer, produce or process Hazardous
Materials, except in compliance in all material respects with all
applicable Environmental Laws, nor release, discharge, dispose of
or permit or suffer any release or disposal as a result of any
intentional act or omission on its part of Hazardous Materials
onto any such property or asset in material violation of any
Environmental Law.
SECTION 6.12. NO FURTHER NEGATIVE PLEDGES.
Except with respect to prohibitions against other
encumbrances on specific property encumbered to secure payment of
particular Indebtedness (which Indebtedness related solely to
such specific property, and improvements and accretions thereto,
and is otherwise permitted hereby), enter into any agreement
(other than this Agreement and the other Loan Documents)
prohibiting the creation or assumption of any Lien upon the
properties or assets of the Borrower or any of its Subsidiaries,
whether now owned or hereafter acquired or requiring an
obligation to be secured if some other obligation is secured.
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SECTION 6.13. CAPITAL FUNDS.
Permit Capital Funds at any time during the periods
referenced below to fall below the amounts indicated below for
such period:
closing - 12/30/95 $50,000,000
12/31/95 - 12/30/96 55,000,000
12/31/96 - 12/30/97 60,000,000
12/31/97 - 12/30/98 65,000,000
12/31/98 - 12/30/99 70,000,000
12/31/99 and thereafter 75,000,000
SECTION 6.14. LEVERAGE RATIO.
Permit the Leverage Ratio at the end of any fiscal quarter of the
Borrower to exceed 1.70:1.
SECTION 6.15. DEBT SERVICE COVERAGE RATIO.
Permit the Debt Service Coverage Ratio as of the last day of any
fiscal quarter of the Borrower measured as to the period
consisting of such fiscal quarter combined with the three
previous fiscal quarters to be less than the amount indicated
below for the applicable fiscal quarters indicated below:
4th Qtr. 1994 - 3d Qtr. 1995 1.50x
4th Qtr. 1995 - 3d Qtr. 1996 1.30x
4th Qtr. 1996 - 3d Qtr. 1998 1.40x
4th Qtr. 1998 and thereafter 1.50x.
SECTION 6.16. ACCOUNTING PRACTICES.
Modify or change financial accounting treatments or
financial reporting practices except as otherwise required by
changes in GAAP or alter its fiscal year end.
SECTION 6.17. LIMITATION ON RESTRICTIONS ON SUBSIDIARY
DIVIDENDS AND OTHER DISTRIBUTIONS, ETC.
Except to the extent otherwise provided in this Agreement,
and except as required by a Gaming Control Act or directives of
Gaming Authorities as a condition to the renewal of a Gaming
Permit concerning the Atlantic City Showboat or the Las Vegas
Showboat, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction on the
ability of any of the Subsidiaries of the Borrower to (i) pay
dividends or make any other distributions on its capital stock or
any other interest or participation in its profits owned by the
Borrower or any of its Subsidiaries, or pay any Indebtedness owed
to the Borrower or any of its Subsidiaries, (ii) make loans or
advances to the Borrower or
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any of its Subsidiaries or (iii) subject to customary provisions
in contracts or other agreements entered into in the ordinary
course of business, transfer any of its properties or assets to
the Borrower or any of its Subsidiaries.
7. EVENTS OF DEFAULT
In the case of the happening and during the continuance of
any of the following events (herein called "Events of Default"):
(a) any material representation or warranty made by
any Obligor in this Agreement or any other Loan Document or any
statement or representation made in any report, financial
statement, certificate or other document furnished by or on
behalf of the Borrower or any Subsidiary to the Lender under this
Agreement, shall prove to have been false or misleading in any
material respect when made or delivered;
(b) default shall be made in the payment of any
principal of or interest on the Note or of any fees or other
amounts payable by the Borrower hereunder, when and as the same
shall become due and payable, whether at the due date thereof or
at a date fixed for prepayment thereof or by acceleration thereof
or otherwise, and, in the case of payments of interest, such
default shall continue unremedied for five Business Days, and in
the case of payments other than of any principal amount of, or
interest on, the Note, such default shall continue remedied for
five Business Days after receipt by the Borrower of an invoice
therefor;
(c) default shall be made by the Borrower or its
Subsidiaries in the due observance or performance of any
covenant, condition or agreement contained in Section 5.01 (with
respect to notice of Default or Events of Default) or Article 6
of this Agreement;
(d) default shall be made by the Borrower or any
Subsidiary in the due observance or performance of any other
covenant, condition or agreement to be observed or performed
pursuant to the terms of this Agreement, the Mortgages or any
other Loan Document and such default shall continue unremedied
for 30 days, in each case after the Borrower receives written
notice from the Lender;
(e) default in payment shall be made with respect to
any Indebtedness of the Borrower or any Subsidiary in an amount
or amounts over $250,000.00 in the aggregate, or in any amount if
an Obligation to the Lender, or default with respect to the
performance of any other obligation incurred in connection with
any such Indebtedness, if the effect of such default is, or with
the giving of notice or passage of time or both would be, to
accelerate the maturity of such Indebtedness or to permit the
holder thereof (after giving effect to any applicable grace
periods) to cause such Indebtedness to become due prior to its
stated maturity or any such Indebtedness shall not be paid when
due, whether at the due date thereof or at acceleration thereof
or otherwise;
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(f) the Borrower or any Subsidiary shall generally not
pay its debts as they become due or shall admit in writing its
inability to pay its debts, or shall make a general assignment
for the benefit of creditors; or any Obligor shall commence any
case, proceeding or other action seeking to have an order for
relief entered on its behalf as debtor or to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, liquidation, dissolution or composition of it or its
debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors or seeking appointment of a
receiver, trustee, custodian or other similar official for it or
for all or any substantial part of its property or shall file an
answer or other pleading in any such case, proceeding or other
action admitting the material allegations of any petition,
complaint or similar pleading filed against it or consenting to
the relief sought therein; any Obligor shall take any action to
authorize any of the foregoing;
(g) any involuntary case, proceeding or other action
against the Borrower or any Subsidiary shall be commenced seeking
to have an order for relief entered against it as debtor or to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition
of it or its debts under the law relating to banking, appointment
of a receiver, trustee, custodian or other similar official for
it or for all or any substantial part of its property, and such
case, proceeding or other action (i) results in the entry of any
order for relief against it or (ii) shall remain undismissed for
a period of sixty (60) days;
(h) final judgment(s) for the payment of money in
excess of $250,000 shall be rendered against an Obligor which
within thirty (30) days from the entry of such judgment shall not
have been discharged or stayed pending appeal or which shall not
have been discharged within thirty (30) days from the entry of a
final order of affirmance on appeal;
(i) a Reportable Event relating to a failure to meet
minimum funding standards or an inability to pay benefits when
due shall have occurred with respect to any Plan under the
control of an Obligor and shall not have been remedied within 45
days after the occurrence of such Reportable Event, and (i) the
Lender shall have notified the Borrower that the Lender made a
good faith determination that, on the basis of such "Reportable
Event", there are reasonable grounds to believe that such
Reportable Event will result in a liability which is materially
adverse to the Borrower and its Subsidiaries taken as a whole,
(ii) a trustee shall be appointed by a United States District
Court to administer such Plan or (iii) the PBGC shall institute
proceedings to terminate such Plan;
(j) any Person shall have (or an Obligor shall assert
that any Person has) a right in the Collateral prior or equal to
that of the Lender or the Mortgages shall cease to be in full
force and effect or shall no longer grant to the Lender a first
mortgage Lien in the property interests subject thereto, in each
case, only to Permitted Liens in effect on the date hereof;
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(k) There has occurred any revocation, suspension or
loss of any Gaming Permit required to operate the Las Vegas
Showboat or the Atlantic City Showboat (other than any
revocation, suspension or loss resulting from an Event of Loss)
which results in the cessation of business at either the Las
Vegas Showboat or the Atlantic City Showboat for a period of more
than 90 consecutive days; then, in every such event and at any
time thereafter during the continuance of such event, the Lender
may take either or both of the following actions, at the same or
different times: terminate forthwith the Revolving Loan Facility
and/or declare the principal of and the interest on the Loan and
the Note and all other amounts payable hereunder or thereunder to
be forthwith due and payable, whereupon the same shall become and
be forthwith due and payable, without presentment, demand,
protest, notice of acceleration, notice of intent to accelerate
or other notice of any kind, all of which are hereby expressly
waived, anything in this Agreement or in the Note to the contrary
notwithstanding. If an Event of Default specified in paragraphs
(f) or (g) above shall have occurred, the principal of and
interest on the Loan and the Note and all other amounts payable
hereunder or thereunder shall thereupon and concurrently become
due and payable without presentment, demand, protest, notice of
acceleration, notice of intent to accelerate or other notice of
any kind, all of which are hereby expressly waived, anything in
this Agreement or the Note to the contrary notwithstanding and
the Revolving Loan Facility of the Lender shall thereupon
forthwith terminate;
(l) Entry of a final order or judgment of a court of
competent jurisdiction, which judgment has not been stayed on
appeal, directing the Borrower to convey to the Atlantic City
Housing Authority its title to real property owned by it and
constituting part of the Atlantic City Showboat known as Block
13, Lot 144.03, on the tax map of the City of Atlantic City.
8. GUARANTY
SECTION 8.01. AGREEMENT OF GUARANTY.
(a) Each Guarantor unconditionally and irrevocably
guarantees the due and punctual payment by, and performance of,
the Obligations (including interest accruing on and after the
filing of any petition in bankruptcy or of reorganization of the
obligor whether or not post filing interest is allowed in such
proceeding). Each Guarantor further agrees that the Obligations
may be extended or renewed, in whole or in part, without notice
or further assent from it (except as may be otherwise required
herein), and it will remain bound upon this guaranty
notwithstanding any extension or renewal of any Obligation.
(b) To the extent permitted by Applicable Law, each
Guarantor waives presentation to, demand for payment from and
protest to, as the case may be, the Borrower or any other
guarantor, and also waives notice of protest for nonpayment. The
obligations of each Guarantor hereunder shall not be affected by
(i) the failure of the Lender to assert any claim or demand or to
enforce any right or remedy against the Borrower or any other
guarantor under the provisions of this Agreement or any other
agreement or otherwise; (ii) any extension or renewal of any
provision hereof or thereof; (iii) the failure of the Lender to
obtain the consent of the Guarantors with respect to any
rescission, waiver, compromise, acceleration, amendment or
modification of any of the terms or provisions of this Agreement,
the Note or of any other agreement; (iv) the release, exchange,
waiver or
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foreclosure of any security held by the Lender for the
Obligations or any of them; (v) the failure of the Lender to
exercise any right or remedy against any other guarantor of the
Obligations; or (vi) the release or substitution of any
guarantor.
(c) Each Guarantor further agrees that this guaranty
constitutes a guaranty of performance and of payment when due and
not just of collection, and, to the extent permitted by
Applicable Law, waives any right to require that any resort be
had by the Lender to any security held for payment of the
Obligations or to any balance of any deposit, account or credit
or the books of the Lender in favor of the Borrower, any other
guarantor or to any other Person.
(d) Each Guarantor hereby expressly assumes all
responsibilities to remain informed of the financial condition of
the Borrower and any circumstances affecting the ability of the
Borrower to perform under this Agreement.
(e) Each Guarantor's guaranty shall not be affected by
the genuineness, validity, regularity or enforceability of the
Obligations, the Note or any other instrument evidencing any
Obligations, or by the existence, validity, enforceability,
perfection, or extent of any collateral therefor or by any other
circumstance relating to the Obligations which might otherwise
constitute a defense to this Guaranty. The Lender makes no
representation or warranty in respect to any such circumstances
and has no duty or responsibility whatsoever to the Guarantors in
respect to the management and maintenance of the Obligations or
any collateral security for the Obligations.
(f) The Guarantors consent to the provisions of the
paragraph of the Note entitled "Security Interest."
SECTION 8.02. NO IMPAIRMENT OF GUARANTY.
The obligations of the Guarantors hereunder shall not be
subject to any reduction, limitation, impairment or termination
for any reason including, without limitation, any claim of
waiver, release, surrender, alteration or compromise, and shall
not be subject to any defense or set-off, counterclaim,
recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations
of the Guarantors hereunder shall not be discharged or impaired
or otherwise affected by the failure of the Lender to assert any
claim or demand or to enforce any remedy under this Agreement or
any other agreement, by any waiver or modification of any
provision thereof, by any default, failure or modification of any
provision thereof, by any default, failure or delay, willful or
otherwise, in the performance of the Obligations, or by any other
act or thing or omission or delay to do any other act or thing
which may or might in any manner or to any extent vary the risk
of the Guarantors or would otherwise operate as a discharge of
the Guarantors as a matter of law, unless and until the
Obligations are paid in full.
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SECTION 8.03. CONTINUATION AND REINSTATEMENT, ETC.
(a) Each Guarantor further agrees that its guaranty
hereunder shall continue to be effective or be reinstated, as the
case may be, if at any time payment, or any part thereof, of
principal of or interest on any Obligation is rescinded or must
otherwise be restored by the Lender upon the bankruptcy or
reorganization of the Borrower or the Guarantors, or otherwise.
In furtherance of the provisions of this Article 8 and not in
limitation of any other right which the Lender may have at law or
in equity against the Borrower or any Guarantor by virtue hereof,
upon failure of the Borrower to pay any Obligation when and as
the same shall become due, whether at maturity, by acceleration,
after notice or otherwise, each Guarantor hereby promises to and
will, upon receipt of written demand by the Lender, forthwith pay
or cause to be paid to the Lender in cash an amount equal to the
unpaid amount of all the Obligations with interest thereon at a
rate of interest equal to the rate specified in the Notes, and
thereupon the Lender shall assign such Obligation, together with
all security interests, if any, then held by the Lender in
respect of such Obligation, to the Guarantors making such
payments.
(b) Upon the payment in full of all principal of and
interest on the Notes and any other amounts payable by the
Borrower under the Loan Documents, the Guarantors shall be
subrogated to the rights of the holders of the Notes in respect
of any payment or other obligation with respect to which an
amount has been payable by the Guarantors hereunder. The
Guarantors shall not seek to exercise any rights of subrogation,
reimbursement or indemnity arising from payments made by the
Guarantors pursuant to the provisions of this Agreement until the
full and complete payment or performance and discharge of the
Obligations.
SECTION 8.04. LIMITATION ON GUARANTEED AMOUNT.
Notwithstanding any other provision of this Article 8, the
amount guaranteed by the Guarantors hereunder shall be limited to
the extent, if any, required so that its obligations under this
Article 8 shall not be subject to avoidance under Section 548 of
the Bankruptcy Code or to being set aside or annulled under any
applicable state law relating to fraud on creditors. In
determining the limitations, if any, on the amount of any
Guarantor's obligations hereunder pursuant to the preceding
sentence, any rights of subrogation or contribution which such
Guarantor may have under this Article 8 or applicable law shall
be taken into account.
9. MISCELLANEOUS
SECTION 9.01. NOTICES.
Notices and other communications provided for herein shall
be in writing and shall be delivered or mailed (or in the case of
telegraphic communication, if by telex, facsimile telecopy or
other telegraphic communications equipment of the sending party
hereto,
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delivered by such equipment) addressed, if to the Lender to it at
1300 Atlantic Avenue, Mezzanine Level, Atlantic City, New Jersey
08401, Attn: John T. Harrison, Vice President, or Showboat, Inc.
Account Officer, or if to the Borrower or a Guarantor, to it at
its address set forth on the signature page or such other address
as such party may from time to time designate by giving written
notice to the other parties hereunder. All notices and other
communications given to any party hereto in accordance with the
provisions of this Agreement shall be deemed to have been given
on the fifth Business Day after the date when sent by registered
or certified mail, postage prepaid, return receipt requested, if
by mail, or when delivered to the telegraph company, charges
prepaid, if by telegram, or when receipt is acknowledged, if by
any telecopy communications equipment of the sender, in each case
addressed to such party as provided in this Section 9.01 or in
accordance with the latest unrevoked written direction from such
party.
SECTION 9.02. SURVIVAL OF AGREEMENT, REPRESENTATIONS AND
WARRANTIES, ETC.
All warranties, representations and covenants made by the
Borrower herein or in any certificate or other instrument
delivered by it or on its behalf in connection with this
Agreement shall be considered to have been relied upon by the
Lender and issuance and delivery to the Lender of the Notes
regardless of any investigation made by the Lender or on its
behalf and shall continue in full force and effect so long as any
amount due or to become due hereunder is outstanding and unpaid
and so long as the Revolving Loan Facility has not been
terminated. All statements in any such certificate or other
instrument shall constitute representations and warranties by the
Borrower hereunder.
SECTION 9.03. SUCCESSORS AND ASSIGNS; SYNDICATIONS; LOAN
SALES; PARTICIPATIONS.
(a) Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party (provided, however, that
the Borrower may not assign its rights hereunder without the
prior written consent of the Lender), and all covenants, promises
and agreements by or on behalf of the Borrower which are
contained in this Agreement shall inure to the benefit of the
successors and assigns of the Lender.
(b) The Lender may without the consent of the Borrower
sell participations to one or more banks or other entities in all
or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its
commitment, to advance funds hereunder and the Loans owing to it
and the Note or Notes held by it); provided, however, that any
such Lender's obligations under this Agreement shall remain
unchanged.
(c) The Lender may, in connection with any assignment
or participation or proposed assignment or participation pursuant
to this Section 9.03, disclose to the assignee or participant any
other financial information concerning Obligors furnished to the
Lender.
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(d) The Borrower consents that the Lender may at any
time and from time to time pledge or otherwise grant a security
interest in any Loan or any Note evidencing such Loan (or any
part thereof) to any Federal Reserve Bank.
SECTION 9.04. EXPENSES; DOCUMENTARY TAXES.
The Borrower agrees to pay all reasonable out-of-pocket
expenses incurred by the Lender in connection with the
preparation, execution, delivery and administration of this
Agreement (including the cost of field examination fees), the
Note and the making of the Loan, as well as all reasonable out-of-
pocket expenses incurred by the Lender in the enforcement or
protection of the rights of the Lender in connection with this
Agreement or the Note, and with respect to any action which may
be instituted by any Person against the Lender in respect of the
foregoing, or as a result of any transaction, action or nonaction
arising from the foregoing, including but not limited to the fees
and disbursements of any counsel for the Lenders. Such payments
shall be made on demand. The Borrower agrees that it shall
indemnify the Lender and hold it harmless against any documentary
taxes, assessments or charges made by an Governmental Authority
by reason of the execution and delivery of this Agreement or the
Note. The obligations of the Borrower under this Section shall
survive the termination of this Agreement and/or the payment of
the Loan.
SECTION 9.05. INDEMNITY.
Further, by the execution hereof, the Borrower agrees to
indemnify and hold harmless the Lender and its directors,
officers, employees and agents (each an "Indemnified Party") from
and against any and all expenses, losses, claims, damages and
liabilities arising out of any claim, litigation, investigation
or proceeding in any way relating to the transactions
contemplated hereby, but excluding therefrom all expenses,
losses, claims, damages, and liabilities arising out of or
resulting from the gross negligence or willful misconduct of any
Indemnified Party. If any proceeding, including any governmental
investigation, shall be instituted involving any Indemnified
Party, in respect of which indemnity may be sought against the
Borrower, such Indemnified Party shall promptly notify the
Borrower in writing, and the Borrower shall assume the defense
thereof on behalf of such Indemnified Party including the
employment of counsel (reasonably satisfactory to such
Indemnified Party) and payment of all reasonable expenses. Any
Indemnified Party shall have the right to employ separate counsel
in any such proceeding and participate in the defense thereof,
but the fees and expenses of such separate counsel shall be at
the expense of such Indemnified Party unless (i) the employment
of such separate counsel has been specifically authorized by the
Borrower or (ii) the named parties to any such action (including
any impleaded parties) include such Indemnified Party and the
Borrower and such Indemnified Party shall have been advised by
its counsel that there may be one or more legal defenses
available to such Indemnified Party which are different from or
additional to those available to the Borrower (in which case the
Borrower shall not have the right to assume the defense of such
action on behalf of such Indemnified Party, it being understood,
however, that the Borrower shall not, in connection with any one
such action
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or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees
or expenses of more than one separate firm of attorneys for all
such Indemnified Parties). The Borrower shall not be liable for
any settlement of any such proceeding effected without the
written consent of the Borrower, but if settled with the written
consent of the Borrower or if there is a final judgment for the
plaintiff in any such action, the Borrower agrees to indemnify
and hold harmless any Indemnified Party from and against any loss
or liability by reason of such settlement or judgment. At any
time after the Borrower has assumed the defense of any proceeding
involving any Indemnified Party in respect of which indemnity has
been sought against the Borrower, such Indemnified Party may
elect, by written notice to the Borrower, to withdraw its request
for indemnity and thereafter the defense of such proceeding shall
be maintained by counsel of the Indemnified Party's choosing and
at the Indemnified Party's expense. The obligations of the
Borrower under this Section 9.05 shall survive the termination of
this Agreement and/or payment of the Loans.
SECTION 9.06. CHOICE OF LAW.
THIS AGREEMENT AND THE NOTES HAVE BEEN EXECUTED AND
DELIVERED IN THE STATE OF NEW JERSEY AND SHALL IN ALL RESPECTS BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SUCH
STATE APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY
WITHIN SUCH STATE AND, IN THE CASE OF PROVISIONS RELATING TO
INTEREST RATES, ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.
SECTION 9.07. NO WAIVER.
No failure on the part of the Lender to exercise, and not
delay in exercising, any right, power or remedy hereunder or
under the Note shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided
by law.
SECTION 9.08. EXTENSION OF MATURITY.
Should any payment of principal of or interest on the Note
or any other amount due hereunder become due and payable on a day
other than a Business Day, the maturity thereof shall be extended
to the next succeeding Business Day and, in the case of
principal, interest shall be payable thereon at the rate herein
specified in the Notes during such extension.
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SECTION 9.09. AMENDMENTS, ETC.
No modification, amendment or waiver of any provision of
this Agreement, and no consent to any departure by the Borrower
herefrom, shall in any event be effective unless the same shall
be in writing and signed by the Lender, and then such waiver or
consent shall be effective only in the specific instance and for
the purpose for which given.
SECTION 9.10. SEVERABILITY.
Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 9.11. SERVICE OF PROCESS.
EACH OBLIGOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF THE STATE COURTS OF THE STATE OF NEW JERSEY AND TO THE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT
OF NEW JERSEY, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER
PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE
SUBJECT MATTER HEREOF BROUGHT BY THE LENDER. EACH OBLIGOR TO THE
EXTENT PERMITTED BY APPLICABLE LAW (A) HEREBY WAIVES, AND AGREES
NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURTS, ANY
CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF
THE ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE
FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING
IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT OR THE
SUBJECT MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT,
AND (B) HEREBY WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION,
SUIT OR PROCEEDING ANY OFFSETS OR COUNTERCLAIMS EXCEPT
COUNTERCLAIMS THAT ARE COMPULSORY. EACH OBLIGOR HEREBY CONSENTS
TO SERVICE OF PROCESS BY MAIL AT ITS ADDRESS AS SET FORTH ON THE
SIGNATURE PAGE HEREOF. EACH OBLIGOR AGREES THAT THIS SUBMISSION
TO JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE
FOR THE EXPRESS BENEFIT OF THE LENDER. FINAL JUDGMENT AGAINST A
BORROWER IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE
CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER JURISDICTION (A) BY
SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR TRUE
COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND THE
AMOUNT OF
46
<PAGE>
INDEBTEDNESS OR LIABILITY OF THE OBLIGOR THEREIN DESCRIBED
OR (B) IN ANY OTHER MANNER PROVIDED BY OR PURSUANT TO
THE LAWS OF SUCH OTHER JURISDICTION, PROVIDED, HOWEVER, THAT THE
LENDER MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL
PROCEEDINGS AGAINST AN OBLIGOR OR ANY OF ITS ASSETS IN ANY STATE
OR FEDERAL COURT OF THE UNITED STATES OR OF ANY COUNTRY OR PLACE
WHERE AN OBLIGOR OR SUCH ASSETS MAY BE FOUND.
SECTION 9.12. HEADINGS.
Section headings used herein are for convenience only and
are not to affect the construction of or be taken into
consideration in interpreting this Agreement.
SECTION 9.13. EXECUTION IN COUNTERPARTS.
This Agreement may be executed in any number of
counterparts, each of which shall constitute an original, but all
of which taken together shall constitute one and the same
instrument.
SECTION 9.14. ENTIRE AGREEMENT.
This Agreement, together with the Loan Documents hereof,
constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and the year first
written.
BORROWER:
SHOWBOAT, INC.
By: /s/ R. Craig Bird
Name: R. Craig Bird
Title: Executive Vice President of
Finance and Administration
Address: 2800 Fremont Street
Las Vegas, NV 89104
<PAGE>
GUARANTORS:
SHOWBOAT OPERATING COMPANY
By: /s/ Leann Schneider
Name: Leann Schneider
Title: Treasurer
Address: 2800 Fremont Street
Las Vegas, NV 89104
OCEAN SHOWBOAT, INC.
By: /s/ R. Craig Bird
Name: R. Craig Bird
Title: Vice President of Finance
and Administration
Address: 801 Boardwalk
Atlantic City, N.J. 08401
ATLANTIC CITY SHOWBOAT, INC.
By: /s/ Herbert R. Wolfe
Name: Herbert R. Wolfe
Title: President/CEO
Address: 801 Boardwalk
Atlantic City, N.J. 08401
LENDER:
NATWEST BANK, N.A.
By: /s/ John Harrison
Name: John Harrison
Title: Vice President
Address: 1300 Atlantic Avenue
Mezzanine Level
Atlantic City, N.J. 08401
<PAGE>
REVOLVING NOTE
$25,000,000.00 July 14, 1995
FOR VALUE RECEIVED, the undersigned (hereinafter referred to
as "BORROWER") promises to pay to the order of NATWEST BANK, N.A.
(hereinafter "LENDER"), at any of its banking offices the
principal sum of Twenty-five Million Dollars ($25,000,000.00), or
so much thereof as may be advanced pursuant to the terms of the
Revolving Loan Facility established under that certain Loan and
Guaranty Agreement between the Borrower, the Lender and the
Guarantors named therein (the "Loan Agreement"), together with
interest thereon, to be payable commencing on the first day of
August, 1995, and continuing on the first day of each month
thereafter. As to each Borrowing under the Revolving Loan
Facility, interest from the date thereof shall accrue on the
unpaid principal balance thereof as follows at the Borrower's
option at either (i) the Prime Rate (as hereinafter defined) plus
one-half of one percent (.5%) (the "Floating Rate" or "Floating
Rate Option"); or (ii) the LIBOR Based Rate (the "LIBOR Rate
Option"). Lender's PRIME RATE of interest shall mean that rate
of interest so designated and established by the Lender from time
to time as its reference rate in making loans but which is not
necessarily the lowest rate of interest charged by the Lender.
The LIBOR Based Rate shall mean a rate per annum equal to Two
Hundred Fifty Basis Points (2.5%) plus the Adjusted LIBOR Rate
with respect to the applicable LIBOR Interest Period. Each
determination of a LIBOR Based Rate shall be made by the Lender
and shall be conclusive and binding upon the Borrower absent
manifest error. The term "Adjusted LIBOR Rate" shall mean a rate
per annum (rounded upwards, if necessary, to the next 1/16 of 1%)
equal to the product arrived at by multiplying the Base LIBOR
Rate with respect to the applicable LIBOR Interest Period by a
fraction (expressed as a decimal), the numerator of which shall
be the number one and the denominator of which shall be the
number one minus the aggregate reserve percentages (expressed as
a decimal) from time to time established by the Board of
Governors of the Federal Reserve System of the United States and
other banking authority to which the Lender is now or hereafter
subject, including, but not limited to, at the ratios provided in
such Regulation, from time to time, it being agreed that any
portion of the Principal bearing interest at a LIBOR Based Rate
shall be deemed to constitute Eurocurrency Liabilities, as
defined by such Regulation, and it being further agreed that such
Eurocurrency Liabilities shall be deemed subject to such reserve
requirements without benefit of or credit for prorations,
exceptions or offsets that may be available to the Lender from
time to time under such Regulation and irrespective of whether
the Lender actually maintains all or any portion of such reserve.
The "Base LIBOR Rate" applicable to a particular LIBOR Interest
Period shall mean a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the rate at which
dollars approximately equal in amount to the Principal of the
applicable Borrowing and for a maturity equal to the applicable
LIBOR Interest Period are offered in immediately available funds
by the National Westminster Bank to leading banks in the London
Interbank Market for Eurodollars at approximately 11:00 a.m.,
London time, three (3) Business Days prior to the commencement of
such LIBOR Interest Period. The term "LIBOR Interest Period"
shall mean the period of time defined in the Loan Agreement
during which a particular LIBOR Rate will be applicable to any
Principal balance in accordance with the provisions of this Note.
No LIBOR Interest Period shall extend beyond the Conversion Date.
The Principal balance with respect to which a particular LIBOR
Interest Period is applicable will bear interest at the LIBOR
Based Rate pertaining to such LIBOR Interest Period from and
including the first day of such LIBOR Interest Period to, but not
including, the last day of such LIBOR Interest Period. Subject
to the paragraph immediately below, the Borrower may elect the
LIBOR Based Rate only upon written notice to Lender no later than
three (3) Business Days prior to the day upon which such
Borrowing is requested. If such notice is not received by the
Lender by or on such date, the Floating Rate Option shall be
deemed to have been elected.
Principal of any LIBOR Rate Borrowing shall be due on the last
day of the applicable Interest Period. If not repaid, such
principal shall be deemed to have been converted to a Floating
Rate Borrowing as of such date, unless three (3) Business Days
prior to the last day of such Interest Period the Borrower shall
have given notice of a LIBOR Rate Borrowing with respect to such
principal amounts intended to be reborrowed as a LIBOR Rate
Borrowing. The entire sum of principal, interest, costs and
other sums due hereunder shall be due and payable in full on July
14, 1997 (the "Conversion Date") unless the principal sum hereof
is converted to a term loan pursuant to the provisions of Section
2.02 of the Loan Agreement.
Capitalization terms used herein which are not otherwise defined
shall have the meaning set forth in the Loan Agreement.
LIMITATION ON RATE OPTIONS - Anything herein to the contrary
notwithstanding, if, on or prior to the determination of a LIBOR
Rate for any Interest Period, the Lender determines in good faith
(which determination shall be conclusive) that: (1) By reason
of any event affecting the money markets in the United States or
the applicable interbank Eurodollar market, quotations of
interest rates for the relevant deposits are not being provided
in the relevant amounts or for the relevant maturities for
purposes of determining the rate of interest for this Loan; or
(2) The rates of interest referred to in this Agreement do not
accurately reflect the cost to the Lender of making or
maintaining such Loans for such period, then the Lender shall
give the Borrower notice thereof (and shall thereafter give the
Borrower prompt notice of the cessation, if any, of such
condition), and so long as such condition remains in effect, the
Lender
<PAGE>
shall be under no obligation to make the LIBOR Rate Option
available and the Borrower shall, on the last day of the then
current Interest Period, either prepay, without premium or
penalty, this Note or select the Floating Rate Option.
PREPAYMENTS (i) The Borrower shall have the right at any time
and from time to time to prepay any Floating Rate Borrowing, in
whole or in part, without premium or penalty. All prepayments
shall be accompanied by accrued interest to the date of
prepayment, and shall be applied in inverse order of maturity.
(ii) In the case of a LIBOR Rate loan, full or
partial prepayments in multiples of $100,000.00 shall be
permitted during a LIBOR Interest Period provided the Borrower
gives Lender not less than five (5) business days prior written
notice and such prepayment shall be applied in inverse order of
maturity and shall be accompanied by payment of accrued interest
to and including the date of prepayment together with Lender's
standard LIBOR Rate indemnification fee, which indemnifies the
Lender against any and all loss and reasonable expenses which the
Lender may sustain or incur as a consequence of the receipt or
recovery by the Lender of any Libor Rate borrowing pursuant to
this Note and the Loan and Guaranty Agreement, whether by
prepayment, acceleration or otherwise. Without limiting the
effect of the foregoing, the amount to be paid by the Borrower to
the Lender in order to so indemnify the Lender for any loss
occasioned by any of the events described above, and as
liquidated damages therefor, shall be equal to the excess,
discounted to its present value as of the date so received or
recovered, of (i) the amount of interest which otherwise would
have accrued on the principal balance so received or recovered at
the Libor Based Rate during the period (the "Indemnity Period")
commencing with the date of such receipt or recovery (the
"Commencement Date") to the Rollover Date over (ii) the amount of
interest which would be earned by the Lender during the Indemnity
Period if it invested, on the Commencement Date, the principal
amount so received or recovered at the rate per annum determined
by the Lender as the rate it would bid in the London Interbank
Market for a deposit of Eurodollars in an amount approximately
equal to such principal amount (or part thereof) for a period of
time comparable to the Indemnity Period. The term "Rollover
Date" applicable to a particular LIBOR Interest Period shall mean
the last day of such LIBOR Interest Period. In the event a
prepayment is made by virtue of a sale or further encumbering of
any security for this Note, or application of insurance proceeds
or condemnation award, or is voluntarily made after an Event of
Default has occurred, the applicable prepayment premium as set
forth under this paragraph will be due and payable on demand.
SECURITY INTEREST - As security for the prompt payment as and
when due of all amounts due under this Note, and the Loan
Documents including any renewals, extensions and/or modifications
hereof (hereinafter collectively referred to as the
"LIABILITIES"), in addition to any other security agreement or
document granting Lender any rights in any of Obligor's
("OBLIGOR", as used herein, shall include Borrower and all
endorsers, sureties and guarantors) property for the purpose of
securing the Liabilities, Obligor hereby grants to Lender,
subject to the terms of Intercreditor agreements between Lender,
Borrower, Guarantor and IBJ Schroder Bank & Trust Company of even
date herewith (collectively the "Intercreditor Agreement"), a
lien and security interest in and to all property of Obligor, or
any of them, which at any time Lender shall have in its
possession, or which is in transit to it, including without
limitation any balance or share belonging to Obligor or Lender,
and any other amounts which may be owing from time to time by
Lender to Obligor, or any of them. Said lien and security
interest shall be independent of any right of set-off which
Lender may have. Such right of set-off shall be deemed to occur
at the time Lender first restricts access of Obligor to property
in Lender's possession, although such set-off may be entered upon
Lender's books and records at a later time.
EVENTS OF DEFAULT - An "Event of Default" hereunder shall have
the meaning set forth in the Loan Agreement.
LENDER'S RIGHTS UPON DEFAULT - Upon the occurrence of any Event
of Default (subject to any applicable grace and cure period
therefor), Lender may:
(1) accelerate the maturity of this Note and demand immediate
payment of all outstanding principal and accrued interest.
(2) exercise its right of set-off and all of the rights,
privileges and remedies of a secured party under the Uniform
Commercial Code and all of its rights and remedies under any
security agreement, pledge agreement, mortgage, power, this Note
or any other note, or other agreement, instrument or document
issued in connection with or arising out of any of the
Liabilities, all of which remedies shall be cumulative and not
alternative. The net proceeds of any collateral held by Lender
as security for any of the Liabilities shall be applied first to
the expenses of Lender in preparing the collateral for sale,
selling and the like, including, without limitation, reasonable
attorneys' fees and expenses incurred by Lender (including fees
and expenses of any litigation incident to any of the foregoing),
and second, in such order as Lender may elect, in its sole
discretion, to the complete satisfaction of all of the
Liabilities together with all interest thereon. To the extent
permitted by applicable law, Obligor waives and releases any
right to require Lender to collect any of the Liabilities to
Lender from any other collateral under any theory of marshalling
of assets or otherwise, and specifically authorizes Lender to
apply any collateral proceeds in which Obligor has any right,
title or interest against any of Obligor's Liabilities to Lender
in any manner that Lender may determine.
<PAGE>
(3) make a late charge of five percent (5%) of any amount due
and unpaid for a period of fifteen (15) days or more.
(4) Upon five (5) Business Day's written notice to Borrower,
begin accruing interest, in addition to any interest provided for
above, at a rate not to exceed five percent (5%) per annum on the
unpaid principal balance; provided, however, that no interest
shall accrue hereunder in excess of the maximum amount of
interest then allowed by law. Borrower agrees to pay such
accrued interest upon demand. The default rate set forth herein
is strictly a measure of liquidated damages to Lender based upon
Lender's excess costs involved in the redeployment of funds and
is not meant to be construed as a penalty.
MISCELLANEOUS - Borrower hereby waives protest, notice of
protest, presentment, dishonor, notice of dishonor, demand, and
notice of demand. If this Note is placed in the hands of an
attorney for collection, Borrower shall reimburse Lender for any
and all of its reasonable attorneys' fees whether or not suit be
brought, together with all actual costs and expenses of any legal
proceedings. Interest shall be calculated hereunder for the
actual number of days that the principal is outstanding, based on
a year of three hundred sixty (360) days, unless otherwise
specified. As to Floating Rate Borrowings changes in the rate of
interest hereon shall become effective on the days on which
Lender announces changes in its Prime Rate. THIS NOTE HAS BEEN
DELIVERED TO AND ACCEPTED BY LENDER IN AND SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF NEW JERSEY. THE PARTIES AGREE TO THE
JURISDICTION OF THE FEDERAL AND STATE COURTS LOCATED IN NEW
JERSEY IN CONNECTION WITH ANY MATTER ARISING HEREUNDER, INCLUDING
THE COLLECTION AND ENFORCEMENT HEREOF. TO THE EXTENT PERMITTED
BY APPLICABLE LAW, BORROWER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, AND LENDER, BY ITS ACCEPTANCE OF THIS
NOTE AND THE MORTGAGE SECURING THE LOAN, IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH, OUT OF
OR OTHERWISE RELATING TO THIS NOTE, THE MORTGAGE, THE LOAN
AGREEMENT OR ANY OTHER DOCUMENT OR INSTRUMENT NOW OR HEREAFTER
EXECUTED AND DELIVERED IN CONNECTION THEREWITH OR THE LOAN.
REGULATORY CHANGES; ADDITIONAL FEES - If any regulatory change or
existing law or regulation shall either (i) impose, modify or
deem applicable, or result in the application of, any reserve,
special deposit, capital maintenance, capital ratio or similar
requirement against fixed rate loans or loan commitments made by
the Lender or against any other extensions of credit or
commitments to extend credit or other assets of or any deposits
or other liabilities taken or entered into by Lender or (ii)
impose on Lender any other condition regarding the Loan or the
Prime Rate, and the result of any event referred to in clause (i)
or (ii) above shall be to increase the cost to Lender of making
or maintaining, or to impose upon Lender or increase any capital
requirement applicable as a result of the making or maintenance
of this Loan or the obligation of the Borrower hereunder or to
reduce the amounts receivable by the Lender hereunder (which
increase in cost or increase in (or imposition of) capital
requirements or reduction in amounts receivable may be determined
by Lender's reasonable allocation of the aggregate of such cost
increases, capital increases or impositions or reductions in
amounts receivable resulting from such events) then, upon written
demand by the Lender, the Borrower shall pay to the Lender not
later than five (5) business days following the date of such
written demand from time to time as specified by the Lender, such
amounts or additional fees which shall be sufficient to
compensate Lender for such increased cost or increase in (or
imposition of) capital requirements or reduction in amounts
receivable by the Lender, together with interest on each such
amount from the date demanded until payment in full thereof at
the Prime Rate provided in this Note. Upon the occurrence of any
event referred to in clause (i) or (ii) above, a certificate
setting forth in reasonable detail the increased cost, reduction
in amounts receivable or amounts necessary to compensate the
Lender as a result of an increase in (or imposition of) capital
requirements submitted by the Lender to the Borrower, shall be
conclusive, absent manifest error or bad faith, as to the amount
thereof. For purposes of this Section, in calculating the amount
necessary to compensate the Lender for any increase in or
imposition of capital requirements, the Lender shall be deemed to
be entitled to a rate of return on capital (after federal, state
and local taxes) of fifteen percent (15%) per annum.
Borrower has duly executed this Note the day and year first above
written, and has hereunto set Borrower's hand and seal.
ATTEST: SHOWBOAT, INC.
/s/ H. Gregory Nasky By: /s/ R. Craig Bird
[Corporate Seal]
<PAGE>
Recording Requested By and
Return Recorded Counterparts to:
Peter W. Leibundgut, Esquire
Clark, Ladner, Fortenbaugh & Young
Woodland Falls Corporate Park
200 Lake Drive East
Suite 300
Cherry Hill, New Jersey 08002
DEED OF TRUST, ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
MADE BY
SHOWBOAT, INC. and SHOWBOAT OPERATING COMPANY
Nevada Corporations,
as Trustor,
to
NEVADA TITLE COMPANY
a Nevada corporation
as Trustee,
for the benefit of
NATWEST BANK, N.A.,
a National Banking Association
THIS INSTRUMENT IS TO BE FILED AND INDEXED IN THE REAL
ESTATE RECORDS AND IS ALSO TO BE INDEXED IN THE INDEX OF
FINANCING STATEMENTS OF CLARK COUNTY, NEVADA, UNDER THE NAMES OF
SHOWBOAT, INC. AS "DEBTOR" AND NATWEST BANK, N.A. AS SECURED
PARTY.
<PAGE>
TABLE OF CONTENTS
ARTICLE ONE
COVENANTS OF TRUSTOR
1.1 Performance of Loan Documents 10
1.2 General Representations, Covenants and Warranties 10
1.3 Compliance with Legal Requirements 10
1.4 Taxes 10
1.5 Insurance 11
1.6 Condemnation 13
1.7 Care of Trust Estate 14
1.8 Environmental Laws 14
1.9 Leases 15
1.10 Further Encumbrance, Sale or Other Disposition of 15
Collateral
1.11 Partial Releases of Trust Estate 16
1.12 Future Advances 17
1.13 Further Assurances 17
1.14 Security Agreement and Financing Statements 17
1.15 Assignment of Rents 19
1.16 Expenses 19
1.17 Beneficiary's Cure of Trustor's Default 19
1.18 Use of Land 20
1.19 Material Space Leases 20
1.20 Compliance with Permitted Lien Agreements 20
1.21 Defense of Actions 20
1.22 Affiliates 20
1.23 Title Insurance 20
ARTICLE TWO
CORPORATE LOAN PROVISIONS
2.1 Interaction with Indenture and Loan Agreement 20
2.2 Other Collateral 21
ARTICLE THREE
DEFAULTS
3.1 Event of Default 21
ARTICLE FOUR
REMEDIES
4.1 Acceleration of Maturity 22
4.2 Protective Advances 22
4.3 Institution of Equity Proceedings 22
4.4 Beneficiary's Power of Enforcement 22
4.5 Beneficiary's Right to Enter and Take Possession,
Operate and Apply Income 23
4.6 Leases 24
4.7 Purchase by Beneficiary 24
4.8 Waiver of Appraisement, Valuation, Stay, Extension
and Redemption Laws 24
4.9 Receiver 25
4.10 Suits to Protect the Trust Estate 25
4.11 Proofs of Claim 25
i
<PAGE>
4.12 Trustor to Pay the First Mortgage Bonds and Promissory 25
Note on Any Default in Payment: Application of Monies
by Beneficiary
4.13 Delay or Omission: No Waiver 25
4.14 No Waiver of One Default to Affect Another 25
4.15 Discontinuance of Proceedings: Position of Parties 26
Restored
4.16 Remedies Cumulative 26
4.17 Interest After Event of Default 26
4.18 Foreclosure: Expenses of Litigation 26
4.19 Deficiency Judgments 27
4.20 Waiver of Jury Trial 27
4.21 Exculpation of Beneficiary 27
ARTICLE FIVE
RIGHTS AND RESPONSIBILITIES OF TRUSTEE;
OTHER PROVISIONS RELATING TO TRUSTEE
5.1 Exercise of Remedies by Trustee 27
5.2 Rights and Privileges of Trustee 27
5.3 Resignation or Replacement of Trustee 28
5.4 Authority of Beneficiary 28
5.5 Effect of Appointment of Successor Trustee 28
5.6 Confirmation of Transfer and Succession 28
5.7 Ratification 28
5.8 Exculpation 28
5.9 Endorsement and Execution of Documents 28
5.10 Multiple Trustees 29
5.11 Terms of Trustee's Acceptance 29
ARTICLE SIX
MISCELLANEOUS PROVISIONS
6.1 Heirs, Successors and Assigns Included in Parties 29
6.2 Notices 29
6.3 Addresses for Notices, Etc. 29
6.3.1Change of Address 30
6.4 Headings 30
6.5 Invalid Provisions to Affect No Others 30
6.6 Changes and Priority Over Intervening Liens 30
6.7 Estoppel Certificates 30
6.8 Governing Law 30
6.9 Required Notices 31
6.10 Reconveyance 31
6.11 Attorneys Fees 31
6.12 Late Charges 31
6.13 Cost of Accounting 31
6.14 Right of Entry 31
6.15 Corrections 31
6.16 Statute of Limitations 31
6.17 Subrogation 32
6.18 Joint and Several Liability 32
6.19 Context 32
6.20 Time 32
6.21 Interpretation 32
6.22 Effect of NRS 57.030 32
6.23 Application of certain Deed of Trust Provisions to 32
Showboat Operating Company
ii
<PAGE>
ARTICLE SEVEN
POWER OF ATTORNEY
7.1 Grant of Power 32
7.2 Possession and Completion 32
7.3 Plans 32
7.4 Employment of Others 32
7.5 Security Guards 32
7.6 Compromise Claims 33
7.7 Legal Proceedings 33
7.8 Other Acts 33
SCHEDULE A LAND DESCRIPTION
SCHEDULE B LIST OF EXISTING ENCUMBRANCES
iii
<PAGE>
DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY
AGREEMENT
Pursuant to Section 1.10 of that certain Deed of Trust,
Assignment of Rents and Security Agreement, dated as of May 18,
1993 made by Showboat, Inc. as Trustor, to Nevada Title Company,
as Trustee for the benefit of IBJ Schroder Bank & Trust Company
as Beneficiary, recorded on May 18, 1993 in Book 930513, Document
No. 00390 the lien created by this instrument ranks pari passu
with the lien created by said Deed of Trust.
THIS DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY
AGREEMENT (hereinafter called Deed of Trust") is made as of July
14, 1995, made by SHOWBOAT, INC., a Nevada corporation, and
SHOWBOAT OPERATING COMPANY, a Nevada Corporation, collectively as
Trustor, whose address is 2800 Fremont Street, Las Vegas, Nevada
89104 to NEVADA TITLE COMPANY, a Nevada corporation, whose
address is 3320 West Sahara, Suite 200, Las Vegas, Nevada 89102-
60677, as Trustee ("Trustee") for the benefit of NATWEST BANK,
N.A., a national banking association ("Beneficiary"), as trustee
under that certain Loan Agreement dated as of even date herewith
among Beneficiary, as trustee, Trustor as borrower and Ocean
Showboat, Inc., a New Jersey corporation, Atlantic City Showboat,
Inc., a New Jersey corporation, and Showboat Operating Company, a
Nevada corporation, as Guarantors.
DEFINITIONS - As used in this Deed of Trust, the
following terms have the meanings hereinafter set forth:
"ACCOUNTS RECEIVABLE", shall have the meaning set forth
in Section 9-106 (NRS 104.9106) of the UCC for the term
"account."
"ACSI" means Atlantic City Showboat, Inc., a New Jersey
corporation.
"ACSI GUARANTY" means that certain Guaranty as set
forth in the Loan Agreement as of the date hereof made by ACSI in
favor of Beneficiary.
"AFFILIATE" of any specified Person means any other
Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such Person, and,
with respect to any specified natural Person, any other Person
having a relationship by blood, marriage or adoption not more
remote than first cousins with such natural Person. For purposes
of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control
with") as used with respect to any Person shall mean the
possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person,
whether through the ownership of voting securities or by
agreement or otherwise; provided, however, that beneficial
ownership of 10% or more of the voting securities of a Person
shall be deemed control.
"APPURTENANT RIGHTS" means all and single tenements,
hereditaments, rights, reversions, remainders, development
rights, privileges, benefits, easements (in gross or
appurtenant), rights-of-way, gores or strips of land, streets,
ways, alleys, passages, sewer rights, water courses, water rights
and powers, and all appurtenances whatsoever and claims or
demands of Trustor at law or in equity in any way belonging,
benefitting, relating or appertaining to the Land, the airspace
over the Land, the Improvements or any of the Trust Estate
encumbered by this Deed of Trust, or which hereinafter shall in
any way belong, relate or be appurtenant thereto, whether now
owned or hereafter acquired by Trustor.
"ATLANTIC CITY SHOWBOAT" means the Showboat Casino
Hotel in Atlantic City, New Jersey.
"BANKRUPTCY" means, with respect to any Person, that
such Person is or becomes bankrupt or insolvent or: (a) is the
subject of any order for relief under any Bankruptcy Law; (b)
commences a voluntary proceeding under any Bankruptcy Law; (c)
consents to the entry of an order for relief in an involuntary
proceeding under any Bankruptcy Law; (d) consents to the
appointment of, or taking possession by any Receiver; (e) makes
any assignment for the benefit of creditors; (f) is unable or
fails, or admits in writing its inability, to pay its debts as
such debts become due; (g) is the subject of any involuntary
proceeding under any Bankruptcy Law or involuntary appointment of
a Receiver, and such involuntary proceeding or appointment is not
dismissed and terminated within 90 days; (h) is the subject of
any other proceeding or relief similar to any of the foregoing
under any law; (i) is the subject of a warrant of attachment,
execution, or similar process with respect to such Person or any
substantial part of such Person's property, which warrant or
similar process remains in effect for sixty days without having
been bonded or discharged; or (j) otherwise ceases to do business
as a going concern.
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"BANKRUPTCY CODE" means the United States Bankruptcy
Code, 11 U.S.C. 101 et seq.
"BANKRUPTCY LAW" means the Bankruptcy Code, and any
other state or federal insolvency, reorganization, moratorium or
similar law for the relief of debtors.
"BENEFICIARY" means NATWEST BANK, N.A., a national
banking association, as lender under the Loan Agreement.
"BONDHOLDERS" means the holders of the First Mortgage
Bonds.
"BUSINESS DAY" means any day that is not a Saturday, a
Sunday or a day on which banking institutions in the State of
Nevada or New York are not required to be open.
"COLLATERAL" means the property described in granting
clauses (A) through (O).
"DEEDS OF TRUST" means collectively (1) that certain
Leasehold Mortgage, Assignment of Rents and Security Agreement
made by ACSI (as mortgagor) in favor of Beneficiary (as
mortgagee), and this Deed of Trust, both dated the date hereof,
securing, among other things, the Promissory Note, the ACSI
Guaranty.
"DISBURSEMENT REQUEST" means a certificate in the form
of Exhibit "A" attached hereto and completed as to all
information required therein, with all required attachments
attached and executed by the president and a vice-president or at
least two vice-presidents of Trustor on behalf of Trustor.
"ENVIRONMENTAL LAWS" means any and all laws and Legal
Requirements relating to environmental matters, pollution, or
hazardous substances, including: the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C.
9601-9657; the Resource Conservation and Recovery Act of 1976,42
U.S.C. 6901 ET SEQ.; the Hazardous Materials Transportation
Act (49 U.S.C. 1801 ET SEQ.); the Nevada Hazardous Materials
Act (NRS Chapters 459 et seq.); any other Laws that may form the
basis of any claim, action, demand, suit, proceeding, hearing, or
notice of violation that is based on or related to the
generation, manufacture, processing, distribution, use,
existence, treatment, storage, disposal, transport, or handling,
or the emission, discharge, release, or threatened release into
the environment, of any hazardous substance, or other threat to
the environment.
"EVENT OF DEFAULT" has the meaning set forth in Section
3.1 hereof.
"EXISTING ENCUMBRANCES" means those matters set forth
on Schedule B attached hereto and incorporated herein by
reference and constituting a prior lien, claim or encumbrance
upon the Trust Estate or any other prior lien, claim or
encumbrance upon the Trust Estate specifically consented to in
writing by Beneficiary.
"FF&E" means all furniture, fixtures, equipment,
appurtenances and personal property now or in the future
contained in, used in connection with, attached to, or otherwise
useful or convenient to the use, operation, or occupancy of, or
placed on, but unattached to, any part of the Land or
Improvements whether or not the same constitutes real property or
fixtures in the State of Nevada, including all removable window
and floor coverings, all furniture and furnishings, heating,
lighting, plumbing, ventilating, air conditioning, refrigerating,
incinerating and elevator and escalator plants, cooking
facilities, vacuum cleaning systems, public address and
communications systems, sprinkler systems and other fire
prevention and extinguishing apparatus and materials, motors,
machinery, pipes, appliances, equipment, fittings, fixtures, and
building materials, together with all venetian blinds, shades,
draperies, drapery and curtain rods, brackets, bulbs, cleaning
apparatus, mirrors, lamps, ornaments, cooling apparatus and
equipment, ranges and ovens, garbage disposals, dishwashers,
mantels, and any and all such property which is at any time
installed in, affixed to or placed upon the Land or Improvements.
"FF&E FINANCING AGREEMENT" shall have the meaning
ascribed to that term in Section 1.10(d) hereof.
"FIRST MORTGAGE BONDS" means Trustor's 9 1/4 % First
Mortgage Bonds due May 1, 2008, issued pursuant to the Indenture,
or any notes exchanged therefor as contemplated in the Indenture.
"GAMING AUTHORITY" means any agency, authority, board,
bureau, commission, department, office or instrumentality of any
nature whatsoever of the United States federal or foreign
government, any state, province or any city
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or other political subdivision or otherwise and whether now
or hereafter in existence, or any officer or official thereof
with authority to regulate any gaming operation (or proposed
gaming operation) owned, managed or operated by the Trustor
or any of its Subsidiaries, including, without limitation, the
Nevada Gaming Commission, The Nevada State Gaming Control Board,
the City Council of the City of Las Vegas, and the New Jersey
Casino Control Commission.
"GAMING CONTROL ACTS" means the laws, regulations and
supervision procedures of the Nevada Gaming Control Act and the
New Jersey Casino Control Act, as from time to time amended, or
any successor provision of law, and the regulations promulgated
thereunder and such other laws, regulations and supervision
procedures of the United States federal or foreign government,
any state, province or any city or other political subdivision or
otherwise and whether now or hereafter in existence, or any
officer or official thereof with authority to regulate any gaming
operation (or proposed gaming operation) owned, managed, or
operated by the Trustor or any of its subsidiaries including,
without limitation, the Nevada Gaming Commission, the Nevada
State Gaming Control Board, the City Council of the City of Las
Vegas, and the New Jersey Casino Control Commission.
"GAMING PERMITS" means every license, franchise, permit
or other authorization on the date of the Indenture or thereafter
required to own, lease, operate or otherwise conduct casino
gaming at the Las Vegas Showboat and the Atlantic City Showboat,
including, without limitation, all such licenses granted under
the Gaming Control Acts, the regulations of the Gaming
Authorities and other applicable laws.
"GOVERNMENTAL AUTHORITY" means any agency, authority,
board, bureau. commission, department, office, public entity, or
instrumentality of any nature whatsoever of the United States
federal or foreign government, any state, province or any city or
other political subdivision or otherwise, whether now or
hereafter in existence, or any officer or official thereof,
including, without limitation, any Gaming Authority.
"GUARANTORS" means each of (i) SBOC, OSI and ACSI and
(ii) any other Subsidiary that executes a Subsidiary Guaranty in
accordance with the provisions of the Loan Agreement, and their
respective successors and assigns.
"HAZARDOUS MATERIAL" shall mean any material or
substance that, whether by its nature or use, is now or hereafter
defined as hazardous waste, hazardous substance, pollutant or
contaminant under any Environmental Law, or which is toxic,
explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and which is now
or hereafter regulated under any Environmental Law, or which is
or contains petroleum, gasoline, diesel fuel or another petroleum
hydrocarbon product.
"IBJ" means IBJ Schroder Bank & Trust Company, Trustee
under the Indenture.
"IMPOSITION" means any taxes, assessments, water rates,
sewer rates, maintenance charges, other governmental impositions
and other charges now or hereafter levied or assessed or imposed
against the Trust Estate or any part thereof.
"IMPROVEMENTS" means (1) all the buildings, structures,
facilities and improvements of every nature whatsoever now or
hereafter situated on the Land or any real property encumbered
hereby, and (2) all fixtures, machinery, appliances, goods,
building or other materials, equipment, including without
limitation all gaming equipment and devices, all bowling balls,
bowling shoes, bowling pins, pin-setting and ball-return
machines, ball drilling and polishing machines, racks, cases,
cabinets, trophies, towels, furniture, furnishings, machinery,
equipment and supplies relating to the operation of the bowling
center located on the Land, and all machinery, equipment,
engines, appliances and fixtures for generating or distributing
air, water, heat, electricity, light, fuel or refrigeration, or
for ventilating or sanitary purposes, or for the exclusion of
vermin or insects, or for the removal of dust, refuse or garbage;
all wall-beds, wall-safes, built-in furniture and installations,
shelving, lockers, partitions, doorstops, vaults, motors,
elevators, dumb-waiters, awnings, window shades, venetian blinds,
light fixtures, fire hoses and brackets and boxes for the same,
fire sprinklers, alarm, surveillance and security systems,
computers, drapes, drapery rods and brackets, mirrors, mantels,
screens, linoleum, carpets and carpeting, plumbing, bathtubs,
sinks, basins, pipes, faucets, water closets, laundry equipment,
washers, dryers, ice-boxes and heating units; all kitchen and
restaurant equipment, including but not limited to silverware,
dishes, menus, cooking utensils, stoves, refrigerators, ovens,
ranges, dishwashers, disposals, water heaters, incinerators,
furniture, fixtures and furnishings, communication systems, and
equipment; all cocktail lounge supplies, including but not
limited to bars, glassware, bottles and tables used in connection
with the Land; all chaise lounges, hot tubs, swimming pool
heaters and equipment and all other recreational equipment
(computerized and otherwise), beauty and barber equipment, and
maintenance supplies used in connection with the Land; all
specifically designed
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installations and furnishings, and all furniture, furnishings
and tangible personal property of every nature whatsoever now or
hereafter owned or leased by Trustor or in which Trustor has any
rights or interest and located in or on, or attached to, or used
or intended to be used or which are now or may hereafter be
appropriated for use on or in connection with the operation of
the Land or any real or personal property encumbered hereby
or any other Improvements, or in connection with any
construction being conducted or which may be conducted thereon,
and all extensions, additions, accessions, improvements,
betterments, renewals, substitutions, and replacements to any of
the foregoing, and all of the right, title and interest of
Trustor in and to any such property (subject to any Permitted
Liens), which, to the fullest extent permitted by law, shall be
conclusively deemed fixtures and improvements and a part of the
real property hereby encumbered.
"INDEBTEDNESS" means all indebtedness whatsoever of
Trustor to Beneficiary.
"INDENTURE" means that certain indenture, dated as of
May 18, 1993, by and among IBJ, as Trustee, Trustor, as issuer,
and ACSI, OSI, and SBOC, as guarantors, as such Indenture is
amended or supplemented from time to time in accordance with the
terms thereof.
"INSOLVENT" means with respect to any person or entity,
that such person or entity shall be deemed to be insolvent if he
or it is unable to pay his or its debts as they become due and/or
if the fair market value of his or its assets does not exceed his
or its aggregate liabilities.
"INTANGIBLE COLLATERAL" means, subject to the terms and
conditions of the Indenture, (a) the rights to use all names and
all derivations thereof now or hereafter used by Trustor in
connection with the Land or Improvements, including, without
limitation, the names "Showboat" and "Showboat Casino" in the
State of Nevada, including any variations thereon, together with
the goodwill associated therewith, and all names, logos, and
designs used by Trustor, or in connection with the Land or in
which Trustor has rights, with the exclusive right to use such
names, logos and designs wherever they are now or hereafter used
in connection with the Las Vegas Showboat, and any and all other
trade names, trademarks or service marks, whether or not
registered, now or hereafter used in the operation of the Las
Vegas Showboat, including, without limitation, any interest as a
lessee, licensee or franchisee, and, in each case, together with
the goodwill associated therewith; (b) subject to the absolute
assignment contained herein, the Rents; (c) any and all books,
records, customer lists, concession agreements, supply or service
contracts, licenses, permits, governmental approvals (to the
extent such licenses, permits and approvals may be pledged under
applicable law), signs, goodwill, casino and hotel credit and
charge records, supplier lists, checking accounts, safe deposit
boxes (excluding the contents of such deposit boxes owned by
persons other than Trustor and its subsidiaries), cash,
instruments, chattel papers, documents, unearned premiums,
deposits, refunds, including but not limited to income tax
refunds, prepaid expenses, rebates, tax and insurance escrow and
impound accounts, if any, actions and rights in action, and all
other claims, including without limitation condemnation awards
and insurance proceeds, and all other contract rights and general
intangibles resulting from or used in connection with the
operation of the Trust Estate and in which Trustor now or
hereafter has rights; (d) all of Trustor's documents,
instruments, contract rights, and general intangibles including,
without limitation, all permits, licenses, franchises and
agreements required for the use, occupancy or operation of any
Improvements (to the extent such licenses, permits and approvals
are not prohibited from being pledged under applicable law); and
(e) general intangibles, vacation license resort agreements or
other time share license or right to use agreements, including
without limitation all rents, issues, profits, income and
maintenance fees resulting therefrom, whether any of the
foregoing is now owned or hereafter acquired.
"INTERCREDITOR AGREEMENT" means, collectively, the
Intercreditor Agreements, of even date herewith, entered into
between Beneficiary, IBJ, Trustor, and ACSI.
"INVENTORY" shall have the meaning set forth in section
9-109(4) of the UCC.
"LAND" means the real property situated in the City of
Las Vegas, County of Clark, State of Nevada, more specifically
described in Schedule A attached hereto and incorporated herein
by reference, including any after acquired title thereto.
"LAS VEGAS SHOWBOAT" means the Showboat Casino Hotel in
Las Vegas, Nevada, as more particularly described in the
Prospectus and any other facilities, businesses or enterprises
owned or operated by Trustor on the Land.
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"LAS VEGAS SHOWBOAT EXPANSION" means any addition,
improvement, extension or capital repair to the Las Vegas
Showboat or related or ancillary facilities.
"LEGAL REQUIREMENTS" means all applicable restrictive
covenants, applicable zoning and subdivision ordinances and
building codes, all applicable health and Environmental Laws and
regulations, all applicable gaming laws and regulations, and all
other applicable laws, ordinances, rules, regulations, judicial
decisions, administrative orders, and other requirements of any
Governmental Authority having jurisdiction over Trustor, the
Trust Estate and/or any Affiliate of Trustor, in effect either at
the time of execution of this Deed of Trust or at any time during
the term hereof, including, without limitation, all Environmental
Laws and Gaming Control Acts.
"LIEN" means with respect to any portion of the Trust
Estate, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such portion of the Trust
Estate, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other
title retention agreement, any lease in the nature thereof, any
option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"LOAN AGREEMENT" means that certain Loan and Guaranty
Agreement between Trustor, Beneficiary, ACSI, SBOC and OSI.
"LOAN" means the definition as set forth in the Loan
Agreement.
"LOAN DOCUMENTS" means the Promissory Note, the ACSI
Guaranty, the Loan and Guaranty Agreement and any other Related
Document or any other documents evidencing, guaranteeing or
securing the Obligations of Trustor to Beneficiary under such
document.
"MATERIAL SPACE LEASE" means a Space Lease that
provides for an annual rent in excess of $100,000 or covers at
least ten percent (10%) of the Trust Estate.
"NRS" means the Nevada Revised Statutes as in effect
from time to time.
"OBLIGATIONS" means the payment and performance of each
covenant and agreement of Trustor contained in this Deed of Trust
and the Loan Documents.
"OSI" means Ocean Showboat, Inc., a New Jersey
corporation.
"OSI GUARANTY" means the Guaranty, contained in the
Loan Agreement dated as of the date hereof and made by OSI in
favor of Beneficiary.
"PERMITTED DISPOSITIONS" means the sale, transfer or
other disposition of Collateral not to exceed an aggregate value
of $3,000,000.00 per annum.
"PERMITTED LIENS" means Liens that are permitted in the
Loan Agreement and the Indenture.
"PERSON" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or any governmental agency or
political subdivision thereof.
"PROCEEDS" has the meaning assigned to it under the UCC
and, in any event, shall include but not be limited to (i) any
and all proceeds of any insurance (including, without limitation,
property, casualty and title insurance), indemnity, warranty or
guaranty payable from time to time with respect to any of the
Trust Estate; (ii) any and all proceeds in the form of accounts,
security deposits, tax escrows (if any), down payments (to the
extent the same may be pledged under applicable law),
collections, contract rights, documents, instruments, chattel
paper, liens and security instruments, guaranties or general
intangibles relating in whole or in part to the Las Vegas
Showboat and all rights and remedies of whatever kind or nature
Trustor may hold or acquire for the purpose of securing or
enforcing any obligation due Trustor thereunder; (iii) any and
all payments in any form whatsoever made or due and payable from
time to time in connection with any requisition,
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confiscation, condemnation, seizure or forfeiture of all or any
part of the Trust Estate by any Governmental Authority; (iv)
subject to the absolute assignment contained herein, the Rents or
other benefits arising out of, in connection with or pursuant to
any Space Lease of the Trust Estate; and (v) any and all other
amounts from time to time paid or payable in connection with any
of the Trust Estate; provided, however, that the Trustor is not
authorized to dispose of any of the Trust Estate unless such
disposition is a Permitted Disposition.
"PROMISSORY NOTE" means that certain Revolving Note as
same may be amended pursuant to the Loan Agreement, between
Borrower and Mortgagee as Lender, both of even date herewith, in
the maximum aggregate amount of $25,000,000.00..
"PROSPECTUS" means that certain prospectus, dated as of
May 18, 1993, relating to the offering of the First Mortgage
Bonds, and all supplements, schedules or other attachments
thereto.
"PROTECTIVE ADVANCES" shall have the meaning set forth
in Section 4.2 herein.
"RECEIVER" means, with respect to any Person (including
Trustor), any receiver, trustee, custodian, debtor in possession,
liquidator, sequestrator, administrator, conservator, or other
successor appointed (whether by a court or otherwise) pursuant to
any creditor's exercise of remedies against such Person, or
pursuant to a Bankruptcy of such Person, or for purposes of
reorganization or liquidation, or otherwise for the benefit of
such Person's creditors, or under any similar circumstances, or
otherwise having similar powers over such Person or its property,
whether such Receiver acts on an interim, temporary, or final
basis and whether such appointment applies to all or any
significant portion of such Person's assets or property,
including or not including any of the Trust Estate.
"RELATED DOCUMENTS" means, collectively, the OSI
Guaranty, the ACSI Guaranty, the SBOC Guaranty, the Deeds of
Trust, and any and all pledges, security agreements, guaranties,
financing statements, filings, instruments or other agreements or
assignments executed by the Trustor or the Guarantors in order to
evidence, secure, perfect, notice or guaranty the Loan Documents
and the Promissory Note or any guaranty of the foregoing
obligations.
"RENTS" means all rents, room revenues, income,
receipts, issues, profits, revenues and maintenance fees, room,
food and beverage revenues, license and concession fees, income,
proceeds and other benefits to which Trustor may now or hereafter
be entitled from the Land, the Improvements, the Facility Leases
or Space Leases or any property encumbered hereby or any business
or other activity conducted by Trustor at the Land or the
Improvements.
"SBOC" means Showboat Operating Company, a Nevada
corporation.
"SBOC GUARANTY" means the Subsidiary Guaranty issued by
SBOC and dated as of the date hereof and made by SBOC in favor of
Beneficiary.
"SPACE LEASES" means any and all leases, subleases,
lettings, licenses, concessions, operating agreements, management
agreements, and all other agreements affecting the Trust Estate
that Trustor has entered into, taken by assignment, taken subject
to, or assumed; or has otherwise become bound by, now or in the
future, that give any person or any entity other than Trustee the
right to conduct its business on, or otherwise use, operate or
occupy, all or any portion of the Land or Improvements and any
leases, agreements or arrangements permitting anyone or any
entity other than Trustee to enter upon or use any of the Trust
Estate to extract or remove natural resources of any kind,
together with all amendments, extensions, and renewals of the
foregoing entered into in compliance with this Deed of Trust,
together with all rental, occupancy, service, maintenance or any
other similar agreements pertaining to use or occupation of, or
the rendering of services at the Land, the Improvements or any
part thereof.
"SPACE LESSEE(S)" means any and all tenants, licensees,
or other grantees of the Space Leases and any and all guarantors,
sureties, endorsers or others having primary or secondary
liability with respect to such Space Lease.
"SUBSIDIARY GUARANTIES" means, collectively, the OSI
Guaranty, the ACSI Guaranty, the SBOC Guaranty and any other
guaranties issued pursuant to the Loan Agreement.
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"TANGIBLE COLLATERAL" means all personal property,
goods (other than intangible personal property), equipment,
supplies, building and other materials of every nature whatsoever
and all other tangible personal property constituting a part or
portion of the Las Vegas Showboat and/or used in the operation of
the hotel, casino, restaurants, stores, parking facilities,
bowling alley and all other commercial operations on the Land or
Improvements, including but not limited to communication systems,
visual and electronic surveillance systems and transportation
systems and not constituting a part of the real property subject
to the real property lien of this Deed of Trust and including all
property and materials stored therein in which Trustor has an
interest and all tools, utensils, food and beverage, liquor,
uniforms, linens, housekeeping and maintenance supplies,
vehicles, fuel, advertising and promotional material, blueprints,
surveys, plans and other documents relating to the Land or
Improvements, and all construction materials and all furnishings,
fixtures and equipment, including, but not limited to, all
bowling balls, bowling shoes, bowling pins, pin-setting and ball
return machines, ball drilling and polishing machines, racks,
cases, cabinets, trophies, towels, furniture, furnishings,
machinery, equipment and supplies relating to the operation of
the bowling center located on the Land, to the extent permitted
by all applicable Gaming Control Acts, all gaming equipment and
devices which are or are to be installed and used in connection
with the operation of the Las Vegas Showboat, those items of
furniture, fixtures and equipment which are to be purchased or
leased by Trustor, machinery and any other item of personal
property in which Trustor now or hereafter own or acquire an
interest or right, and which are used or useful in the
construction, operation, use and occupancy of the Las Vegas
Showboat; to the extent permitted by the applicable contract or
applicable law, all gaming and financial equipment, computer
equipment, calculators, adding machines, gaming tables, video
game and slot machines, and any other electronic equipment of
every nature used or located on any part of the Land or
Improvements, and all present and future right, title and
interest of Trustor in and to any casino operator's agreement,
license agreement or sublease agreement used in connection with
the Land or Improvements; excluding therefrom, however, all
Inventory.
"365(H) ELECTION" means Trustor's election to treat a
Facility Lease as terminated under Sec. 365(h) of the Bankruptcy
Code or any similar Bankruptcy Law, or any comparable right
provided under any other Bankruptcy Law, together with all
rights, remedies and privileges related thereto.
"TITLE INSURER" means Nevada Title Company, a Nevada
corporation.
"TRUST ESTATE" means all of the property described in
Granting Clauses (A) through (O) below, inclusive, and each item
of property therein described, provided, however, that such term
shall not include the property described in Granting Clause (P)
below.
"TRUSTEE" means Nevada Title Company, a Nevada
corporation.
"TRUSTOR" means collectively Showboat, Inc., a Nevada
corporation and Showboat Operating Company, a Nevada corporation,
and includes not only the original Trustor hereunder, but also
any successors or assigns of the Trust Estate, or any part
thereof, at any time and from time to time, as the case requires.
"UCC" means the Uniform Commercial Code in effect in
the State of Nevada from time to time, NRS chapters 104 and 104A.
Capitalized terms used in this Deed of Trust which are not
otherwise defined herein shall have the meaning ascribed to such
terms in the Indenture.
W I T N E S S E T H:
IN CONSIDERATION OF TEN DOLLARS AND OTHER GOOD AND VALUABLE
CONSIDERATION; THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY
ACKNOWLEDGED, AND FOR THE PURPOSE OF SECURING an in pari passu
first priority Lien in an aggregate amount of $25,000,000.00 plus
advances, if any, made by the Trustee or Beneficiary to preserve
the Collateral, subject to the terms and conditions set forth in
the Intercreditor Agreement, in favor of Beneficiary (1) the due
and punctual payment of the indebtedness evidenced by the
Promissory Note and Loan Agreement; (2) the performance of each
covenant and agreement of Trustor contained in the Loan Agreement
herein or in the other Loan Documents; (3) the payment of such
additional loans or advances as hereafter may be made to Trustor
or its successors or assigns, when evidenced by a promissory note
or notes reciting that they are secured by this Deed of Trust;
provided, however, that any and all future advances to Trustor
made for the improvement, protection or
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preservation of the Trust Estate, together with interest at the
interest rate on the Promissory Notes, shall be automatically
secured hereby unless such a note or instrument evidencing such
advances specifically recites that it is not intended to be
secured hereby and (4) the payment of all sums expended or
advanced by Beneficiary under or pursuant to the terms hereof or
to protect the security hereof, together with interest thereon
as herein provided, Trustor, in consideration of the premises,
and for the purposes aforesaid, does hereby GRANT, ASSIGN,
BARGAIN, CONVEY, PLEDGE, RELEASE, HYPOTHECATE, WARRANT, AND
TRANSFER UNTO TRUSTEE IN TRUST FOR THE BENEFIT OF BENEFICIARY:
(A) The Land.
(B) TOGETHER WITH the Improvements.
(C) TOGETHER WITH all Appurtenant Rights.
(D) TOGETHER WITH the Tangible Collateral.
(E) TOGETHER WITH the Intangible Collateral.
(F) TOGETHER WITH (i) all the estate, right, title and
interest of Trustor of, in and to all judgments and decrees,
insurance proceeds, awards of damages and settlements hereafter
made resulting from condemnation proceedings or the taking of any
of the property described in Granting Clauses (A), (B), (C), (D)
and (E) hereof or any part thereof under the power of eminent
domain, or for any damage (whether caused by such taking or
otherwise) to the property described in Granting Clauses (A),
(B), (C), (D) and (E) hereof or any part thereof, or to any
Appurtenant Rights thereto, and Beneficiary is hereby authorized
to collect and receive said awards and proceeds and to give
proper receipts and acquittance therefor, and (subject to the
terms hereof) to apply the same toward the payment of the
Indebtedness and other sums secured hereby, notwithstanding the
fact that the amount owing thereon may not then be due and
payable; (ii) all proceeds of any sales or other dispositions of
the property or rights described in Granting Clauses (A), (B),
(C), (D) and (E) hereof or any part thereof whether voluntary or
involuntary, provided, however, that the foregoing shall not be
deemed to permit such sales, transfers, or other disposition
except as specifically permitted herein; and (iii) whether
arising from any voluntary or involuntary disposition of the
property described in Granting Clauses (A), (B), (C), (D) and
(E), all Proceeds, products, replacements, additions,
substitutions, renewals and accessions, remainders, reversions
and after-acquired interest in, of and to such property.
(G) TOGETHER WITH the absolute assignment of any Space
Leases or any part thereof that Trustor has entered into, taken
by assignment, taken subject to, or assumed, or has otherwise
become bound by, now or in the future, together with all of the
following (including all "Cash Collateral" within the meaning of
the Bankruptcy Code) arising from the Space Leases: (a) Rents
(subject, however, to the aforesaid absolute assignment to
Beneficiary and the conditional permission hereinafter given to
Trustor to collect the Rents), (b) all guaranties, letters of
credit, security deposits, collateral, cash deposits, and other
credit enhancement documents, arrangements and other measures
with respect to the Space Leases, (c) all of Trustor's right,
title, and interest under the Space Leases, including the
following: (i) the right to receive and collect the Rents from
the lessee, sublessee or licensee, or their Successor(s), under
any Space Lease(s) and (ii) the right to enforce against any
tenants thereunder and otherwise any and all remedies under the
Space Leases, including Trustor's right to evict from possession
any tenant thereunder or to retain, apply, use, draw upon,
pursue, enforce or realize upon any guaranty of any Space Lease;
to terminate, modify, or amend the Space Leases; to obtain
possession of, use, or occupy, any of the real or personal
property subject to the Space Leases; and to enforce or exercise,
whether at law or in equity or by any other means, all provisions
of the Space Leases and all obligations of the tenants thereunder
based upon (A) any breach by such tenant under the applicable
Space Lease (including any claim that Trustor may have by reason
of a termination, rejection, or disaffirmance of such Space Lease
pursuant to any Bankruptcy Law) and (B) the use and occupancy of
the premises demised, whether or not pursuant to the applicable
Space Lease (including any claim for use and occupancy arising
under landlord-tenant law of the State of Nevada or any
Bankruptcy Law). Permission is hereby given to Trustor, so long
as no Event of Default has occurred and is continuing hereunder,
to collect and use the Rents, as they become due and payable, but
not in advance thereof. Upon the occurrence of an Event of
Default and the expiration of any applicable cure or grace
period, the permission hereby given to Trustor to collect the
Rents shall automatically terminate, but such permission shall be
reinstated upon a cure of such Event of Default. Beneficiary
shall have the right, at any time and from time to time, to
notify any Space Lessee of the rights of Beneficiary as provided
by this section.
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Notwithstanding anything to the contrary contained
herein, the foregoing provisions of this Paragraph (G) shall not
constitute an assignment for purposes of security but shall
constitute an absolute and present assignment of the Rents to
Beneficiary, subject, however, to the conditional license given
to Trustor to collect and use the Rents as hereinabove provided;
and the existence or exercise of such right of Trustor shall not
operate to subordinate this assignment to any subsequent
assignment, in whole or in part, by Trustor.
(H) TOGETHER WITH all of Trustor's right, title and
interest in and to any and all maps, plans, specifications,
surveys, studies, tests, reports, data and drawings relating to
the development of the Land or the Las Vegas Showboat and the
construction of the Improvements, including, without limitation,
all marketing plans, feasibility studies, soils tests, design
contracts and all contracts and agreements of Trustor relating
thereto including, without limitation, architectural, structural,
mechanical and engineering plans and specifications, studies,
data and drawings prepared for or relating to the development of
the Land or the Las Vegas Showboat or the construction,
renovation or restoration of any of the Improvements or the
extraction of minerals, sand, gravel or other valuable substances
from the Land.
(I) TOGETHER WITH, to the extent permitted by
applicable law, all of Trustor's right, title, and interest in
and to any and all licenses, permits, variances, special permits,
franchises, certificates, rulings, certifications, validations,
exemptions, filings, registrations, authorizations, consents,
approvals, waivers, orders, rights and agreements (including
options, option rights and contract rights) now or hereafter
obtained by Trustor from any Governmental Authority having or
claiming jurisdiction over the Land, the FF&E, the Las Vegas
Showboat, or any other element of the Trust Estate or providing
access thereto, or the operation of any business on, at, or from
the Land including, without limitation, any Gaming Permits;
provided, that upon an Event of Default hereunder or under the
Indenture and the expiration of any applicable cure or grace
period, if Beneficiary is not qualified under the Gaming Control
Acts to hold such Gaming Permits, then Beneficiary shall
designate an appropriately qualified third party to which an
assignment of such Gaming Permits can be made in compliance with
the Gaming Control Acts.
(J) TOGETHER WITH all water stock, water permits and
other water rights relating to the Land.
(K) TOGETHER WITH all oil and gas and other mineral
rights, if any, in or pertaining to the Land and all royalty,
leasehold and other rights of Trustor pertaining thereto.
(L) TOGETHER WITH any and all monies and other
property, real or personal, which may from time to time be
subjected to the lien hereof by Trustor or by anyone on its
behalf or with its consent, or which may come into the possession
or be subject to the control of Trustee or Beneficiary pursuant
to this Deed of Trust or any Loan Document, including, without
limitation, any Protective Advances under this Deed of Trust; and
all of Trustor's right, title, and interest in and to all
extensions, improvements, betterments, renewals, substitutes for
and replacements of, and all additions, accessions, and
appurtenances to, any of the foregoing that Trustor may
subsequently acquire or obtain by any means, or construct,
assemble, or otherwise place on any of the Trust Estate, and all
conversions of any of the foregoing; it being the intention of
Trustor that all property hereafter acquired by Trustor and
required by any Loan Document or this Deed of Trust to be subject
to the lien of this Deed of Trust or intended so to be shall
forthwith upon the acquisition thereof by Trustor be subject to
the lien of this Deed of Trust as if such property were now owned
by Trustor and were specifically described in this Deed of Trust
and granted hereby or pursuant hereto, and Trustee and
Beneficiary are hereby authorized, subject to Gaming Control
Acts, to receive any and all such property as and for additional
security for the obligations secured or intended to be secured
hereby. Trustor agrees to take any action as may reasonably be
necessary to evidence and perfect such liens or security
interests, including, without limitation, the execution of any
documents reasonably necessary to evidence and perfect such liens
or security interests.
(M) TOGETHER WITH, to the extent permitted by the Act,
any and all Accounts Receivable, royalties, earnings, income,
proceeds, products, rents, revenues, reversions, remainders,
issues, profits, avails, production payments, and other benefits
directly or indirectly derived or otherwise arising from any of
the foregoing, all of which are hereby assigned to Beneficiary,
who, except as otherwise expressly provided in this Deed of
Trust, is authorized to collect and receive the same, to give
receipts and acquittances therefor and to apply the same to the
Obligations secured hereunder, whether or not then due and
payable.
(N) TOGETHER WITH Proceeds of the foregoing property
described in Granting Clauses (A) through (M).
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(O) TOGETHER WITH (i) Trustor's rights further to
assign, sell, encumber or otherwise transfer or dispose of the
property described in Granting Clauses (A) through (N) inclusive,
above, for debt or otherwise.
(P) EXPRESSLY EXCLUDING, HOWEVER, (i) Inventory; and
(ii) FF&E (to the extent that (a) Trustor is permitted to enter
into a FF&E Financing Agreement for such FF&E under the Indenture
and Loan Agreement and (b) such FF&E Financing Agreement
prohibits Beneficiary from maintaining a security interest in the
FF&E covered thereby); together with the proceeds of the property
described in this Granting Clause (P).
Trustor, for itself and its successors and assigns,
covenants and agrees to and with Trustee that, at the time or
times of the execution of and delivery of these presents or any
instrument of further assurance with respect thereto, Trustor has
good right, full power and lawful authority to assign, grant,
convey, warrant, transfer, bargain or sell its interests in the
Trust Estate in the manner and form as aforesaid, and that the
Trust Estate is free and clear of all liens and encumbrances
whatsoever, except the Existing Encumbrances and Permitted Liens,
and Trustor shall warrant and forever defend the above-bargained
property in the quiet and peaceable possession of Trustee and its
successors and assigns against all and every person or persons
lawfully or otherwise claiming or to claim the whole or any part
thereof, except for Permitted Liens. Trustor agrees that any
greater title to the Trust Estate hereafter acquired by Trustor
during the term hereof shall be automatically subject hereto.
ARTICLE ONE
COVENANTS OF TRUSTOR
The Beneficiary has been induced to make the Loan on the
basis of the following material covenants, all agreed to by
Trustor:
1.1 Performance of Loan Documents. Trustor shall perform,
observe and comply with each and every provision hereof, and with
each and every provision contained in the Loan Documents and
shall promptly pay to Beneficiary, when payment shall become due,
the principal with interest thereon and all other sums required
to be paid by Trustor under this Deed of Trust and the Loan
Documents.
1.2 General Representations, Covenants and Warranties.
Trustor or its counsel represents, covenants and warrants that:
(a) Showboat, Inc. has good and marketable title to an
indefeasible fee estate in the Land, free and clear of all
encumbrances except Permitted Liens, and that it has the right to
hold, occupy and enjoy its interest in the Trust Estate, and has
good right, full power and lawful authority to subject the Trust
Estate to the Lien of this Deed of Trust and pledge the same as
provided herein and, subject to the Gaming Control Acts,
Beneficiary may at all times peaceably and quietly enter upon,
hold, occupy and enjoy the entire Trust Estate in accordance with
the terms hereof; (b) neither Trustor nor any Affiliate of
Trustor is Insolvent and no bankruptcy or insolvency proceedings
are pending or contemplated by or, to the best of Trustor's
knowledge, against Trustor or any Affiliate of Trustor; (c) all
costs arising from construction of any Improvements, the
performance of any labor and the purchase of all Tangible
Collateral and Improvements have been or shall be paid when due
unless same are being contested in good faith and adequately
bonded; (d) the Land has frontage on, and direct access for
ingress and egress to dedicated street(s); (e) Trustor shall at
all times conduct and operate the Trust Estate in a manner so as
not to lose the right to conduct gaming activities at the Las
Vegas Showboat; (f) no material part of the Trust Estate has been
damaged, destroyed, condemned or abandoned; and (g) no part of
the Trust Estate is the subject of condemnation proceedings and
Trustor has no knowledge of any contemplated or pending
condemnation proceeding with respect to any portion of the Trust
Estate.
1.3 Compliance with Legal Requirements. Trustor shall
promptly, fully, and faithfully comply with all Legal
Requirements and shall cause all portions of the Trust Estate and
its use and occupancy to fully comply with Legal Requirements at
all times, whether or not such compliance requires work or
remedial measures that are ordinary or extraordinary, foreseen or
unforeseen, structural or nonstructural, or that interfere with
the use or enjoyment of the Trust Estate.
1.4 Taxes. Trustor shall pay all Impositions as they become
due and payable and shall deliver to Beneficiary promptly upon
Beneficiary's request, evidence satisfactory to Beneficiary that
the Impositions have been paid or are not delinquent. Trustor
shall not suffer to exist, permit or initiate the joint
assessment of the real and personal property, or any
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other procedure whereby the lien of the real property taxes and
the lien of the personal property taxes shall be assessed, levied
or charged to the Land as a single lien, except as may be
required by law. In the event of the passage of any law deducting
from the value of real property for the purposes of taxation any
lien thereon, or changing in any way the taxation of deeds of
trust or obligations secured thereby for state or local purposes,
or the manner of collecting such taxes and imposing a tax,
either directly or indirectly, on this Deed of Trust or the
First Mortgage Bonds, Trustor shall pay all such taxes.
1.5 Insurance.
(a) HAZARD INSURANCE REQUIREMENTS AND PROCEEDS.
(1) Hazard Insurance. Trustor shall at its sole
expense obtain for, deliver to, assign and maintain for the
benefit of Beneficiary, during the term of this Deed of Trust,
insurance policies insuring the Trust Estate and liability
insurance policies, all in accordance with the requirements of
Section 4.17 of the Indenture and Par. 5.03 of the Loan
Agreement. Trustor shall pay promptly when due any premiums
on such insurance policies and on any renewals thereof. The form
of such policies and the companies issuing them shall be
reasonably acceptable to Beneficiary. All such policies and
renewals thereof shall be held by Beneficiary and shall contain a
noncontributory standard mortgagee or beneficiary endorsement
(Form 438 BFU or its equivalent) making losses payable to
Beneficiary as its interest may appear and shall name the
Beneficiary as an additional insured. At least thirty (30) days
prior to the expiration date of all such policies, renewals
thereof satisfactory to Beneficiary shall be delivered to
Beneficiary together with receipts evidencing the payment of all
premiums on such insurance policies and renewals. In the event
of loss, Trustor shall give immediate written notice to
Beneficiary and Beneficiary may make proof of loss if not made
promptly by Trustor. In the event of the foreclosure of this Deed
of Trust or any other transfer of title to the Trust Estate in
extinguishment of the indebtedness and other sums secured hereby,
all right, title and interest of Beneficiary in and to all
insurance policies and renewals thereof then in force shall pass
to the purchaser or grantee, upon delivery of written notice to
Beneficiary within thirty (30) days following the occurrence of
such loss.
(2) Payment of Proceeds to Beneficiary. Pursuant
to its rights granted hereunder in all proceeds from any
insurance policies, Beneficiary is hereby authorized and
empowered at its option to adjust or compromise any loss under
any insurance policies on the Trust Estate and to collect and
receive the proceeds from any such policy or policies. Each
insurance company is hereby authorized and directed to make
payment for all such losses directly to Beneficiary alone and not
to the Trustor and Beneficiary jointly. After deducting from such
insurance proceeds any reasonable expenses incurred by
Beneficiary in the collection or handling such funds, including
reasonable attorneys' fees, Beneficiary shall apply such
insurance proceeds as follows:
(A) Trustor shall notify Beneficiary, within
one (1) year following the event giving rise to a payment
under an insurance policy ("Loss"), to inform Beneficiary
whether or not Trustor intends to restore the Improvements
or any portion thereof and provide an Officers' Certificate
(as defined in the Indenture) certifying that such
restoration is allowed under Section 4.10(d) of the
Indenture. If Trustor notifies Beneficiary that it intends
to restore the Improvements or any portion thereof, and such
restoration is allowed under the Indenture, then Trustor
shall have the right to use the balance of such award or
settlement in accordance with the provisions of Section 1
.5(a)(3) hereof to reimburse Trustor or pay for the costs of
such rebuilding, reconstruction or repair by Trustor
pursuant to this Section 1.5(a)(2)(A). Any proceeds
allocable to Improvements which Trustor has elected not to
restore shall be applied in accordance with Section 4.5 of
the Indenture. Trustor shall not invest or use any
insurance proceeds from the Loss of the Improvements to
purchase or invest in real estate, real property, or
accessions or improvements to real estate or real property,
except for the restoration of the Improvements in accordance
with this Section 1.5(a).
(B) If Trustor fails to notify Beneficiary
that it intends to restore the Improvements within said one
(1) year period as provided in Section 1.5(a)(2)(A) hereof,
or Trustor has elected not to restore the Improvements or
any portion thereof, or a Purchase Offer is required under
Section 4.10 of the Indenture, or in the event there remain
any insurance proceeds following such reconstruction or
repair, then in any such event, subject to the Intercreditor
Agreement, such award or settlement or amounts then
remaining shall be applied in accordance with Section 4.10
of the Indenture.
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(3) Restoration. Provided that (A) the Indenture
does not require a repurchase of the First Deed of Trust Notes
and the maturity of the First Deed of Trust Notes has not been
accelerated under the Indenture at the time of a Loss, or at the
time Trustor seeks the benefit of this paragraph, and (B)
Beneficiary reasonably determines that Trustor has the ability
(including financial ability) to restore the Improvements or any
portion thereof to a condition substantially the same as prior to
the Loss, and pay for the complete costs of such restoration
(taking into account available insurance proceeds), Beneficiary
agrees that Trustor shall have the right to require Beneficiary
to apply the insurance proceeds received by Beneficiary under the
provisions of Section 1.5(a)(2) on account of such Loss for the
purpose of the restoration of the Trust Estate in the following
manner and upon satisfaction of the following conditions:
If the insurance proceeds resulting from the
Loss of the Improvements or any portion thereof are made
available to Trustor under the provisions of this Section
l.5(a)(3), then upon the occurrence of a Loss, Trustor
shall, following its election to restore the Improvements
under Section 1.5(a)(2)(A) hereof, commence the restoration
of the Improvements to as good and substantially the same
condition as such property was prior to such Loss and upon
commencement thereof shall diligently prosecute the same to
completion.
(A) Subject to the terms and conditions of
the Intercreditor Agreement, such insurance proceeds shall
be paid over to Beneficiary or its designee, as depository
for the disbursement thereof as provided herein. In the
event such proceeds are to be used to restore the
Improvements, such proceeds shall be invested in Investment
Grade Securities, as defined in the Indenture, the interest
from which shall inure to the benefit of Trustor. Pending
disbursement of such proceeds, Trustor hereby grants to
Beneficiary a security interest in such Investment Grade
Securities and pledges such Investment Grade Securities to
Beneficiary as further security for the indebtedness secured
hereby. If an Event of Default occurs (and any applicable
cure or grace period has expired) prior to the completion of
the restoration, Beneficiary at its option shall, during the
continuance of such Event of Default, have the right to
either apply all or any portion of such Investment Grade
Securities toward restoration of the Trust Estate or toward
any amounts secured hereby.
(B) The manner of disbursement by the
depository of such insurance proceeds shall be by written
request of Trustor, not more than once per week, and only if
(l) said depository has not received any notice from
Beneficiary or Trustee that an Event of Default has occurred
hereunder or under the Indenture or Loan Agreement and (2)
the depository shall have received a commitment from Title
Insurer, attached to the Disbursement Request, evidencing
the Title Insurer's unconditional commitment to issue an
endorsement in the form of a 122 CLTA Endorsement insuring
the continuing priority of the lien of this Deed of Trust as
security for each advance of funds from the insurance
proceeds. Trustor covenants and agrees (a) to comply with
all material covenants and conditions set forth in the
Indenture and which are incorporated herein by reference to
the extent such provisions are applicable to the restoration
of the Improvements, or any portion thereof and (b) to cause
each Disbursement Request to be true, correct and complete.
(C) If IBJ and Beneficiary reasonably
determine that the amount of the insurance proceeds
available for the restoration work to be completed under
Section 1.5(a)(2)(A) hereunder shall be insufficient for the
performance and completion of such work, Trustor covenants
and agrees, as a condition precedent to any disbursement of
insurance proceeds to deliver to Beneficiary an amount,
which, together with the insurance proceeds, shall be
sufficient to pay the total amount necessary or reasonably
required to restore the Trust Estate as herein provided, and
which amounts shall be disbursed in accordance with
subsection (iii) of this section.
(D) Without limiting the generality of the
foregoing provisions, the restoration work and the
performance thereof shall be subject to and performed in
accordance with each of the following provisions: (1) such
work and the performance thereof shall be conducted in a
first-class, workmanlike manner, shall not permanently
weaken nor impair the structural strength of any existing
Improvements, nor change the character thereof or the
purpose for which the same may be used, nor lessen the value
of the Trust Estate; (2) before the commencement of any such
work, the plans and specifications (the "Plans") therefor
shall be filed with and approved by all Governmental
Authorities having jurisdiction and all necessary licenses,
permits and/or authorizations from all Governmental
Authorities shall have been obtained, and all such work
shall be done subject to and in accordance with all
applicable Legal Requirements; (3) before commencing any
such work, Trustor shall have delivered to Beneficiary the
Plans and a line item budget setting forth with reasonable
particularity the cost of completing such work together with
a certificate in a form, and from a licensed architect,
reasonably satisfactory to Beneficiary certifying (a) that
the execution of the work described in the Plans will
substantially restore the Trust Estate and
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(b) that the budget constitutes a reasonable appreciation of
the cost of restoring the Trust Estate in accordance with
the Plans; and (4) before commencing any such work, should
Beneficiary so request, Trustor shall, at Trustor's expense,
give to Beneficiary surety company labor and material,
payment and performance bonds in a company or companies
and in form reasonably satisfactory to Beneficiary (or
other security guaranteeing performance satisfactory to
Beneficiary) in an aggregate amount equal to one hundred
twenty percent (120%) of the estimated cost of such work,
guaranteeing the completion of such work, free and clear
of all liens, encumbrances, claims, chattel mortgages,
conditional bills of sale and security agreements;
provided, however, that such bonds or other security
shall not be required from contractors which, in
Beneficiary's reasonable judgment do not need to post such
bonds or provide such security. Notwithstanding the
foregoing, to the extent that the restoration work is
contracted for under fixed-price contracts, such surety
company labor and material payment and performance bonds
(or other security guaranteeing performance satisfactory
to Beneficiary) may be equal to one hundred ten percent
(110%) of the amount of such fixed price contracts.
(b) Insurance Escrow. In order to secure the
performance and discharge of the Trustor's obligations under this
Section 1.5, but not in lieu of such obligations, Trustor shall,
upon a failure to pay or provide such insurance at the times and
in the manner required herein, pay over to Beneficiary an amount
equal to one-twelfth (1/12th) of the next maturing annual
insurance premiums for each month that has elapsed since the last
date to which such premiums were paid; and Trustor shall, in
addition, pay over to Beneficiary, on the first day of each
month, sufficient funds (as estimated from time to time by
Beneficiary in its sole discretion) to permit Beneficiary to pay
said premiums when due. Such deposits shall not be, nor be deemed
to be, trust funds but may be commingled with the general funds
of Beneficiary, and no interest shall be payable in respect
thereof except as required by law. Upon demand by Beneficiary,
Trustor shall deliver to Beneficiary such additional monies as
are necessary to make up any deficiencies in the amounts
necessary to enable Beneficiary to pay such premiums when due.
(c) Compliance with Insurance Policies. Trustor
shall not violate or permit to be violated any of the conditions
or provisions of any policy of insurance required by the Loan
Agreement, Indenture, or this Deed of Trust and Trustor shall so
perform and satisfy the requirements of the companies writing
such policies that, at all times, companies of good standing
reasonably satisfactory to Beneficiary shall be willing to write
and/or continue such insurance. Trustor further covenants to
promptly send to Beneficiary all notices relating to any
violation of such policies or otherwise affecting Trustor's
insurance coverage or ability to obtain and maintain such
insurance coverage.
1.6 Condemnation. Pursuant to its rights in condemnation
awards and proceeds, IBJ and Beneficiary shall be entitled to the
receipt of all compensation awards, damages, claims, rights of
action and proceeds of, or on account of, any damage or taking
through condemnation and is hereby authorized, at its option, to
commence, appear in and prosecute in its own or Trustor's names
any action or proceeding relating to any condemnation and to
settle or compromise any claim in connection therewith, and
Trustor hereby appoints Beneficiary as their attorney-in-fact to
take any action in Trustor's names pursuant to Beneficiary's
rights hereunder. Immediately upon obtaining knowledge of the
institution of any proceedings for the condemnation of the Trust
Estate or any portion thereof, Trustor shall notify Trustee and
Beneficiary of the pendency of such proceedings. Trustor from
time to time shall execute and deliver to Beneficiary all
instruments requested by it to permit such participation
provided, however, that such instruments shall be deemed as
supplemental to the foregoing grant of permission to Trustee and
Beneficiary, and unless otherwise required, the foregoing
permission shall, without more, be deemed sufficient to permit
Trustee and/or Beneficiary to participate in such proceedings on
behalf of Trustor. All such compensation awards, damages, claims,
rights of action and proceeds, and any other payments or relief,
and the right thereto, are included in the Trust Estate, and
Beneficiary, after deducting therefrom all its expenses,
including reasonable attorneys fees, shall apply such proceeds as
follows:
(a) In the event that any Land or Improvements are
condemned (whether by one or successive condemnation
proceedings), proceeds of such condemnation shall be applied in
accordance with the provisions of Section 4.10 of the Indenture.
(b) If such condemnation affects Improvements or any
Land upon which Improvements are located (other than a
condemnation of all of the Trust Estate (discussed in Section
1.6(c) hereinbelow), Trustor shall notify Beneficiary within one
(1) year following the conclusion of such condemnation proceeding
whether or not Trustor intends to (i) restore the Improvements or
replace the Improvements with substantially similar improvements,
(ii) replace the Improvements with other improvements which are
not substantially similar to the Improvements lost or damaged
through condemnation, or (iii) not restore the Improvements. In
the event that Trustor makes an election pursuant to 1.6(b)(i) or
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(ii) hereinabove, Trustor shall cause such restoration to be
completed substantially in accordance with the provisions of
Section 1.5(a)(3) hereof. In the event Trustor makes an election
pursuant to l.6(b)(ii) above, then, in addition to any other
obligations of Trustor hereunder, Trustor shall deliver to
Beneficiary an MAI appraisal performed by an MAI appraiser
selected by Trustor and reasonably satisfactory to IBJ and
Beneficiary showing that the value of the Trust Estate upon
completion of such restoration shall be in an amount not less
than 100% of the indebtedness secured by this Deed of Trust
(calculated as if Trustor had been entitled to, and had drawn
down the entire undrawn amount of any further advances Trustor
may be entitled to receive from Beneficiary) and any indebtedness
secured by a Permitted Lien which is secured on a pari passu
basis with the lien hereof. In the event that there shall remain
any balance of such award after the payment of settlement costs
and the payment of costs of demolition, repair, restoration and
replacement under 1.6(b)(i) or (ii) above, any balance shall be
retained by Trustor.
(c) In the event that (i) the Improvements are not so
rebuilt, reconstructed or substituted with other improvements, or
repaired in accordance with Section 1.6(b) hereof, (ii) Trustor
fails to notify Beneficiary within said one (1) year period as
provided in Section 1.6(b) hereof or elects under 1 .6(b)(iii)
hereof not to restore, repair, replace or substitute such
Improvements or (iii) all or substantially all of the Trust
Estate is condemned, then such award or settlement shall be
applied in accordance with the provisions of Section 4.10 of the
Indenture.
1.7 Care of Trust Estate.
(a) Trustor shall preserve and maintain the Trust
Estate in good condition and repair. Trustor shall not permit,
commit or suffer to exist any waste, impairment or deterioration
of the Trust Estate or of any part thereof that in any manner
materially impairs Beneficiary's security hereunder and shall not
take any action which will increase the risk of fire or other
hazard to the Trust Estate or to any part thereof.
(b) Except for Permitted Dispositions, no part of the
Improvements shall be removed, demolished or materially altered,
without the prior written consent of Beneficiary, which consent
shall not be unreasonably withheld. Trustor shall have the right,
without such consent, to remove and dispose of free from the lien
of this Deed of Trust any part of the Improvements as from time
to time may become worn out or obsolete, provided that either (i)
such removal or disposition does not materially adversely affect
the value of the Trust Estate or (ii) prior to or promptly
following such removal, any such property shall be replaced with
other property of substantially equal utility and of a value at
least substantially equal to that of the replaced property when
first acquired and free from any security interest of any other
person (subject to Permitted Liens), and by such removal and
replacement Trustor shall be deemed to have subjected such
replacement property to the lien of this Deed of Trust.
1.8 Environmental Laws.
(a) Trustor shall comply with all Environmental Laws.
If Trustor fails to do so, then Beneficiary may cause the Trust
Estate to so comply and Trustor shall indemnify Beneficiary with
respect to any expenditures that Beneficiary reasonably incurs in
doing so. This shall not limit any other rights or remedies
available to Beneficiary.
(b) Trustor shall have 90 days to cure any lien
imposed on any portion of the Trust Estate pursuant to any
Environmental Laws or such greater period of time as permitted by
the Governmental Authority which has imposed the lien.
(c) Trustor shall notify Beneficiary immediately of
Trustor's discovery of (i) any contamination of any portion of
the Trust Estate which may require remediation; or (ii) any past
or present violation of any Environmental Law on any portion of
the Trust Estate.
(d) Turstor will defend, indemnify, and hold harmless
Beneficiary, its employees, agents, officers, and directors, from
and against any and all claims, demands, penalties, causes of
action, fines, liabilities, settlements, damages, costs, or
expenses of whatever kind or nature, known or unknown, foreseen
or unforeseen, contingent or otherwise (including, without
limitation, counsel and consultant fees and expenses,
investigation and laboratory fees and expenses, court costs, and
litigation expenses) arising out of, or in any way related to,
(i) any breach by the Trustor of any of the provisions set forth
above, (ii) the presence, disposal, spillage, discharge,
emission, leakage, release, or threatened release of any
Hazardous Material which is at, in, on, under, about, from or
affecting the Trust Estate, including, without limitation, any
damage or injury resulting from any such Hazardous Material to or
affecting the Trust Estate or the soil, water, air, vegetation,
buildings,
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personal property, persons or animals located on the
Trust Estate or on any other property or otherwise, (iii) any
personal injury (including wrongful death) or property damage
(real or personal) arising out of or related to any such
Hazardous Material, (iv) any lawsuit brought or threatened,
settlement reached, or order or directive of or by any
governmental authority relating to such Hazardous Material, or
(v) any violation of any Environmental Law.
1.9 Leases.
(a) Trustor represents and warrants that:
(i) Trustor has delivered to Beneficiary true,
correct and complete copies of all Material Space Leases,
including all amendments and modifications, written or oral
existing as of the Issue date;
(ii) Trustor has not executed or entered into any
modifications or amendments of the Material Space Leases, either
orally or in writing, other than written amendments that have
been disclosed to Beneficiary in writing;
(iii) no default now exists under any Space
Lease;
(iv) no event has occurred that, with the giving
of notice or the passage of time or both, would constitute such a
default or would entitle Trustor or any other party under such
Space Lease to cancel the same or otherwise avoid its
obligations;
(v) Trustor has not accepted prepayments of
installments of Rent under any Space Leases, except for that
certain Lease Agreement among SBOC and Mordechai Yerushalamin
dated July 8, 1992, more than one month in advance of the date
when the same are due, except for security deposits not in excess
of one month's Rent;
(vi) except for the Existing Encumbrances and
this assignment Trustor has not executed any assignment or pledge
of any of the Existing Encumbrances, Space Leases, the Rents, or
of Trustor's right, title and interest in the same; and
(vii) this Deed of Trust conforms and
complies with all Space Leases, does not constitute a violation
or default under any Space Lease, and is and shall at all times
constitute a valid lien (subject only to Permitted Liens) on
Trustor's interests in the Space Leases.
(b) Trustor shall not enter into any new Space Leases
or any modifications or amendments of existing Space Leases in
the future other than written, bona fide amendments or
modifications entered into in arms-length transactions.
1.10 Further Encumbrance, Sale or Other Disposition of
Collateral.
(a) Trustor covenants that at all times prior to the
discharge of the Promissory Note or Loan Documents, except for
Permitted Liens and Permitted Dispositions, Trustor shall not,
without the consent of Beneficiary, make nor suffer to exist, nor
enter into any agreement for, any sale, assignment, exchange,
mortgage, transfer, Lien, hypothecation or encumbrance of all or
any part of the Trust Estate, including, without limitation, the
Rents. As used herein, "transfer" includes the actual transfer or
other disposition, whether voluntary or involuntary, by law, or
otherwise, except those transfers specifically permitted herein,
provided, however, that "transfer" shall not include the granting
of utility or other beneficial easements with respect to the
Trust Estate which have been granted by Trustor and are
reasonably necessary to the construction, maintenance or
operation of the Las Vegas Showboat.
(b) Any Permitted Lien described in the definition of
"Permitted Liens" set forth in Section 1.01 of the Indenture and
1 of the Loan Agreement which is junior to the lien of the Loan
Documents (a "Subordinate Deed of Trust") shall be permitted
hereunder so long as there shall have been delivered to
Beneficiary, not less than thirty (30) days prior to the date
thereof, a copy thereof which shall contain express covenants in
form and substance reasonably satisfactory to Beneficiary to the
effect that: (i) the Subordinate Deed of Trust is in all respects
subject and subordinate to this Deed of Trust; (ii) if any action
or proceeding shall be brought to foreclose the Subordinate Deed
of Trust (regardless of whether
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the same is a judicial proceeding or pursuant to a power of sale
contained therein), no tenant of any portion of the Trust Estate
shall be named as a party defendant nor shall any action be taken
with respect to the Trust Estate which would terminate any
occupancy or tenancy of the Trust Estate, or any portion thereof,
without the consent of Beneficiary; (iii) any Rents, if collected
through a receiver or by the holder of the Subordinate Deed
of Trust, shall be applied first to the obligations secured by
this Deed of Trust, including principal and interest due and
owing on or to become due and owing on the First Mortgage Bonds,
and then to the payment of maintenance expenses, operating
charges, taxes, assessments, and disbursements incurred in
connection with the ownership, operation, and maintenance of
the Trust Estate; and (iv) if any action or proceeding shall
be brought to foreclose the Subordinate Deed of Trust, prompt
notice of the commencement thereof shall be given to Beneficiary.
(c) Trustor agrees that in the event the ownership of
the Trust Estate or any part thereof becomes vested in a person
other than Trustor, Beneficiary may, without notice to Trustor,
deal in any way with such successor or successors in interest
with reference to this Deed of Trust, the First Mortgage Bonds,
the Promissory Note, and other Obligations hereby secured without
in any way vitiating or discharging Trustor's or any Guarantor's,
surety's or endorser's liability hereunder or upon the
obligations hereby secured. No sale of the Trust Estate and no
forbearance to any person with respect to this Deed of Trust and
no extension to any person of the time for payment of the First
Mortgage Bonds, and other sums hereby secured given by
Beneficiary shall operate to release, discharge, modify, change
or affect the original liability of Trustor, or such Guarantor,
surety or endorser either in whole or in part.
(d) This Deed of Trust may be subordinated to the
liens of any FF&E Financing Agreements (as hereinafter defined in
this Section 1.10(d)) and any future or further advances made
thereunder and to any modifications, renewals or extensions
thereof to which the lien of this Deed of Trust attaches. Trustor
covenants and agrees to comply with all of the terms and
conditions set forth in any FF&E Financing Agreement. If Trustor
shall fail to make any payment of principal of or pursuant to any
FF&E Financing Agreement on its part to be performed or observed,
except where Trustor is contesting such payment in good faith,
then Beneficiary may make such payment of the principal of or
interest on the sums secured by such security interest or may
make any payment in order to perform or observe any other term,
covenant, condition or agreement of any FF&E Financing Agreement
on Trustor's part to be performed or observed and any and all
sums so expended by Beneficiary or Trustee shall be secured by
this Deed of Trust and shall be repaid by Trustor upon demand,
together with interest thereon at the interest rate on the First
Mortgage Bonds from the date of advance. In furtherance of such
subordination, Beneficiary shall execute, acknowledge and deliver
to Trustor, at Trustor's expense, any and all such evidence and
document the subordination of this Deed of Trust in accordance
with the foregoing provisions of this Section 1.10(d). As used
herein, "FF&E Financing Agreement" shall mean any financing (i)
as to which the lender holds a security interest in only the
assets purchased by such financing for the payment of principal
and interest, (ii) which is permitted by the Indenture to be
incurred and (iii) the proceeds of which are used to acquire or
lease the FF&E subject to such security interest.
1.11 Partial Releases of Trust Estate. Trustor may from
time to time (i) transfer a portion of the Trust Estate
(including any temporary taking) to any person legally empowered
to exercise the power of eminent domain, (ii) make a Permitted
Disposition or (iii) grant utility and other easements reasonably
necessary for the construction and operation of the Las Vegas
Showboat, which grant or transfer is for the benefit of the Trust
Estate. In each such case, Beneficiary shall execute and deliver
any instruments necessary or appropriate to effectuate or confirm
any such transfer or grant, free from the lien of this Deed of
Trust, provided. however, that Beneficiary shall execute a lien
release or subordination agreement, as appropriate, for matters
described in clauses (i) and (iii) above only if Beneficiary and
Trustee shall have received the following:
(a) A written request of Trustor, dated as of the date
of such transfer, grant or release and signed by an authorized
officer of Trustor, requesting Beneficiary and Trustee to execute
one or more described instruments, and certifying that (i) no
Event of Default hereunder, and no event which with notice or
lapse of time or both would constitute such Event of Default, has
occurred and is continuing and that the conditions of this
Section 1.11 have been fulfilled, (ii) the transfer, grant or
release is not materially adverse to the proper conduct of the
business of Trustor on the Land, (iii) in the case of a transfer
of property whose value is greater than $1,000,000 to a person
legally empowered to exercise the power of eminent domain, the
consideration being paid for the portion of the Trust Estate
being transferred, and that such consideration is not less than
the fair market value of such portion, and in the case of a grant
or release of easements or other rights, the consideration, if
any, being paid for such grant or release, (iv) in the case of a
transfer to a person legally empowered to exercise the power of
eminent domain, that such transfer is being made in anticipation
that such portion would
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otherwise be taken under the power of eminent domain, and (v)
that such transfer, grant or release does not materially impair
the use of the Trust Estate for the purposes for which it is
then held by Trustor;
(b) A counterpart of the instrument pursuant to which
such transfer, grant or release is to be made, and each
instrument which Beneficiary or Trustee is requested to execute
in order to effectuate or confirm such transfer, grant or
release;
(c) In the case of a transfer to a person legally
empowered to exercise the power of eminent domain, which transfer
involves property whose value is greater than $6,000,000, an
opinion of counsel to Trustor to the effect that the assignee or
grantee of the portion of the Trust Estate being transferred is
legally empowered to take such portion under the power of eminent
domain; and
(d) Such other instruments, certificates (including
evidence of authority) and legal opinions as Beneficiary or
Trustee may reasonably request.
Any consideration received for a transfer to any person
empowered to exercise the right of eminent domain shall be
subject to Section 1.6 hereof.
1.12 Future Advances. All funds advanced in the reasonable
exercise of Beneficiary's judgment that the same are needed to
protect its security hereunder are deemed to be obligatory
advances and are to be added to the total indebtedness secured by
this Deed of Trust and such indebtedness shall be increased
accordingly. All sums so advanced shall be secured by this Deed
of Trust with the same priority of Lien as the security for the
Obligations secured hereunder.
1.13 Further Assurances.
(a) At its sole cost and without expense to Trustee or
Beneficiary, Trustor shall do, execute, acknowledge and deliver
any and all such further acts, deeds, conveyances, notices,
requests for notices, financing statements, continuation
statements, certificates, assignments, notices of assignments,
agreements, instruments and further assurances, and shall mark
any chattel paper, deliver any chattel paper or instruments to
Beneficiary and take any other actions that are reasonably
necessary, prudent, or requested by Beneficiary or Trustee to
perfect or continue the perfection and first priority in pari
passu of Beneficiary's security interest in the Trust Estate, to
protect the Collateral against the rights, claims, or interests
of third persons other than holders of Permitted Liens or to
effect the purposes of this Deed of Trust, including the security
agreement and the absolute assignment of Rents contained herein,
or for the filing. registering or recording thereof.
(b) Trustor shall forthwith upon the execution and
delivery of this Deed of Trust, and thereafter from time to time,
cause this Deed of Trust and each instrument of further assurance
to be filed, indexed, registered, recorded, given or delivered in
such manner and in such places as may be required by any present
or future law in order to publish notice of and fully to protect
the lien hereof upon, and the title of Trustee and/or Beneficiary
to, the Trust Estate.
1.14 Security Agreement and Financing Statements. Trustor
(as debtor) hereby grants to Beneficiary (as creditor and secured
party) a present and future security interest in all Tangible
Collateral, Intangible Collateral, FF&E (to the extent
Beneficiary is permitted, in each applicable FF&E Financing
Agreement, to maintain a security interest therein).
Improvements, all other personal property now or hereafter owned
or leased by Trustor or in which Trustor has or will have any
interest, to the extent that such property constitutes a part of
the Trust Estate (whether or not such items are stored on the
premises or elsewhere). Proceeds of the foregoing comprising a
portion of the Trust Estate and all proceeds of insurance
policies and consideration awards arising therefrom and all
proceeds, products, substitutions, and accessions therefor and
thereto, subject to Beneficiary's rights to treat such property
as real property as herein provided (collectively, the "Personal
Property"). Trustor shall execute any and all documents and
writings. including without limitation financing statements
pursuant to the UCC. as may be reasonably necessary or prudent to
preserve and maintain the priority of the security interest
granted hereby on property which may be deemed subject to the
foregoing security agreement or as Beneficiary may reasonably
request, and shall pay to Beneficiary on demand any reasonable
expenses incurred by Beneficiary in connection with the
preparation, execution and filing of any such documents. Trustor
hereby authorizes and empowers Beneficiary to execute and file,
on Trustor's behalf, all financing statements and refiling and
continuations thereof as Beneficiary deems reasonably necessary
or advisable to create, preserve and protect said security
interest. This Deed of Trust constitutes both a real property
deed of trust and a "security agreement," within the meaning of
the UCC, and the Trust Estate includes both
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real and personal property and all other rights and
interests, whether tangible or intangible in nature, of Trustor
in the Trust Estate. Trustor by executing and delivering this
Deed of Trust has granted to Beneficiary, as security of the
Obligations, a security interest in the Trust Estate.
(a) FIXTURE FILING. Without in any way limiting the
generality of the immediately preceding paragraph or of the
definition of the Trust Estate, this Deed of Trust constitutes a
fixture filing under Section 9-402 of the UCC (NRS 104.9402). For
such purposes, (i) the "debtor" is Trustor and its address is the
address given for it in the initial paragraph of this Deed of
Trust; (ii) the "secured party" is the Beneficiary and its
address for the purpose of obtaining information is the address
given for it in the initial paragraph of this Deed of Trust;
(iii) the real estate to which the fixtures are or are to become
attached is Trustor's interest in the land; and (iv) the record
owner of such real estate is Showboat, Inc.
(b) REMEDIES. This Deed of Trust shall be deemed a
security agreement as defined in the UCC and the remedies for any
violation of the covenants, terms and conditions of the
agreements herein contained shall include any or all of (i) those
prescribed herein, and (ii) those available under applicable law,
and (iii) those available under the UCC, all at Beneficiary's
sole election. In addition, a photographic or other reproduction
of this Deed of Trust shall be sufficient as a financing
statement for filing wherever filing may be necessary to perfect
or continue the security interest granted herein.
(c) DEROGATION OF REAL PROPERTY. It is the intention
of the parties that the filing of a financing statement in the
records normally having to do with personal property shall never
be construed as in anyway derogating from or impairing the
express declaration and intention of the parties hereto as
hereinabove stated that everything used in connection with the
production of income from the Trust Estate and/or adapted for use
therein and/or which is described or reflected in this Deed of
Trust is, and at all times and for all purposes and in all
proceedings both legal or equitable, shall be regarded as part of
the real property encumbered by this Deed of Trust irrespective
of whether (i) any such item is physically attached to the
Improvements, (ii) serial numbers are used for the better
identification of certain equipment items capable of being thus
identified in a recital contained herein or in any list filed
with Beneficiary, or (iii) any such item is referred to or
reflected in any such financing statement so filed at any time.
It is the intention of the parties that the mention in any such
financing statement of (1) rights in or to the proceeds of any
fire and/or hazard insurance policy, or (2) any award in eminent
domain proceedings for a taking or for loss of value, or (3)
Trustor's interest as lessors in any present or future Space
Lease or rights to Rents, shall never be construed as in anyway
altering any of the rights of Beneficiary as determined by this
Deed of Trust or impugning the priority of Beneficiary's real
property lien granted hereby or by any other recorded document,
but such mention in the financing statement is declared to be for
the protection of Beneficiary in the event any court or judge
shall at any time hold with respect to the matters set forth in
the foregoing clauses (1), (2) and (3) that notice of
Beneficiary's priority of interest to be effective against a
particular class of persons, including but not limited to, the
federal government and any subdivisions or entity of the federal
government, must be filed in the UCC records.
(d) PRIORITY; PERMITTED FINANCING OF TANGIBLE
COLLATERAL. Except as provided in Section 1.10(d) hereof, all
Personal Property of any nature whatsoever, which is subject to
the provisions of this security agreement, shall be purchased or
obtained by Trustor in its name and free and clear of any lien or
encumbrance, except for Existing Encumbrances and Permitted Liens
and the lien hereof, for use only in connection with the business
and operation of the Las Vegas Showboat, and shall be and at all
times remain free and clear of any lease or similar arrangement,
chattel financing, installment sale agreement, security agreement
and any encumbrance of like kind, so that Beneficiary's security
interest shall attach to and vest in Trustor for the benefit of
Beneficiary, with the priority herein specified, immediately upon
the installation or use of the Personal Property at the Land and
Trustor warrants and represents that Beneficiary's security
interest in the Personal Property is a validly attached and
binding security interest, properly perfected and prior to all
other security interests therein except as otherwise permitted in
this Agreement.
(e) PRESERVATION OF CONTRACTUAL RIGHTS OF COLLATERAL.
Trustor shall, prior to delinquency, default, or forfeiture,
perform all obligations and satisfy all material conditions
required on its part to be satisfied to preserve its rights and
privileges under any contract, lease, license, permit, or other
authorization (i) under which it holds any Tangible Collateral or
(ii) which constitutes part of the Intangible Collateral except
where Trustor is contesting such obligations in good faith.
(f) REMOVAL OF COLLATERAL. Except as otherwise
permitted herein, none of the Tangible Collateral shall be
removed from the Trust Estate without Beneficiary's prior written
consent, and except damaged or obsolete Tangible Collateral which
is either no longer usable or which is removed temporarily for
repair or improvement or removed for replacement on the Trust
Estate with Tangible Collateral of similar function.
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(g) CHANGE OF NAME. Trustor shall not change its
corporate or business name, or do business within the State of
Nevada under any name other than such name, or any trade name(s)
other than those as to which Trustor gives prior written notice
to Beneficiary of its intent to use such trade names, or any
other business names (if any) specified in the financing
statements delivered to Beneficiary for filing in connection with
the execution hereof, without providing Beneficiary with the
additional financing statement(s) and any other similar documents
deemed reasonably necessary by Beneficiary to assure that its
security interest remains perfected and of undiminished priority
in all such Personal Property notwithstanding such name change.
1.15 Assignment of Rents. The assignment of Leases and
Rents set out above in Granting Clause (G) shall constitute an
absolute and present assignment to Beneficiary, subject to the
license herein given to Trustor to collect the Rents, and shall
be fully operative without any further action on the part of any
party, and specifically Beneficiary shall be entitled upon the
occurrence of an Event of Default hereunder, and the expiration
of any applicable cure or grace period, to all Rents, whether or
not Beneficiary takes possession of the Trust Estate, or any
portion thereof. The absolute assignment contained in Granting
Clause (G) shall not be deemed to impose upon Beneficiary any of
the obligations or duties of Trustor provided in any such Space
Lease (including, without limitation, any liability under the
covenant of quiet enjoyment contained in any lease in the event
that any lessee shall have been joined as a party defendant in
any action to foreclose this Deed of Trust and shall have been
barred and foreclosed thereby of all right, title and interest
and equity of redemption in the Trust Estate or any part
thereof).
1.16 Expenses.
(a) Trustor shall pay when due and payable all costs,
including without limitation, those reasonable appraisal fees,
recording fees, taxes, brokerage fees and commissions, abstract
fees, title policy fees, escrow fees, attorneys' and paralegal
fees, travel expenses, fees for inspecting architect(s) and
engineer(s) and all other costs and expenses of every character
which have been incurred or which may hereafter be incurred by
Beneficiary or any assignee of Beneficiary in connection with the
preparation and execution of loan documents, amendments thereto
or instruments, agreements or documents of further assurance, the
funding of the loan secured hereby, and the enforcement of any
Loan Document; and
(b) Trustor shall, upon demand by Beneficiary,
reimburse Beneficiary or any assignee of Beneficiary for all such
reasonable expenses which have been incurred; and
(c) Trustor shall indemnify Beneficiary with respect
to any transaction or matter in any way connected with any
portion of the Trust Estate, this Deed of Trust, including any
occurrence at, in, on, upon or about the Trust Estate (including
any personal injury, loss of life, or property damage), or
Trustor's use, occupancy, or operation of the Trust Estate, or
the filing or enforcement of any mechanic's lien, or otherwise
caused in whole or in part by any act, omission or negligence
occurring on or at the Trust Estate, including failure to comply
with any Legal Requirement or with any requirement of this Deed
of Trust that applies to Trustor, or any Person's violation of
any environmental law or any contamination of any portion of the
Trust Estate. If Beneficiary is a party to any litigation as to
which either Trustor is required to indemnify Beneficiary (or is
made a defendant in any action of any kind against Trustor or
relating directly or indirectly to any portion of the Trust
Estate) then, at Beneficiary's option, Trustor shall undertake
Beneficiary's defense, using counsel satisfactory to Beneficiary
(and any settlement shall be subject to Beneficiary's consent),
and in any case shall indemnify Beneficiary against such
litigation. Trustor shall pay all reasonable costs and expenses,
including reasonable legal costs, that Beneficiary pays or incurs
in connection with any such litigation. Any amount payable under
any indemnity in this Deed of Trust shall be a demand obligation,
shall be added to, and become a part of, the secured obligations
under this Deed of Trust, shall be secured by this Deed of Trust,
and shall bear interest at the default interest rate on the
Promissory Note. Such indemnity shall survive any release of this
Deed of Trust and any Foreclosure.
1.17 Beneficiary's Cure of Trustor's Default. If Trustor
defaults in the payment of any tax, assessment, lien, encumbrance
or other Imposition, in its obligation to furnish insurance
hereunder, or in the performance or observance of any other
covenant, condition or term of this Deed of Trust or any Loan
Document (including any obligation relating to Trustor's
performance under any Facility Lease), Beneficiary may, but is
not obligated to, to preserve its interest in the Trust Estate,
perform or observe the same, and all payments made (whether such
payments are regular or accelerated payments) and reasonable
costs and expenses incurred or paid by Beneficiary in connection
therewith shall become due and payable immediately. The amounts
so incurred or paid by Beneficiary, together with interest
thereon at the default interest rate on the Promissory Note from
the date incurred until paid by Trustor, shall be added to the
indebtedness and secured by the lien of this Deed of Trust.
Beneficiary is hereby empowered to enter and to authorize others
to enter upon the Land or any
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part thereof for the purpose of performing or observing any such
defaulted covenant, condition or term, without thereby becoming
liable to Trustor or any person in possession holding under
Trustor, provided, however, such entry upon the Land shall be
done in such manner so as not to disrupt the Trustor's business
conducted thereon. No exercise of any rights under this Section
by Beneficiary shall cure or waive any Event of Default or notice
of default hereunder or invalidate any act done pursuant hereto
or to any such notice, but shall be cumulative of all other
rights and remedies.
1.18 Use of Land. Trustor covenants that the Trust Estate
shall be used and operated in a manner consistent with the
description of the Las Vegas Showboat in the Prospectus open
during such days and hours as are customarily observed by casino-
hotels located in Las Vegas, Nevada.
1.19 Material Space Leases. Trustor shall not enter into
any Material Space Lease without first obtaining Beneficiary's
consent in writing, which consent shall not be unreasonably
withheld, as to (i) such Material Space Lease and (ii) the
identity of the Space Lessee thereunder.
1.20 Compliance with Permitted Lien Agreements. Trustor or
any Affiliate of Trustor shall comply with each and every
material obligation contained in any agreement pertaining to a
material Permitted Lien.
1.21 Defense of Actions. Trustor shall appear in and defend
any action or proceeding affecting or purporting to affect the
security hereof or the rights or powers of Beneficiary or
Trustee, and shall pay all reasonable costs and expenses,
including cost of title search and insurance or other evidence of
title, preparation of survey, and reasonable attorneys' fees in
any such action or proceeding in which Beneficiary or Trustee may
appear or may be joined as a party and in any suit brought by
Beneficiary based upon or in connection with this Deed of Trust
or any Loan Document. Nothing contained in this section shall,
however, limit the right of Beneficiary to appear in such action
or proceeding with counsel of its own choice, either on its own
behalf or on behalf of Trustor at the Trustor's sole cost and
expense.
1.22 Affiliates.
(a) SUBJECT TO TRUST DEED. Trustor shall cause all of
its Affiliates in any way involved with the operation of the
Trust Estate or the Las Vegas Showboat to observe the covenants
and conditions of this Deed of Trust to the extent necessary to
give the full intended effect to such covenants and conditions
and to protect and preserve the security of Beneficiary
hereunder. Trustor shall, at Beneficiary's request, cause any
such Affiliate to execute and deliver to Beneficiary or Trustee
such further instruments or documents as Beneficiary may
reasonably deem necessary to effectuate the terms of this Section
1.22.
(b) RESTRICTION ON USE OF SUBSIDIARY OR AFFILIATE.
Trustor shall not use any Affiliate in the operation of the Trust
Estate or the Las Vegas Showboat if such use would in any way
impair the security for the First Mortgage Bonds and the
Indenture or circumvent any covenant or condition of this Deed of
Trust or of any other Loan Document.
1.23 Title Insurance. Promptly after the execution and
delivery of this Deed of Trust, Trustor shall cause to be
delivered to Trustee at Trustor's expense, one or more ALTA
extended coverage Lender's Policies of Title Insurance showing
fee title to the Land vested in Trustor and the lien of this Deed
of Trust to be a perfected lien on a pari passu basis, prior to
any and all encumbrances other than Permitted Liens.
ARTICLE TWO
CORPORATE LOAN PROVISIONS
2.1 Interaction with Indenture and Loan Agreement.
(a) INCORPORATION BY REFERENCE. All terms, covenants,
conditions, provisions and requirements of the Indenture and Loan
Agreement are incorporated by reference in this Deed of Trust.
Any capitalized term used in this Deed
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of Trust without definition, but defined in the Indenture or Loan
Agreement, shall have the same meaning here as in the Indenture.
(b) CONFLICTS. Notwithstanding any other provision of
this Deed of Trust, the terms and provisions of this Deed of
Trust shall be subject and subordinate to the terms of the
Indenture, Intercreditor Agreement and Loan Agreement. To the
extent that the Indenture, Intercreditor Agreement or Loan
Agreement provides Trustor with a particular cure or notice
period, or establishes any limitations or conditions on
Beneficiary's actions with regard to a particular set of facts,
Trustor shall be entitled to the same cure periods and notice
periods, and Beneficiary shall be subject to the same limitations
and conditions, under this Deed of Trust, in place of the cure
periods, notice periods, limitations and conditions provided for
under this Deed of Trust; provided, however, that such cure
periods, notice periods, limitations and conditions shall not be
cumulative as between the Indenture, Intercreditor Agreement or
Loan Agreement and this Deed of Trust. In the event of any
conflict or inconsistency between the provisions of this Deed of
Trust and those of the Indenture, Intercreditor Agreement or Loan
Agreement, including, without limitation, any conflicts or
inconsistencies in any definitions herein or therein, the
provisions or definitions of the Indenture, Intercreditor
Agreement or Loan Agreement shall govern.
2.2 Other Collateral. This Deed of Trust is one of a
number of security agreements to secure the debt delivered by or
on behalf of Trustor pursuant to the Promissory Note and the
other Loan Documents and securing the Obligations secured
hereunder. All potential junior Lien claimants are placed on
notice that, under any of the Loan Documents or otherwise (such
as by separate future unrecorded agreement between Trustor and
Beneficiary), other collateral for the Obligations secured
hereunder (i. e., collateral other than the Trust Estate) may,
under certain circumstances, be released without a corresponding
reduction in the total principal amount secured by this Deed of
Trust. Such a release would decrease the amount of collateral
securing the same indebtedness, thereby increasing the burden on
the remaining Trust Estate created and continued by this Deed of
Trust. No such release shall impair the priority of the lien of
this Deed of Trust. By accepting its interest in the Trust
Estate, each and every junior Lien claimant shall be deemed to
have acknowledged the possibility of, and consented to, any such
release. Nothing in this paragraph shall impose any obligation
upon Beneficiary nor impair its Pari Passu Lien rights hereunder.
ARTICLE THREE
DEFAULTS
3.1 Event of Default. The term "Event of Default," wherever
used in this Deed of Trust, shall mean any one or more of the
following events (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order
of any court or any order, rule or regulation of any
administrative or governmental body):
(a) The failure by Trustor to pay any principal,
premium or interest when due, whether at maturity, upon
redemption, or otherwise, under the Promissory Note or First
Mortgage Bonds.
(b) The occurrence of an Event of Default and the
expiration of any applicable cure or grace period under any Loan
Document.
(c) A sale, lease, sublease, encumbrance or other
transfer in violation of Section 1.10 (Further Encumbrances)
hereof.
(d) Failure by Trustor to duly keep, perform and
observe any other covenant, condition, agreement, term,
representation or warranty in this Deed of Trust or any Loan
Document to be performed or observed by Trustor for a period of
sixty (60) days after notice from Beneficiary.
(e) Any representation or warranty of Trustor in this
Deed of Trust shall prove to be incorrect in any material respect
as of the time when the same shall have been made.
(f) The entry by any court of competent jurisdiction
of a judgment or decree that an undertaking by Trustor as herein
provided to pay the Promissory Note or Bonds or any interest
thereon, or any taxes, assessments, levies, liabilities,
obligations or encumbrances is legally inoperative or cannot be
enforced, so as to affect adversely either the security
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of this Deed of Trust, the indebtedness or other Obligations
secured hereby, the rate of interest on the First Mortgage Bonds
or all or any portion of the indebtedness, and such judgment
shall not be appealed and stayed pending appeal within ten (10)
days after such notice.
ARTICLE FOUR
REMEDIES
4.1 Acceleration of Maturity. Following an Event of
Default and the expiration of any applicable cure or grace
period, Beneficiary may (except that such acceleration shall be
automatic if the Event of Default is caused by a Trustor's
Bankruptcy), declare the Indebtedness and all other sums secured
hereby, to be due and payable immediately, and upon such
declaration such principal and interest and other sums shall
immediately become due and payable without demand, presentment,
notice or other requirements of any kind (all of which Trustor
waives to the extent permitted by law to do so) notwithstanding
anything in this Deed of Trust or any Loan Document or applicable
law to the contrary.
4.2 Protective Advances. If Trustor fails to make any
payment or perform any other obligation under the First Mortgage
Bonds, the Promissory Note, or any other Loan Document, then
without thereby limiting Beneficiary's other rights or remedies,
waiving or releasing any of Trustor's obligations, or imposing
any obligation on Beneficiary, Beneficiary may either advance any
amount owing or perform any or all actions that Beneficiary
reasonably considers necessary or appropriate to cure such
default. All such advances shall constitute "Protective
Advances." No sums advanced or performance rendered by
Beneficiary shall cure, or be deemed a waiver of any Event of
Default.
4.3 Institution of Equity Proceedings. Following an Event
of Default and the expiration of any applicable cure or grace
period, Beneficiary may institute an action, suit or proceeding
in equity for specific performance of this Deed of Trust, the
Loan Agreement or any Loan Document, all of which shall be
specifically enforceable by injunction or other equitable remedy.
Trustor waives any defense based on laches or any applicable
statue of limitations.
4.4 Beneficiary's Power of Enforcement.
(a) Following an Event of Default and the expiration
of any applicable cure or grace period, Beneficiary shall be
entitled, at its option and in its sole and absolute discretion,
to prepare and record on its own behalf, or to deliver to Trustee
for recording, if appropriate, written declaration of default and
demand for sale and written Notice of Breach and Election to Sell
(or other statutory notice) to cause the Trust Estate to be sold
to satisfy the obligations hereof, and in the case of delivery to
Trustee, Trustee shall cause said notice to be filed for record.
(b) After the lapse of such time as may then be
required by law following the recordation of said Notice of
Breach and Election to Sell, and notice of sale having been given
as then required by law, including compliance with all applicable
Gaming Control Acts, Trustee, without demand on Trustor, shall
sell the Trust Estate or any portion thereof at the time and
place fixed by it in said notice, either as a whole or in
separate parcels, and in such order as it may determine, at
public auction to the highest bidder, of cash in lawful money of
the United States payable at the time of sale. Trustee may, for
any cause it deems expedient, postpone the sale of all or any
portion of said property until it shall be completed and, in
every case, notice of postponement shall be given by public
announcement thereof at the time and place last appointed for the
sale and from time to time thereafter Trustee may postpone such
sale by public announcement at the time fixed by the preceding
postponement. Trustee shall execute and deliver to the purchaser
its Deed, Bill of Sale, or other instrument conveying said
property so sold, but without any covenant or warranty, express
or implied. The recitals in such instrument of conveyance of any
matters or facts shall be conclusive proof of the truthfulness
thereof. Any person, including Beneficiary, may bid at the sale.
(c) After deducting all costs, fees and expenses of
Trustee and of this Deed of Trust, including, without limitation,
costs of evidence of title and reasonable attorneys' fees of
Trustee or Beneficiary in connection with a sale, Trustee shall
apply the proceeds of such sale to payment of all sums expended
under the terms hereof not then repaid, with accrued interest at
the default interest rate on the Promissory Note then to the
payment of all other sums then secured hereby and the remainder,
if any, to the person or persons legally entitled thereto as
provided in NRS 40.462.
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(d) Subject to compliance with applicable Gaming
Control Acts, following any Event of Default and the expiration
of any applicable cure or grace period, Beneficiary may, either
with or without entry or taking possession of the Trust Estate,
and without regard to whether or not the indebtedness and other
sums secured hereby shall be due and without prejudice to the
right of Beneficiary thereafter to bring an action or proceeding
to foreclose or any other action for any default existing at the
time such earlier action was commenced, proceed by any
appropriate action or proceeding: (1) to enforce payment of the
Promissory Note, to the extent permitted by law, or the
performance of any term hereof or any other right; (2) to
foreclose this Deed of Trust in any manner provided by law for
the foreclosure of mortgages or deeds of trust on real property
and to sell, as an entirety or in separate lots or parcels, the
Trust Estate or any portion thereof pursuant to the laws of the
State of Nevada or under the judgment or decree of a court or
courts of competent jurisdiction, and Beneficiary shall be
entitled to recover in any such proceeding all costs and expenses
incident thereto, including reasonable attorneys' fees in such
amount as shall be awarded by the court; (3) to exercise any or
all of the rights and remedies available to it under the Loan
Agreement; and (4) to pursue any other remedy available to it.
Beneficiary shall take action either by such proceedings or by
the exercise of its powers with respect to entry or taking
possession, or both, as Beneficiary may determine.
(e) The remedies described in this Section 4.4 may be
exercised with respect to all or any portion of the Personal
Property, either simultaneously with the sale of any real
property encumbered hereby or independent thereof. Beneficiary
shall at any time be permitted to proceed with respect to all or
any portion of the Personal Property in any manner permitted by
the UCC. Trustor agrees that Beneficiary's inclusion of all or
any portion of the Personal Property in a sale or other remedy
exercised with respect to the real property encumbered hereby, as
permitted by the UCC, is a commercially reasonable disposition of
such property.
4.5 Beneficiary's Right to Enter and Take Possession,
Operate and Apply Income.
(a) Subject to the Intercreditor Agreement and
compliance with applicable Gaming Control Acts, following an
Event of Default and the expiration of any applicable cure or
grace period, (i) Trustor, upon demand of Beneficiary, shall
forthwith surrender to Beneficiary the actual possession and, if
and to the extent permitted by law, Beneficiary itself, or by
such officers or agents as it may appoint, may enter and take
possession of all the Trust Estate including the Personal
Property, without liability for trespass, damages or otherwise,
and may exclude Trustor and its agents and employees wholly
therefrom and may have joint access with Trustor to the books,
papers and accounts of Trustor; and (ii) Trustor shall pay
monthly in advance to Beneficiary on Beneficiary's entry into
possession, or to any receiver appointed to collect the Rents,
all Rents then due and payable.
(b) If Trustor shall for any reason fail to surrender
or deliver the Trust Estate, the Personal Property or any part
thereof after Beneficiary's demand, Beneficiary may obtain a
judgment or decree conferring on Beneficiary or Trustee the right
to immediate possession or requiring Trustor to deliver immediate
possession of all or part of such property to Beneficiary or
Trustee and Trustor hereby specifically consents to the entry of
such judgment or decree. Trustor shall pay to Beneficiary or
Trustee, upon demand, all reasonable costs and expenses of
obtaining such judgment or decree and reasonable compensation to
Beneficiary or Trustee, their attorneys and agents, and all such
costs, expenses and compensation shall, until paid, be secured by
the lien of this Deed of Trust.
(c) Subject to compliance with applicable Gaming
Control Acts, upon every such entering upon or taking of
possession, Beneficiary or Trustee may hold, store, use, operate,
manage and control the Trust Estate and conduct the business
thereof, and, from time to time in its sole and absolute
discretion and without being under any duty to so act:
(1) make all necessary and proper maintenance,
repairs, renewals, replacements, additions, betterments and
improvements thereto and thereon and purchase or otherwise
acquire additional fixtures, personalty and other property;
(2) insure or keep the Trust Estate insured;
(3) manage and operate the Trust Estate and
exercise all the rights and powers of Trustor in their name or
otherwise with respect to the same;
(4) enter into agreements with others to exercise
the powers herein granted Beneficiary or Trustee, all as
Beneficiary or Trustee from time to time may determine; and,
subject to the absolute assignment of the Leases
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and Rents to Beneficiary, Beneficiary or Trustee may collect and
receive all the Rents, including those past due as well as those
accruing thereafter; and shall apply the monies so received by
Beneficiary or Trustee in such priority as Beneficiary may
determine to (1) the payment of interest and principal due and
payable on the Promissory Note, (2) the deposits for taxes and
assessments and insurance premiums due, (3) the cost of
insurance, taxes, assessments and other proper charges upon the
Trust Estate or any part thereof; (4) the reasonable
compensation, expenses and disbursements of the agents, attorneys
and other representatives of Beneficiary or Trustee; and (5) any
other reasonable and necessary charges or costs required to be
paid by Trustor under the terms hereof; and
(5) rent or sublet the Trust Estate or any
portion thereof for any purpose permitted by the Facility Lease
or this Deed of Trust.
Beneficiary or Trustee shall surrender possession of
the Trust Estate and the Personal Property to Trustor only when
all that is due upon such interest and principal, tax and
insurance deposits, and all amounts under any of the terms of the
Loan Agreement or this Deed of Trust, shall have been paid and
all defaults made good. The same right of taking possession,
however, shall exist if any subsequent Event of Default shall
occur and be continuing.
4.6 Leases. Beneficiary is authorized to foreclose this
Deed of Trust subject to the Intercreditor Agreement and the
rights of any tenants of the Trust Estate, and the failure to
make any such tenants parties defendant to any such foreclosure
proceedings and to foreclose their rights shall not be, nor be
asserted by Trustor to be, a defense to any proceedings
instituted by Beneficiary to collect the sums secured hereby or
to collect any deficiency remaining unpaid after the foreclosure
sale of the Trust Estate, or any portion thereof. Unless
otherwise agreed by Beneficiary in writing, all Space Leases
executed subsequent to the date hereof, or any part thereof,
shall be subordinate and inferior to the lien of this Deed of
Trust, except that from time to time Beneficiary may execute and
record among the land records of the jurisdiction where this Deed
of Trust is recorded, subordination statements with respect to
such of said Space Leases as Beneficiary may designate in its
sole discretion, whereby the Space Leases so designated by
Beneficiary shall be made superior to the lien of this Deed of
Trust for the term set forth in such subordination statement.
From and after the recordation of such subordination statements,
and for the respective periods as may be set forth therein, the
Space Leases therein referred to shall be superior to the lien of
this Deed of Trust and shall not be affected by any foreclosure
hereof. All such Space Leases shall contain a provision to the
effect that the Trustor and Space Lessee recognize the right of
Beneficiary to elect and to effect such subordination of this
Deed of Trust and consents thereto.
4.7 Purchase by Beneficiary. Upon any foreclosure sale
(whether judicial or nonjudicial), Beneficiary may bid for and
purchase the property subject to such sale and, upon compliance
with the terms of sale, may hold, retain and possess and dispose
of such property in its own absolute right without further
accountability.
4.8 Waiver of Appraisement, Valuation, Stay, Extension and
Redemption Laws. Trustor agrees to the full extent permitted by
law that if an Event of Default occurs, neither Trustor nor
anyone claiming through or under it shall or will set up, claim
or seek to take advantage of any appraisement, valuation, stay,
extension or redemption laws now or hereafter in force, in order
to prevent or hinder the enforcement or foreclosure of this Deed
of Trust or the absolute sale of the Trust Estate or any portion
thereof or the final and absolute putting into possession
thereof, immediately after such sale, of the purchasers thereof,
and Trustor for itself and all who may at any time claim through
or under it, hereby waives, to the full extent that it may
lawfully so do, the benefit of all such laws, and any and all
right to have the assets comprising the Trust Estate marshalled
upon any foreclosure of the lien hereof and agrees that Trustee
or any court having jurisdiction to foreclose such lien may sell
the Trust Estate in part or as an entirety.
4.9 Receiver. Following an Event of Default and the
expiration of any applicable cure or grace period, Beneficiary,
to the extent permitted by law and in accordance with all
applicable Gaming Control Acts, and without regard to the value,
adequacy or occupancy of the security for the indebtedness and
other sums secured hereby, shall be entitled as a matter of right
if it so elects to the appointment of a receiver to enter upon
and take possession of the Trust Estate and to collect all Rents
and apply the same as the court may direct, and such receiver may
be appointed by any court of competent jurisdiction upon
application by Beneficiary. Beneficiary may have a receiver
appointed without notice to Trustor or any third party, and
Beneficiary may waive any requirement that the receiver post a
bond. Beneficiary shall have the power to designate and select
the Person who shall serve as the receiver and to negotiate all
terms and conditions under which such receiver shall serve. Any
receiver appointed on Beneficiary's behalf may be an Affiliate of
Beneficiary. The expenses, including receiver's fees, reasonable
attorneys' fees, costs and agent's compensation, incurred
pursuant to the powers herein contained shall be secured by this
Deed of Trust. The right to enter and take possession of and to
manage and operate the Trust Estate
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and to collect all Rents, whether by a receiver or otherwise,
shall be cumulative to any other right or remedy available to
Beneficiary under this Deed of Trust, the Indenture or otherwise
available to Beneficiary and may be exercised concurrently
therewith or independently thereof. Beneficiary shall be liable
to account only for such Rents (including, without limitation,
security deposits) actually received by Beneficiary, whether
received pursuant to this section or any other provision
hereof. Notwithstanding the appointment of any receiver or other
custodian, Beneficiary shall be entitled as pledgee to the
possession and control of any cash, deposits, or instruments at
the time held by, or payable or deliverable under the terms
of this Deed of Trust to, Beneficiary.
4.10 Suits to Protect the Trust Estate. Beneficiary shall
have the power and authority to institute and maintain any suits
and proceedings as Beneficiary, in its sole and absolute
discretion, may deem advisable (a) to prevent any impairment of
the Trust Estate by any acts which may be unlawful or any
violation of this Deed of Trust, (b) to preserve or protect its
interest in the Trust Estate, or (c) to restrain the enforcement
of or compliance with any legislation or other Legal Requirement
that may be unconstitutional or otherwise invalid, if the
enforcement of or compliance with such enactment, rule or order
might impair the security hereunder or be prejudicial to
Beneficiary's interest
4.11 Proofs of Claim. In the case of any receivership,
Insolvency, Bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceedings affecting Trustor, any
Affiliate or any guarantor, co-maker or endorser of any of
Trustor's obligations, its creditors or its property,
Beneficiary, to the extent permitted by law, shall be entitled to
file such proofs of claim or other documents as it may deem to be
necessary or advisable in order to have its claims allowed in
such proceedings for the entire amount due and payable by Trustor
under the Promissory Note or any other Loan Document, at the date
of the institution of such proceedings, and for any additional
amounts which may become due and payable by Trustor after such
date.
4.12 Trustor to Pay the First Mortgage Bonds and
Promissory Note on Any Default in Payment:
Application of Monies by Beneficiary.
(a) In case of a foreclosure sale of all or any part
of the Trust Estate and of the application of the proceeds of
sale to the payment of the sums secured hereby, Beneficiary shall
be entitled to enforce payment from Trustor of any additional
amounts then remaining due and unpaid and to recover judgment
against Trustor for any portion thereof remaining unpaid, with
interest at the default interest rate on the Promissory Note.
(b) Trustor hereby agrees to the extent permitted by
law, that no recovery of any such judgment by Beneficiary or
other action by Beneficiary and no attachment or levy of any
execution upon any of the Trust Estate or any other property
shall in any way affect the Lien and security interest of this
Deed of Trust upon the Trust Estate or any part thereof or any
Lien, rights, powers or remedies of Beneficiary hereunder, but
such Lien, rights, powers and remedies shall continue unimpaired
as before.
(c) Any monies collected or received by Beneficiary
under this Section 4.12 shall be first applied to the payment of
the reasonable compensation, expenses and disbursements of the
agents, attorneys and other representatives of Beneficiary, and
the balance remaining shall be applied to the payment of amounts
due and unpaid under the First Mortgage Bonds and Promissory
Note.
(d) The provisions of this section shall not be deemed
to limit or otherwise modify the provisions of any guaranty of
the indebtedness evidenced by the First Mortgage Bonds and
Promissory Note.
4.13 Delay or Omission: No Waiver. No delay or omission of
Beneficiary or Bondholder to exercise any right, power or remedy
upon any Event of Default (and after the expiration of any
applicable cure or grace period) shall exhaust or impair any such
right, power or remedy or shall be construed to waive any such
Event of Default or to constitute acquiescence therein. Every
right, power and remedy given to Beneficiary whether contained
herein or in the Indenture or otherwise available to Beneficiary
may be exercised from time to time and as often as may be deemed
expedient by Beneficiary.
4.14 No Waiver of One Default to Affect Another. No waiver
of any Event of Default hereunder shall extend to or affect any
subsequent or any other Event of Default then existing, or impair
any rights, powers or remedies consequent thereon. If
Beneficiary or any Bondholder (a) grants forbearance or an
extension of time for the payment of any sums secured hereby; (b)
takes other or additional security for the payment thereof; (c)
waives or does not exercise any right
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granted in the First Mortgage Bonds, the Indenture, this Deed
of Trust, the Loan Agreement, or any other Loan Document; (d)
releases any part of the Trust Estate from the lien or security
interest of this Deed of Trust or any other instrument securing
the First Mortgage Bonds or the Loan; (e) consents to the filing
of any map, plat or replat of the Land; (f) consents to the
granting of any easement on the Land; or (g) makes or consents
to any agreement changing the terms of this Deed of Trust,
the Loan Agreement, or any Loan Document subordinating the lien
or any charge hereof, no such act or omission shall release,
discharge, modify, change or affect the original liability under
the First Mortgage Bonds, this Deed of Trust or any other Loan
Document or otherwise of Trustor, or any subsequent purchaser of
the Trust Estate or any part thereof or any maker, co-signer,
surety or guarantor. No such act or omission shall preclude
Beneficiary from exercising any right, power or privilege
herein granted or intended to be granted in case of any Event
of Default then existing or of any subsequent Event of Default,
nor, except as otherwise expressly provided in an instrument or
instruments executed by Beneficiary, shall the lien or security
interest of this Deed of Trust be altered thereby, except to
the extent expressly provided in any releases, maps, easements or
subordinations described in clause (d), (e), (f) or (g) above of
this Section 4.14. In the event of the sale or transfer by
operation of law or otherwise of all or any part of the Trust
Estate, Beneficiary, without notice to any person, firm or
corporation, is hereby authorized and empowered to deal with any
such vendee or transferee with reference to the Trust Estate or
the indebtedness secured hereby, or with reference to any of the
terms or conditions hereof, as fully and to the same extent as
it might deal with the original parties hereto and without in
any way releasing or discharging any of the liabilities
or undertakings hereunder, or waiving its right to declare such
sale or transfer an Event of Default as provided herein.
Notwithstanding anything to the contrary contained in this Deed
of Trust or any Loan Document, (i) in the case of any
non-monetary Event of Default (and after the expiration of any
applicable cure or grace period), Beneficiary may continue to
accept payments due hereunder without thereby waiving the
existence of such or any other Event of Default and (ii) in the
case of any monetary Event of Default, Beneficiary may accept
partial payments of any sums due hereunder without thereby
waiving the existence of such Event of Default if the partial
payment is not sufficient to completely cure such Event of
Default.
4.15 Discontinuance of Proceedings: Position of Parties
Restored. If Beneficiary shall have proceeded to enforce any
right or remedy under this Deed of Trust by foreclosure, entry of
judgement or otherwise and such proceedings shall have been
discontinued or abandoned for any reason, or such proceedings
shall have resulted in a final determination adverse to
Beneficiary, then and in every such case Trustor and Beneficiary
shall be restored to their former positions and rights hereunder,
and all rights, powers and remedies of Beneficiary shall continue
as if no such proceedings had occurred or had been taken.
4.16 Remedies Cumulative. No right, power or remedy,
including without limitation remedies with respect to any
security for the First Mortgage Bonds, conferred upon or reserved
to Beneficiary by the Subsidiary Guaranties, this Deed of Trust,
the other Deeds of Trust or any other Loan Document is exclusive
of any other right, power or remedy, but each and every such
right, power and remedy shall be cumulative and concurrent and
shall be in addition to any other right, power and remedy given
hereunder or under any Loan Document, now or hereafter existing
at law, in equity or by statute, and Beneficiary shall be
entitled to resort to such rights, powers, remedies or security
as Beneficiary shall in its sole and absolute discretion deem
advisable.
4.17 Interest After Event of Default. If an Event of
Default shall have occurred and is continuing, all sums
outstanding and unpaid under the Promissory Note and this Deed of
Trust shall, at Beneficiary's option, bear interest at the
default interest rate on the Promissory Note until such Event of
Default has been cured. Trustor's obligation to pay such interest
shall be secured by this Deed of Trust.
4.18 Foreclosure: Expenses of Litigation. If foreclosure be
made by Trustee, reasonable attorneys' fees for services in the
supervision of said foreclosure proceeding shall be allowed to
the Trustee and Beneficiary as part of the foreclosure costs. In
the event of foreclosure of the lien hereof, there shall be
allowed and included as additional indebtedness all reasonable
expenditures and expenses which may be paid or incurred by or on
behalf of Beneficiary for attorneys' fees, appraiser's fees,
outlays for documentary and expert evidence, stenographers'
charges, publication costs, and costs (which may be estimated as
to items to be expended after foreclosure sale or entry of the
decree) of procuring all such abstracts of title, title searches
and examinations, title insurance policies and guaranties, and
similar data and assurances with respect to title as Beneficiary
may deem reasonably advisable either to prosecute such suit or to
evidence to a bidder at any sale which may be had pursuant to
such decree the true condition of the title to or the value of
the Trust Estate or any portion thereof. All expenditures and
expenses of the nature in this section mentioned, and such
expenses and fees as may be incurred in the protection of the
Trust Estate and the maintenance of the lien and security
interest of this Deed of Trust, including the fees of any
attorney employed by Beneficiary in any litigation or proceeding
affecting this Deed of Trust or any Loan Document,
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the Trust Estate or any portion thereof, including, without
limitation, civil, probate, appellate and bankruptcy
proceedings, or in preparation for the commencement or defense
of any proceeding or threatened suit or proceeding, shall be
immediately due and payable by Trustor, with interest thereon at
the default interest rate on the Promissory Note, and shall be
secured by this Deed of Trust. Trustee waives its right to
any statutory fee in connection with any judicial or nonjudicial
foreclosure of the lien hereof and agrees to accept a
reasonable fee for such services.
4.19 Deficiency Judgments. If after foreclosure of this
Deed of Trust or Trustee's sale hereunder, there shall remain any
deficiency with respect to any amounts payable under the
Promissory Note or hereunder or any amounts secured hereby, and
Beneficiary shall institute any proceedings to recover such
deficiency or deficiencies, all such amounts shall continue to
bear interest at the default interest rate on the Promissory
Note. Trustor waives, to the extent permitted by applicable law,
any defense to Beneficiary's recovery against Trustor of any
deficiency after any foreclosure sale of the Trust Estate.
Trustor expressly waives, to the extent permitted by applicable
law, any defense or benefits that may be derived from any statute
granting Trustor any defense to any such recovery by Beneficiary.
In addition, Beneficiary and Trustee shall be entitled to
recovery of all of their reasonable costs and expenditures
(including without limitation any court imposed costs) in
connection with such proceedings, including their reasonable
attorneys' fees, appraisal fees and the other costs, fees and
expenditures referred to in Section 4.18 above. This provision
shall survive any foreclosure or sale of the Trust Estate, any
portion thereof and/or the extinguishment of the lien hereof.
4.20 Waiver of Jury Trial. Beneficiary and Trustor each
waive, to the extent permitted by applicable law, any right to
have a jury participate in resolving any dispute, whether
sounding in contract, tort, or otherwise arising out of,
connected with, related to, or incidental to the relationship
established between them in connection with the First Mortgage
Bonds, the Promissory Note, the Loan Agreement, this Deed of
Trust or any Loan Document. Any such disputes shall be resolved
in a bench trial without a jury.
4.21 Exculpation of Beneficiary. The acceptance by
Beneficiary of the assignment contained herein with all of the
rights, powers, privileges and authority created hereby shall
not, prior to entry upon and taking possession of the Trust
Estate by Beneficiary, be deemed or construed to make Beneficiary
a "mortgagee in possession"; nor thereafter or at any time or in
any event obligate Beneficiary to appear in or defend any action
or proceeding relating to the Space Leases, the Rents or the
Trust Estate, or to take any action hereunder or to expend any
money or incur any expenses or perform or discharge any
obligation, duty or liability under any Space Lease or to assume
any obligation or responsibility for any security deposits or
other deposits except to the extent such deposits are actually
received by Beneficiary, nor shall Beneficiary, prior to such
entry and taking, be liable in any way for any injury or damage
to person or property sustained by any Person in or about the
Trust Estate.
ARTICLE FIVE
RIGHTS AND RESPONSIBILITIES OF TRUSTEE;
OTHER PROVISIONS RELATING TO TRUSTEE
Notwithstanding anything to the contrary in this Deed of
Trust, Trustor and Beneficiary agree as follows.
5.1 Exercise of Remedies by Trustee. To the extent that
this Deed of Trust or applicable law, including all applicable
Gaming Control Acts, authorizes or empowers Beneficiary to
exercise any remedies set forth in Article Four hereof or
otherwise, or perform any acts in connection therewith, Trustee
(but not to the exclusion of Beneficiary unless so required under
the law of the State of Nevada) shall have the power to exercise
any or all such remedies, and to perform any acts provided for in
this Deed of Trust in connection therewith, all for the benefit
of Beneficiary and on Beneficiary's behalf in accordance with
applicable law of the State of Nevada. In connection therewith,
Trustee: (a) shall not exercise, or waive the exercise of, any
Beneficiary's Remedies (other than any rights of Trustee to any
indemnity or reimbursement), except at Beneficiary's request, and
(b) shall exercise, or waive the exercise of, any or all of
Beneficiary's remedies at Beneficiary's request, and in
accordance with Beneficiary's directions as to the manner of such
exercise or waiver. Trustee may, however, decline to follow
Beneficiary's request or direction if Trustee shall be advised by
counsel that the action or proceeding, or manner thereof, so
directed may not lawfully be taken or waived.
5.2 Rights and Privileges of Trustee. To the extent that
this Deed of Trust requires Trustor to indemnify Beneficiary or
reimburse Beneficiary for any expenditures Beneficiary may incur,
Trustee shall be entitled to the same
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indemnity and the same rights to reimbursement of expenses as
Beneficiary, subject to such limitations and conditions as would
apply in the case of Beneficiary. To the extent that this Deed
of Trust negates or limits Beneficiary's liability as to any
matter, Trustee shall be entitled to the same negation or
limitation of liability. To the extent that Trustor, pursuant
to this Deed of Trust, appoints Beneficiary as Trustor's attorney
in fact for any purpose, Beneficiary or (when so instructed by
Beneficiary) Trustee shall be entitled to act on Trustor's
behalf without joinder or confirmation by the other.
5.3 Resignation or Replacement of Trustee. Trustee may
resign by an instrument in writing addressed to Beneficiary, and
Trustee may be removed at any time with or without cause (i.e.,
in Beneficiary's sole and absolute discretion) by an instrument
in writing executed by Beneficiary. In case of the death,
resignation, removal or disqualification of Trustee or if for any
reason Beneficiary shall deem it desirable to appoint a
substitute, successor or replacement Trustee to act instead of
Trustee originally named (or in place of any substitute,
successor or replacement Trustee), then Beneficiary shall have
the right and is hereby authorized and empowered to appoint a
successor, substitute or replacement Trustee, without any
formality other than appointment and designation in writing
executed by Beneficiary, which instrument shall be recorded if
required by the law of the State of Nevada. The law of the State
of Nevada shall govern the qualifications of any Trustee. The
authority conferred upon Trustee by this Deed of Trust shall
automatically extend to any and all other successor, substitute
and replacement Trustee(s) successively until the Obligations
have been paid in full or the Trust Estate has been sold
hereunder or released in accordance with the provisions of the
Loan Documents. Beneficiary's written appointment and
designation of any Trustee shall be full evidence of
Beneficiary's right and authority to make the same and of all
facts therein recited. No confirmation, authorization, approval
or other action by Trustor shall be required in connection with
any resignation or other replacement of Trustee.
5.4 Authority of Beneficiary. If Beneficiary is a banking
corporation, state banking corporation or a national banking
association and the instrument of appointment of any successor or
replacement Trustee is executed on Beneficiary's behalf by an
officer of such corporation, state banking corporation or
national banking association, then such appointment shall be
conclusively presumed to be executed with authority and shall be
valid and sufficient without proof of any action by the board of
directors or any superior officer of Beneficiary.
5.5 Effect of Appointment of Successor Trustee. Upon the
appointment and designation of any successor, substitute or
replacement Trustee, Trustee's entire estate and title in the
Trust Estate shall vest in the designated successor, substitute
or replacement Trustee. Such successor, substitute or replacement
Trustee shall thereupon succeed to and shall hold, possess and
execute all the rights, powers, privileges, immunities and duties
herein conferred upon Trustee. All references herein to Trustee
shall be deemed to refer to Trustee (including any successor or
substitute appointed and designated as herein provided) from time
to time acting hereunder.
5.6 Confirmation of Transfer and Succession. Upon the
written request of Beneficiary or of any successor, substitute or
replacement Trustee, any former Trustee ceasing to act shall
execute and deliver an instrument transferring to such successor,
substitute or replacement Trustee all of the right, title, estate
and interest in the Trust Estate of Trustee so ceasing to act,
together with all the rights, powers, privileges, immunities and
duties herein conferred upon Trustee, and shall duly assign,
transfer and deliver all properties and moneys held by said
Trustee hereunder to said successor, substitute or replacement
Trustee.
5.7 Ratification. Trustor hereby ratifies and confirms any
and all acts that any Trustee may properly take or perform by
virtue of this Deed of Trust and in accordance with all
applicable laws.
5.8 Exculpation. Trustee shall not be liable for any error
of judgment or act done by Trustee in good faith, or otherwise be
responsible or accountable under any circumstances whatsoever,
except for Trustee's gross negligence, willful misconduct or
knowing violation of law. Trustee shall have the right to rely on
any instrument, document or signature authorizing or supporting
any action taken or proposed to be taken by it hereunder,
believed by it in good faith to be genuine. All moneys received
by Trustee shall, until used or applied as herein provided, be
held in trust for the purposes for which they were received, but
need not be segregated in any manner from any other moneys
(except to the extent required by law). Trustee shall be under no
liability for interest on any moneys received by it hereunder.
5.9 Endorsement and Execution of Documents. Upon
Beneficiary's written request, Trustee shall, without liability
or notice to Trustor, execute, consent to, or join in any
instrument or agreement in connection with or necessary to
effectuate the purposes of the Loan Documents. Trustor hereby
irrevocably designates Trustee as its attorney-in-fact to
execute, acknowledge and deliver, on Trustor's behalf and in
Trustor's name, all instruments or agreements necessary to
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implement any provision(s) of this Deed of Trust or to further
perfect the lien created by this Deed of Trust on the Trust
Property. This power of attorney shall be deemed to be coupled
with an interest and shall survive any disability of Trustor.
5.10 Multiple Trustees. If Beneficiary appoints multiple
trustees, then any Trustee, individually, may exercise all powers
granted to Trustee under this instrument, without the need for
action by any other Trustee(s).
5.11 Terms of Trustee's Acceptance. Trustee accepts the
trust created by this Deed of Trust upon the following terms and
conditions.
(a) DELEGATION. Trustee may exercise any of its
powers through appointment of attorney(s)-in-fact or agents.
(b) COUNSEL. Trustee may select and employ legal
counsel (including any law firm representing Beneficiary).
Trustor shall reimburse all reasonable legal fees and expenses
that Trustee may thereby incur.
(c) SECURITY. Trustee shall be under no obligation to
take any action upon any Event of Default unless furnished
security or indemnity, in form satisfactory to Trustee, against
costs, expenses, and liabilities that Trustee may reasonably
incur.
(d) COSTS AND EXPENSES. Trustor shall reimburse
Trustee, as part of the Obligations secured hereunder, for all
reasonable disbursements and expenses (including reasonable legal
fees and expenses) incurred by reason of and as provided for in
this Deed of Trust, including any of the foregoing incurred in
Trustee's administering and executing the trust created by this
Deed of Trust and performing Trustee's duties and exercising
Trustee's powers under this Deed of Trust.
(e) RELEASE. Upon payment of the Obligations secured
hereunder, Beneficiary shall request Trustee to release this Deed
of Trust and shall surrender all the Obligations secured
hereunder to Trustee. Trustee shall release this Deed of Trust
without charge to Trustor. Trustor shall pay all costs of
recordation, if any.
ARTICLE SIX
MISCELLANEOUS PROVISIONS
6.1 Heirs. Successors and Assigns Included in Parties.
Whenever one of the parties hereto is named or referred to
herein, the heirs, successors and assigns of such party shall be
included, and subject to the limitations set forth in Section
1.10, all covenants and agreements contained in this Deed of
Trust, by or on behalf of Trustor or Beneficiary shall bind and
inure to the benefit of its heirs, successors and assigns,
whether so expressed or not.
6.2 Notices. Whenever any notice, report, demand or other
instrument is authorized or required to be given or furnished
under this Deed of Trust to Beneficiary, an additional copy of
such notice, report, demand or other instrument shall be given or
furnished to the trustee under the Indenture, as collateral
assignee of this Deed of Trust pursuant hereto.
6.3 Addresses for Notices. Etc.
(a) Any notice, report, demand or other instrument
authorized or required to be given or furnished under this Deed
of Trust to Trustor or Beneficiary shall be deemed given or
furnished (i) when addressed to the party intended to receive the
same, at the address of such party set forth below, and delivered
at such address or (ii) three (3) days after the same is
deposited in the United States mail as first class certified
mail, return receipt requested, postage paid, whether or not the
same is actually received by such party:
Beneficiary: Natwest Bank, N.A.
22 Route 70 W
Cherry Hill, NJ 08002
Attention: John T. Harrison, Vice President
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With a copy to:
Peter W. Leibundgut, Esquire
Clark, Ladner, Fortenbaugh & Young
Woodland Falls Corporate Park
200 Lake Drive East, Suite 300
Cherry Hill, New Jersey 08002
Trustor: Showboat, Inc.
2800 Fremont Street
Las Vegas, Nevada 89104
Attention: Chief Financial Officer
With a copy to:
John N. Brewer, Esquire
Kummer, Kaempfer, Bonner & Renshaw
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
Trustee: Nevada Title Company
3320 West Sahara
Suite 200
Las Vegas, Nevada 89102-6067
6.3.1 Change of Address. Any person may change the
address to which any such notice, report, demand or other
instrument is to be delivered or mailed to that person, by
furnishing written notice of such change to the other party but
no such notice of change shall be effective unless and until
received by such other party.
6.4 Headings. The headings of the articles, sections,
paragraphs and subdivisions of this Deed of Trust are for
convenience of reference only, are not to be considered a part
hereof, and shall not limit or expand or otherwise affect any of
the terms hereof.
6.5 Invalid Provisions to Affect No Others. In the event
that any of the covenants, agreements, terms or provisions
contained herein or in the First Mortgage Bonds, the Indenture or
any other Loan Document shall be invalid, illegal or
unenforceable in any respect, the validity of the lien hereof and
the remaining covenants, agreements, terms or provisions
contained herein or in the First Mortgage Bonds, the Indenture,
the Subsidiary Guaranties or any other Loan Document shall be in
no way affected, prejudiced or disturbed thereby. To the extent
permitted by law, Trustor waives any provision of law which
renders any provision hereof prohibited or unenforceable in any
respect.
6.6 Changes and Priority Over Intervening Liens. Neither
this Deed of Trust nor any term hereof may be changed, waived,
discharged or terminated orally, or by any action or inaction,
but only by an instrument in writing signed by the party against
which enforcement of the change, waiver, discharge or termination
is sought. Any agreement hereafter made by Trustor and
Beneficiary relating to this Deed of Trust shall be superior to
the rights of the holder of any intervening lien or encumbrance.
6.7 Estoppel Certificates. Within ten (10) Business Days
after Beneficiary's written request, Trustor shall from time to
time execute a certificate, in recordable form (an "Estoppel
Certificate"), stating, except to the extent it would be
inaccurate to so state: (a) the current amount of the Obligations
secured hereunder and all elements thereof, including principal,
interest, and all other elements; (b) Trustor has no defense,
offset, claim, counterclaim, right of recoupment, deduction, or
reduction against any of the Obligations secured hereunder; (c)
none of the Loan Documents have been amended, whether orally or
in writing; (d) Trustor has no claims against Beneficiary of any
kind; (e) any Power of Attorney granted to Beneficiary is in full
force and effect; and (f) such other matters relating to this
Deed of Trust, any Loan Documents and the relationship of Trustor
and Beneficiary as Beneficiary shall reasonably request. In
addition, the Estoppel Certificate shall set forth the reasons
why it would be inaccurate to make any of the foregoing
assurances ('a" through 'f").
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6.8 Governing Law. This Deed of Trust shall be construed,
interpreted, enforced and governed by and in accordance with the
laws of the State of Nevada, without regard to its choice of law
provisions.
6.9 Required Notices. Trustor shall notify Beneficiary
promptly of the occurrence of any of the following and shall
immediately provide Beneficiary a copy of the notice or documents
referred to: (i) receipt of notice from any Governmental
Authority relating to all or any material part of the Trust
Estate if such notice relates to a default or act, omission or
circumstance which would result in a default after notice or
passage of time or both; (ii) receipt of any notice from any
tenant leasing all or any material portion of the Trust Estate if
such notice relates to a default or act, omission or circumstance
which would result in a default after notice or passage of time
or both; (iii) receipt of notice from the holder of any Permitted
Lien relating to a default or act, omission or circumstance which
would result in a default after notice or passage of time or
both; (iv) the commencement of any proceedings or the entry of
any judgment, decree or order materially affecting all or any
portion of the Trust Estate or which involve the potential
liability of Trustor or its Affiliates in an amount in excess of
$25,000,000 (other than for personal injury actions and related
property damage suits which have been acknowledged by the insurer
to be covered by such insurance); or (v) commencement of any
judicial or administrative proceedings or the entry of any
judgment, decree or order by or against or otherwise affecting
Trustor or any Affiliate of Trustor, a material portion of the
Trust Estate, or a material portion of the Personal Property, or
any other action by any creditor or lessor thereof as a result of
any material default under the terms of any lease.
6.10 Reconveyance. Upon written request of Beneficiary
stating that all sums secured hereby have been paid, and upon
surrender of this Deed of Trust to Trustee for cancellation and
retention and upon payment of its fees, Trustee shall reconvey,
without warranty, the property then held hereunder. The recitals
in such reconveyance of any matters or facts shall be conclusive
proof of the truthfulness thereof. The grantee in such
reconveyance may be described as "the person or persons legally
entitled thereto."
6.11 Attorneys Fees. Without limiting any other provision
contained herein, Trustor agrees to pay all reasonable costs of
Beneficiary or Trustee incurred in connection with the
enforcement of this Deed of Trust or the taking of this Deed of
Trust as security for the repayment of the Promissory Note,
including without limitation all reasonable attorneys' fees
whether or not suit is commenced, and including, without
limitation, fees incurred in connection with any probate,
appellate, bankruptcy, deficiency or any other litigation
proceedings, all of which sums shall be secured hereby.
6.12 Late Charges. By accepting payment of any sum secured
hereby after its due date, Beneficiary does not waive its right
to collect any late charge thereon or interest thereon at the
default interest rate on the Promissory Note, if so provided, not
then paid or its right either to require prompt payment when due
of all other sums so secured or to declare default for failure to
pay any amounts not so paid.
6.13 Cost of Accounting. Trustor shall pay to Beneficiary,
for and on account of the preparation and rendition of any
accounting, which Trustor may be entitled to require under any
law or statute now or hereafter providing therefor, the
reasonable costs thereof.
6.14 Right of Entry. Subject to compliance with applicable
Gaming Control Acts, Beneficiary may at any reasonable time or
times, upon no less than 24 hours advance notice (except in the
case of an emergency), make or cause to be made entry upon and
inspections of the Trust Estate or any part thereof in person or
by agent.
6.15 Corrections. Trustor shall, upon request of Trustee,
promptly correct any defect, error or omission which may be
discovered in the contents of this Deed of Trust or in the
execution or acknowledgement hereof, and shall execute,
acknowledge and deliver such further instruments and do such
further acts as may be necessary or as may be reasonably
requested by Trustee to carry out more effectively the purposes
of this Deed of Trust, to subject to the lien and security
interest hereby created any of Trustor's properties, rights or
interest covered or intended to be covered hereby, and to perfect
and maintain such lien and security interest. In the event that
there is a new Facility Lease, Trustor shall execute a
supplemental Deed of Trust if requested by Beneficiary.
6.16 Statute of Limitations. To the fullest extent allowed
by the law, the right to plead, use or assert any statute of
limitations as a plea or defense or bar of any kind, or for any
purpose, to any debt, demand or obligation secured or to be
secured hereby, or to any complaint or other pleading or
proceeding filed, instituted or maintained for the purpose of
enforcing this Deed of Trust or any rights hereunder, is hereby
waived by Trustor.
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6.17 Subrogation. Should the proceeds of the loan made by
Beneficiary to Trustor, repayment of which is hereby secured, or
any part thereof, or any amount paid out or advanced by
Beneficiary, be used directly or indirectly to pay off,
discharge, or satisfy, in whole or in part, any prior or superior
lien or encumbrance upon the Trust Estate, or any part thereof,
then, as additional security hereunder, Trustee, on behalf of
Beneficiary, shall be subrogated to any and all rights, superior
titles, liens, and equities owned or claimed by any owner or
holder of said outstanding liens, charges, and indebtedness,
however remote, regardless of whether said liens, charges, and
indebtedness are acquired by assignment or have been released of
record by the holder thereof upon payment.
6.18 Joint and Several Liability. All obligations of
Trustor hereunder, if more than one, are joint and several.
Recourse for deficiency after sale hereunder may be had against
the property of Trustor, without, however, creating a present or
other lien or charge thereon.
6.19 Context. In this Deed of Trust, whenever the context
so requires, the neuter includes the masculine and feminine, and
the singular includes the plural, and vice versa.
6.20 Time. Time is of the essence of each and every term,
covenant and condition hereof. Unless otherwise specified herein,
any reference to "days" in this Deed of Trust shall be deemed to
mean "calendar days."
6.21 Interpretation. As used in this Deed of Trust unless
the context clearly requires otherwise: The terms "herein" or
"hereunder" and similar terms without reference to a particular
section shall refer to the entire Deed of Trust and not just to
the section in which such terms appear; the term "lien" shall
also mean a security interest, and the term "security interest"
shall also mean a lien.
6.22 Effect of NRS 57.030. To the extent not inconsistent
herewith, the provisions of NRS 57.030 are included herein by
reference.
6.23 Application of Certain Deed of Trust Provisions to
Showboat Operating Company. The parties hereto acknowledge that
many of the provisions set forth herein are inapplicable to the
Collateral owned by Showboat Operating Company whose
participation herein as co-trustor is premised solely upon
pledging Collateral comprised of certain equipment, personal
property and fixtures. To the extent any provision herein is
inapplicable to same, Showboat Operating Company shall be
relieved from compliance therewith.
ARTICLE SEVEN
POWER OF ATTORNEY
7.1 Grant of Power. Trustor irrevocably appoints
Beneficiary and any successor thereto as its attorney-in-fact,
with full power and authority, including the power of
substitution, exercisable only during the continuance of an Event
of Default following the expiration of any applicable cure or
grace period to act, subject to all applicable Gaming Control
Acts, for Trustor in its name, place and stead as hereinafter
provided:
7.2 Possession and Completion. To take possession of the
Land and Las Vegas Showboat, remove all employees, contractors
and agents of Trustor therefrom, complete or attempt to complete
the work of construction, and market, sell or lease the Land and
the Las Vegas Showboat.
7.3 Plans. To make such additions, changes and corrections
in the current Plans as may be necessary or desirable, in
Beneficiary's reasonable discretion, or as it deems proper to
complete the restoration of the Las Vegas Showboat.
7.4 Employment of Others. To employ such contractors,
subcontractors, suppliers, architects, inspectors, consultants,
property managers and other agents as Beneficiary, in its
discretion, deems proper for the restoration of the Las Vegas
Showboat, for the protection or clearance of title to the Land or
Personal Property, or for the protection of Beneficiary's
interests with respect thereto.
7.5 Security Guards. To employ watchmen to protect the
Land and the Las Vegas Showboat from injury.
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7.6 Compromise Claims. To pay, settle or compromise all
bills and claims then existing or thereafter arising against
Trustor, which Beneficiary, in its discretion, deems proper for
the protection or clearance of title to the Land or Personal
Property, or for the protection of Beneficiary's interests with
respect thereto.
7.7 Legal Proceedings. To prosecute and defend all actions
and proceedings in connection with the Land or the Las Vegas
Showboat.
7.8 Other Acts. To execute, acknowledge and deliver all
other instruments and documents in the name of Trustor that are
necessary or desirable, to exercise Trustor's rights under all
contracts concerning the Land or the Projects, including, without
limitation, under any Space Leases, and to do all other acts with
respect to the Land or the Las Vegas Showboat that Trustor might
do on its own behalf, as Beneficiary, in its reasonable
discretion, deems proper.
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust,
Assignment of Rents and Security Agreement the day and year first
above written.
SHOWBOAT, INC.
a Nevada corporation,
as Trustor
By: /s/ R. Craig Bird
Name: R. Criag Bird
Title: Executive Vice President
Finance and Administration
SHOWBOAT OPERATING COMPANY
a Nevada corporation,
as Trustor
By: /s/ Leann Schneider
Name: Leann Schneider
Title: Treasurer
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STATE OF NEVADA :
: ss.
COUNTY OF CLARK :
This instrument was acknowledged before me on July 28, 1995
by R. Craig Bird as Executive Vice President-Finance and
Administration of Showboat, Inc.
/s/ Jean Y. Zorn
NOTARY PUBLIC
STATE OF NEVADA :
: ss.
COUNTY OF CLARK :
This instrument was acknowledged before me on July 28, 1995
by Leann Schneider as Treasurer of Showboat Operating Co.
/s/ Jean Y. Zorn
NOTARY PUBLIC
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SCHEDULE A
LAND DESCRIPTION
PARCEL ONE (1) :
THAT PORTION OF GOVERNMENT LOT THREE (3) IN SECTION 1,
TOWNSHIP 21 SOUTH, RANGE 61 EAST, M.D.B. & M., DESCRIBED AS
FOLLOWS:
BEGINNING AT THE POINT OF INTERSECTION OF THE WEST LINE OF SAID
GOVERNMENT LOT THREE (3) WITH THE SOUTHWESTERLY RIGHT OF WAY LINE
OF U.S. HIGHWAY NOS. 93-95-466 (200 FEET WIDE);
THENCE SOUTH 42 DEGREES 27' EAST ALONG THE SAID RIGHT OF WAY LINE
A DISTANCE OF 244.63 FEET TO THE TRUE POINT OF BEGINNING;
THENCE CONTINUING SOUTH 42 DEGREES 27' EAST A DISTANCE OF 404.01
FEET TO A POINT OF THE SOUTH LINE OF SAID LOT THREE (3);
THENCE SOUTH 89 DEGREES 37' WEST ALONG THE SAID SOUTH LINE A
DISTANCE OF 405.99 FEET TO A POINT ON THE EASTERLY RIGHT OF WAY
LINE OF ATLANTIC STREET (60 FEET WIDE);
THENCE NORTH 0 DEGREES 10' 30" WEST ALONG THE SAID EASTERLY RIGHT
OF WAY LINE, A DISTANCE OF 173.12 FEET TO A POINT;
THENCE NORTH 47 DEGREES 33' EAST A DISTANCE OF 181.63 FEET TO THE
TRUE POINT OF BEGINNING.
PARCEL TWO (2) :
THAT PORTION OF THE SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST
QUARTER (NW 1/4) OF SECTION 1, TOWNSHIP 21 SOUTH, RANGE 61 EAST,
M.D.B. & M., LYING WESTERLY OF U.S. HIGHWAY #93-95-466 (BOULDER
HIGHWAY), MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE NORTH LINE OF THE SAID
SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST QUARTER (NW 1/4) WITH
THE WEST LINE OF THE U.S. HIGHWAY #93-95-466;
THENCE SOUTH 42 DEGREES 27' EAST ALONG THE SAID WEST LINE OF THE
HIGHWAY A DISTANCE OF 135.87 FEET TO A POINT;
THENCE SOUTH 47 DEGREES 33' WEST A DISTANCE OF 500 FEET TO A
POINT;
THENCE NORTH 42 DEGREES 27' WEST AND PARALLEL WITH THE
AFOREMENTIONED WEST LINE OF THE U.S. HIGHWAY TO A POINT IN THE
WEST LINE OF THE SAID SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST
QUARTER (NW 1/4) OF SAID SECTION 1;
THENCE NORTH ALONG THE LAST MENTIONED WEST LINE TO THE NORTHWEST
CORNER OF SAID SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST
QUARTER (NW 1/4) OF SECTION 1;
CONTINUED
<PAGE>
THENCE NORTH 89 DEGREES 37' 50" EAST ALONG THE NORTH LINE OF SAID
SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST QUARTER (NW 1/4) A
DISTANCE OF 435.99 FEET TO THE POINT OF BEGINNING.
EXCEPT THE INTEREST IN THE WEST 30 FEET OF THE ABOVE DESCRIBED
PROPERTY AS CONVEYED TO THE COUNTY OF CLARK BY DEED DATED APRIL
17, 1950 AS DOCUMENT NO. 131015 OF OFFICIAL RECORDS, CLARK
COUNTY, NEVADA RECORDS, FOR STREET PURPOSES.
PARCEL THREE (3) :
THAT PORTION OF THE SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST
QUARTER (NW 1/4) OF SECTION 1, TOWNSHIP 21 SOUTH, RANGE 61 EAST,
M.D.B. & M., DESCRIBED AS FOLLOWS:
COMMENCING AT THE INTERSECTION OF THE NORTH LINE OF THE SAID
SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST QUARTER (NW 1/4) OF
SECTION 1, WITH THE WEST LINE OF THE STATE HIGHWAY (BOULDER
HIGHWAY);
THENCE SOUTH 42 DEGREES 27' EAST ALONG THE SAID WEST LINE OF THE
STATE HIGHWAY A DISTANCE OF 135.87 FEET TO THE TRUE POINT OF
BEGINNING;
THENCE SOUTH 47 DEGREES 33' WEST A DISTANCE OF 500 FEET TO A
POINT;
THENCE SOUTH 42 DEGREES 27' EAST AND PARALLEL WITH THE WEST LINE
OF THE SAID STATE HIGHWAY A DISTANCE OF 200 FEET TO A POINT;
THENCE NORTH 47 DEGREES 33' EAST A DISTANCE OF 500 FEET TO A
POINT IN THE AFOREMENTIONED WEST LINE OF THE STATE HIGHWAY;
THENCE NORTH 42 DEGREES 27"; WEST ALONG THE SAID WEST LINE OF THE
HIGHWAY A DISTANCE OF 200 FEET TO THE TRUE POINT OF BEGINNING.
PARCEL FOUR (4) :
THAT PORTION OF THE SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST
QUARTER (NW 1/4) OF SECTION 1, TOWNSHIP 21 SOUTH, RANGE 61 EAST,
M.D.B. & M., DESCRIBED AS FOLLOWS:
COMMENCING AT THE POINT OF INTERSECTION OF THE NORTH LINE OF THE
SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST QUARTER (NW 1/4) OF
SAID SECTION 1, WITH THE SOUTHWESTERLY RIGHT OF WAY LINE OF U.S.
HIGHWAY NOS. 93-95-466 (200 FEET WIDE);
THENCE SOUTH 42 DEGREES 27' EAST ALONG THE SAID RIGHT OF WAY LINE
A DISTANCE OF 735.87 FEET TO A POINT;
THENCE SOUTH 47 DEGREES 33' WEST A DISTANCE OF 500 FEET TO THE
MOST SOUTHERLY CORNER OF THAT CERTAIN PARCEL OF LAND CONVEYED BY
HARRY MACK ET AL TO RICHARD M. CLOUGH ET UX BY DEED RECORDED JUNE
3, 1949 AS DOCUMENT NO. 314105, CLARK COUNTY, NEVADA RECORDS, THE
TRUE POINT OF BEGINNING;
CONTINUED
<PAGE>
THENCE SOUTH 89 DEGREES 57' 35" WEST AND PARALLEL TO THE SOUTH
LINE OF THE SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST QUARTER
(NW 1/4) OF SAID SECTION 1 A DISTANCE OF 560.41 FEET MORE OR LESS
TO A POINT ON THE WEST LINE OF THE SOUTHEAST QUARTER (SE 1/4) OF
THE NORTHWEST QUARTER (NW 1/4) OF SAID SECTION 1;
THENCE NORTH 01 DEGREES 12' 57" WEST ALONG THE LAST MENTIONED
WEST LINE A DISTANCE OF 615.67 FEET MORE OR LESS TO A POINT
DISTANT SOUTH 47 DEGREES 33' WEST 500 FEET FROM THE
AFOREMENTIONED SOUTHWEST RIGHT OF WAY LINE;
THENCE SOUTH 42 DEGREES 27' EAST PARALLEL TO A DISTANT 500 FEET
FROM THE SAID SOUTHWESTERLY RIGHT OF WAY LINE A DISTANCE OF
833.74 FEET TO THE TRUE POINT OF BEGINNING.
EXCEPT THE INTEREST IN THE WEST THIRTY (30) FEET OF THE ABOVE
DESCRIBED PROPERTY AS CONVEYED TO THE COUNTY OF CLARK BY DEED
DATED APRIL 17, 1950 AS DOCUMENT NO. 131015 OF OFFICIAL RECORDS,
CLARK COUNTY, NEVADA RECORDS, FOR STREET PURPOSES.
PARCEL FIVE (5) :
THAT PORTION OF THE SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST
QUARTER (NW 1/4) OF SECTION 1, TOWNSHIP 21 SOUTH, RANGE 61 EAST,
M.D.M., DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF THE SOUTHEAST QUARTER
(SE 1/4) OF THE NORTHWEST QUARTER (NW 1/4) OF SAID SECTION 1;
THENCE NORTH 0 DEGREES 12' 57" WEST ALONG THE WEST LINE THEREOF A
DISTANCE OF 477.8 FEET TO THE SOUTHWEST CORNER OF THAT CERTAIN
PARCEL OF LAND CONVEYED TO IRVING KING, ET UX, BY DEED RECORDED
MAY 3, 1951 AS DOCUMENT NO. 370209 OF CLARK COUNTY,
NEVADA RECORDS.
THENCE ALONG THE SOUTH LINE OF SAID CONVEYED PARCEL NORTH
89 DEGREES 57' 35" EAST, 560.41 FEET TO THE SOUTHEAST CORNER OF
SAID CONVEYED PARCEL, SAID SOUTHEAST CORNER BEING DISTANT SOUTH
47 DEGREES 33' 00" WEST, 500 FEET FROM THE SOUTHWESTERLY LINE OF
U.S. HIGHWAY NOS. 93-05-466 (BOULDER HIGHWAY);
THENCE SOUTH 42 DEGREES 27' 00" EAST, PARALLEL WITH THE
SOUTHWESTERLY LINE OF SAID HIGHWAY, 579.45 FEET TO A POINT
DISTANT 50 FEET NORTH OF AND MEASURED AT RIGHT ANGLES TO THE
SOUTH LINE OF THE SAID SOUTHEAST QUARTER (SE 1/4) OF THE
NORTHWEST QUARTER (NW 1/4);
THENCE NORTH 89 DEGREES 56' 35" EAST, PARALLEL WITH THE LAST
MENTIONED SOUTH LINE, 179.23 FEET TO THE SOUTHEAST CORNER OF THAT
CERTAIN PARCEL OF LAND COVEYED TO I.A. STUB BY DEED RECORDED
JANUARY 4, 1950 AS DOCUMENT NO. 330010 OF SAID COUNTY RECORDS;
THENCE SOUTH 47 DEGREES 33' 00" WEST, ALONG THE SOUTHWESTERLY
PROLONGATION OF THE SOUTHEASTERLY LINE OF SAID PARCEL CONVEYED BY
DOCUMENT NO. 330010, A DISTANCE OF 74.13 FEET;
continued
<PAGE>
THENCE SOUTH 89 DEGREES 57' 43" WEST, ALONG THE SOUTH LINE OF THE
SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST QUARTER (NW 1/4) OF
SAID SECTION 1, A DISTANCE OF 1074.24 FEET TO THE POINT OF
BEGINNING.
EXCEPT THEREFROM THE INTEREST IN AND TO THE SOUTH 40.00 FEET OF
SAID LAND, AS CONVEYED TO THE COUNTY OF CLARK, FOR ROAD PURPOSES,
BY DEED RECORDED MARCH 22, 1951, AS DOCUMENT NO. 366543 OF CLARK
COUNTY NEVADA RECORDS.
ALSO EXCEPT THEREFROM THE INTEREST IN AND TO THE WEST 30 FEET
OF SAID LAND AS CONVEYED TO THE CITY OF LAS VEGAS, FOR ROAD
PURPOSES BY DEED RECORDED OCTOBER 9, 1962, AS DOCUMENT NO. 316163
OF OFFICIAL RECORDS OF CLARK COUNTY, NEVADA.
ALSO EXCEPT THEREFROM THAT CERTAIN SPANDREL AREA IN THE SOUTHWEST
CORNER THEREOF AS CONVEYED TO THE CITY OF LAS VEGAS BY DEED
RECORDED JUNE 23, 1966 IN BOOK 725 AS DOCUMENT NO. 582913 AND
JULY 19, 1966 IN BOOK 731 AS DOCUMENT NO. 587980, OF OFFICIAL
RECORDS.
PARCEL SIX (6) :
THAT PORTION OF THE SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST
QUARTER (NW 1/4) OF SECTION 1, TOWNSHIP 21 SOUTH, RANGE 61 EAST,
M.D.M., LYING WEST OF U.S. HIGHWAY NOS. 93-95-466, MORE
PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE INTERSECTION OF THE NORTH LINE OF THE SAID
SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST QUARTER (NW 1/4) WITH
THE WESTERLY LINE OF THE U.S. HIGHWAY NOS. 93-95-466 (BOULDER
HIGHWAY);
THENCE SOUTH 42 DEGREES 27' EAST ALONG THE WEST LINE OF SAID U.S.
HIGHWAY A DISTANCE OF 335.87 FEET TO THE TRUE POINT OF BEGINNING;
THENCE SOUTH 47 DEGREES 33' WEST A DISTANCE OF 500.00 FEET TO A
POINT;
THENCE SOUTH 47 DEGREES 27' EAST AND PARALLEL WITH THE
AFOREMENTIONED WEST LINE OF THE U.S. HIGHWAY A DISTANCE OF 100
FEET TO A POINT;
THENCE NORTH 47 DEGREES 33' EAST A DISTANCE OF 500 FEET TO A
POINT IN THE WEST LINE OF THE U.S. HIGHWAY;
THENCE NORTH 42 DEGREES 27' WEST ALONG THE LAST MENTIONED WEST
LINE A DISTANCE OF 100 FEET TO THE TRUE POINT OF BEGINNING.
continued
<PAGE>
PARCEL SEVEN (7) :
THAT PORTION OF THE SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST
QUARTER (NW 1/4) OF SECTION 1, TOWNSHIP 21 SOUTH, RANGE 61 EAST,
M.D.M., LYING SOUTHWESTERLY OF THE U.S. HIGHWAY NOS. 93-95-466,
MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE INTERSECTION OF THE NORTH LINE OF SAID
SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST QUARTER (NW 1/4) WITH
THE SOUTHWESTERLY LINE OF SAID U.S. HIGHWAY NOS. 93-95-466
(BOULDER HIGHWAY);
THENCE SOUTH 42 DEGREES 27' EAST ALONG THE SOUTHWESTERLY LINE OF
THE SAID HIGHWAY A DISTANCE OF 435.87 FEET TO THE MOST EASTERLY
CORNER OF THAT CERTAIN PARCEL OF LAND CONVEYED BY LOUIS MACK, ET
AL TO VAUGHN O. HOLT, ET UX, BY DEED DATED SEPTEMBER 13, 1948 AND
RECORDED SEPTEMBER 16, 1948 AS DOCUMENT NO. 295909, CLARK COUNTY,
NEVADA RECORDS, BEING THE POINT OF BEGINNING;
THENCE SOUTH 47 DEGREES 33' WEST ALONG THE SOUTHEASTERLY LINE OF
THE SAID CONVEYED PARCEL, A DISTANCE OF 500 FEET TO THE MOST
SOUTHERLY CORNER OF THE PARCEL CONVEYED TO SAID VAUGHN O. HOLT;
THENCE SOUTH 42 DEGREES 27' EAST AND PARALLEL WITH THE SAID
SOUTHWESTERLY LINE OF THE U.S. HIGHWAY A DISTANCE OF 100 FEET TO
A POINT;
THENCE NORTH 47 DEGREES 33' EAST A DISTANCE OF 500 FEET TO A
POINT IN SAID SOUTHWESTERLY LINE OF THE HIGHWAY;
THENCE NORTH 47 DEGREES 27' WEST, ALONG THE LAST MENTIONED
SOUTHWESTERLY LINE A DISTANCE OF 100 FEET TO THE TRUE POINT OF
BEGINNING.
continued
<PAGE>
PARCEL EIGHT (8) :
THAT PORTION OF THE SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST
QUARTER (NW 1/4) OF SECTION 1, TOWNSHIP 21 SOUTH, RANGE 61 EAST,
M.D.B. & M., LYING SOUTHWESTERLY OF U.S. HIGHWAY NOS. 93-95-466,
MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE INTERSECTION OF THE NORTH LINE OF SAID
SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST QUARTER (NW 1/4) WITH
THE SOUTHWESTERLY LINE OF SAID U.S. HIGHWAY NOS. 93-95-466
(BOULDER HIGHWAY);
THENCE NORTH 42 DEGREES 27' EAST ALONG THE SOUTHWESTERLY LINE OF
THE SAID HIGHWAY A DISTANCE OF 535.87 FEET TO THE MOST EASTERLY
CORNER OF THAT CERTAIN PARCEL OF LAND CONVEYED BY LOUIS MACK, ET
AL TO KARL L. SCHOTT BY DEED RECORDED NOVEMBER 22, 1948, AS SHOWN
AS DOCUMENT NO. 300678, CLARK COUNTY, NEVADA RECORDS, BEING THE
TRUE POINT OF BEGINNING;
THENCE SOUTH 47 DEGREES 33' WEST ALONG THE SOUTHEASTERLY LINE OF
THE LAST MENTIONED CONVEYED PARCEL A DISTANCE OF 500 FEET TO
THE MOST SOUTHERLY CORNER OF THE SAID PARCEL CONVEYED TO KARL L.
SCHOTT;
THENCE SOUTH 42 DEGREES 27' EAST AND PARALLEL WITH THE SAID
SOUTHWESTERLY LINE OF U.S. HIGHWAY NOS. 93-95-466 A DISTANCE OF
100 FEET TO A POINT;
THENCE NORTH 47 DEGREES 33' EAST A DISTANCE OF 500 FEET TO A
POINT IN THE AFOREMENTIONED SOUTHWESTERLY LINE OF THE U.S.
HIGHWAY;
THENCE NORTH 42 DEGREES 27' WEST ALONG THE LAST MENTIONED
SOUTHWESTERLY LINE A DISTANCE OF 100 FEET TO THE TRUE POINT OF
BEGINNING.
continued
<PAGE>
PARCEL NINE (9) :
THAT PORTION OF THE SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST
QUARTER (NW 1/4) OF SECTION 1, TOWNSHIP 21 SOUTH, RANGE 61 EAST,
M.D.B. & M., (CLARK COUNTY, NEVADA) BEING MORE PARTICULARLY
DESCRIBED AS FOLLOWS:
COMMENCING AT THE NORTH INTERSECTION OF THE NORTH LINE OF THE
SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST QUARTER (NW 1/4) OF
SAID SECTION 1, AND THE SOUTHWESTERLY RIGHT-OF-WAY LINE OF U.S.
HIGHWAY NOS. 93-95-466 (200.00 FEET WIDE);
THENCE SOUTH 42 DEGREES 27' 00" EAST ALONG THE SAID SOUTHWESTERLY
RIGHT-OF-WAY LINE A DISTANCE OF 635.87 FEET TO A POINT BEING THE
MOST EASTERLY CORNER OF THAT CERTAIN PARCEL OF LAND AS CONVEYED
TO FIRST NATIONAL BANK OF NEVADA, A NATIONAL BANKING ASSOCIATION,
BY DEED RECORDED DECEMBER 12, 1962 AS DOCUMENT NO. 327145
OFFICIAL RECORDS, CLARK COUNTY, NEVADA, SAID POINT ALSO BEING THE
TRUE POINT OF BEGINNING;
THENCE SOUTH 47 DEGREES 33' 0" WEST ALONG THE SOUTHEASTERLY LINE
OF SAID FIRST NATIONAL BANK PARCEL A DISTANCE OF 500.00 FEET TO A
POINT IN THE NORTHEASTERLY LINE OF THAT CERTAIN PARCEL OF LAND
CONVEYED TO IRVING KING, ET UX BY DEED RECORDED MAY 3, 1951 AS
DOCUMENT NO. 37209 OFFICIAL RECORDS, CLARK COUNTY, NEVADA;
THENCE SOUTH 42 DEGREES 27' 00" EAST ALONG THE NORTHEASTERLY LINE
OF SAID KING PARCEL A DISTANCE OF 400.00 FEET TO A POINT BEING
THE MOST WESTERLY CORNER OF THAT CERTAIN PARCEL OF LAND AS
CONVEYED TO THE I.A. STUB BY AN AGREEMENT DATED AUGUST 19,
1948 AS DOCUMENT NO. 294205 OFFICIAL RECORDS, CLARK COUNTY,
NEVADA;
THENCE NORTH 47 DEGREES 33' 00" EAST ALONG THE NORTHWESTERLY LINE
OF SAID STUB PARCEL A DISTANCE OF 500.00 FEET TO A POINT IN THE
AFOREMENTIONED SOUTHWESTERLY RIGHT-OF-WAY LINE OF U.S. HIGHWAY
NOS. 93-95-466;
THENCE NORTH 47 DEGREES 27' 00" WEST ALONG SAID RIGHT-OF-WAY LINE
A DISTANCE OF 400.00 FEET TO THE TRUE POINT OF BEGINNING.
<PAGE>
SCHEDULE B
List of Existing Encumbrances
(1) TAXES: State and County Taxes for the fiscal period of 1995
to 1996, a lien now due and payable in the total amount of
$515,564.46
First installment of $128,891.46 unpaid delinquent third Monday
in August
Second installment of $128,891.00 upaid delinquent first Monday
in October
Third installment of $128,891.00 unpaid delinquent first Monday
in January
Fourth installment of $128,891.00 unpaid delinquent first Monday
in March
AFFECTS: PARCELS 1 THROUGH 5
(2) TAXES: State and County Taxes for the fiscal period of 1995
to 1996, a lien now due and payable in the total amount of
$23,851.99
First installment of $5,965.99 unpaid delinquent third Monday in
August
Second installment of $5,962.00 unpaid delinquent first Monday in
October
Third installment of $5,962.00 unpaid delinquent first Monday in
January
Fourth installment of $5,962.00 unpaid delinquent first Monday in
March
AFFECTS: PARCELS 6 THROUGH 9
(3) SUPPLEMENTAL TAXES: Any supplemental taxes which may become
a lien on the subject property by reason of increased valuations
due to land use or improvement, NRS 361.260, or otherwise.
(4) PATENT: Reservations and Easements in the patent from the
State of Nevada, recorded November 30, 1902, in Book 3 "F" of
Miscellaneous Records, Page 270, Lincoln County, Records.
Affects: Parcel 1
<PAGE>
(5) PATENT: Reservations and Easements in the patent from the
State of Nevada, recorded September 11, 1911, in Book 2 of Deeds,
Page 62 as Document No. 3168 of Official Records.
Affects: Parcels 2 through 9
(6) EASEMENT: An easement affecting that portion of said land
and for the purposes therein and incidental purposes thereto,
in favor of NEVADA POWER COMPANY, for electrical lines, recorded
October 14, 1959, as Document No. 176384 of Official Records.
Affects: The South 10 feet of Parcel 8
(7) EASEMENT: An easement affecting that portion of said land
and for the purposes therein and incidental purposes thereto, in
favor of SOUTHERN NEVADA POWER COMPANY, for electrical lines,
recorded April 18, 1961, as Document No. 237213 of Official
Records.
Affects: The Southeasterly 6.00 feet of Parcel 3; the Southerly
6.00 feet; and the Southeasterly 400.00 feet of the Northeasterly
6.00 feet of Parcel 4
A portion of said right-of-way has been relinquished by
instrument entitled "PARTIAL RELINQUISHMENT OF RIGHT-OF-WAY
GRANT" executed by NEVADA POWER COMPANY, recorded July 27, 1972
as Document No. 209184 of Offical Records.
Affects: The Southeasterly 6.00 feet of Parcel 3
(8) EASEMENT: An easement affecting that portion of said land
and for the purposes therein and incidental purposes thereto, in
favor of SOUTHERN NEVADA POWER COMPANY, for electrical lines,
recorded May 17, 1961, as Document No. 241058 and recorded June
20, 1961 as Document No. 245546 of Official Records.
Affects: The Northerly 6.00 feet of Parcel 5
(9) EASEMENT: An easement affecting that portion of said land
and for the purposes therein and incidental purposes thereto, in
favor of NEVADA POWER COMPANY, for electrical lines, recorded
June 19, 1962, as Document No. 273434 of Official Records.
Affects: The Westerly 50.00 feet of the Southerly 10.00 feet of
the Northerly 156.00 feet of said Southeast Quarter of the
Northwest Quarter.
SAVING AND ACCEPTING that portion within Atlantic Avenue (60 feet
wide).
Affects: Parcel 2
<PAGE>
(10) EASEMENT: An easement affecting that portion of said land
and for the purposes therein and incidental purposes thereto, in
favor of NEVADA POWER COMPANY, for electrical and communication
lines, recorded June 5, 1962, as Document No. 294462 of Official
Records.
Affects: The Southeasterly 6.00 feet of Parcel 9
(11) EASEMENT: An easement affecting that portion of said land
and for the purposes therein and incidental purposes thereto, in
favor of NEVADA POWER COMPANY, for electrical lines, recorded
April 4, 1963, as Document No. 350080 of Official Records.
Affects: A strip of land 12.00 feet in width being 6.00 feet on
each side of the following described centerline:
COMMENCING at the Southeast Quarter (SE 1/4) of the Northwest
Quarter (NW 1/4) of said Section 1;
thence North 0 degrees 10' 00" West a distance of 155.00 feet to
a point;
thence North 89 degrees 59' 00" East a distance of 30.00 feet to
a point on the East line of Atlantic Street, said point being the
POINT OF BEGINNING;
thence continuing North 89 degrees 59' 00" East a distance of
25.00 feet to the point of ending.
Affects: Parcel 1
(12) EASEMENT: An easement affecting that portion of said land
and for the purposes therein and incidental purposes thereto, in
favor of NEVADA POWER COMPANY, for electrical lines, recorded
April 26, 1963, as Document No. 355007 of Official Records.
Affects: The South 250.00 feet of the Easterly 6.00 feet of
Parcel 6
(13) EASEMENT: An easement affecting that portion of said land
and for the purposes therein and incidental purposes thereto, in
favor of NEVADA POWER COMPANY, for electrical lines, recorded
June 21, 1963, as Document No. 366400 of Official Records.
Affects: The Easterly 6.00 feet of Parcel 6
(14) EASEMENT: An easement affecting that portion of said land
and for the purposes therein and incidental purposes thereto, in
favor of NEVADA POWER COMPANY, for electrical lines, recorded
June 21, 1963, as Document No. 366415 of Official Records.
Affects: Westerly 6.00 feet of Parcel 7
<PAGE>
(15) EASEMENT: An easement affecting that portion of said land
and for the purposes therein and incidental purposes thereto, in
favor of CENTRAL TELEPHONE COMPANY, for communication lines,
recorded November 23, 1971, as Document No. 147041 of Official
Records.
The exact location and extent of said easement is not disclosed
in the document of record.
Affects: Parcel 9
(16) EASEMENT: An easement affecting that portion of said land
and for the purposes therein and incidental purposes thereto, in
favor of NEVADA POWER COMPANY and CENTRAL TELEPHONE COMPANY, for
electrical and communication lines, recorded March 21, 1972, as
Document No. 175649 of Official Records.
Affects: The South 6.00 feet of Parcel 6
(17) EASEMENT: An easement affecting that portion of said land
and for the purposes therein and incidental purposes thereto, in
favor of NEVADA POWER COMPANY and CENTRAL TELEPHONE COMPANY, for
electrical and communication facilities, recorded April 3, 1975,
as Document No. 466430 of Official Records.
Affects: Strips of land 10.00 feet in width being 5.00 feet on
each side of the following centerlines:
CENTERLINE NO. 1:
COMMENCING at the point of intersection of the North line of the
Southeast Quarter (SE 1/4) of the Northwest Quarter (NW 1/4) of
said Section 1, with the Westerly line of the U.S. Highway Nos.
93-95-466 (Boulder Highway);
thence South 42 degrees 27' 00" East along the West line of said
highway a distance of 530.87 feet to a point hereinafter
designated as Point 1;
thence South 47 degrees 33' 00" West a distance of 505.00 feet to
a point;
thence South 42 degrees 27' 00" East a distance of 105.00 feet to
a point hereinafter designated as Point 2;
thence continuing South 42 degrees 27' 00" East a distance of
68.00 feet to a point hereinafter desifnated as Point 3;
thence continuing South 42 degrees 27' 00" East a distance of
32.00 feet to the POINT OF BEGINNING;
thence continuing South 42 degress 27' 00" East a distance of
276.00 feet to a point hereinafter designated as Point 4;
thence continuing South 42 degrees 27' 00" East to a point on
Grantor's Southerly property line, said point being the point of
ending of Centerline No. 1.
Continued
<PAGE>
CENTERLINE NO. 2:
BEGINNING at aforementioned Point 1;
thence South 47 degrees 33' 00" West a distance of 535.00 feet to
the Point of ending of Centerline No. 2.
CENTERLINE NO. 3:
BEGINNING at aforementioned Point 2;
thence South 47 degress 33' 00" West a distance of 30.00 feet to
the point of ending of Centerline No. 3.
CENTERLINE NO. 4:
BEGINNING at aforementioned Point 3;
thence South 47 degrees 33' 00" West a distance of 30.00 feet to
the point of ending of Centerline No. 4.
CENTERLINE NO. 5:
BEGINNING at aforementioned Point 4;
thence South 47 degrees 33' 00" West a distance of 30.00 feet to
the point of ending of Centerline No. 5.
Affects: Parcels 4, 5 and 7
(18) EASEMENT: An easement affecting that portion of said land
and for the purposes therein and incidental purposes thereto, in
favor of NEVADA POWER COMPANY, for an electrical substation,
recorded April 29, 1975, as Document No. 473255 of Official
Records.
Affects: COMMENCING at Southwest (SW) corner of the Southeast
Quarter (SE 1/4) of the Northwest Quarter (NW 1/4) of said
Section 1;
thence South 89 degrees 43' 39" East along the South line of the
Southeast Quarter (SE 1/4) of the Northwest Quarter (NW 1/4) of
said Section 1, per File 8 of Surveys, page 49, in the Office of
the County Recorder, a distance of 30.00 feet to a point;
thence North 00 degrees 00' 25" West a distance of 449.50 feet to
a point;
thence North 89 degrees 31' 40" East a distance of 425.00 feet to
the POINT OF BEGINNING;
thence continuing North 89 degrees 31' 40" East a distance of
80.00 feet to a point;
thence South 00 degrees 28' 20" East a distance of 25.00 feet to
a point;
thence South 89 degrees 31' 40" West a distance of 80.00 feet to
a point;
thence North 00 degrees 28' 20" West a distance of 25.00 feet to
the POINT OF BEGINNING.
Affects: Parcel 5
<PAGE>
(19) EASEMENT: An easement affecting that portion of said land
and for the purposes therein and incidental purposes thereto, in
favor of NEVADA POWER COMPANY, for electrical lines, recorded
November 1, 1978, in Book 964 as Document No. 923075 of Official
Records.
Affects: PARCEL NO. 1:
A strip of land 10.00 feet in width being 5.00 feet on each side
of the following described centerline:
COMMENCING at the centerline intersection of Atlantic Street and
Clifford Avenue;
thence North 89 degrees 46' 20" East, 30.00 feet;
thence North 00 degrees 13' 40" West per File 13 of Surveys, page
26, recorded June 5, 1963 as Document No. 363093 in Book 450 of
Official Records, Clark County, Nevada, a distance of 39.00 feet
to the POINT OF BEGINNING;
thence North 89 degrees 46' 20" East, 45.00 feet;
thence South 51 degrees 02' 30" East, 128.00 feet to a point
hereinafter designated as Point A, said point also being the
point of ending of said centerline.
PARCEL NO. 2:
A strip of land 20.00 feet in width being 10.00 feet on each side
of the following described centerline:
BEGINNING at the aforementioned Point A;
thence South 51 degrees 02' 30" East, 30.00 feet to the point of
ending of said centerline.
Affects: Parcels 1 and 2
(20) TERM, COVENANTS, CONDITIONS AND PROVISIONS in an instrument
entitiled, "ENCROACHMENT AGREEMENT", by and between CITY OF LAS
VEGAS, a municipal corporation and SHOWBOAT, INC. recorded
October 27, 1986, in Book 861027 as Document No. 00778, of
Official Records.
(21) A LEASE executed by and between the parties named herein,
for the term and upon and subject to all of the terms, covenants,
and provisions contained therein;
Dated: January 1, 1989
Lessor: SHOWBOAT, INC., a Nevada corporation
Lessee: SHOWBOAT OPERATING COMPANY, a Nevada corporation
Term: 10 YEARS
Disclosed by: MEMORANDUM OF LEASE (WITH CANCELLLATION OF PRIOR
LEASE)
Recorded: June 21, 1990 in Book 900621 as Document No. 00420
Affects: All Parcels
<PAGE>
The herein above referenced lease was suboridnated to the lien or
charge of the Deed of trust referred to as Item No. 24 by
document entitiled "SUBORDINATION AGREEMENT", recorded May 18,
1993 in Book 930518 as Document No. 00392.
(22) EASEMENT: An easement affecting that portion of said land
and for the purposes therein and incidental purposes thereto, in
favor of NEVADA POWER COMPANY, for underground electric
system(s), recorded September 21, 1990, in Book 900921 as
Document No. 00787 of Official Records.
Affects: A strip of land 6.00 feet in width, being 3.00 feet on
each side of the following described centerline:
COMMENCING at the intersection of the North (N) line of the
Southeast Quarter of the Northwest Quarter (SE 1/4 NW 1/4) of
said Section 1 with the West line of the U.S. Highway 93-95-466;
thence South 42 degrees 27' 00" East, along the West right-of-way
line of said U.S. Highway 93-95-466, a distance of 124.37 feet;
thence South 48 degrees 05' 25" West, 26.43 feet to a point
hereinafter referred to as POINT "A", being also the POINT OF
BEGINNING;
thence continuing South 48 degrees 05' 25" West, 231.94 feet;
thence North 42 degrees 31' 33" West, 205.50 feet to a point
hereinafter referred to as POINT "B", being the point of ending.
The sideline boundaries of said Strip shall be lengthened or
shortened so as to intersect at the angle point.
Also, the following described parcels of land:
PARCEL 1:
BEGINNING at POINT "A";
thence North 42 degrees 27' 00" West, 37.49 feet;
thence North 47 degrees 33' 00" East, 26.43 to a point on the
Westerly right of way line of the U.S. Highway 93-95-466;
thence South 42 degrees 27' 00" East, along said Westerly right
of way line, 66.85 feet;
thence South 42 degrees 33' 00" West, 26.43 feet;
thence North 42 degrees 27' 00" West, 29.36 feet to the POINT OF
BEGINNING.
PARCEL 2:
BEGINNING at POINT "B";
thence North 46 degrees 45' 10" East, 15.61 feet;
thence North 43 degrees 14' 50" West, 23.00 feet;
thence South 46 degrees 45' 10" West, 20.10 feet;
thence South 43 degrees 14' 50" East, 23.00 feet;
thence North 46 degrees 45' 10" East, 4.49 feet to the POINT OF
BEGINNING.
Affects: Parcels 2 and 3
<PAGE>
(23) FINANCING STATEMENT: The effect of a FINANCING STATEMENT to
secure an indebtedness of the amount stated herein, executed by
SHOWBOAT OPERATING COMPANY, in favor of SIGN SYSTEMS, in the
amount of $3,515,512.00, dated March 10, 1993, and recorded March
19, 1993 in Book 930319 as Document No. 00860 of Official
Records.
Affects: Pylon Display Sign situated on said property (Exact
Location not disclosed)
(24) DEED OF TRUST: A Deed of Trust to secure an indebtedness of
$215,000,000.00 and any other amounts payable under the terms
thereof:
Recorded: May, 18 1993 in Book 930518 Document No. 00390 of
Official Records.
Dated: May 18, 1993
Trustor: SHOWBOAT, INC., A NEVADA CORPORATION
Trustee: NEVADA TITLE COMPANY, A NEVADA CORPORATION
Beneficiary: IBJ SCHRODER BANK & TRUST COMPANY, A NEW YORK
BANKING CORPORATION AS INDENTURE TRUSTEE
The amount due, terms and conditions of the indebtedness should
be determined by contacting the owner if the debt.
Affects: All Parcels
(25) FINANCING STATEMENT: the effect of a FINANCING STATEMENT to
secure an indebtedness of the amount stated herein, executed by
SHOWBOAT, INC., A NEVADA CORPORATION, in favor of IBJ SCHRODER
BANK & TRUST COMPANY, A NEW YORK BANKING CORPORATION, AS TRUSTEE
UNDER THAT CERTAIN INDENTURE DATED AS OF MAY 17, 1993, in the
amount of $ (NOT SET OUT), dated May 17, 1993, and recorded May
18, 1993 in Book 930518 as Document No. 00391 of Official
Records.
Affects: All Parcels
(26) FINANCING STATEMENT: The effect of a FINANCING STATEMENT to
secure an indebtedness of the amount stated herein, executed by
SHOWBOAT OPERATING COMPANY, in favor of IBJ SCHRODER BANK & TRUST
COMPANY, in the amount of $ (NOT SET OUT), dated (NOT SET OUT),
and recorded May 18, 1993 in Book 930518 as Document No. 00393 of
Official Records.
Affects: All Parcels
(27) MECHANICS LIEN: A claim of MECHANIC'S LIEN by COM CON, INC.,
a Nevada corporation, recorded July 1, 1993 in Book 930701 of
Official Records as document number 01081.
Amount: $71,879.11
<PAGE>
(28) MECHANICS LIEN: A claim of MECHANIC'S LIEN by DAN BRADLEY'S
GLASS SHOP, recorded July 23, 1993 in Book 930723 of Official
Records as document number 00895.
Amount: $8,100.00
(29) MECHANICS LIEN: A claim of MECHANIC'S LIEN by MORENA TILE,
recorded August 3, 1993 in Book 930803 of Official Records as
document number 00963.
Amount: $4,653.40
(30) MECHANICS LIEN: A claim of MECHANIC'S LIEN by THE LABOR
EXCHANGE, recorded August 9, 1993 in Book 930809 of Official
Records as document number 01307.
Amount: $12,150.40
(31) MECHANICS LIEN: A claim of MECHANIC'S LIEN by VERSA-TILE,
recorded September 16, 1993 in Book 930916 of Official Records as
document number 00913.
Amount: $7,451.40
(32) LIS PENDENS: An action commenced in the DISTRICT COURT,
CLARK COUNTY, NEVADA, dated December 17, 1993, Case No. A328549,
entitled, "AN ACTION TO FORECLOSE UPON THE NOTICE OF CLAIM OF
LIEN FILED BY PLAINTIFF", COM CON, INC., a Nevada Corporation
- -vs- NEW HOTEL SHOWBOAT, INC., a Nevada Corporation
Notice of Pendency of said Action was recorded December 22, 1993
in Book 931222 as Dcoument No. 01263 of Official Records.
Affects: Mechanic's Lien shown as Item No. 27 herein.
Said Lis pendens was Amended by Notice recorded December 29, 1993
in Book 931229 as Document No. 01492 of Official Records.
NOTE: COM CON, INC., A NEVADA CORPORATION filed a petition for
relief under Chapter 7 of the Bankruptcy Code on March 21, 1995
in the U.S. Bankruptcy Court, District of Nevada, Case No.
95-1093.
<PAGE>
Recording Requested By and
Return Recorded Counterparts to:
Peter W. Leibundgut, Esquire
Clark, Ladner, Fortenbaugh & Young
Woodland Falls Corporate Park
200 Lake Drive East
Suite 300
Cherry Hill, New Jersey 08002
LEASEHOLD IN PARI PASSU MORTGAGE, ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
MADE BY
ATLANTIC CITY SHOWBOAT, INC,
a New Jersey Corporation,
as Mortgagor,
for the benefit of
NATWEST BANK, N.A.,
a National Banking Corporation
*****************************************************************
THIS INSTRUMENT IS TO BE FILED AND INDEXED IN THE REAL
ESTATE RECORDS OF ATLANTIC COUNTY, NEW JERSEY, UNDER THE NAMES OF
ATLANTIC CITY SHOWBOAT, INC., AS "MORTGAGOR" AND RESORTS
INTERNATIONAL, INC. AS "LESSOR."
THIS MORTGAGE OPERATES AS A FIXTURE FILING AND THE RECORD
OWNERS OF THE PROPERTY LOCATED IN ATLANTIC CITY, COUNTY OF
ATLANTIC, STATE OF NEW JERSEY, ARE ATLANTIC CITY SHOWBOAT, INC.,
AND RESORTS INTERNATIONAL, INC.
THIS MORTGAGE OPERATES AS A FEE MORTGAGE WITH RESPECT TO
REAL PROPERTY OWNED BY MORTGAGOR AS DESCRIBED HEREIN AND AS A
LEASEHOLD MORTGAGE WITH RESPECT TO REAL PROPERTY OWNED BY RESORTS
INTERNATIONAL, INC. AND LEASED BY MORTGAGOR AS DESCRIBED HEREIN.
1
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TABLE OF CONTENTS
ARTICLE ONE
COVENANTS OF MORTGAGOR
1.1 Performance of Loan Documents 17
1.2 General Representations, Covenants and Warranties 17
1.3 Compliance with Legal Requirements 18
1.4 Taxes 18
1.5 Insurance 18
1.6 Condemnation 21
1.7 Care of Mortgaged Property 22
1.8 Environmental Laws 22
1.9 Leases 24
1.10 Treatment of Facility Leases in Bankruptcy 26
1.11 Rejection of Facility Leases by Facility Lessor 27
1.12 Assignment of Claims to Mortgagee 27
1.13 Offsets by Mortgagor 27
1.14 Mortgagor's Acquisition of Interest in Leased 28
Parcels
1.15 New Facility Leases Issued to Mortgagee 28
1.16 Further Encumbrance, Sale or Other Disposition of 28
Collateral
1.17 Partial Releases of Mortgaged Property 29
1.18 Lien Subrogation 30
1.19 Further Assurances 30
1.20 Security Agreement and Financing Statements 30
1.21 Assignment of Rents 32
1.22 Expenses 33
1.23 Mortgagee's Cure of Mortgagor's Default 33
1.24 Use of Land 34
1.25 Material Space Leases 34
1.26 Compliance with Permitted Lien Agreements 34
1.27 Defense of Actions 34
1.28 Affiliates 34
1.29 Future Advances 34
1.30 Title Insurance 34
1.31 Exculpation of Mortgagee 34
ARTICLE TWO
CORPORATE LOAN PROVISIONS
2.1 Interaction with Indenture, Loan Agreement and 35
Intercreditor Agreement
2.2 Other Collateral 35
ARTICLE THREE
DEFAULTS
3.1 Event of Default 35
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PAGE
ARTICLE FOUR
REMEDIES
4.1 Acceleration of Maturity 36
4.2 Protective Advances 37
4.3 Institution of Equity Proceedings 37
4.4 Mortgagee's Power of Enforcement 37
4.5 Mortgagee's Right to Enter and Take Possession, 38
Operate and Apply Income
4.6 Leases 39
4.7 Purchase by Mortgagee 39
4.8 Waiver of Appraisement, Valuation, Stay, Extension 39
and Redemption Laws
4.9 Receiver 39
4.10 Suits to Protect the Mortgaged Property 40
4.11 Proofs of Claim 40
4.12 Mortgagor to Perform Obligations; Application of 40
Monies by Mortgagee
4.13 Delay or Omission; No Waiver 41
4.14 No Waiver of One Default to Affect Another 41
4.15 Discontinuance of Proceedings; Position of Parties 41
Restored
4.16 Remedies Cumulative 41
4.17 Interest After Event of Default 42
4.18 Foreclosure; Expenses of Litigation 42
4.19 Deficiency Judgments 42
4.20 Waiver of Jury Trial 42
4.21 Reasonable Use and Occupancy 42
4.22 Exculpation of Mortgagee 43
ARTICLE FIVE
MISCELLANEOUS PROVISIONS
5.1 Heirs, Successors and Assigns Included in Parties 43
5.2 No Merger 43
5.3 Addresses for Notices, Etc 44
5.3.1 Change of Address 44
5.4 Headings 44
5.5 Invalid Provisions to Affect No Others 44
5.6 Changes and Priority Over Intervening Liens 45
5.7 Estoppel Certificates 45
5.8 Governing Law 45
5.9 Required Notices 45
5.10 Continued Priority of Lien 45
5.11 Attorneys' Fees 45
5.12 Late Charges 46
5.13 Cost of Accounting 46
5.14 Right of Entry 46
5.15 Corrections 46
5.16 Statute of Limitations 46
5.17 Subrogation 46
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Page
5.18 Joint and Several Liability 46
5.19 Context 46
5.20 Time 47
5.21 Interpretation 47
5.22 Exhibits and Schedules 47
5.23 Integration 47
5.24 Recording of Mortgage, Etc 47
5.25 Consents 47
5.26 Usury Laws 47
5.27 Gaming Control Acts 47
ARTICLE SIX
POWER OF ATTORNEY
6.1 Grant of Power 48
6.2 Possession and Completion 48
6.3 Employment of Others 48
6.4 Security Guards 48
6.5 Compromise Claims 48
6.6 Legal Proceedings 48
6.7 Other Acts 48
EXHIBIT A FORM OF DISBURSEMENT REQUEST AND CERTIFICATE
SCHEDULE A LAND DESCRIPTION, INCLUDING LEASE DESCRIPTION
SCHEDULE B LIST OF EXISTING ENCUMBRANCES
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LEASEHOLD IN PARI PASSU MORTGAGE, ASSIGNMENT OF
RENTS AND SECURITY
AGREEMENT
Pursuant to Section 1.16 of that certain Leasehold Mortgage,
Assignment of Rents and Security Agreement, dated as of May 18,
1993 among Atlantic City Showboat, Inc., as mortgagor and
Showboat, Inc., as mortgagee, recorded in the office of the Clerk
of Atlantic County on May 19, 1993 in Book 5028 Page 284 as
amended by that certain First Amendment to Leasehold Mortgage,
Assignment of Rents and Security Agreement dated July 9, 1993
recorded May 19, 1993 in Mortgage Book 5095, page 209; and
pursuant to that Leasehold Mortgage, Assignment of Rents and
Security Agreement made by Atlantic City Showboat, Inc. to IBJ
Schroder Bank & Trust Company (as Trustee) recorded May 19, 1993
in Mortgage Book 5020, page 1 as amended by that First Amendment
to Leasehold Mortgage Assignment of Rents and Security Agreement
recorded July 28, 1993 in Mortgage Book 5095, page 209 as amended
by that Second Amendment to Leasehold Mortgage Assignment of
Rents and Security Agreement dated as of July 6, 1995; and,
pursuant to Section 1.10 of that certain Deed of Trust,
Assignment of Rents and Security Agreement, dated as of May 18,
1993 made by Showboat, Inc., as Trustor, to Nevada Title Company,
as Trustee for the benefit of IBJ Schroder Bank and Trust Company
as Beneficiary, recorded on May 18, 1993 in Book 5500, page 284,
the lien created by this instrument ranks PARI PASSU with the
liens created by said Leasehold Mortgages, and Deed of Trust as
amended.
THIS LEASEHOLD MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY
AGREEMENT (hereinafter called "Leasehold Mortgage") is made as of
July 6, 1995, by and between ATLANTIC CITY SHOWBOAT, INC., a New
Jersey corporation ("Mortgagor"), whose address is 801 Boardwalk,
Atlantic City, New Jersey 08401, and NATWEST BANK, N.A. a
National Banking Association, ("Mortgagee").
DEFINITIONS - As used in this Leasehold Mortgage, the
following terms have the meanings hereinafter set forth:
"ACCOUNTS RECEIVABLE" shall have the meaning set forth in
Section 9-106 of the UCC for the term "account."
"ACSI GUARANTY" means that certain guaranty made by
Mortgagor in favor of Mortgagee under the Loan Agreement.
"ACSI PROMISSORY NOTE" means that certain promissory note
in the amount of $215,000,000.00 between Atlantic City Showboat,
Inc., as payor and Showboat, Inc. as payee.
"AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person, and, with
respect to any specified natural Person, any other Person having
a relationship by blood, marriage or adoption not more remote
than first cousins with such natural Person. For purposes of this
definition, "control" (including, with correlative meanings, the
terms "controlled by" and "under common control with") as used
with respect to any Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the
ownership of voting securities or by agreement or otherwise;
PROVIDED, HOWEVER, that beneficial ownership of 10% or more of
the voting securities of a Person shall be deemed control.
"APPURTENANT RIGHTS" means all and singular tenements,
hereditaments, rights, reversions, remainders, development
rights, privileges, benefits, easements (in gross or
appurtenant), rights-of-way, gores or strips of land, streets,
ways, alleys, passages, sewer rights, water courses, water rights
and powers, and all appurtenances whatsoever and claims or
demands of Mortgagor at law or in equity in any way belonging,
benefitting, relating or appertaining to Mortgagee's interest in
the Land under any Facility Lease or otherwise, the airspace over
the Land, the
5
<PAGE>
Improvements or any of the Mortgaged Property encumbered by this
Leasehold Mortgage, or which hereinafter shall in any way belong,
relate or be appurtenant thereto, whether now owned or hereafter
acquired by Mortgagor.
"ATLANTIC CITY SHOWBOAT" means the Showboat Casino Hotel in
Atlantic City, New Jersey, as more particularly described in the
Prospectus and any other facilities, businesses or enterprises
owned or operated by Mortgagor on the Land.
"ATLANTIC CITY SHOWBOAT EXPANSION" means any addition,
improvement, extension or capital repair to the Atlantic City
Showboat or related or ancillary facilities.
"BANKRUPTCY" means, with respect to any Person, that such
Person is or becomes bankrupt or Insolvent or: (a) is the subject
of any order for relief under any Bankruptcy Law; (b)commences a
voluntary proceeding under any Bankruptcy Law; (c) consents to
the entry of an order for relief in an involuntary proceeding
under any Bankruptcy Law; (d) consents to the appointment of, or
taking possession by any Receiver; (e) makes any assignment for
the benefit of creditors; (f) is unable or fails, or admits in
writing its inability, to pay its debts as such debts become due;
(g) is the subject of any involuntary proceeding under any
Bankruptcy Law or involuntary appointment of a Receiver, and such
involuntary proceeding or appointment is not dismissed and
terminated within 90 days; (h) is the subject of any other
proceeding or relief similar to any of the foregoing under any
law; (i) is the subject of a warrant of attachment, execution, or
similar process with respect to such Person or any substantial
part of such Person's property, which warrant or similar process
remains in effect for sixty days without having been bonded or
discharged; or (j) otherwise ceases to do business as a going
concern.
"BANKRUPTCY CODE" means the United States Bankruptcy Code,
11 U.S.C. 101 et seq.
"BANKRUPTCY LAW" means the Bankruptcy Code and any other
state or federal insolvency, reorganization, moratorium or
similar law for the relief of debtors.
"BONDHOLDERS" means the holders of the First Mortgage
Bonds.
"BORROWER" means Showboat, Inc., a Nevada corporation.
"BUSINESS DAY" means any day that is not a Saturday, a
Sunday or a day on which banking institutions in the State of New
Jersey or the State of New York are not required to be open.
"COLLATERAL" means the property described in granting
clauses (A) through (S) (subject to the exclusions set forth in
clause T) below.
"DEEDS OF TRUST" means collectively (1) that certain Deed
of Trust, Assignment of Rents and Security Agreement made by
Showboat, Inc., dated of even date herewith, and securing, among
other things, the Loan Agreement; and (2) this Mortgage.
"DEP" means the New Jersey Department of Environmental
Protection and Energy together with its successors.
"DISBURSEMENT REQUEST" means a certificate in the form of
Exhibit "A" attached hereto and completed as to all information
required therein, with all required attachments attached and
executed by the president and a vice-president or at least two
vice-presidents of Mortgagor on behalf of Mortgagor.
"ENVIRONMENTAL LAWS" means any and all laws and Legal
Requirements relating to environmental matters, pollution, or
hazardous substances, including: the Comprehensive Environmental
Response, Compensation and
6
<PAGE>
Liability Act of 1980,42 U.S.C. 9601-9657; the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. 6901 et seq.;
the Hazardous Materials Transportation Act (49 U.S.C. 1801 et
seq.); ISRA; the Spill Act; any other Laws that may form the
basis of any claim, action, demand, suit, proceeding, hearing, or
notice of violation that is based on or related to the
generation, manufacture, processing, distribution, use,
existence, treatment, storage, disposal, transport, or handling,
or the emission, discharge, release, or threatened release into
the environment, of any hazardous substance, or other threat to
the environment.
"EVENT OF DEFAULT" has the meaning set forth in Section 3.1
hereof.
"EXISTING ENCUMBRANCES" means those matters set forth on
Schedule "B" attached hereto constituting a prior lien, claim or
encumbrance upon the Mortgaged Property or any other prior lien,
claim or encumbrance upon the Mortgaged Property specifically
consented to in writing by Mortgagee.
"FACILITY LEASE(S)" means all of Mortgagor's estate, right,
title and interest in, to and under (1) the Resorts Lease, as it
may be amended, restated, renewed or extended from time to time
in the future in compliance with this Leasehold Mortgage,
including any options to purchase, extend, or renew provided for
in the Resorts Lease and (2) any or all other lease(s) or
sublease(s) with respect to the Atlantic City Showboat, under
which Mortgagor is lessee or sublessee, as such (sub)lease(s) may
be amended, restated, renewed, modified, supplemented, or
extended from time to time in the future in compliance with this
Leasehold Mortgage, including any options to purchase, extend or
renew provided for in such (sub)lease(s).
"FACILITY LEASE DAMAGE CLAIMS" means all of Mortgagor's
claims and rights to the payment of damages that may arise from
Facility Lessor's failure to perform under any Facility Lease, or
rejection of any Facility Lease under any Bankruptcy Law.
"FACILITY LESSOR" means each lessor under each Facility
Lease.
"FF&E" means all furniture, fixtures, equipment,
appurtenances and personal property now or in the future owned or
leased by Mortgagor contained in, used in connection with,
attached to, or otherwise useful or convenient to the use,
operation, or occupancy of, or placed on, but unattached to, any
part of the Land or Improvements whether or not the same
constitutes real property or fixtures in the State of New Jersey,
including all removable window and floor coverings, all furniture
and furnishings, heating, lighting, plumbing, ventilating, air
conditioning, refrigerating, incinerating and elevator and
escalator plants, cooking facilities, vacuum cleaning systems,
public address and communications systems, sprinkler systems and
other fire prevention and extinguishing apparatus and materials,
motors, machinery, pipes, appliances, equipment, fittings,
fixtures, and building materials, together with all venetian
blinds, shades, draperies, drapery and curtain rods, brackets,
bulbs, cleaning apparatus, mirrors, lamps, ornaments, cooling
apparatus and equipment, ranges and ovens, garbage disposals,
dishwashers, mantels, and any and all such property which is at
any time installed in, affixed to or placed upon the Land or
Improvements.
"FF&E FINANCING AGREEMENT" shall have the meaning ascribed
to that term in Section 1.16(d) hereof.
"FIRST MORTGAGE BONDS" means Mortgagee's 9-1/4% First
Mortgage Bonds due May 1, 2008, issued pursuant to the Indenture,
or any notes exchanged therefor as contemplated in the Indenture.
"GAMING AUTHORITY" means any agency, authority, board,
bureau, commission, department, office or instrumentality of any
nature whatsoever of the United States federal or foreign
government, any state, province or any city or other political
subdivision or otherwise and whether now or hereafter in
existence, or any officer or official thereof with authority to
regulate any gaming operation (or proposed gaming operation)
owned, managed or operated by the Issuer or any of its
Subsidiaries, including, without limitation, the Nevada Gaming
Commission,
7
<PAGE>
The Nevada State Gaming Control Board, the City Council of the
City of Las Vegas, and the New Jersey Casino Control Commission.
"GAMING CONTROL ACTS" means the laws, regulations and
supervision procedures of the Nevada Gaming Control Act and the
New Jersey Casino Control Act, as from time to time amended, or
any successor provision of law, and the regulations promulgated
thereunder and such other laws, regulations and supervision
procedures of the United States federal or foreign government,
any state, province or any city or other political subdivision or
otherwise and whether now or hereafter in existence, or any
officer or official thereof with authority to regulate any gaming
operation (or proposed gaming operation) owned, managed, or
operated by the Mortgagor or any of its subsidiaries including,
without limitation, the Nevada Gaming Commission, the Nevada
State Gaming Control Board, the City Council of the City of Las
Vegas, and the New Jersey Casino Control Commission.
"GAMING PERMITS" means every license, franchise, permit or
other authorization on the date of the Indenture or thereafter
required to own, lease, operate or otherwise conduct casino
gaming at the Las Vegas Showboat and the Atlantic City Showboat,
including, without limitation, all such licenses granted under
the Gaming Control Acts, the regulations of the Gaming
Authorities and other applicable laws.
"GOVERNMENTAL AUTHORITY" means any agency, authority,
board, bureau, commission, department, office, public entity or
instrumentality of any nature whatsoever of the United States
federal or foreign government, any state, province or any city or
other political subdivision or otherwise, whether now or
hereafter in existence, or any officer or official thereof,
including, without limitation, any Gaming Authority.
"GUARANTORS" means each of (i) SBOC, OSI and Mortgagor and
(ii) any other Subsidiary that executes a Subsidiary Guaranty in
accordance with the provisions of the Loan Agreement, and their
respective successors and assigns.
"HAZARDOUS MATERIALS" means any hazardous substance or
toxic chemical and shall include, without limitation, gasoline,
refined petroleum products, explosives, radioactive materials,
asbestos, polychlorinated biphenyls or related or similar
materials, or any other substance or material defined as a
hazardous or toxic substance or waste or toxic pollutant by any
federal, state or local law, ordinance, rule, or regulation,
including without limitation, Environmental Laws.
"IBJ" means IBJ Schroder Bank & Trust Company, Trustee
under the Indenture.
"IMPOSITIONS" means all taxes, assessments, water rates,
sewer rents, maintenance charges, other governmental inspections
and other charges now or hereafter levied or assessed or imposed
against the Mortgaged Property or any part thereof.
"IMPROVEMENTS" means (1) all the buildings, structures,
facilities and improvements of every nature whatsoever now or
hereafter situated on the Land or any real property encumbered
hereby, and (2) all of the following to the extent owned or
leased by Mortgagor: all fixtures, machinery, appliances, goods,
building or other materials and equipment, including without
limitation all gaming equipment and devices, all bowling balls,
bowling shoes, bowling pins, pin-setting and ball return
machines, ball drilling and polishing machines, racks, cases,
cabinets, trophies, towels, furniture, furnishings, machinery,
equipment and supplies relating to the operation of the bowling
center located on the Land, and all machinery, equipment,
engines, appliances and fixtures for generating or distributing
air, water, heat, electricity, light, fuel or refrigeration, or
for ventilating or sanitary purposes, or for the exclusion of
vermin or insects, or for the removal of dust, refuse or garbage;
all wall-beds, wall-safes, built-in furniture and installations,
shelving, lockers, partitions, doorstops, vaults, motors,
elevators, dumb-waiters, awnings, window shades, venetian blinds,
light fixtures, fire hoses and brackets and boxes for the same,
fire sprinklers, alarm, surveillance and security systems,
computers, drapes, drapery rods and brackets, mirrors, mantels,
screens, linoleum,
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carpets and carpeting, plumbing, bathtubs, sinks, basins, pipes,
faucets, water closets, laundry equipment, washers, dryers, ice-
boxes and heating units; all kitchen and restaurant equipment,
including but not limited to silverware, dishes, menus, cooking
utensils, stoves, refrigerators, ovens, ranges, dishwashers,
disposals, water heaters, incinerators, furniture, fixtures and
furnishings, communication systems, and equipment; all cocktail
lounge supplies, including but not limited to bars, glassware,
bottles and tables used in connection with the Land; all chaise
lounges, hot tubs, swimming pool heaters and equipment and all
other recreational equipment (computerized and otherwise), beauty
and barber equipment, and maintenance supplies used in connection
with the Land; all specifically designed installations and
furnishings, and all furniture, furnishings and tangible personal
property of every nature whatsoever now or hereafter owned or
leased by Mortgagor or in which Mortgagor has any rights or
interest and located in or on, or attached to, or used or
intended to be used or which are now or may hereafter be
appropriated for use on or in connection with the operation of
the Land or any real or personal property encumbered hereby or
any other Improvements, or in connection with any construction
being conducted or which may be conducted thereon, and all
extensions, additions, accessions, improvements, betterments,
renewals, substitutions, and replacements to any of the
foregoing, and all of the right, title and interest of Mortgagor
in and to any such property (subject to any Permitted Liens),
which, to the fullest extent permitted by law, shall be
conclusively deemed fixtures and improvements and a part of the
real property hereby encumbered.
"INDENTURE" means that certain indenture, dated as of May
18, 1993, by and among the Mortgagee, as issuer, Mortgagor, OSI
and SBOC, as guarantors, and Trustee, as trustee, as such
Indenture is amended or supplemented from time to time in
accordance with the terms thereof.
"INSOLVENT" means with respect to any person or entity,
that such person or entity shall be deemed to be insolvent if he
or it is unable to pay his or its debts as they become due and/or
if the fair market value of his or its assets does not exceed his
or its aggregate liabilities.
"INTANGIBLE COLLATERAL" means, subject to the terms and
conditions of the Indenture, (a) the rights to use all names and
all derivations thereof now or hereafter used by Mortgagor in
connection with the Land or Improvements, including, without
limitation, the names "Atlantic City Showboat," "Atlantic City
Showboat Casino" and any use of the name "Showboat Casino" in the
State of New Jersey, including any variations thereon, together
with the goodwill associated therewith, and all names, logos, and
designs used by Mortgagor, or in connection with the Land or in
which Mortgagor has rights, with the exclusive right to use such
names, logos and designs wherever they are now or hereafter used
in connection with the Atlantic City Showboat, and any and all
other trade names, trademarks or service marks, whether or not
registered, now or hereafter used in the operation of the
Atlantic City Showboat, including, without limitation, any
interest as a lessee, licensee or franchisee, and, in each case,
together with the goodwill associated therewith; (b) subject to
the absolute assignment contained herein, the Rents; (c) any and
all books, records, customer lists, concession agreements, supply
or service contracts, licenses, permits, governmental approvals
(to the extent such licenses, permits and approvals may be
pledged under applicable law), signs, goodwill, casino and hotel
credit and charge records, supplier lists, checking accounts,
safe deposit boxes (excluding the contents of such deposit boxes
owned by persons other than Mortgagor and its subsidiaries),
cash, instruments, chattel papers, documents, unearned premiums,
deposits, refunds, including but not limited to income tax
refunds, prepaid expenses, rebates, tax and insurance escrow and
impound accounts, if any, actions and rights in action, and all
other claims, including without limitation condemnation awards
and insurance proceeds, and all other contract rights and general
intangibles resulting from or used in connection with the
operation of the Mortgaged Property and in which Mortgagor now or
hereafter has rights; (d) all of Mortgagor's documents,
instruments, contract rights, and general intangibles including,
without limitation, all permits, licenses, franchises and
agreements required for the use, occupancy or operation of any
Improvements (to the extent such licenses, permits and approvals
are not prohibited from being pledged under applicable law); and
(e) general intangibles, vacation license resort agreements or
other time share license or right to use agreements, including
without limitation all rents, issues, profits, income and
maintenance fees resulting therefrom, whether any of the
foregoing is now owned or hereafter acquired.
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"INTERCREDITOR AGREEMENT" means, collectively, the
Intercreditor Agreements, of even date herewith, entered into
between Mortgagee, IBJ, Borrower, and Mortgagor.
"INVENTORY" shall have the meaning set forth in section 9-
109(4) of the UCC.
"ISRA" means the Industrial Site Recovery Act, N.J. S A.13:
1K-6 et seq.
"LAND" means the real property situated in Atlantic City,
County of Atlantic, State of New Jersey, more specifically
described in Schedule A attached hereto, including any after
acquired title thereto.
"LEGAL REQUIREMENTS" means all applicable restrictive
covenants, applicable zoning and subdivision ordinances and
building codes, all applicable health and environmental laws and
regulations, all applicable gaming laws and regulations, and all
other applicable laws, ordinances, rules, regulations, judicial
decisions, administrative orders, and other requirements of any
Governmental Authority having jurisdiction over Mortgagor, the
Mortgaged Property and/or any Affiliate of Mortgagor, in effect
either at the time of execution of this Leasehold Mortgage or at
any time during the term hereof, including, without limitation,
all Environmental Laws and Gaming Control Acts.
"LIEN" means with respect to any portion of the Mortgaged
Property, any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such portion of the
Mortgaged Property whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or
other title retention agreement, any lease in the nature thereof,
any option or other agreement to sell or give a security interest
in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"LOAN AGREEMENT" means that certain Loan and Guaranty
Agreement between Borrower, Mortgagor, Mortgagee, SBOC and OSI of
even date herewith.
"LOAN DOCUMENTS" means this Leasehold Mortgage, the
Promissory Note, the Loan Agreement, the In PARI PASSU Assignment
of Leases and Rents, the Intercreditor Agreements, and any other
documents evidencing, guaranteeing or securing the Obligations of
Borrower, Mortgagor and Guarantors to Mortgagee or IBJ under such
document.
"MATERIAL SPACE LEASE" means any Space Lease that provides
for an annual rent in excess of $100,000.
"MORTGAGED PROPERTY" means all of the property described in
Granting Clauses (A) through (S) below, inclusive, and each item
of property therein described, provided, however, that such term
shall not include the property described in Granting Clause (T)
below.
"MORTGAGEE" means NatWest Bank, N.A. a national banking
corporation, and any assignee of its rights hereunder or of the
Promissory Note secured hereby.
"MORTGAGOR" means Atlantic City Showboat, Inc., a New
Jersey corporation and includes not only the original Mortgagor
hereunder, but also any successors or assigns of the Mortgagor,
or any part thereof, at any time and from time to time, as the
case requires.
"OBLIGATIONS" means the payment and performance of each
covenant and agreement of Mortgagor contained in this Leasehold
Mortgage and the Loan Documents.
"OSI" means Ocean Showboat, Inc., a New Jersey corporation.
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"OSI GUARANTY" means the Subsidiary Guaranty contained in
the Loan Agreement of even date herewith made by OSI in favor of
Mortgagee.
"PERMITTED DISPOSITION" means the sale, transfer or other
disposition of Collateral not to exceed an aggregate value of
$3,000,000.00 per annum.
"PERMITTED LIENS" means Liens that are permitted under
Section 6.05 of the Loan Agreement.
"PERSON" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust,
unincorporated organization or any governmental agency or
political subdivision thereof.
"PLANS" shall have the meaning ascribed to that term in
Section 1.5 hereof.
"PROCEEDS" has the meaning assigned to it under the UCC
and, in any event, shall include but not be limited to (i) any
and all proceeds of any insurance (including without limitation
property casualty and title insurance), indemnity, warranty or
guaranty payable from time to time with respect to any of the
Mortgaged Property; (ii) any and all proceeds in the form of
accounts, security deposits, tax escrows (if any), down payments
(to the extent the same may be pledged under applicable law),
collections, contract rights, documents, instruments, chattel
paper, liens and security instruments, guaranties or general
intangibles relating in whole or in part to the Atlantic City
Showboat and all rights and remedies of whatever kind or nature
Mortgagor may hold or acquire for the purpose of securing or
enforcing any obligation due Mortgagor thereunder; (iii) any and
all payments in any form whatsoever made or due and payable from
time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the
Mortgaged Property by any Governmental Authority; (iv) subject to
the absolute assignment contained herein, the Rents or other
benefits arising out of, in connection with or pursuant to any
Space Lease of the Mortgaged Property; and (v) any and all other
amounts from time to time paid or payable in connection with any
of the Mortgaged Property; PROVIDED, HOWEVER, that the Mortgagor
is not authorized to dispose of any of the Mortgaged Property
unless such disposition is a Permitted Disposition.
"PROMISSORY NOTE" means that certain Revolving Note as same
may be amended pursuant to the Loan Agreement, between Borrower
and Mortgagee as Lender, both of even date herewith, in the
maximum aggregate amount of $25,000,000.00.
"PROSPECTUS" means that certain prospectus, dated as of May
18, 1993, relating to the offering of the First Mortgage Bonds of
Mortgagor, and all supplements, schedules or other attachments
thereto.
"PROTECTIVE ADVANCES" has the meaning set forth in Section
4.2.
"RECEIVER" means, with respect to any Person (including
Mortgagor), any receiver, trustee, custodian, debtor in
possession, liquidator, sequestrator, administrator, conservator,
or other successor appointed (whether by a court or otherwise)
pursuant to any creditor's exercise of remedies against such
Person, or pursuant to a Bankruptcy of such Person, or for
purposes of reorganization or liquidation, or otherwise for the
benefit of such Person's creditors, or under any similar
circumstances, or otherwise having similar powers over such
Person or its property, whether such Receiver acts on an interim,
temporary, or final basis and whether such appointment applies to
all or any significant portion of such Person's assets or
property, including or not including any of the Mortgaged
Property.
"RENTS" means all rents, income, receipts, issues, profits,
revenues and maintenance fees, room, food and beverage revenues,
license and concession fees, income, proceeds and other benefits
to which Mortgagor may now or hereafter be entitled from the
Land, the Improvements, the Facility Leases or Space Leases or
any property encumbered hereby or any business or other activity
conducted by Mortgagor at the Land or the Improvements.
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"RESORTS" means Resorts International, Inc., a Delaware
corporation.
"RESORTS LEASE" means that certain Lease Agreement dated as
of October 26, 1983 between Resorts and 0S1, recorded May 1, 1984
in Deed Book 3878, page 1, as assigned to Mortgagor pursuant to
that certain Assignment and Assumption of Lease made December 3,
1984 between 0S1 and Mortgagor recorded, December 24, 1984 in
Deed Book 4004, page 310, as amended by (i) that certain First
Amendment to Lease Agreement dated as of January 15, 1985 between
Resorts and Mortgagor recorded, August 16, 1985 in Deed Book
4107, page 141; (ii) that certain Second Amendment to Lease
Agreement dated as of July 5, 1985 between Resorts and Mortgagor
recorded, November 25, 1985 in Deed Book 4158, page 221; (iii)
that certain Third Amendment to Lease Agreement dated as of
October 28, 1985 between Resorts and Mortgagor, recorded November
25, 1985 in Deed Book 4158, page 227; (iv) that certain Restated
Third Amendment to Lease Agreement dated as of August 28, 1986
between Resorts and Mortgagor, recorded February 20, 1987 in Deed
Book 4406 page 17; (v) that certain Fourth Amendment to Lease
Agreement dated as of December 16, 1986 between Resorts and
Mortgagor, recorded February 20, 1987 in Deed Book 4406, page 37;
(vi) that certain Fifth Amendment to Lease Agreement dated as of
March 2,1987 between Resorts and Mortgagor, recorded March 23,
1987 in Deed Book 4421, page 10; (vii) that certain Sixth
Amendment to Lease Agreement dated as of March 13, 1987 between
Resorts and Mortgagor, recorded March 23, 1987 in Deed Book 4421,
page 17; (viii) that certain Seventh Amendment to Lease Agreement
dated as of October 18, 1988 between Resorts and Mortgagor,
recorded December 19, 1988 in Deed Book 4814, page 231; and (ix)
that certain Eighth Amendment to Lease Agreement dated as of May
18, 1993 between Resorts and Mortgagor, recorded May 18, 1993 in
Deed Book 5500, page 284.
"SBOC" means Showboat Operating Company, a Nevada
corporation.
"SBOC GUARANTY" means the Guaranty of even date herewith
and made by SBOC in favor of Mortgagee.
"SPACE LEASES" means any and all leases, subleases,
lettings, licenses, concessions, operating agreements, management
agreements, and all other agreements affecting the Mortgaged
Property that Mortgagor has entered into, taken by assignment,
taken subject to, or assumed, or has otherwise become bound by,
now or in the future, that give any person or entity other than
Mortgagor the right to conduct its business on, or otherwise use,
operate or occupy, all or any portion of the Land or Improvements
and any leases, agreements or arrangements permitting anyone or
any entity other than Mortgagor to enter upon or use any of the
Mortgaged Property to extract or remove natural resources of any
kind, together with all amendments, extensions, and renewals of
the foregoing entered into in compliance with this Leasehold
Mortgage, together with all rental, occupancy, service,
maintenance or any other similar agreements pertaining to use or
occupation of, or the rendering of services at the Land, the
Improvements or any part thereof.
"SPACE LESSEE(S)" means any and all tenants, licensees, or
other grantees of the Space Leases and any and all guarantors,
sureties, endorsers or others having primary or secondary
liability with respect to such Space Lease.
"SPILL ACT" means the Spill Compensation and Control Act,
N.J.S.A. 58:10-23.11 ET SEQ. together with any amendments or
revisions thereof and any regulations promulgated pursuant
thereto.
"SUBSIDIARY GUARANTIES" means, collectively, the OSI
Guaranty, the ACSI Guaranty, the SBOC Guaranty and any other
guaranties issued pursuant to the Loan Agreement with respect to
the Borrower's obligations thereunder.
"TANGIBLE COLLATERAL" means all personal property, goods
(other than intangible personal property), equipment, supplies,
building and other materials of every nature whatsoever and all
other tangible personal property constituting a part or portion
of the Atlantic City Showboat and/or used in the operation of the
hotel, casino, restaurants, stores, parking facilities, bowling
alley and all other commercial operations on the Land or
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Improvements, including but not limited to communication systems,
visual and electronic surveillance systems and transportation
systems and not constituting a part of the real property subject
to the real property lien of this Leasehold Mortgage or any
Facility Lease and including all property and materials stored
therein in which Mortgagor has an interest and all tools,
utensils, food and beverage, liquor, uniforms, linens,
housekeeping and maintenance supplies, vehicles, fuel,
advertising and promotional material, blueprints, surveys, plans
and other documents relating to the Land or Improvements, and all
construction materials and all furnishings, fixtures and
equipment, including, but not limited to, all bowling balls,
bowling shoes, bowling pins, pin-setting and ball return
machines, ball drilling and polishing machines, racks, cases,
cabinets, trophies, towels, furniture, furnishings, machinery,
equipment and supplies relating to the operation of the bowling
center located on the Land; to the extent permitted by all
applicable Gaming Control Acts, all gaming equipment and devices
which are or are to be installed and used in connection with the
operation of the Atlantic City Showboat and those items of
furniture, fixtures and equipment which are to be purchased or
leased by Mortgagor, machinery and any other item of personal
property in which Mortgagor now or hereafter own or acquire an
interest or right, and which are used or useful in the
construction, operation, use and occupancy of the Atlantic City
Showboat; to the extent permitted by the applicable contract or
applicable Gaming Control Acts, all gaming and financial
equipment, computer equipment, calculators, adding machines,
gaming tables, video game and slot machines, and any other
electronic equipment of every nature used or located on any part
of the Land or Improvements, and all present and future right,
title and interest of Mortgagor in and to any casino operator's
agreement, license agreement or sublease agreement used in
connection with the Land or Improvements; excluding therefrom,
however, all Inventory.
"365(H) ELECTION" means Mortgagor's election to treat a
Facility Lease as terminated under 365(h) of the Bankruptcy Code
or any similar Bankruptcy Law, or any comparable right provided
under any other Bankruptcy Law, together with all rights,
remedies and privileges related thereto.
"TITLE INSURER" means Commonwealth Land Title Insurance
Company, a Pennsylvania corporation.
"TRUSTEE" means IBJ Schroder Trust & Bank Company, a New
York corporation, as trustee under the Indenture.
"UCC" means the Uniform Commercial Code in effect in the
State of New Jersey from time to time.
Capitalized terms used in this Leasehold Mortgage which are not
otherwise defined herein shall have the meaning ascribed to such
terms in the Loan Agreement. In the event of a substantive
conflict between capitalized terms used herein and in the Loan
Agreement, the Loan Agreement shall govern.
WI T N E S S E T H:
IN CONSIDERATION OF TEN DOLLARS AND OTHER GOOD AND VALUABLE
CONSIDERATION; THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY
ACKNOWLEDGED, AND FOR THE PURPOSE OF SECURING as an in PARI PASSU
first priority Lien, subject to the terms and conditions set
forth in the Intercreditor Agreement, in favor of Mortgagee (I)
the Promissory Note and the payment of all sums payable
thereunder as such sums become due and payable; (2) the
performance of each covenant and agreement of Mortgagor which is
(a) to be performed for the benefit of Mortgagee and (b)
contained in the Loan Agreement, in this Leasehold Mortgage or in
the other Loan Documents; (3) the payment of such additional
loans or advances as hereafter may be made to Mortgagor or its
successors or assigns, when evidenced by a promissory note or
notes reciting that they are secured by this Leasehold Mortgage;
PROVIDED, HOWEVER, that any and all future advances made to
Mortgagor for the improvement, protection or preservation of the
Mortgaged Property together with interest at the rate then
payable on the Promissory Note, shall be automatically secured
hereby unless such a note or instrument evidencing such advances
specifically recites that it is not intended to be secured
hereby; and
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(4) the payment of all sums expended or advanced by Mortgagee
under or pursuant to the terms hereof or to protect the security
hereof, together with interest thereon as herein provided.
Mortgagor does hereby GRANT, ASSIGN, BARGAIN, CONVEY,
HYPOTHECATE, MORTGAGE, PLEDGE, RELEASE, TRANSFER AND GRANT A
SECURITY INTEREST IN AND WARRANT UNTO MORTGAGEE, UPON THE TERMS
AND CONDITIONS OF THIS LEASEHOLD MORTGAGE, WITH POWER OF SALE AND
RIGHT OF ENTRY AS PROVIDED BELOW:
(A) Any present or future interest in the Land.
(B) TOGETHER WITH the Improvements.
(C) TOGETHER WITH all Appurtenant Rights.
(D) TOGETHER WITH the Tangible Collateral.
(E) TOGETHER WITH the Intangible Collateral.
(F) TOGETHER WITH any fee simple interest in the Land and
all that certain leasehold estate and interest of the Mortgagor
in and to the Land, together with any and all other, further or
additional, title, estates, interests or rights which may at any
time be acquired by Mortgagor in or to the Land demised by the
Resorts Lease, and Mortgagor expressly agrees that if Mortgagor
shall, at any time (whether by exercise of the purchase option
set forth in Article 24 of the Resorts Lease or otherwise) prior
to payment in full of all indebtedness secured hereby, acquire
fee title to or any other greater interest in the Land, the lien
of this Mortgage shall attach, extend to, cover and be a lien
upon such fee simple title or other greater estate involving real
property.
(G) TOGETHER WITH all of Mortgagor's estate, right, title
and interest in, to and under any other Facility Lease now or
hereafter on or affecting any of the Land or property described
in Granting Clause (B), (C) or (D) hereof or any part thereof,
together with all credits, deposits, options (including any
options to purchase or renew set forth in the Facility Lease(s)),
privileges, rights, estate, title and interest of Mortgagor as
tenant or subtenant under the Facility Lease(s), and all books
and records which contain records of payments of rent or security
made under the Facility Lease(s) and all Facility Lease Damage
Claims.
(H) TOGETHER WITH all modifications, extensions and
renewals of any Facility Lease.
(I) TOGETHER WITH all credits, deposits, options,
privileges and rights of the Mortgagor, as lessee under any
Facility Lease.
(J) TOGETHER WITH (i) all the estate, right, title and
interest of Mortgagor of, in and to all judgments and decrees,
insurance proceeds, awards of damages and settlements hereafter
made resulting from condemnation proceedings or the taking of any
of the property described in Granting Clauses (A), (B), (C), (D),
(E), (F), (G), (H) and (I) hereof or any part thereof under the
power of eminent domain, or for any damage (whether caused by
such taking or otherwise) to the property described in Granting
Clauses (A), (B), (C), (D), (E), (F), (G), (H) and (I) hereof or
any part thereof, or to any Appurtenant Rights thereto, and
Mortgagee is hereby authorized to collect and receive said awards
and proceeds and to give proper receipts and acquittance
therefor, and (subject to the terms hereof) to apply the same
toward the payment of the indebtedness and other sums secured
hereby, notwithstanding the fact that the amount owing thereon
may not then be due and payable; (ii) all proceeds of any sales
or other dispositions of the property or rights described in
Granting Clauses (A), (B), (C), (D), (E), (F), (G), (H) and (I)
hereof or any part thereof whether voluntary or involuntary,
provided, however, that the foregoing shall not be deemed to
permit such sales, transfers, or other dispositions except as
specifically permitted herein; and (iii) whether arising from any
voluntary or involuntary disposition of the property described
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in Granting Clauses (A), (B), (C), (D), (E), (F), (G), (H) and
(I) all Proceeds, products, replacements, additions,
substitutions, renewals and accessions, remainders, reversions
and after-acquired interest in, of and to such property.
(K) TOGETHER WITH the absolute assignment of any Space
Leases or any part thereof that Mortgagor has entered into, taken
by assignment, taken subject to, or assumed, or has otherwise
become bound by, now or in the future, together with all of the
following (including all "Cash Collateral" within the meaning of
the Bankruptcy Code) arising from the Space Leases: (a) Rents
(subject, however, to the aforesaid absolute assignment to
Mortgagee and the conditional permission hereinafter given to
Mortgagor to collect the Rents), (b) all guaranties, letters of
credit, security deposits, collateral, cash deposits, and other
credit enhancement documents, arrangements and other measures
with respect to the Space Leases, (c) all of Mortgagor's right,
title, and interest under the Space Leases, including the
following: (i) the right to receive and collect the Rents from
the lessee, sublessee or licensee, or their Successor(s), under
any Space Lease(s) and (ii) the right to enforce against any
tenants thereunder and otherwise any and all remedies under the
Space Leases, including Mortgagor's right to evict from
possession any tenant thereunder or to retain, apply, use, draw
upon, pursue, enforce or realize upon any guaranty of any Space
Lease; to terminate, modify, or amend the Space Leases; to obtain
possession of, use, or occupy, any of the real or personal
property subject to the Space Leases; and to enforce or exercise,
whether at law or in equity or by any other means, all provisions
of the Space Leases and all obligations of the tenants thereunder
based upon (A) any breach by such tenant under the applicable
Space Lease (including any claim that Mortgagor may have by
reason of a termination, rejection, or disaffirmance of such
Space Lease pursuant to any Bankruptcy Law) and (B) the use and
occupancy of the premises demised, whether or not pursuant to the
applicable Space Lease (including any claim for use and occupancy
arising under landlord-tenant law of the State of New Jersey or
any Bankruptcy Law). Notwithstanding the foregoing, permission is
hereby given to Mortgagor, so long as no Event of Default has
occurred and is continuing hereunder, to collect and use the
Rents and to exercise the rights set forth in Granting Clause
(K)(c)(ii) in accordance with the provisions of the Leasehold
Mortgage, as they become due and payable, but not in advance
thereof. Upon the occurrence of an Event of Default and the
expiration of any applicable cure or grace period, the permission
hereby given to Mortgagor to collect the Rents and to exercise
the rights set forth in Granting Clause (K)(c)(ii) in accordance
with the provisions of the Leasehold Mortgage shall automatically
terminate, but such permission shall be reinstated upon a cure of
such Event of Default. Mortgagee shall have the right, at any
time and from time to time, to notify any Space Lessee of the
rights of Mortgagee as provided by this section.
Notwithstanding anything to the contrary contained herein,
the foregoing provisions of this Paragraph (K) shall not
constitute an assignment for purposes of security but shall
constitute an absolute and present assignment of the Rents to
Mortgagee, subject, however, to the license given to Mortgagor to
collect and use the Rents as hereinabove provided; and the
existence or exercise of such right of Mortgagor shall not
operate to subordinate this assignment to any subsequent
assignment, in whole or in part, by Mortgagor.
(L) TOGETHER WITH all of Mortgagor's right, title and
interest in and to any and all maps, plans, specifications,
surveys, studies, tests, reports, data and drawings relating to
the development of the Land or the Atlantic City Showboat and the
construction of the Improvements, including, without limitation,
all marketing plans, feasibility studies, soils tests, design
contracts and all contracts and agreements of Mortgagor relating
thereto including, without limitation, architectural, structural,
mechanical and engineering plans and specifications, studies,
data and drawings prepared for or relating to the development of
the Land or the Atlantic City Showboat or the construction,
renovation or restoration of any of the Improvements or the
extraction of minerals, sand, gravel or other valuable substances
from the Land.
(M) TOGETHER WITH, to the extent permitted by applicable
law, all of Mortgagor's right, title, and interest in and to any
and all licenses, permits, variances, special permits,
franchises, certificates, rulings, certifications, validations,
exemptions, filings, registrations, authorizations, consents,
approvals, waivers, orders, rights and agreements (including
options, option rights and contract rights) now or hereafter
obtained by Mortgagor from
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any Governmental Authority having or claiming jurisdiction over
the Land, the FF&E, the Atlantic City Showboat, or any other
element of the Mortgaged Property or providing access thereto,
or the operation of any business on, at, or from the Land
including, without limitation, any Gaming Permits; PROVIDED, that
upon an Event of Default hereunder or under the Indenture and the
expiration of any applicable cure or grace period, if Mortgagee
is not qualified under the Gaming Control Acts to hold such
Gaming Permits, then Mortgagee shall designate an appropriately
qualified third party to which an assignment of such Gaming
Permits can be made in compliance with the Gaming Control Acts.
(N) TOGETHER WITH all water stock, water permits and other
water rights relating to the Land.
(O) TOGETHER WITH all oil and gas and other mineral
rights, if any, in or pertaining to the Land and all royalty,
leasehold and other rights of Mortgagor pertaining thereto.
(P) TOGETHER WITH any and all monies and other property,
real or personal, which may from time to time be subjected to the
lien hereof by Mortgagor or by anyone on its behalf or with its
consent, or which may come into the possession or be subject to
the control of Mortgagee pursuant to this Leasehold Mortgage or
any Loan Document, including, without limitation, any Protective
Advances under this Leasehold Mortgage; and all of Mortgagor's
right, title, and interest in and to all extensions,
improvements, betterments, renewals, substitutes for and
replacements of, and all additions, accessions, and appurtenances
to, any of the foregoing that Mortgagor may subsequently acquire
or obtain by any means, or construct, assemble, or otherwise
place on any of the Mortgaged Property, and all conversions of
any of the foregoing; it being the intention of Mortgagor that
all property hereafter acquired by Mortgagor and required by this
Leasehold Mortgage or the Indenture to be subject to the lien of
this Leasehold Mortgage or intended so to be shall forthwith upon
the acquisition thereof by Mortgagor be subject to the lien of
this Leasehold Mortgage as if such property were now owned by
Mortgagor and were specifically described in this Leasehold
Mortgage and granted hereby or pursuant hereto, and Mortgagee is
hereby authorized to receive any and all such property as and for
additional security for the obligations secured or intended to be
secured hereby. Mortgagor agrees to take any action as may
reasonably be necessary to evidence and perfect such liens or
security interests, including, without limitation, the execution
of any documents reasonably necessary to evidence and perfect
such liens or security interests.
(Q) TOGETHER WITH, to the extent permitted by the Act, any
and all Accounts Receivable, royalties, earnings, income,
proceeds, products, rents, revenues, reversions, remainders,
issues, profits, avails, production payments, and other benefits
directly or indirectly derived or otherwise arising from any of
the foregoing, all of which are hereby assigned to Mortgagee,
who, except as otherwise expressly provided in this Leasehold
Mortgage, is authorized to collect and receive the same, to give
receipts and acquittances therefor and to apply the same to the
Obligations secured hereunder, whether or not then due and
payable.
(R) TOGETHER WITH Proceeds of the foregoing property
described in Granting Clauses (A) through (Q).
(S) TOGETHER WITH Mortgagor's rights further to assign,
mortgage, sell, encumber or otherwise transfer or dispose of the
property described in Granting Clauses (A) through (R) inclusive,
above, for debt or otherwise.
(T) EXPRESSLY EXCLUDING, HOWEVER, (i) Inventory; and (ii)
FF&E (to the extent that (a) Mortgagor is permitted to enter into
a FF&E Financing Agreement for such FF&E under the Indenture and
the Loan Agreement and (b) such FF&E Financing Agreement
prohibits Mortgagee from maintaining a security interest in the
FF&E covered thereby); together with the proceeds of the property
described in this Granting Clause (T).
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Mortgagor, for itself and its successors and assigns,
covenants and agrees to and with Mortgagee that, at the time or
times of the execution of and delivery of these presents or any
instrument of further assurance with respect thereto, Mortgagor
has good right, full power and lawful authority to assign, grant,
convey, warrant, transfer, bargain or sell its interests in the
Mortgaged Property in the manner and form as aforesaid and that
the Mortgaged Property is free and clear of all liens and
encumbrances whatsoever, except the Existing Encumbrances and
Permitted Liens, and Mortgagor shall warrant and forever defend
the above-bargained property in the quiet and peaceable
possession of Mortgagee and its successors and assigns against
all and every person or persons lawfully or otherwise claiming or
to claim the whole or any part thereof, except for Permitted
Liens. Mortgagor agrees that any greater title to the Mortgaged
Property hereafter acquired by Mortgagor during the term hereof
shall be automatically subject hereto.
PROVIDED HOWEVER, these presents are upon the express
condition that, if Borrower, Mortgagor and/or any other Guarantor
shall well and truly pay, or cause to be paid, to Mortgagee all
amounts required to be so paid under the Loan Documents,
including without limitation, the ACSI Guaranty and shall well
and truly abide by and perform each of the Obligations, then,
these presents and the estate granted hereby shall terminate,
cease and be void.
ARTICLE ONE
COVENANTS OF MORTGAGOR
1.1 PERFORMANCE OF LOAN DOCUMENTS. Mortgagor shall
perform, observe and comply with, or cause to be performed,
observed or complied with, each and every provision hereof, and
with each and every provision contained in the Loan Documents
and shall promptly pay to Mortgagee, when payment shall become
due, the principal with interest thereon and all other sums
required to be paid by Mortgagor under this Leasehold Mortgage
and the Loan Documents.
1.2 GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES.
Mortgagor represents, covenants and warrants that: (a) Mortgagor
has good and marketable leasehold title to a Leasehold estate in
a portion of the Land, free and clear of all encumbrances except
Permitted Liens, and that it has the right to hold, occupy and
enjoy its interest in the Mortgaged Property, and has good right,
full power and lawful authority to mortgage and pledge the same
as provided herein and, subject to the Gaming Control Acts,
Mortgagee may at all times peaceably and quietly enter upon,
hold, occupy and enjoy the entire Mortgaged Property in
accordance with the terms hereof; (b) Mortgagor has good and
marketable title to a fee estate (subject and subordinate to a
reversionary interest of the Housing Authority of the City of
Atlantic City in certain of the real property described on
Schedule A) in that portion of the Land which is not covered by
the Resorts Lease, free and clear of all encumbrances except
Permitted Liens, and that it has the right to hold, occupy and
enjoy its interest in the Mortgaged Property, and has good right,
full power and lawful authority to mortgage and pledge the same
as provided herein and Mortgagee may at all times peaceably and
quietly enter upon, hold, occupy and enjoy the entire Mortgaged
Property in accordance with the terms hereof; (c) neither
Mortgagor nor any Affiliate of Mortgagor is Insolvent and no
bankruptcy or insolvency proceedings are pending or contemplated
by or, to the best of Mortgagor's knowledge, against Mortgagor or
any Affiliate of Mortgagor; (d) all costs arising from
construction of any Improvements, the performance of any labor
and the purchase of all Tangible Collateral and Improvements have
been or shall be paid when due, unless same are being contested
in good faith and adequately bonded; (e) the Mortgaged Property
has frontage on, and direct access for ingress and egress to
dedicated street(s); (f) Mortgagor shall at all times conduct and
operate the Mortgaged Property in a manner so as not to lose the
right to conduct gaming activities at the Atlantic City Showboat;
(g) no material part of the Mortgaged Property has been damaged,
destroyed, condemned or abandoned; (h) no part of the Mortgaged
Property is the subject of condemnation proceedings and Mortgagor
has no knowledge of any contemplated or pending condemnation
proceeding with respect to any portion of the Mortgaged Property;
(i) Mortgagor shall warrant, defend and preserve its fee,
easement and leasehold rights and title to the Mortgaged
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Property and (j) no Space Lessee has been granted an option to
purchase or right of first refusal with respect to Mortgagor's
interest in the Mortgaged Property.
1.3 COMPLIANCE WITH LEGAL REQUIREMENTS. Mortgagor shall
promptly, fully, and faithfully comply with all Legal
Requirements and shall cause all portions of the Mortgaged
Property and its use and occupancy to fully comply with Legal
Requirements at all times, whether or not such compliance
requires work or remedial measures that are ordinary or
extraordinary, foreseen or unforeseen, structural or
nonstructural, or that interfere with the use or enjoyment of the
Mortgaged Property.
1.4 TAXES. Mortgagor shall pay all Impositions as they
become due and payable and shall deliver to Mortgagee promptly
upon Mortgagee's request, evidence satisfactory to Mortgagee that
the Impositions have been paid or are not delinquent. Mortgagor
shall not suffer to exist, permit or initiate the joint
assessment of the real and personal property, or any other
procedure whereby the lien of the real property taxes and the
lien of the personal property taxes shall be assessed, levied or
charged to the Land as a single lien, except as may be required
by law. In the event of the passage of any law deducting from the
value of real property for the purposes of taxation any lien
thereon, or changing in any way the taxation of mortgages or
obligations secured thereby for state or local purposes, or the
manner of collecting such taxes and imposing a tax, either
directly or indirectly, on this Leasehold Mortgage or the
Promissory Note, Mortgagor shall pay all such taxes. If at any
time any Governmental Authority shall require internal revenue or
other documentary stamps or any other tax on the Promissory Note
or this Leasehold Mortgage, then, if Mortgagor lawfully pays for
such stamps or tax, including interest and penalties thereon, to
or for Mortgagee, Mortgagor shall pay, when payable, for all such
stamps and taxes, including interest and penalties thereon.
Mortgagor shall not be entitled to any credit against any of the
indebtedness secured by the Leasehold by reason of the payment of
taxes in respect of the Mortgaged Property.
1.5 INSURANCE.
(a) Hazard Insurance Requirements and Proceeds.
(1) HAZARD INSURANCE. Mortgagor shall at its
sole expense obtain for, deliver to, assign and maintain for the
benefit of Mortgagee, during the term of this Leasehold Mortgage,
insurance policies insuring the Mortgaged Property and liability
insurance policies, all in accordance with the requirements of
Section 4.17 of the Indenture and of the Loan Agreement.
Mortgagor shall pay promptly when due any premiums on such
insurance policies and on any renewals thereof. The form of such
policies and the companies issuing them shall be reasonably
acceptable to Mortgagee. All such policies and renewals thereof
shall be held by Mortgagee and shall contain a lender's loss
payable endorsement, and a noncontributory standard mortgagee or
beneficiary endorsement (Form 438 BFU or its equivalent) making
losses payable to Mortgagee as its interests may appear and shall
name the Mortgagee as an additional insured. At least thirty (30)
days prior to the expiration date of all such policies, renewals
thereof satisfactory to Mortgagee shall be delivered to Mortgagee
together with receipts evidencing the payment of all premiums on
such insurance policies and renewals. Should Mortgagor fail to
deliver such receipts, Mortgagee shall have the right, but shall
not be obligated, to purchase such insurance and pay such premium
as Mortgagee shall deem advisable and the amount of any such
premium shall be added to Mortgager's liability secured hereby.
In the event of loss, Mortgagor shall give immediate written
notice to Mortgagee and Mortgagee may make proof of loss if not
made promptly by Mortgagor. In the event of the foreclosure of
this Leasehold Mortgage or any other transfer of title to the
Mortgaged Property in extinguishment of the indebtedness and
other sums secured hereby, all right, title and interest of
Mortgagee in and to all insurance policies and renewals thereof
then in force, shall pass to the purchaser or grantee upon
delivery of written notice to Mortgagee within thirty (30) days
following the occurrence of such loss.
(2) PAYMENT OF PROCEEDS TO MORTGAGEE. Pursuant
to its rights granted hereunder in all proceeds from any
insurance policies, Mortgagee is hereby authorized and empowered
at its option to adjust
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or compromise any loss under any insurance policies on the
Mortgaged Property and to collect and receive the proceeds from
any such policy or policies. Each insurance company is hereby
authorized and directed to make payment for all such losses
directly to Mortgagee alone and not to Mortgagor and Mortgagee
jointly. After deducting from such insurance proceeds any
reasonable expenses incurred by Mortgagee in the collection or
handling such funds, including reasonable attorneys' fees,
Mortgagee shall apply such insurance proceeds as follows:
(A) Mortgagor shall, within one (1)
month following the event giving rise to a payment under
an insurance policy ("Loss"), notify and inform Mortgagee
whether Mortgagor intends to restore the Improvements or
any portion thereof and provide an Officers Certificate
(as defined in the Indenture) certifying that such
restoration is allowed under Section 4.10(d) of the
Indenture and the Loan Agreement. If Mortgagor notifies
Mortgagee that it intends to restore the Improvements or
any portion thereof, and such restoration is allowed under
the Indenture and the Loan Agreement, then Mortgagor shall
have the right to use the balance of such award or
settlement in accordance with the provisions of Section
1.5(a)(3) hereof to reimburse Mortgagor or pay for the
costs of such rebuilding, reconstruction or repair by
Mortgagor pursuant to this Section 1.5(a)(2)(A). Any
proceeds allocable to Improvements which Mortgagor has
elected not to restore shall be applied in accordance with
Section 4.10 of the Indenture. Mortgagor shall not invest
or use any insurance proceeds from the Loss of the
Improvements to purchase or invest in real estate, real
property, or accessions or improvements to real estate or
real property, except for the restoration of the
Improvements in accordance with Section 1 .5(a)(3).
(B) If Mortgagor fails to notify
Mortgagee that it intends to restore the Improvements
within said one (1) year period as provided in Section 1.5
(a)(2)(A) hereof, or Mortgagor has elected not to restore
the Improvements or any portion thereof, or a Purchase
Offer is required under Section 4.10 of the Indenture, or
in the event there remain any insurance proceeds following
such reconstruction or repair, then in any such event such
award or settlement or amounts then remaining shall be
applied in accordance with Section 4.10 of the Indenture
and the Loan Agreement.
(3) RESTORATION. Provided that (1) the
Indenture does not require a repurchase of the First Mortgage
Bonds and the maturity of the First Mortgage Bonds has not been
accelerated under the Indenture at the time of a Loss, or at the
time Mortgagor seeks the benefit of this paragraph, (2) the Loan
Agreement does not require an acceleration of the Promissory Note
and Loan evidenced thereby, and (3) Mortgagee reasonably
determines that Mortgagor has the ability (including financial
ability) to restore the Improvements or any portion thereof to a
condition substantially the same as prior to the Loss, and pay
for the complete costs of such restoration (taking into account
available insurance proceeds), Mortgagee agrees that Mortgagor
shall have the right to require Mortgagee to apply the insurance
proceeds received by Mortgagee under the provisions of Section
1.5(a)(2) on account of such Loss for the purpose of the
restoration of the Mortgaged Property in the following manner and
upon satisfaction of the following conditions:
(A) If the insurance proceeds resulting
from the Loss of the Improvements or any portion thereof
are made available to Mortgagor under the provisions of
this section 1.5(a)(3), then upon the occurrence of a
Loss, Mortgagor shall, following its election to restore
the Improvements under Section 1.5(a)(2)(A) hereof,
commence the restoration of the Improvements to as good and
substantially the same condition as such property was prior
to such Loss and upon commencement thereof shall diligently
prosecute the same to completion.
(B) Subject to the Intercreditor
Agreement, such insurance proceeds shall be paid over to
Mortgagee or its designee, as depository for the
disbursement thereof as provided herein. In the event such
proceeds are to be used to restore the Improvements, such
proceeds shall be invested in Investment Grade Securities
(the interest from which shall inure to the benefit of
Mortgagor). Pending disbursement of such proceeds,
Mortgagor hereby grants to Mortgagee a security interest in
such
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Investment Grade Securities and pledges such Investment
Grade Securities to Mortgagee as further security for the
indebtedness secured hereby. Mortgagor shall file all
documents and take all other steps necessary to perfect the
pledge of the Investment Grade Securities. If an Event of
Default occurs (and any applicable cure or grace period has
expired) prior to the completion of the restoration,
Mortgagee at its option shall, during the continuance of
such Event of Default, have the right to either apply all
or any portion of such Investment Grade Securities toward
restoration of the Mortgaged Property or toward any amounts
secured hereby.
(C) The depository of such insurance
proceeds shall disburse such proceeds following Mortgagor's
delivery of a Disbursement Request, not more than once per
week and only if (1) said depository has not received any
notice from Mortgagee that an Event of Default has occurred
hereunder or under the Indenture or (2) the depository
shall have received a commitment from Title Insurer,
attached to the Disbursement Request, evidencing the Title
Insurer's unconditional commitment to issue an endorsement
in the form of a 122 CLTA Endorsement insuring the
continuing priority of the lien of the Mortgage as security
for each advance of funds from the insurance proceeds.
Mortgagor covenants and agrees (a) to comply with all
material covenants and conditions set forth in the
Indenture and the Loan Agreement and which are incorporated
herein by reference to the extent such provisions are
applicable to the restoration of the Improvements or any
portion thereof and (b) to cause each Disbursement Request
to be true, correct and complete.
(D) If Mortgagee reasonably determines
that the amount of the insurance proceeds available for the
restoration work to be completed under Section 1.5(a)(2)(A)
hereunder shall be insufficient for the performance and
completion of such work, Mortgagor covenants and agrees, as
a condition precedent to any disbursement of insurance
proceeds, to deliver to Mortgagee an amount, which,
together with the insurance proceeds, shall be sufficient
to pay the total amount necessary or reasonably required to
restore the Mortgaged Property as herein provided, and
which amounts shall be disbursed in accordance with
subsection (iii) of this section.
(E) Without limiting the generality of
the foregoing provisions, the restoration work and the
performance thereof shall be subject to and performed in
accordance with each of the following provisions: (1) such
work and the performance thereof shall be conducted in a
first-class, workmanlike manner, shall not permanently
weaken nor impair the structural strength of any existing
Improvements, nor change the character thereof or the
purpose for which the same may be used, nor lessen the
value of the Mortgaged Property; (2) before the
commencement of any such work, the plans and specifications
(the "Plans") therefor shall be filed with and approved by
all Governmental Authorities having jurisdiction and all
necessary licenses, permits and/or authorizations from all
Governmental Authorities shall have been obtained, and all
such work shall be done subject to and in accordance with
all applicable Legal Requirements; (3) before commencing
any such work, Mortgagor shall have delivered to Mortgagee
the Plans and a line item budget setting forth with
reasonable particularity the cost of completing such work
together with a certificate in a form, and from a licensed
architect, reasonably satisfactory to Mortgagee certifying
(a) that the execution of the work described in the Plans
will substantially restore the Mortgaged Property and (b)
that the budget constitutes a reasonable estimate of the
cost of restoring the Mortgaged Property in accordance with
the Plans; and (4) before commencing any such work, should
Mortgagee so request, Mortgagor shall, at Mortgagor's
expense, give to Mortgagee surety company labor and
material, payment and performance bonds in a company or
companies and in form reasonably satisfactory to Mortgagee
(or other security guaranteeing performance satisfactory to
Mortgagee) in an aggregate amount equal to one hundred
twenty percent (120%) of the estimated cost of such work,
guaranteeing the completion of such work, free and clear of
all liens, encumbrances, claims, chattel mortgages,
conditional bills of sale and security agreements;
PROVIDED, HOWEVER, that such bonds or other security shall
not be required from contractors which, in the reasonable
judgment of Mortgagee
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do not need to post such bonds or provide such security.
Notwithstanding the foregoing, to the extent that the
restoration work is contracted for under fixed-price
contracts, such surety company labor and material payment
and performance bonds (or other security guaranteeing
performance satisfactory to Mortgagee) may be equal to one
hundred ten percent (110%) of the amount of such fixed
price contracts.
(b) Insurance Escrow. In order to secure the
performance and discharge of the Mortgagor's obligations under
this Section 1.5, but not in lieu of such obligations, Mortgagor
shall, upon a failure to pay or provide such insurance, at the
times and in the manner required herein, pay over to Mortgagee an
amount equal to one-twelfth (1/12th) of the next maturing annual
insurance premiums for each month that has elapsed since the last
date to which such premiums were paid; and Mortgagor shall, in
addition, pay over to Mortgagee, on the first day of each month,
sufficient funds (as estimated from time to time by Mortgagee in
its sole discretion) to permit Mortgagee to pay said premiums
when due. Such deposits shall not be, nor be deemed to be, trust
funds but may be commingled with the general funds of Mortgagee,
and no interest shall be payable in respect thereof except as
required by law. Upon demand by Mortgagee, Mortgagor shall
deliver to Mortgagee such additional monies as are necessary to
make up any deficiencies in the amounts necessary to enable
Mortgagee to pay such premiums when due.
(c) Compliance with Insurance Policies. Mortgagor
shall not violate or permit to be violated any of the conditions
or provisions of any policy of insurance required by the
Indenture or this Leasehold Mortgage and Mortgagor shall so
perform and satisfy the requirements of the companies writing
such policies that, at all times, companies of good standing
reasonably satisfactory to Mortgagee shall be willing to write
and/or continue such insurance. Mortgagor further covenants to
promptly send to Mortgagee all notices relating to any violation
of such policies or otherwise affecting Mortgagor's insurance
coverage or ability to obtain and maintain such insurance
coverage. Mortgagor shall not obtain insurance as to the
Mortgaged Property except that of which Mortgagee is aware and
which complies with the provisions of this Leasehold Mortgage,
the Indenture, and the Loan Agreement.
1.6 CONDEMNATION. Pursuant to its rights in condemnation
awards and proceeds Mortgagee shall be entitled to the receipt of
all compensation awards, damages, claims, rights of action and
proceeds of, or on account of, any damage or taking through
condemnation and is hereby authorized, at its option, to
commence, appear in and prosecute in its own or Mortgagor's name
any action or proceeding relating to any condemnation and to
settle or compromise any claim in connection therewith, and
Mortgagor hereby appoints Mortgagee as its attorney-in-fact to
take any action in Mortgagor's name pursuant to Mortgagee's
rights hereunder. Immediately upon obtaining knowledge of the
institution of any proceedings for the condemnation of the
Mortgaged Property or any portion thereof, Mortgagor shall notify
Mortgagee of the pendency of such proceedings. Mortgagor from
time to time shall execute and deliver to Mortgagee all
instruments requested by it to permit such participation
provided, however, that such instruments shall be deemed as
supplemental to the foregoing grant of permission to Mortgagee,
and unless otherwise required, the foregoing permission shall,
without more, be deemed sufficient to permit Mortgagee to
participate in such proceedings on behalf of Mortgagor. All such
compensation awards, damages, claims, rights of action and
proceeds, and any other payments or relief, and the right
thereto, are included in the Mortgaged Property, and Mortgagee,
after deducting therefrom all its expenses, including reasonable
attorneys fees, shall apply such proceeds as follows:
(a) In the event that any Land or Improvements are
condemned (whether by one or successive condemnation
proceedings), proceeds of such condemnation shall be applied in
accordance with the provisions of Section 4.10 of the Indenture.
(b) Mortgagor shall notify Mortgagee within one (1)
year following the conclusion of such condemnation proceeding
whether or not Mortgagor intends to (i) restore the Improvements
or replace the Improvements with substantially similar
improvements, (ii) replace the Improvements with other
improvements which are not substantially similar to the
Improvements lost or damaged through condemnation, or (iii) not
restore
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the Improvements. In the event that Mortgagor makes an election
pursuant to 1.6(b)(i) or (ii) hereinabove, Mortgagor shall cause
such restoration to be completed substantially in accordance
with the provisions of Section 1 .5(a)(3) hereof. In the event
Mortgagor makes an election pursuant to 1.6(b)(ii) above, then,
in addition to any other obligations of Mortgagor hereunder,
Mortgagor shall deliver to Mortgagee an MAI appraisal performed
by an MAI appraiser selected by Mortgagor and reasonably
satisfactory to Mortgagee showing that the value of the Mortgaged
Property upon completion of such restoration shall be in an
amount not less than 100% of the indebtedness secured by this
Leasehold Mortgage and any indebtedness secured by a Permitted
Lien which is secured on a PARI PASSU basis with or which is
senior to the lien hereof. In the event that there shall remain
any balance of such award after the payment of settlement costs
and the payment of costs of demolition, repair, restoration and
replacement under 1 .6(b)(i) or (ii) above, any balance shall be
retained by Mortgagor.
(c) In the event that (i) the Improvements are not
so rebuilt, reconstructed or substituted with other improvements,
or repaired in accordance with Section 1.6(b) hereof, (ii)
Mortgagor fails to notify Mortgagee within said one (1) year
period as provided in Section 1.6(b) hereof or elects under 1.6
(b)(iii) hereof not to restore, repair, replace or substitute
such Improvements or (iii) all or substantially all of the
Mortgaged Property is condemned, then such award or settlement
shall be applied in accordance with the provisions of Section
4.10 of the Indenture, PROVIDED, HOWEVER, should any events
described in clauses 1.6(c)(i), 1.6(c)(ii), or l.6(c)(iii) occur,
Mortgagor shall not invest any portion of any such award or
settlement in real property, real estate, improvements or
accessions to real estate or real property.
1.7 CARE OF MORTGAGED PROPERTY.
(a) Mortgagor shall preserve and maintain the
Mortgaged Property in good condition and repair. Mortgagor shall
not permit, commit or suffer to exist any waste, impairment or
deterioration of the Mortgaged Property or of any part thereof
that in any manner materially impairs Mortgagee's security
hereunder, and shall not take any action which will increase the
risk of fire or other hazard to the Mortgaged Property or to any
part thereof.
(b) Except for Permitted Dispositions, no part of
the Improvements shall be removed, demolished or materially
altered without the prior written consent of Mortgagee, which
consent shall not be unreasonably withheld. Mortgagor shall have
the right, without such consent, to remove and dispose of free
from the lien of this Leasehold Mortgage any part of the
Improvements as from time to time may become worn out or
obsolete, provided that either (i) such removal or disposition
does not materially adversely affect the value of the Mortgaged
Property or (ii) prior to or promptly following such removal, any
such property shall be replaced with other property of
substantially equal utility and of a value at least substantially
equal to that of the replaced property when first acquired and
free from any security interest of any other person (subject to
Permitted Liens), and by such removal and replacement Mortgagor
shall be deemed to have subjected such replacement property to
the lien of this Leasehold Mortgage.
1.8 ENVIRONMENTAL LAWS.
(a) Mortgagor represents and warrants that, to the
best of Mortgagor's knowledge, after due inquiry and
investigation, (a) there are no Hazardous Materials on or at the
Mortgaged Property, except those in compliance with all
applicable federal, state and local laws, ordinances, rules and
regulations, and (b) neither Mortgagor nor any occupant of, nor
any prior owner or occupant of, the Mortgaged Property has
received any notice or advice of violations of any applicable
federal, state or local law, ordinance, rule or regulation from
any governmental agency or any source whatsoever with respect to
Hazardous Materials on, from or affecting the Mortgaged Property.
Mortgagor covenants that the Mortgaged Property shall be kept
free of Hazardous Materials except in compliance with all
applicable federal, state and local laws, ordinances, rules and
regulations, and neither Mortgagor nor any occupant of the
Mortgaged Property shall use, transport, store, dispose of or in
any manner deal
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with Hazardous Materials on the Mortgaged Property, except in
compliance with all applicable federal, state and local laws,
ordinances, rules and regulations. Mortgagor shall comply with,
and ensure compliance by all occupants or the Mortgaged Property
with, all applicable federal, state and local laws, ordinances,
rules and regulations, including Environmental Laws. Mortgagor
shall have 90 days to cure any lien imposed on any portion of the
Mortgaged Property pursuant to Environmental Laws. In the event
that Mortgagor receives any notice or advice from any
governmental agency or any source whatsoever with respect to
Hazardous Materials on, from or affecting the Mortgaged Property,
Mortgagor shall immediately notify Mortgagee. Mortgagor shall
conduct and complete all investigations, studies, sampling, and
testing and all remedial actions necessary to clean up and remove
all Hazardous Materials on or at the Mortgaged Property in
accordance with all applicable federal, state, and local laws,
ordinances, rules and regulations or as Mortgagee may reasonably
require.
(b) Mortgagor represents and warrants that, to the
best of Mortgagor's knowledge after due inquiry and
investigation, no lien has attached to the Mortgaged Property as
a result of any action by DEP or its designee pursuant to the
Spill Compensation Fund, as such term is defined in the Spill
Act, expending monies from said fund to pay for "cleanup and
removal costs" or "natural resources" damages as a result of any
"discharge" of any "hazardous substances" on or at the Mortgaged
Property, as such terms are defined in the Spill Act. Mortgagor
further represents, warrants and covenants that Mortgagor did not
in the past, and does not now, own, operate or control and shall
not prior to the satisfaction and discharge of the lien of this
Mortgage acquire, own, operate or control any "major facility"
(as such term is defined in the Spill Act) or any hazardous or
solid waste disposal facility.
(c) If a lien is filed against the Mortgaged
Property pursuant to the Spill Act, Mortgagor shall immediately
either (i) pay the claim and remove the lien from the Mortgaged
Property, or (ii) furnish (a) a bond satisfactory to Mortgagee
and the title insurance company which insured the priority of
lien of this Mortgage in the amount of the claim out of which the
lien arises, or (b) other security reasonably satisfactory to the
Mortgagee in an amount sufficient to discharge the claim of which
the lien arises.
(d) Upon Mortgagee's request in connection with the
"closing, terminating or transferring of operations" (as such
term is defined in ISRA) relating to Mortgagor or any one or more
of the Tenants (as hereinafter defined), Mortgagor shall promptly
provide Mortgagee with:
(i) a letter of non-applicability from the
DEP accompanied by the supporting affidavit of the applicant or
an attorney's opinion letter addressed to Mortgagee, from counsel
satisfactory to a Mortgagee and in a form satisfactory to
Mortgagee's counsel, stating that ISRA does not apply to such
closing, terminating or transferring of operations; or
(ii) a Negative Declaration (as such term is
defined in ISRA) duly and finally approved by DEP; or
(iii) a Cleanup Plan (as such term is defined
in ISRA) duly and finally approved by DEP; or
(iv) an Administrative Consent Order ("ACO"),
issued by the DEP permitting the closing, terminating or
transferring of operations; or
(v) other administrative approval issued by
DEP permitting the closing, terminating or transferring of
operations.
Nothing in this subsection (d) shall be construed as
limiting Mortgagor's obligation to otherwise comply with ISRA.
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(e) If Mortgagor complies with subsection (d) of
this Section by obtaining an approved and final Cleanup Plan or
ACO, Mortgagor shall promptly implement and prosecute to
completion or cause to be so implemented and prosecuted, the
Cleanup Plan or the requirements of the ACO, as the case may be,
in accordance with the schedules contained therein or as may be
otherwise ordered or directed by DEP. Mortgagor expressly
understands and acknowledges that Mortgagor's compliance with
the provisions of this subsection (e) may require Mortgagor to
expend funds or do acts after the expiration or termination of
the term of one or more leases. Mortgagor shall expend such
funds though the terms of the relevant Lease shall have
previously in any such Lease or the provisions of ISRA have
placed the burden of compliance on the Tenant.
(f) The obligations and liabilities of Mortgagor
under this Section shall survive any entry of a judgment of
foreclosure or a foreclosure sale or the delivery of a deed in
lieu of foreclosure of this Leasehold Mortgage.
(g) The Mortgagor will defend, indemnify, and hold
harmless Mortgagee, its employees, agents, officers, and
directors, from and against any and all claims, demands,
penalties, causes of action, fines, liabilities, settlements,
damages, costs, or expenses of whatever kind or nature, known or
unknown, foreseen or unforeseen, contingent or otherwise
(including, without limitation, counsel and consultant fees and
expenses, investigation and laboratory fees and expenses, court
costs, and litigation expenses) arising out of, or in any way
related to, (i) any breach by the Mortgagor of any of the
provisions set forth above, (ii) the presence, disposal,
spillage, discharge, emission, leakage, release, or threatened
release of any Hazardous Material which is at, in, on, under,
about, from or affecting the Mortgaged Property, including,
without limitation, any damage or injury resulting from any such
Hazardous Material to or affecting the Mortgaged Property or the
soil, water, air, vegetation, buildings, personal property,
persons or animals located on the Mortgaged Property or on any
other property or otherwise, (iii) any personal injury (including
wrongful death) or property damage (real or personal) arising out
of or related to any such Hazardous Material, (iv) any lawsuit
brought or threatened, settlement reached, or order or directive
of or by any governmental authority relating to such Hazardous
Material, or (v) any violation of any Environmental Law.
1.9 LEASES.
(a) Mortgagor represents and warrants that:
(i) Mortgagor has delivered to Mortgagee
true, correct and complete copies of all Facility Leases
and Material Space Leases, including all amendments and
modifications, written or oral existing as of the date
hereof;
(ii) Mortgagor has not executed or entered
into any modifications or amendments of the Facility Leases
or Material Space Leases, either orally or in writing,
other than written amendments that have been disclosed to
Mortgagee in writing;
(iii) no default now exists under any Facility
Lease or Space Lease;
(iv) except for the Bankruptcy of Resorts, no
event has occurred that, with the giving of notice or the
passage of time or both, would constitute such a default or
would entitle Mortgagor or any other party under such
Facility Lease or Space Lease to cancel the same or
otherwise avoid its obligations;
(v) Mortgagor has not accepted prepayments of
installments of Rent under any Space Leases more than one
month in advance of the date when the same are due, except
for security deposits not in excess of one month's Rent;
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(vi) except for this Leasehold Mortgage and
the Existing Encumbrances, Mortgagor has not executed any
assignment or pledge of any of the Facility Leases or the
Space Leases, the Rents, or of Mortgagor 's right, title
and interest in the same;
(vii) this Leasehold Mortgage conforms and
complies with all Facility Leases and Space Leases, does
not constitute a violation or default under any Facility
Lease or Space Lease, and is and shall at all t imes
constitute a valid lien (subject only to Permitted Liens)
on Mortgagor's interests in the Facility Leases and Space
Leases; and
(viii) all rents (including additional rents
and other charges reserved in the Facility Lease) have been
paid to the extent they were due and payable to the date
hereof.
(b) Subject to Section 5.2 of this Leasehold
Mortgage, Mortgagor shall not enter into any new Facility Leases
or Space Leases or any modifications or amendments of existing
FacilityLeases or Space Leases in the future other than written,
bona fide amendments or modifications entered into in arms-
length transactions. Mortgagor will not, without the prior
written consent of Mortgagee, which consent shall not be
unreasonably withheld, modify, supplement, change or amend the
Resorts Lease, PROVIDED, HOWEVER, that Mortgagor may modify,
supplement, change or amend the Resorts Lease (other than Article
26 thereof), without Mortgagee's prior written consent, (i) to
the extent necessary to comply with the requirements of any of
the Gaming Control Acts or any order, rule or regulation of any
Gaming Control Authority or other state or local governmental
body or authority having jurisdiction to require the Resorts or
Mortgagor to change the Resorts Lease, or (ii) if the following
items shall have been delivered to Mortgagee prior to the
occurrence of any such amendment and as a condition to the
effectiveness thereof: (A) opinion of an investment banking firm
of national character, reputation and prominence to the effect
that the proposed amendment does not materially impair the
security of this Leasehold Mortgage, which opinion may be given
in reliance upon the opinion required by clause (B) below, (B) an
opinion of independent legal counsel given to Mortgagee to the
effect that the proposed amendment does not impair the rights of
Mortgagee under the Resorts Lease and this Leasehold Mortgage to
foreclose this Leasehold Mortgage and take possession of the
Facility Lease, and (C) such other instruments, statements,
agreement and documents as such investment banking firm or such
counsel may require in order to render the opinions described in
clauses (A) and (B) above. Mortgagor shall send notice and a copy
of any new Facility Lease, any new Material Space Lease or any
amendment or modification of a Space Lease which causes such
Space Lease to become a Material Space Lease to Mortgagee with a
certificate attached thereto from a licensed real estate broker
in the State of New Jersey attesting to the substantially fair
market terms and conditions of such transaction.
(c) Promptly after the date hereof, and again
promptly after execution of any amendment to this Leasehold
Mortgage, Mortgagor shall notify each Facility Lessor of the
execution and delivery of this Leasehold Mortgage or amendment,
as the case may be.
(d) Mortgagor shall pay, when due and payable, the
rentals, additional rentals, and other charges required by, and
payable under, each Facility Lease in accordance with such
Facility Lease.
(e) Mortgagor shall perform and observe all terms,
covenants, and conditions that Mortgagor must perform and observe
as lessee under the Facility Leases, and do everything necessary
to preserve and to keep unimpaired Mortgagor's rights under the
Facility Leases. Mortgagor shall provide all insurance required
by any Facility Lease. All such insurance shall also comply with
this Leasehold Mortgage. Mortgagor shall enforce the Facility
Lessor's obligations under each of the Facility Leases so that
Mortgagor may enjoy all its rights as lessee under the Facility
Leases. Mortgagor shall furnish to Mortgagee all information that
Mortgagee may reasonably request from time to time concerning
Mortgagor's compliance with Facility Leases.
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(f) Subject to the Gaming Control Acts, Mortgagor
hereby irrevocably delegates to Mortgagee, following an Event of
Default and the expiration of any applicable cure or grace
period, the nonexclusive authority to exercise any or all of
Mortgagor's rights, including the right to give any and all
notices to the Facility Lessor, under each and every Facility
Lease, whether or not Mortgagor has failed to exercise any such
right. Nothing in the foregoing delegation of authority shall be
deemed to impose any obligation or duty upon Mortgagee.
(g) Mortgagor shall promptly deliver to Mortgagee a
copy of any notice of default or termination that it receives
from any Facility Lessor. Mortgagor shall promptly notify
Mortgagee of any request that either party to a Facility Lease
makes for arbitration pursuant to such Facility Lease and of the
institution of any such arbitration. Mortgagor shall promptly
deliver to Mortgagee a copy of the arbitrators' determination in
each such arbitration.
(h) Mortgagor shall renew all Facility Leases when
and as permitted in accordance with their terms except to the
extent Mortgagee directs otherwise in writing. Mortgagor shall
not, without Mortgagee's consent, fail or refuse to take timely
and appropriate action to renew any Facility Lease when and as
permitted by such Facility Lease.
(i) Mortgagor shall not, without Mortgagee's
consent which consent shall not be unreasonably withheld, consent
or refuse to consent to any action that any Facility Lessor or
any third party takes or desires to take under or with respect to
any Facility Lease.
(j) Mortgagor shall not subordinate, or consent to
the subordination of, any Facility Lease to any mortgage or deed
of trust encumbering the Facility Lessor's estate in the affected
portion of the Mortgaged Property.
(k) Mortgagor's obligations under this Leasehold
Mortgage are independent of and in addition to Mortgagor's
obligations under any Facility Lease. Nothing in this Leasehold
Mortgage shall be construed to require Mortgagor or Mortgagee to
take or omit to take any action that would cause a default under
any Facility Lease.
(l) Mortgagor promptly shall notify Mortgagee
orally after learning of the commencement of any Bankruptcy
affecting any Facility Lessor or the occurrence of any event
that, with the passage of time, could constitute such a
Bankruptcy. Mortgagor also shall give written notice of such
event to Mortgagee, which shall include any information available
to Mortgagor as to the date of such filing, the court in which
such petition was filed, and the relief sought in such petition.
Mortgagor promptly shall deliver to Mortgagee any and all
notices, summonses, pleadings, applications, and other documents
that Mortgagor receives in connection with any Facility Lessor's
Bankruptcy and any related proceedings.
(m) Each Material Space Lease hereafter entered
into shall provide (i) that it is subordinate to this Leasehold
Mortgage, (ii) that the Space Lessee shall attorn to the
Mortgagee and (iii) that the tenant must comply, at its own cost,
with ISRA.
1.10 TREATMENT OF FACILITY LEASES IN BANKRUPTCY.
(a) 365(h) Election. If any Facility Lessor rejects
or disaffirms, or seeks or purports to reject or disaffirm, any
Facility Lease pursuant to any Bankruptcy Law, then Mortgagor
shall not exercise the 365(h) Election except as otherwise
provided in this paragraph. To the extent permitted by law,
Mortgagor shall not suffer or permit the termination of any
Facility Lease by exercise of the 365(h) Election or otherwise
without Mortgagee's consent. Mortgagor acknowledges that because
the Facility Leases are a primary element of Mortgagee's security
for the Obligations secured hereunder, it is not anticipated that
Mortgagee would consent to termination of any
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Facility Lease. If Mortgagor makes any 365(h) Election in
violation of this Leasehold Mortgage, then such 365(h) Election
shall be void and of no force or effect.
(b) Assignment to Mortgagee. Mortgagor hereby
assigns to Mortgagee the 365(h) Election with respect to any
Facility Lease. Mortgagor acknowledges and agrees that the
foregoing assignment of the 365(h) Election and related rights is
one of the rights that Mortgagee may use at any time to protect
and preserve Mortgagee's other rights and interests under this
Leasehold Mortgage. Mortgagor further acknowledges that exercise
of the 365(h) Election in favor of terminating any Facility Lease
would constitute waste prohibited by this Leasehold Mortgage.
Mortgagor acknowledges and agrees that the 365(h) Election is in
the nature of a remedy available to Mortgagor under a Facility
Lease, and is not a property interest that Mortgagor can separate
from the Facility Lease as to which it arises. Therefore,
Mortgagor agrees and acknowledges that exercise of the 365(h)
Election in favor of preserving the right to possession under a
Facility Lease shall not be deemed to constitute Mortgagee's
taking or sale of the Mortgaged Property (or any element thereof)
and shall not entitle Mortgagor to any credit against the
Obligations secured hereunder or otherwise impair Mortgagee's
Remedies.
(c) Scope of Collateral. Mortgagor acknowledges
that if the 365(h) Election is exercised in favor of Mortgagor's
remaining in possession under the affected Facility Lease, then
Mortgagor's resulting occupancy rights, as adjusted by the effect
of Section 365 of the Bankruptcy Code, shall then be part of the
Mortgaged Property and shall be subject to the lien of this
Leasehold Mortgage.
1.11 REJECTION OF FACILITY LEASES BY FACILITY LESSOR. If
any Facility Lessor rejects or disaffirms a Facility Lease or
purports or seeks to disaffirm such Facility Lease pursuant to
any Bankruptcy Law, then:
(a) Continuance of Possession. Mortgagor shall
attempt to remain in possession of the premises demised under
such Facility Lease and shall perform all acts necessary for
Mortgagor to remain in such possession for the unexpired term of
such Facility Lease (including all renewals), whether the then
existing terms and provisions of such Facility Lease require such
acts or otherwise; and
(b) Extension of Lien Under Bankruptcy Code. All
the terms and provisions of this Leasehold Mortgage and the lien
created by this Leasehold Mortgage shall remain in full force and
effect and shall extend automatically to all of Mortgagor's
rights and remedies arising at any time under, or pursuant to,
365(h) of the Bankruptcy Code, including all of Mortgagor's
rights to remain in possession of the Mortgaged Property.
1.12 ASSIGNMENT OF CLAIMS TO MORTGAGEE. Mortgagor,
immediately upon learning that any Facility Lessor has failed to
perform the terms and provisions under any Facility Lease
(including by reason of a rejection or disaffirmance or purported
rejection or disaffirmance of such Facility Lease pursuant to any
Bankruptcy Law), shall notify Mortgagee of any such failure to
perform. Mortgagor unconditionally assigns, transfers, and sets
over to Mortgagee the Facility Lease Damage Claims. This
assignment constitutes a present, irrevocable, and unconditional
assignment of the Facility Lease Damage Claims, and shall
continue in effect until the Obligations secured hereunder have
been satisfied in full.
1.13 OFFSETS BY MORTGAGOR. If pursuant to Section
365(h)(2) of the Bankruptcy Code or any other similar Bankruptcy
Law, Mortgagor seeks to offset against the rent under any
Facility Lease the amount of any Facility Lease Damage Claim,
then Mortgagor shall notify Mortgagee of its intent to do so at
least 20 days before effecting such offset. Such notice shall set
forth the amounts proposed to be so offset and the basis for such
offset. If Mortgagee objects to all or any part of such offset,
then Mortgagor shall not effect any offset of the amounts to
which Mortgagee objects. If Mortgagee approves such offset, then
Mortgagor may effect such offset as set forth in Mortgagor's
notice. Neither Mortgagee's failure to object, nor any objection
or other communication between Mortgagee and Mortgagor that
relates to such offset, shall constitute Mortgagee's approval of
any such offset. Mortgagor shall indemnify Mortgagee against any
offset against the rent reserved in any Facility Lease.
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1.14 MORTGAGOR'S ACQUISITION OF INTEREST IN LEASED
PARCELS. If Mortgagor acquires the fee or any other interest in
any of Land or Improvements, such acquired interest shall
immediately become subject to the lien of this Leasehold Mortgage
as fully and completely, and with the same effect, as if
Mortgagor now owned it and as if this Leasehold Mortgage
specifically described it, without need for the delivery and/or
recording of a supplement to this Leasehold Mortgage or any other
instrument. In the event of any such acquisition, the fee and
leasehold interests in such Land or Improvements, unless
Mortgagee elects otherwise in writing, remain separate and
distinct and shall not merge, notwithstanding any principle of
law to the contrary.
1.15 NEW FACILITY LEASES ISSUED TO MORTGAGEE. If any
Facility Lease is for any reason whatsoever terminated before the
expiration of its term and, pursuant to any provision of such
Facility Lease, and Mortgagee or its designee shall acquire from
Facility Lessor a new lease of the relevant leased parcel, then
Mortgagor shall have no right, title or interest in or to such
new lease or the estate created thereby. If, however, the
Promissory Note has been satisfied, then Mortgagee shall convey
(as Mortgagor shall direct) without warranty its right, title and
interest in such new lease or estate, provided that Mortgagor
simultaneously pays any taxes, fees, expenses and including,
without limitation, reasonable legal fees and expenses, relating
to such conveyance.
1.16 FURTHER ENCUMBRANCE, SALE OR OTHER DISPOSITION OF
COLLATERAL.
(a) Mortgagor covenants that at all times prior to
the discharge of this Mortgage, except for Permitted Liens and
Permitted Dispositions, Mortgagor shall not, without Mortgagee's
prior written consent, make nor suffer to exist, nor enter into
any agreement for, any sale, assignment, exchange, mortgage,
transfer, Lien, hypothecation or encumbrance of all or any part
of the Mortgaged Property, including, without limitation, the
Rent as used herein, "transfer" includes the actual transfer or
other disposition, whether voluntary, involuntary, by law, or
otherwise, except those transfers specifically permitted herein,
provided however, that "transfer" shall not include the granting
of utility or other beneficial easements with respect to the
Mortgaged Property which have been granted by Mortgagor and are
reasonably necessary to the construction, maintenance or
operation of the Atlantic City Showboat. Notwithstanding any
other provisions hereof, the liens created by that certain
Leasehold Mortgage, Assignment of Rents and Security Agreement
made by Mortgagor in favor of Trustee and SBI and recorded in the
records of the Atlantic County Recorder, on May 19, 1993 in Book
5028 Page 1; and the First Amendment to Leasehold Mortgage,
Assignment of Rents and Security Agreement dated July 9, 1993
recorded July 28, 1993 in Mortgage Book 5028, page 79; and in the
Second Amendment to Leasehold Mortgage, Assignment of Leases and
Rents and Security Agreement dated as of July 6, 1995; and the
Leasehold Mortgage, Assignment of Rents and Security Agreement
made by Atlantic City Showboat, Inc. to Showboat, Inc. recorded
May 19, 1993 in Mortgage Book 5028, page 79, as amended, shall be
PARI PASSU Encumbrances.
(b) Any Permitted Lien described in the definition
of "Permitted Liens" set forth in Section 1.01 of the Indenture
which is junior to the lien of the Loan Documents (a "Subordinate
Mortgage") shall be permitted hereunder so long as there shall
have been delivered to Mortgagee, not less than thirty (30) days
prior to the date thereof, a copy thereof which shall contain
express covenants in form and substance satisfactory to Mortgagee
to the effect that: (i) the Subordinate Mortgage is in all
respects subject and subordinate to this Leasehold Mortgage; (ii)
if any action or proceeding shall be brought to foreclose the
Subordinate Mortgage (regardless of whether the same is a
judicial proceeding or pursuant to a power of sale contained
therein), no tenant of any portion of the Mortgaged Property
shall be named as a party defendant nor shall any action be taken
with respect to the Mortgaged Property which would terminate any
occupancy or tenancy of the Mortgaged Property, or any portion
thereof, without the consent of Mortgagee; (iii) any Rents, if
collected through a receiver or by the holder of the Subordinate
Mortgage, shall be applied first to the obligations secured by
this Leasehold Mortgage, including principal and interest due and
owing on or to become due and owing on the Promissory Note, and
then to the payment of maintenance expenses, operating charges,
taxes, assessments, and disbursements incurred in connection with
the ownership, operation, and maintenance of the Mortgaged
Property; and (iv) if any action or
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proceeding shall be brought to foreclose the Subordinate
Mortgage, prompt notice of the commencement thereof shall be
given to Mortgagee.
(c) Mortgagor agrees that in the event the
Leasehold interest held by Mortgagor in the Mortgaged Property or
any part thereof becomes vested in a person other than
Mortgagor, Mortgagee may, without notice to Mortgagor, deal in
any way with such successor or successors in interest with
reference to this Leasehold Mortgage, the Promissory Note and
other Obligations hereby secured without in any way vitiating or
discharging Mortgagor's or any Guarantor's, surety's or
endorser's liability hereunder or upon the obligations hereby
secured. No sale of the Mortgaged Property and no forbearance to
any person with respect to this Leasehold Mortgage and no
extension to any person of the time for payment of the Promissory
Note, and other sums hereby secured given by Mortgagee shall
operate to release, discharge, modify, change or affect the
original liability of Mortgagor, or such Guarantor, surety or
endorser either in whole or in part.
(d) This Leasehold Mortgage may be subordinated to
the liens of any FF&E Financing Agreements (as hereinafter
defined in this Section 1.16(d) and any future or further
advances made thereunder and to any modifications, renewals or
extensions thereof to which the lien of this Leasehold Mortgage
attaches. Mortgagor covenants and agrees to comply with all of
the terms and conditions set forth in any FF&E Financing
Agreement. If Mortgagor shall fail to make any payment of
principal of or pursuant to any FF&E Financing Agreement on its
part to be performed or observed, except where Mortgagor is
contesting such payment in good faith, then Mortgagee may make
such payment of the principal of or interest on the sums secured
by such security interest or may make any payment in order to
perform or observe any other term, covenant, condition or
agreement of any FF&E Financing Agreement on Mortgagor's part to
be performed or observed and any and all sums so expended by
Mortgagee shall be secured by this Leasehold Mortgage and shall
be repaid by Mortgagor upon demand, together with interest
thereon at the interest rate on the Promissory Note from the date
of advance. In furtherance of such subordination, Mortgagee
shall execute, acknowledge and deliver to Mortgagor, at
Mortgagor's expense, any and all such evidence and document the
subordination of this Leasehold Mortgage in accordance with the
foregoing provisions of this Section 1.16(d). As used herein,
"FF&E Financing Agreement" shall mean the agreement with respect
to any financing (i) as to which the lender holds a security
interest in only the assets purchased with the proceeds of such
financing for the payment of principal and interest, (ii) which
is permitted by the Loan Agreement to be incurred and (iii) the
proceeds of which are used to acquire or lease the FF&E subject
to such security interest.
1.17 PARTIAL RELEASES OF MORTGAGED PROPERTY. Mortgagor
may from tim to time (i) transfer a portion of the Mortgaged
Property (including any temporary taking) to any person legally
empowered to exercise the power of eminent domain, (ii) make a
Permitted Disposition or (iii) grant utility and other easements
reasonably necessary for the construction and operation of the
Atlantic City Showboat, which grant or transfer is for the
benefit of the Mortgaged Property. In each such case, Mortgagee
shall execute and deliver any instruments necessary or
appropriate to effectuate or confirm any such transfer or grant,
free from the lien of this Leasehold Mortgage, provided, however,
that Mortgagee shall execute a lien release or subordination
agreement, as appropriate, for matters described in clauses (i)
and (iii) above only if Mortgagee shall have received the
following:
(a) A written request of Mortgagor, dated as of the
date of such transfer, grant or release and signed by an
authorized officer of Mortgagor, requesting Mortgagee to execute
one or more described instruments, and certifying that (i) no
Event of Default hereunder, and no event which with notice or
lapse of time or both would constitute such Event of Default, has
occurred and is continuing and that the conditions of this
Section 1.17 have been fulfilled, (ii) the transfer, grant or
release is not materially adverse to the proper conduct of the
business of Mortgagor on the Land, (iii) in the case of a
transfer of property whose value is greater than $1,000,000 to a
person legally empowered to exercise the power of eminent domain,
the consideration being paid for the portion of the Mortgaged
Property being transferred, and that such consideration is not
less than the fair market value of such portion, and in the case
of a grant or release of easements or other rights, the
consideration,
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if any, being paid for such grant or release, (iv) in the case of
a transfer to a person legally empowered to exercise the power of
eminent domain, that such transfer is being made in anticipation
that such portion would otherwise be taken under the power of
eminent domain, and (v) that such transfer, grant or release
does not materially impair the use of the Mortgaged Property for
the purposes for which it is then held by Mortgagor;
(b) A counterpart of the instrument pursuant to
which such transfer, grant or release is to be made, and each
instrument which Mortgagee is requested to execute in order to
effectuate or confirm such transfer, grant or release;
(c) In the case of a transfer to a person legally
empowered to exercise the power of eminent domain, which transfer
involves property whose value is greater than $6,000,000, an
opinion of counsel, who may be counsel to Mortgagor, to the
effect that the assignee or grantee of the portion of the
Mortgaged Property being transferred is legally empowered to take
such portion under the power of eminent domain;
(d) An opinion of counsel, who may be counsel to
Mortgagor to the effect that the transfer of property does not
violate New Jersey's subdivision laws and that the transferred
property and the remaining portions of the Land constitute
legally subdivided lots;
(e) Such other instruments, certificates (including
evidence of authority) and opinions as Mortgagee may reasonably
request.
Any consideration received for a transfer to any
person empowered to exercise the right of eminent domain shall be
subject to Section 1.6 hereof.
1.18 LIEN SUBROGATION. As further security, Mortgagee
shall be subrogated to any and all liens or encumbrances prior or
superior to this Leasehold Mortgage, whether or not released of
record, to the extent paid out of the proceeds received in
exchange for the indebtedness or obligations secured by this
Leasehold Mortgage.
1.19 FURTHER ASSURANCES.
(a) At its sole cost and without expense to
Mortgagee, Mortgagor shall do, execute, acknowledge and deliver
any and all such further acts, deeds, conveyances, notices,
requests for notices, financing statements, continuation
statements, certificates, assignments, notices of assignments,
agreements, instruments and further assurances, and shall mark
any chattel paper, deliver any chattel paper or instruments to
Mortgagee and take any other actions that are reasonably
necessary, prudent or requested by Mortgagee to perfect or
continue the perfection and first priority (in PARI PASSU) of
Mortgagee's security interest in the Mortgaged Property, to
protect the Mortgaged Property against the rights, claims, or
interests of third persons other than holders of Permitted Liens
or to effect the purposes of this Leasehold Mortgage, including
the security agreement and the absolute assignment of Rents
contained herein, or for the filing, registering or recording
thereof.
(b) Mortgagor shall forthwith upon the execution
and delivery of this Leasehold Mortgage, and thereafter from time
to time, cause this Leasehold Mortgage and each instrument of
further assurance to be filed, indexed, registered, recorded,
given or delivered in such manner and in such places as may be
required by any present or future law in order to publish notice
of and fully to protect the lien hereof upon, and the title of
Mortgagee to, the Mortgaged Property.
1.20 SECURITY AGREEMENT AND FINANCING STATEMENTS.
Mortgagor (as debtor) hereby grants to Mortgagee (as creditor and
secured party) a present and future security interest in all
Tangible Collateral, Intangible Collateral, FF&E (to the extent
Mortgagee is permitted in each applicable FF&E Financing
Agreement to maintain a security interest therein), Improvements,
all other personal property now or hereafter owned or leased by
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Mortgagor or in which Mortgagor has or will have any interest, to
the extent that such property constitutes a part of the Mortgaged
Property (whether or not such items are stored on the premises or
elsewhere), Proceeds of the foregoing comprising a portion of the
Mortgaged Property and all proceeds of insurance policies and
condemnation awards arising therefrom and all proceeds, products,
substitutions, and accessions therefor and thereto, subject to
Mortgagee's rights to treat such property as real property as
herein provided (collectively, the "PERSONAL PROPERTY") Mortgagor
shall execute any and all documents and writings, including
without limitation financing statements pursuant to the UCC, as
may be reasonably necessary or prudent to preserve and maintain
the priority of the security interest granted hereby on property
which may be deemed subject to the foregoing security agreement
or as Mortgagee may reasonably request, and shall pay to
Mortgagee on demand any reasonable expenses incurred by Mortgagee
in connection with the preparation, execution and filing of any
such documents. Mortgagor hereby authorizes and empowers
Mortgagee to execute and file, on Mortgagor's behalf, all
financing statements and refiling and continuations thereof as
Mortgagee deems necessary or advisable to create, preserve and
protect said security interest. This Leasehold Mortgage
constitutes both a real property mortgage and a "security
agreement," within the meaning of the UCC and the Mortgaged
Property includes both real and personal property and all other
rights and interests, whether tangible or intangible in nature,
of Mortgagor in the Mortgaged Property. Mortgagor by executing
and delivering this Leasehold Mortgage has granted to Mortgagee,
as security for the Debt, a security interest in the Mortgaged
Property.
(a) Fixture Filing. Without in any way limiting the
generality of the immediately preceding paragraph or of the
definition of Mortgaged Property, this Leasehold Mortgage
constitutes a fixture filing under Section 9-402 of the UCC. For
such purpose, (i) the "debtor" is Mortgagor and its address is
the address given for it in the initial paragraph of this
Leasehold Mortgage; (ii) the "secured party" is Mortgagee, and
its address for the purpose of obtaining information is the
address given for it in the initial paragraph of this Leasehold
Mortgage; (iii) the real estate to which the fixtures are or are
to become attached is Mortgagor's interest in the Land; and (iv)
the record owner of such real estate is Resorts.
(b) Remedies. The remedies for any violation of the
covenants, terms and conditions of the agreements herein
contained shall include any or all of (i) those prescribed herein
and (ii) those available under applicable law, and (iii) those
available under the UCC, all at Mortgagee's sole election. In
addition, a photographic or other reproduction of this Leasehold
Mortgage shall be sufficient as a financing statement for filing
wherever filing may be necessary to perfect or continue the
security interest granted herein.
(c) Derogation of Real Property. It is the
intention of the parties that the filing of a financing statement
in the records normally having to do with personal property shall
never be construed as in anyway derogating from or impairing the
express declaration and intention of the parties hereto as
hereinabove stated that everything used in connection with the
production of income from the Mortgaged Property and/or adapted
for use therein and/or which is described or reflected in this
Leasehold Mortgage is, and at all times and for all purposes and
in all proceedings both legal or equitable, shall be regarded as
part of the real property encumbered by this Leasehold Mortgage
irrespective of whether (i) any such item is physically attached
to the Improvements, (ii) serial numbers are used for the better
identification of certain equipment items capable of being thus
identified in a recital contained herein or in any list filed
with Mortgagee, or (iii) any such item is referred to or
reflected in any such financing statement so filed at any time.
It is the intention of the parties that the mention in any such
financing statement of (1) rights in or to the proceeds of any
fire and/or hazard insurance policy, or (2) any award in eminent
domain proceedings for a taking or for loss of value, or (3)
Mortgagor's interest as lessor in any present or future Space
Lease or rights to Rents, shall never be construed as in anyway
altering any of the rights of Mortgagee as determined by this
Leasehold Mortgage or impugning the priority of Mortgagee's real
property lien granted hereby or by any other recorded document,
but such mention in the financing statement is declared to be for
the protection of Mortgagee in the event any court or judge shall
at any time hold with respect to the matters set forth in the
foregoing clauses (1), (2) and (3) that notice of Mortgagee's
priority of interest to be
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effective against a particular class of persons, including but
not limited to, the federal government and any subdivisions or
entity of the federal government, must be filed in the UCC
records.
(d) Priority; Permitted Financing of Tangible
Collateral. Except for Permitted Liens and as provided in
Section 1.16(b) hereof, all Personal Property of any nature
whatsoever, which is subject to the provisions of this security
agreement, shall be purchased or obtained by Mortgagor in its
name and free and clear of any lien or encumbrance, except for
Existing Encumbrances and Permitted Liens and the lien hereof,
for use only in connection with the business and operation of the
Atlantic City Showboat, and shall be and at all times remain free
and clear of any lease or similar arrangement, chattel financing,
installment sale agreement, security agreement and any
encumbrance of like kind, so that Mortgagee's security interest
shall attach to and vest in Mortgagor for the benefit of
Mortgagee, with the priority herein specified, immediately upon
the installation or use of the Personal Property at the Land and
Mortgagor warrants and represents that Mortgagee's security
interest in the Personal Property is a validly attached and
binding security interest, properly perfected and prior to all
other security interests therein except as otherwise permitted in
this Agreement.
(e) Preservation of Contractual Rights of
Collateral. Mortgagor shall, prior to delinquency, default, or
forfeiture, perform all obligations and satisfy all material
conditions required on its part to be satisfied to preserve its
rights and privileges under any contract, lease, license, permit,
or other authorization (i) under which it holds any Tangible
Collateral or (ii) which constitutes part of the Intangible
Collateral except where Mortgagor is contesting such obligations
in good faith.
(f) Removal of Collateral. Except as otherwise
permitted herein, none of the Tangible Collateral shall be
removed from the Mortgaged Property without Mortgagee's prior
written consent, and except damaged or obsolete Tangible
Collateral which is either no longer usable or which is removed
temporarily for repair or improvement or removed for replacement
on the Mortgaged Property with Tangible Collateral of similar
function.
(g) Change of Name. Mortgagor shall not change its
corporate or business name, or do business within the State of
New Jersey under any name other than such name, or any trade
name(s) other than those as to which Mortgagor gives prior
written notice to Mortgagee of its intent to use such trade
names, or any other business names (if any) specified in the
financing statements delivered to Mortgagee for filing in
connection with the execution hereof, without providing Mortgagee
with the additional financing statement(s) and any other similar
documents deemed reasonably necessary by Mortgagee to assure that
its security interest remains perfected and of undiminished
priority in all such Personal Property notwithstanding such name
change.
1.21 ASSIGNMENT OF RENTS. The assignment of Leases and
Rents set out above in Granting Clauses (F), (G), (H), (I) and
(K) shall constitute an absolute and present assignment to
Mortgagee, subject to the license herein given to Mortgagor to
collect the Rents and to exercise the rights set forth in
Granting Clause (K)(c)(ii), and shall be fully operative without
any further action on the part of any party, and specifically
Mortgagee shall be entitled upon the occurrence of an Event of
Default hereunder and the expiration of any applicable cure or
grace periods to all Rents, whether or not Mortgagee takes
possession of the Mortgaged Property, or any portion thereof. The
absolute assignment contained in Granting Clause (K) shall not be
deemed to impose upon Mortgagee any of the obligations or duties
of Mortgagor provided in any such Space Lease (including, without
limitation, any liability under the covenant of quiet enjoyment
contained in any lease in the event that any lessee shall have
been joined as a party defendant in any action to foreclose this
Leasehold Mortgage and shall have been barred and foreclosed
thereby of all right, title and interest and equity of redemption
in the Mortgaged Property or any part thereof). Mortgagor hereby
consents to the appointment of a receiver to collect all Rents
under any Space Lease upon the occurrence of an Event of Default
and the expiration of any applicable cure or grace periods.
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1.22 EXPENSES.
(a) Mortgagor shall pay when due and payable all
costs, including without limitation, those reasonable appraisal
fees, recording fees, taxes, brokerage fees and commissions,
abstract fees, title policy fees, escrow fees, attorneys and
paralegal fees, travel expenses, fees for inspecting architect(s)
and engineer(s) and all other costs and expenses of every
character which have been incurred or which may hereafter be
incurred by Mortgagee or any assignee of Mortgagee in connection
with the preparation and execution of loan documents, amendments
thereto or instruments, agreements or documents of further
assurance, the funding of the Loan secured hereby, and the
enforcement of any Loan Document; and
(b) Mortgagor shall, upon demand by Mortgagee,
reimburse Mortgagee or any assignee of Mortgagee for all such
reasonable expenses which have been incurred or which shall be
incurred by it; and
(c) Mortgagor shall indemnify Mortgagee with respect
to any transaction or matter in any way connected with any
portion of the Mortgaged Property, this Leasehold Mortgage,
including any occurrence at, in, on, upon or about the Mortgaged
Property (including any personal injury, loss of life, or
property damage), or Mortgagor's use, occupancy, or operation of
the Mortgaged Property, or the filing or enforcement of any
mechanic's lien, or otherwise caused in whole or in part by any
act, omission or negligence occurring on or at the Mortgaged
Property, including failure to comply with any Legal Requirement
or with any requirement of this Leasehold Mortgage that applies
to Mortgagor, or any Person's violation of any environmental law
or any contamination of any portion of the Mortgaged Property. If
Mortgagee is a party to any litigation as to which either
Mortgagor is required to indemnify Mortgagee (or is made a
defendant in any action of any kind against Mortgagor or relating
directly or indirectly to any portion of the Mortgaged Property)
then, at Mortgagee's option, Mortgagor shall undertake
Mortgagee's defense, using counsel satisfactory to Mortgagee (and
any settlement shall be subject to Mortgagee's consent), and in
any case shall indemnify Mortgagee against such litigation.
Mortgagor shall pay all reasonable costs and expenses, including
reasonable legal costs, that Mortgagee pays or incurs in
connection with any such litigation. Any amount payable under any
indemnity in this Leasehold Mortgage shall be a demand
obligation, shall be added to, and become a part of, the secured
obligations under this Leasehold Mortgage, shall be secured by
this Leasehold Mortgage, and shall bear interest at the interest
rate on the Promissory Note. Such indemnity shall survive any
release of this Leasehold Mortgage and any Foreclosure.
1.23 MORTGAGEE'S CURE OF MORTGAGOR'S DEFAULT. If Mortgagor
defaults in the payment of any tax, assessment, lien, encumbrance
or other imposition, in its obligation to furnish insurance
hereunder, or in the performance or observance of any other
covenant, condition or term of this Leasehold Mortgage or any
Loan Document (including any obligation relating to Mortgagor's
performance under any Facility Lease), Mortgagee may, but is not
obligated to, to preserve its interest in the Mortgaged Property,
perform or observe the same, and all payments made (whether such
payments are regular or accelerated payments) and reasonable
costs and expenses incurred or paid by Mortgagee in connection
therewith shall become due and payable immediately. The amounts
so incurred or paid by Mortgagee, together with interest thereon
at the default interest rate on the Promissory Note from the date
incurred until paid by Mortgagor, shall be added to the
indebtedness and secured by the lien of this Leasehold Mortgage.
Mortgagee is hereby empowered to enter and to authorize its
agents to enter upon the Land or any part thereof for the purpose
of performing or observing any such defaulted covenant, condition
or term, without thereby becoming liable to Mortgagor or any
person in possession holding under Mortgagor; provided, however,
such entry upon the Land shall be done in such manner so as not
to disrupt the Mortgagor's business conducted thereon. No
exercise of any rights under this Section by Mortgagee shall cure
or waive any Event of Default or notice of default hereunder or
invalidate any act done pursuant hereto or to any such notice,
but shall be cumulative of all other rights and remedies.
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1.24 USE OF LAND. Mortgagor covenants that the Mortgaged
Property shall be used and operated in a manner consistent with
the description of the Atlantic City Showboat in the Prospectus
open during such days and hours as are customarily observed by
casino-hotels located in Atlantic City, New Jersey.
1.25 MATERIAL SPACE LEASES. Mortgagor shall not enter into
any Material Space Lease without first obtaining Mortgagee's
consent in writing, which consent shall not be unreasonably
withheld or delayed. A copy of such Material Space Lease and
(ii) the identity of the Space Lessee thereunder shall be
furnished to Mortgagee by Mortgagor upon receipt of such request.
1.26 COMPLIANCE WITH PERMITTED LIEN AGREEMENTS. Mortgagor
or any Affiliate of Mortgagor shall comply with each and every
material obligation contained in any agreement pertaining to a
material Permitted Lien.
1.27 DEFENSE OF ACTIONS. Mortgagor shall appear in and
defend any action or proceeding affecting or purporting to affect
the security hereof or the rights or powers of Mortgagee, and
shall pay all reasonable costs and expenses, including cost of
title search and insurance or other evidence of title,
preparation of survey, and reasonable attorneys' fees in any such
action or proceeding in which Mortgagee may appear or may be
joined as a party and in any suit brought by Mortgagee based upon
or in connection with this Leasehold Mortgage or any Loan
Document. Nothing contained in this section shall, however, limit
the right of Mortgagee to appear in such action or proceeding
with counsel of its own choice, either on its own behalf or on
behalf of Mortgagor.
1.28 AFFILIATES.
(a) Subject to Leasehold Mortgage. Mortgagor shall
cause all of its Affiliates in any way involved with the
operation of the Mortgaged Property or the Atlantic City Showboat
to observe the covenants and conditions of this Leasehold
Mortgage to the extent necessary to give the full intended effect
to such covenants and conditions and to protect and preserve the
security of Mortgagee hereunder. Mortgagor shall, at Mortgagee's
request, cause any such Affiliate to execute and deliver to
Mortgagee such further instruments or documents as Mortgagee may
reasonably deem necessary to effectuate the terms of this Section
1.28.
(b) Restriction on Use of Subsidiary or Affiliate.
Mortgagor shall not use any Affiliate in the operation of the
Mortgaged Property or the Atlantic City Showboat if such use
would in any way impair the security for the Promissory Note or
circumvent any covenant or condition of this Leasehold Mortgage
or of any other Loan Document.
1.29 FUTURE ADVANCES. All funds advanced in the reasonable
exercise of Mortgagee's judgment that the same are needed to
protect its security hereunder are deemed to be obligatory
advances and are to be added to the total indebtedness secured by
this Leasehold Mortgage and such indebtedness shall be increased
accordingly. All sums so advanced shall be secured by this
Leasehold Mortgage with the same priority of Lien as the security
for the Obligations secured hereunder.
1.30 TITLE INSURANCE. Promptly after the execution and
delivery of this Leasehold Mortgage, Mortgagor shall cause to be
delivered to Mortgagee at Mortgagor's expense, one or more ALTA
extended coverage Lender's Policies of Title Insurance showing
leasehold title to the Land vested in Mortgagor and the lien of
this Leasehold Mortgage to be a perfected lien, prior to any and
all encumbrances other than Permitted Liens.
1.31 EXCULPATION OF MORTGAGEE. The acceptance by Mortgagee
of the assignment contained herein with all of the rights,
powers, privileges and authority created hereby shall not, prior
to entry upon and taking possession of the Mortgaged Property by
Mortgagee, be deemed or construed to make Mortgagee a "mortgagee
in possession"; nor thereafter or at any time or in any event
obligate Mortgagee to appear in or defend any action or
proceeding relating to the Space Leases, the Rents or the
Mortgaged Property, or to take any action hereunder
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or to expend any money or incur any expenses or perform or
discharge any obligation, duty or liability under any Space Lease
or to assume any obligation or responsibility for any security
deposits or other deposits except to the extent such deposits are
actually received by Mortgagee, nor shall Mortgagee, prior to
such entry and taking, be liable in any way for any injury or
damage to person or property sustained by any Person in or about
the Mortgaged Property.
ARTICLE TWO
CORPORATE LOAN PROVISIONS
2.1 INTERACTION WITH INDENTURE, LOAN AGREEMENT AND
INTERCREDITOR AGREEMENT.
(a) Incorporation Reference. All terms, covenants,
conditions, provisions and requirements of the Loan Agreement and
Intercreditor Agreement are incorporated by reference in this
Leasehold Mortgage.
(b) Conflicts. Notwithstanding any other provision
of this Agreement, the terms and provisions of this Leasehold
Mortgage shall be subject and subordinate to the terms of the
Loan Agreement and the Indenture. To the extent that the Loan
Agreement provides Mortgagor with a particular cure or notice
period, or establishes any limitations or conditions on
Mortgagee's actions with regard to a particular set of facts,
Mortgagor shall be entitled to the same cure periods and notice
periods, and Mortgagee shall be subject to the same limitations
and conditions, under this Leasehold Mortgage, in place of the
cure periods, notice periods, limitations and conditions provided
for under this Leasehold Mortgage; PROVIDED, HOWEVER, that such
cure periods, notice periods, limitations and conditions shall
not be cumulative as between the Loan Agreement and this
Leasehold Mortgage. In the event of any conflict or inconsistency
between the provisions of this Leasehold Mortgage and those of
the Loan Agreement, including, without limitation, any conflicts
or inconsistencies in any definitions herein or therein, the
provisions or definitions of the Indenture, Loan Agreement and
Intercreditor Agreement shall govern.
2.2 OTHER COLLATERAL. This Leasehold Mortgage is one of a
number of security agreements to secure the debt delivered by or
on behalf of Mortgagor pursuant to the Indenture and the other
Loan Documents and securing the Obligations secured hereunder.
All potential junior Lien claimants are placed on notice that,
under any of the Loan Documents or otherwise (such as by separate
future unrecorded agreement between Mortgagor and Mortgagee),
other collateral for the Obligations secured hereunder (i.e.,
collateral other than the Mortgaged Property) may, under certain
circumstances, be released without a corresponding reduction in
the total principal amount secured by this Leasehold Mortgage.
Such a release would decrease the amount of collateral securing
the same indebtedness, thereby increasing the burden on the
remaining Mortgaged Property created and continued by this
Leasehold Mortgage. No such release shall impair the priority of
the lien of this Leasehold Mortgage. By accepting its interest in
the Mortgaged Property, each and every junior Lien claimant shall
be deemed to have acknowledged the possibility of, and consented
to, any such release. Nothing in this paragraph shall impose any
obligation upon Mortgagee.
ARTICLE THREE
DEFAULTS
3.1 EVENT OF DEFAULT. The term "Event of Default,"
wherever used in this Leasehold Mortgage, shall mean any one or
more of the following events (whether any such event shall be
voluntary or involuntary or come
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about or be effected by operation of law or pursuant to or in
compliance with any judgment, decree or order of any court or any
order, rule or regulation of any administrative or governmental
body):
(a) The failure by Mortgagor to pay any principal,
premium or interest when due, whether at maturity, upon
redemption, or otherwise, under the Promissory Note if such
failure results in the failure to pay in full any principal,
premium or interest when due (after any grace period) on the
Promissory Note.
(b) The occurrence of an Event of Default and the
expiration of any applicable cure or grace period under any Loan
Document.
(c) Failure by Mortgagor to perform any obligation
under any Facility Lease and (if such Facility Lease provides for
a cure period) such failure continues for a period equal to (a)
the cure period provided in such Facility Lease, if any, less (b)
five Business Days.
(d) A sale, lease, sublease, encumbrance or other
transfer in violation of Section 1.16 (Further Encumbrances)
hereof.
(e) Failure by Mortgagor to duly keep, perform and
observe any other covenant, condition, agreement, term,
representation or warranty in this Leasehold Mortgage or any Loan
Document to be performed or observed by Mortgagor for a period of
sixty (60) days after notice from Mortgagee.
(f) Any representation or warranty of Mortgagor in
this Leasehold Mortgage shall prove to be incorrect in any
material respect as of the time when the same shall have been
made.
(g) The entry by any court of competent jurisdiction
of a judgment or decree that an undertaking by Mortgagor as
herein provided to pay or perform its obligation under the ACSI
Guaranty or any interest on amounts payable thereon, or any
taxes, assessments, levies, liabilities, obligations or
encumbrances is legally inoperative or cannot be enforced, so as
to affect adversely either the security of this Leasehold
Mortgage, the indebtedness or other Obligations secured hereby,
the rate of interest on the Promissory Note or all or any portion
of the indebtedness, and such judgment shall not be appealed and
stayed pending appeal within ten (10) days after the entry
thereof.
(h) The Bankruptcy of Mortgagor.
ARTICLE FOUR
REMEDIES
4.1 ACCELERATION OF MATURITY. Following an Event of
Default and the expiration of any applicable cure or grace
period, Mortgagee may (except that such acceleration shall be
automatic if the Event of Default is caused by Mortgagor's
Bankruptcy) declare all indebtedness or sums secured hereby,
including the Promissory Note, to be due and payable immediately,
and upon such declaration such principal and interest and other
sums shall immediately become due and payable without demand,
presentment, notice or other requirements of any kind (all of
which Mortgagor waives to the extent permitted by law to do so)
notwithstanding anything in this Leasehold Mortgage or any Loan
Document or applicable law to the contrary.
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4.2 PROTECTIVE ADVANCES. If Mortgagor fails to make any
payment or perform any other obligation under the Promissory Note
or any other Loan Document, then without thereby limiting
Mortgagee's other rights or remedies, waiving or releasing any of
Mortgagor's obligations, or imposing any obligation on Mortgagee,
Mortgagee may either advance any amount owing or perform any or
all actions that Mortgagee considers necessary or appropriate to
cure such default. All such advances and the expense of all such
actions shall constitute "Protective Advances." No sums advanced
or performance rendered by Mortgagee shall cure, or be deemed a
waiver of any Event of Default.
4.3 INSTITUTION OF EQUITY PROCEEDINGS. Following an Event
of Default and the expiration of any applicable cure or grace
period, Mortgagee may institute an action, suit or proceeding in
equity for specific performance of this Leasehold Mortgage, the
ACSI Guaranty or any Loan Document, all of which shall be
specifically enforceable by injunction or other equitable remedy.
Mortgagor waives any defense based on laches or any applicable
statue of limitations.
4.4 MORTGAGEE'S POWER OF ENFORCEMENT.
(a) Following an Event of Default and the expiration
of any applicable cure or grace period, Mortgagee may, subject to
compliance with applicable Gaming Control Acts, either with or
without entry or taking possession of the Mortgaged Property, and
without regard to whether or not the indebtedness and other sums
secured hereby shall be due and without prejudice to the right of
Mortgagee thereafter to bring an action or proceeding to
foreclose or any other action for any default existing at the
time such earlier action was commenced, proceed by any
appropriate action or proceeding: (1) to enforce the ACSI
Promissory Note, to the extent permitted by law, or the
performance of any term hereof or any other right; (2) to
foreclose this Leasehold Mortgage in any manner provided by law
for the foreclosure of mortgages or deeds of trust on real
property and to sell, as an entirety or in separate lots or
parcels, the Mortgaged Property or any portion thereof pursuant
to the laws of the State of New Jersey or under the judgment or
decree of a court or courts of competent jurisdiction, and
Mortgagee shall be entitled to recover in any such proceeding all
costs and expenses incident thereto, including reasonable
attorneys' fees in such amount as shall be awarded by the court;
(3) to exercise any or all of the rights and remedies available
to it under the Loan Documents; and (4) to pursue any other
remedy available to it. Mortgagee shall take action either by
such proceedings or by the exercise of its powers with respect to
entry or taking possession, or both, as Mortgagee may determine.
(b) Following an Event of Default and the expiration
of any applicable cure or grace period, Mortgagee may, subject to
the Intercreditor Agreement and compliance with applicable Gaming
Control Acts and other applicable law, sell the Mortgaged
Property, and all estate, right, title, interest, claim and
demand of Mortgagor therein, and all rights of redemption
thereof, at one or more sales, as an entirety or in parcels, with
such elements of real and personal property, and at such time and
place and upon such terms, as it may deem expedient, or as may be
required by applicable law, and in the event of a sale of less
than all of the Mortgaged Property, this Mortgage shall continue
as a lien and security interest on the remaining portion of the
Mortgaged Property.
(c) The remedies described in this Section 4.4 may
be exercised with respect to all or any portion of the Personal
Property, either simultaneously with the sale of any real
property encumbered hereby or independent thereof. Mortgagee
shall at any time be permitted to proceed with respect to all or
any portion of the Personal Property in any manner permitted by
the UCC. Mortgagor agrees that Mortgagee's inclusion of all or
any portion of the Personal Property in a sale or other remedy
exercised with respect to the real property encumbered hereby, as
permitted by the UCC, is a commercially reasonable disposition of
such property. Mortgagor agrees that Mortgagee may dispose of any
or all of the Personal Property at the same time and place and
after giving the same notice provided for in this Leasehold
Mortgage in connection with a nonjudicial foreclosure sale under
the terms and conditions set forth in this Leasehold Mortgage. In
this connection, Mortgagor agrees that the sale of the real
estate, leaseholds and Improvements described in this Leasehold
Mortgage and the Personal Property or any part
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thereof may be conducted separately and/or together; and that in
the event the real estate, leaseholds and Improvements described
herein and the Personal Property or any part thereof are sold
together, Mortgagee shall not be obligated to allocate the
consideration received as between the real estate, leaseholds and
Improvements and the Personal Property. The Personal Property
need not be present at the place of sale.
4.5 MORTGAGEE'S RIGHT TO ENTER AND T AKE POSSESSION.
OPERATE AND APPLY INCOME.
(a) Following an Event of Default and the expiration
of any applicable cure or grace period, (i) subject to the
Intercreditor Agreement and compliance with applicable Gaming
Control Acts and other applicable law, Mortgagor upon demand of
Mortgagee, shall forthwith surrender to Mortgagee the actual
possession and, if and to the extent permitted by law, Mortgagee
itself, or by such officers or agents as it may appoint, may
enter and take possession of all the Mortgaged Property including
the Personal Property, without liability for trespass, damages or
otherwise, and may exclude Mortgagor and its agents and employees
wholly therefrom and may have joint access with Mortgagor to the
books, papers and accounts of Mortgagor; and (ii) Mortgagor shall
pay monthly in advance to Mortgagee on Mortgagee's entry into
possession, or to any receiver appointed to collect the Rents,
all Rents then due and payable.
(b) If Mortgagor shall for any reason fail to
surrender or deliver the Mortgaged Property, the Personal
Property or any part thereof after Mortgagee's demand, Mortgagee
may obtain a judgment or decree conferring on Mortgagee the right
to immediate possession or requiring Mortgagor to deliver
immediate possession of all or part of such property to Mortgagee
and Mortgagor hereby specifically consents to the entry of such
judgment or decree. Mortgagor shall pay to Mortgagee, upon
demand, all reasonable costs and expenses of obtaining such
judgment or decree and reasonable compensation to Mortgagee, its
attorneys and agents, and all such costs, expenses and
compensation shall, until paid, be secured by the lien of this
Leasehold Mortgage.
(c) Upon every such entering upon or taking of
possession, Mortgagee may, subject to compliance with applicable
Gaming Control Acts, hold, store, use, operate, manage and
control the Mortgaged Property and conduct the business thereof,
and, from time to time in its sole and absolute discretion and
without being under any duty to so act:
(1) make all necessary and proper maintenance,
repairs, renewals, replacements, additions, betterments and
improvements thereto and thereon and purchase or otherwise
acquire additional fixtures, personalty and other property;
(2) insure or keep the Mortgaged Property
insured;
(3) manage and operate the Mortgaged Property
and exercise all the rights and powers of Mortgagor in their name
or otherwise with respect to the same;
(4) enter into agreements with others to
exercise the powers herein granted Mortgagee, all as Mortgagee
from time to time may determine; and, subject to the absolute
assignment of the Leases and Rents to Mortgagee, Mortgagee may
collect and receive all the Rents, including those past due as
well as those accruing thereafter; and shall apply the monies so
received by Mortgagee in such priority as Mortgagee may determine
to (l) the payment of all amounts due and payable on the
Promissory Note; (2) the deposits for taxes and assessments and
insurance premiums due, (3) the cost of insurance, taxes,
assessments and other proper charges upon the Mortgaged Property
or any part thereof; (4) the reasonable compensation, expenses
and disbursements of the agents, attorneys and other
representatives of Mortgagee; and (5) any other reasonable and
necessary charges or costs required to be paid by Mortgagor under
the terms hereof; and
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(5) rent or sublet the Mortgaged Property or
any portion thereof for any purpose permitted by the Facility
Lease or this Leasehold Mortgage.
Mortgagee shall surrender possession of the Mortgaged
Property and the Personal Property to Mortgagor only when all
that is due upon such interest and principal, tax and insurance
deposits, and all amounts under any of the terms of the
Promissory Note, the Loan Agreement, Loan Documents, or this
Leasehold Mortgage, shall have been paid and all defaults made
good. The same right of taking possession, however, shall exist
if any subsequent Event of Default shall occur and be continuing.
If Mortgagor shall exercise any right or remedy herein
contained, Mortgagee shall not be deemed to have entered into or
taken possession of the Mortgaged Property except upon the
exercise of its option to do so evidenced by Mortgagee's overt
act to do so, nor shall Mortgagee be deemed to be a mortgagee in
possession by reason of such entry or taking possession.
4.6 LEASES. Mortgagee is authorized to foreclose this
Leasehold Mortgage subject to the rights of any tenants of the
Mortgaged Property, and the failure to make any such tenants
parties defendant to Intercreditor Agreement and any such
foreclosure proceedings and to foreclose their rights shall not
be, nor be asserted by Mortgagor to be, a defense to any
proceedings instituted by Mortgagee to collect the sums secured
hereby or to collect any deficiency remaining unpaid after the
foreclosure sale of the Mortgaged Property, or any portion
thereof. Unless otherwise agreed by Mortgagee in writing, all
Space Leases executed subsequent to the date hereof, or any part
thereof, shall be subordinate and inferior to the lien of this
Leasehold Mortgage, except that from time to time Mortgagee may
execute and record among the land records of the jurisdiction
where this Leasehold Mortgage is recorded, subordination
statements with respect to such of said Space Leases as Mortgagee
may designate in its sole discretion, whereby the Space Leases so
designated by Mortgagee shall be made superior to the lien of
this Leasehold Mortgage for the term set forth in such
subordination statement. From and after the recordation of such
subordination statements, and for the respective periods as may
be set forth therein, the Space Leases therein referred to shall
be superior to the lien of this Leasehold Mortgage and shall not
be affected by any foreclosure hereof. All such Space Leases
shall contain a provision to the effect that the Mortgagor and
Space Lessee recognize the right of Mortgagee to elect and to
effect such subordination of this Leasehold Mortgage and consents
thereto.
4.7 PURCHASE BY MORTGAGEE. Upon any foreclosure sale
(whether judicial or nonjudicial), Mortgagee may bid for and
purchase the property subject to such sale and, upon compliance
with the terms of sale, may hold, retain and possess and dispose
of such property in its own absolute right without further
accountability.
4.8 WAIVER OF APPRAISEMENT, VALUATION, STAY, EXTENSION AND
REDEMPTION LAWS. Mortgagor agrees to the full extent permitted
by law that if an Event of Default occurs, neither Mortgagor nor
anyone claiming through or under it shall or will set up, claim
or seek to take advantage of any appraisement, valuation, stay,
extension or redemption laws now or hereafter in force, in order
to prevent or hinder the enforcement or foreclosure of this
Leasehold Mortgage or the absolute sale of the Mortgaged Property
or any portion thereof or the final and absolute putting into
possession thereof, immediately after such sale, of the
purchasers thereof, and Mortgagor for itself and all who may at
any time claim through or under it, hereby waives, to the full
extent that it may lawfully so do, the benefit of all such laws,
and any and all right to have the assets comprising the Mortgaged
Property marshalled upon any foreclosure of the lien hereof and
agrees that Mortgagee or any court having jurisdiction to
foreclose such lien may sell the Mortgaged Property in part or as
an entirety and cash collateral as derived from the Mortgaged
Property.
4.9 RECEIVER. Following an Event of Default and the
expiration of any applicable cure or grace period, Mortgagee, to
the extent permitted by law and applicable Gaming Control Acts
and without regard to the value, adequacy or occupancy of the
security for the indebtedness and other sums secured hereby,
shall be entitled as a matter of right if it so elects to the
appointment of a receiver to enter upon and take possession of
the
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Mortgaged Property and to collect all Rents and apply the same as
the court may direct, and such receiver may be appointed by any
court of competent jurisdiction upon application by Mortgagee.
Mortgagee may have a receiver appointed without notice to
Mortgagor or any third party, and Mortgagee may waive any
requirement that the receiver post a bond. Mortgagee shall have
the power to designate and select the Person who shall serve as
the receiver and to negotiate all terms and conditions under
which such receiver shall serve. Any receiver appointed on
Mortgagee's behalf may be an Affiliate of Mortgagee. The
expenses, including receiver's fees, reasonable attorneys' fees,
costs and agent's compensation, incurred pursuant to the powers
herein contained shall be secured by this Leasehold Mortgage. The
right to enter and take possession of and to manage and operate
the Mortgaged Property and to collect all Rents, whether by a
receiver or otherwise, shall be cumulative to any other right or
remedy available to Mortgagee under this Leasehold Mortgage, the
Indenture or otherwise available to Mortgagee and may be
exercised concurrently therewith or independently thereof.
Mortgagee shall be liable to account only for such Rents
(including, without limitation, security deposits) actually
received by Mortgagee, whether received pursuant to this section
or any other provision hereof. Notwithstanding the appointment
of any receiver or other custodian, Mortgagee shall be entitled
as pledgee to the possession and control of any cash, deposits,
or instruments at the time held by, or payable or deliverable
under the terms of this Leasehold Mortgage to, Mortgagee.
4.10 SUITS TO PROTECT THE MORTGAGED PROPERTY. Mortgagee
shall have the power and authority to institute and maintain any
suits and proceedings as Mortgagee, in its sole and absolute
discretion, may deem advisable (a) to prevent any impairment of
the Mortgaged Property by any acts which may be unlawful or any
violation of this Leasehold Mortgage, (b) to preserve or protect
its interest in the Mortgaged Property, or (c) to restrain the
enforcement of or compliance with any legislation or other Legal
Requirement that may be unconstitutional or otherwise invalid, if
the enforcement of or compliance with such enactment, rule or
order might impair the security hereunder or be prejudicial to
Mortgagee's interest.
4.11 PROOFS OF CLAIM. In the case of any receivership,
Insolvency, Bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceedings affecting Mortgagor,
any Affiliate or any guarantor, co-maker or endorser of any of
Mortgagor's obligations, its creditors or its property,
Mortgagee, to the extent permitted by law, shall be entitled to
file such proofs of claim or other documents as it may deem to be
necessary or advisable in order to have its claims allowed in
such proceedings for the entire amount due and payable by
Mortgagor under the Promissory Note, this Leasehold Mortgage or
any other Loan Document, at the date of the institution of such
proceedings, and for any additional amounts which may become due
and payable by Mortgagor after such date.
4.12 MORTGAGOR TO PERFORM OBLIGATIONS; APPLICATION OF
MONIES BY MORTGAGEE. Subject to the Intercreditor
Agreement:
(a) In lieu of a foreclosure sale of all or any part
of the Mortgaged Property and of the application of the proceeds
of sale to the payment of the sums secured hereby, Mortgagee
shall be entitled to enforce payment from Mortgagor of any
additional amounts then remaining due and unpaid and to recover
judgment against Mortgagor for any portion thereof remaining
unpaid, with interest at the interest rate on the Promissory
Note.
(b) Mortgagor hereby agrees to the extent permitted
by law, that no recovery of any such judgment by Mortgagee or
other action by Mortgagee and no attachment or levy of any
execution upon any of the Mortgaged Property or any other
property shall in any way affect the Lien and security interest
of this Leasehold Mortgage upon the Mortgaged Property or any
part thereof or any Lien, rights, powers or remedies of
Mortgagee hereunder, but such Lien, rights, powers and remedies
shall continue unimpaired as before.
(c) Any monies collected or received by Mortgagee
under this Section 4.12 shall be first applied to the payment of
reasonable compensation, expenses and disbursements of the
agents, attorneys and other
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representatives of Mortgagee, and the balance remaining shall be
applied to the payment of amounts due and unpaid under the
Promissory Note, and this Leasehold Mortgage.
4.13 DELAY OR OMISSION; NO WAIVER. No delay or omission of
Mortgagee, any holder of the Note or any Bondholder to exercise
any right, power or remedy upon any Event of Default and the
expiration of any applicable cure or grace period shall exhaust
or impair any such right, power or remedy or shall be construed
to waive any such Event of Default or to constitute acquiescence
therein. Every right, power and remedy given to Mortgagee
whether contained herein or in the Indenture or otherwise
available to Mortgagee may be exercised from time to time and as
often as may be deemed expedient by Mortgagee.
4.14 NO WAIVER OF ONE DEFAULT TO AFFECT ANOTHER. No waiver
of any Event of Default hereunder shall extend to or affect any
subsequent or any other Event of Default then existing, or impair
any rights, powers or remedies consequent thereon. If Mortgagee
or any Bondholder (a) grants forbearance or an extension of time
for the payment of any sums secured hereby; (b)takes other or
additional security for the payment thereof; (c) waives or does
not exercise any right granted in the ASCI Guaranty, this
Leasehold Mortgage or any other Loan Document; (d) releases any
part of the Mortgaged Property from the lien or security interest
of this Leasehold Mortgage or any other instrument securing the
Promissory Note; (e) consents to the filing of any map, plat or
replat of the Land; (f) consents to the granting of any easement
on the Land; or (g) makes or consents to any agreement changing
the terms of this Leasehold Mortgage or any Loan Document
subordinating the lien or any charge hereof, then no such act or
omission shall release, discharge, modify, change or affect the
original liability under the Promissory Note, this Leasehold
Mortgage, any other Loan Document or otherwise of Mortgagor, or
any subsequent purchaser of the Mortgaged Property or any part
thereof or any maker, co-signer, surety or guarantor. No such act
or omission shall preclude Mortgagee from exercising any right,
power or privilege herein granted or intended to be granted in
case of any Event of Default then existing or of any subsequent
Event of Default, nor, except as otherwise expressly provided in
an instrument or instruments executed by Mortgagee, shall the
lien or security interest of this Leasehold Mortgage be altered
thereby, except to the extent expressly provided in any releases,
maps, easements or subordinations described in clause (d), (e),
(f) or (g) above of this Section 4.14. In the event of the sale
or transfer by operation of law or otherwise of all or any part
of the Mortgaged Property, Mortgagee, without notice to any
person, firm or corporation, is hereby authorized and empowered
to deal with any such vendee or transferee with reference to the
Mortgaged Property or the indebtedness secured hereby, or with
reference to any of the terms or conditions hereof, as fully and
to the same extent as it might deal with the original parties
hereto and without in any way releasing or discharging any of the
liabilities or undertakings hereunder, or waiving its right to
declare such sale or transfer an Event of Default as provided
herein. Notwithstanding anything to the contrary contained in
this Leasehold Mortgage or any Loan Document, (i) in the case of
any non-monetary Event of Default and the expiration of any
applicable cure or grace period, Mortgagee may continue to accept
payments due hereunder without thereby waiving the existence of
such or any other Event of Default and (ii) in the case of any
monetary Event of Default, Mortgagee may accept partial payments
of any sums due hereunder without thereby waiving the existence
of such Event of Default if the partial payment is not sufficient
to completely cure such Event of Default.
4.15 DISCONTINUANCE OF PROCEEDINGS; POSITION OF PARTIES
RESTORED. If Mortgagee shall have proceeded to enforce any right
or remedy under this Leasehold Mortgage by foreclosure, entry of
judgment or otherwise and such proceedings shall have been
discontinued or abandoned for any reason, or such proceedings
shall have resulted in a final determination adverse to
Mortgagee, then and in every such case Mortgagor and Mortgagee
shall be restored to their former positions and rights hereunder,
and all rights, powers and remedies of Mortgagee shall continue
as if no such proceedings had occurred or had been taken.
4.16 REMEDIES CUMULATIVE. No right, power or remedy,
including without limitation remedies with respect to any
security for the Promissory Note, conferred upon or reserved to
Mortgagee by the ACSI Guaranty, this Leasehold Mortgage or any
Loan Document is exclusive of any other right, power or remedy,
but each and
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every such right, power and remedy shall be cumulative and
concurrent and shall be in addition to any other right, power and
remedy given hereunder or under any Loan Document, now or
hereafter existing at law, in equity or by statute, and Mortgagee
shall be entitled to resort to such rights, powers, remedies or
security as Mortgagee shall in its sole and absolute discretion
deem advisable.
4.17 INTEREST AFTER EVENT OF DEFAULT. If an Event of
Default shall have occurred and is continuing, all sums
outstanding and unpaid under the Promissory Note and this
Leasehold Mortgage shall, at Mortgagee's option, bear interest at
the default interest rate on the Promissory Note until such Event
of Default has been cured. Mortgagor's obligation to pay such
interest shall be secured by this Leasehold Mortgage.
4.18 FORECLOSURE: EXPENSES OF LITIGATION. If foreclosure be
made by Mortgagee, reasonable attorneys' fees for services in the
supervision of said foreclosure proceeding shall be allowed to
Mortgagee as part of the foreclosure costs. In the event of
foreclosure of the lien hereof, there shall be allowed and
included as additional indebtedness all reasonable expenditures
and expenses which may be paid or incurred by or on behalf of
Mortgagee for attorneys fees, appraiser's fees, outlays for
documentary and expert evidence, stenographers' charges,
publication costs, and costs (which may be estimated as to items
to be expended after foreclosure sale or entry of the decree) of
procuring all such abstracts of title, title searches and
examinations, title insurance policies and guaranties, and
similar data and assurances with respect to title as Mortgagee
may deem reasonably advisable either to prosecute such suit or to
evidence to a bidder at any sale which may be had pursuant to
such decree the true condition of the title to or the value of
the Mortgaged Property or any portion thereof. All expenditures
and expenses of the nature in this section mentioned, and such
expenses and fees as may be incurred in the protection of the
Mortgaged Property and the maintenance of the lien and security
interest of this Leasehold Mortgage, including the reasonable
fees of any attorney employed by Mortgagee in any litigation or
proceeding affecting this Leasehold Mortgage or any Loan
Document, the Mortgaged Property or any portion thereof,
including, without limitation, civil, probate, appellate and
bankruptcy proceedings, or in preparation for the commencement or
defense of any proceeding or threatened suit or proceeding, shall
be immediately due and payable by Mortgagor, with interest
thereon at the default interest rate on the Promissory Note, and
shall be secured by this Leasehold Mortgage.
4.19 DEFICIENCY JUDGMENTS. If after foreclosure of this
Leasehold Mortgage hereunder, there shall remain any deficiency
with respect to any amounts payable under the Promissory Note or
hereunder or any amounts secured hereby, and Mortgagee shall
institute any proceedings to recover such deficiency or
deficiencies, all such amounts shall continue to bear interest at
the default interest rate under the Promissory. Mortgagor waives
to the extent permitted by applicable law, any defense to
Mortgagee's recovery against Mortgagor of any deficiency after
any foreclosure sale of the Mortgaged Property. Mortgagor
expressly waives to the extent permitted by applicable law, any
defense or benefits that may be derived from any statute granting
Mortgagor any defense to any such recovery by Mortgagee. In
addition, Mortgagee shall be entitled to recovery of all of its
reasonable costs and expenditures (including without limitation
any court imposed costs) in connection with such proceedings,
including its reasonable attorneys' fees, appraisal fees and the
other costs, fees and expenditures referred to in Section 4.18
above. This provision shall survive any foreclosure or sale of
the Mortgaged Property, any portion thereof and/or the
extinguishment of the lien hereof.
4.20 WAIVER OF JURY TRIAL. Mortgagee and Mortgagor each
waive to the extent permitted by applicable law, any right to
have a jury participate in resolving any dispute, whether
sounding in contract, tort, or otherwise arising out of,
connected with, related to, or incidental to the relationship
established between them in connection with the Promissory Note,
this Leasehold Mortgage or any Loan Document. Any such disputes
shall be resolved in a bench trial without a jury.
4.21 REASONABLE USE AND OCCUPANCY. Subject to all
applicable Gaming Control Acts in addition to the rights which
Mortgagee may have herein, upon the occurrence of any Event of
Default, Mortgagee, at its option, may require Mortgagor to pay
monthly in advance to Mortgagee, or any receiver appointed to
collect the Rents,
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the fair and reasonable rental value for the use and occupation
of such part of the Mortgaged Property as may be occupied by
Mortgagor or may require Mortgagor to vacate and surrender
possession of the Mortgaged Property to Mortgagee or to such
receiver and, in default thereof, Mortgagor may be evicted by
summary proceedings or otherwise.
4.22 EXCULPATION OF MORTGAGEE. The acceptance by Mortgagee
of the assignment contained herein with all of the rights,
powers, privileges and authority created hereby shall not, prior
to entry upon and taking possession of the Mortgaged Property by
Mortgagee, be deemed or construed to make Mortgagee a "mortgagee
in possession"; nor thereafter or at any time or in any event
obligate Mortgagee to appear in or defend any action or
proceeding relating to the Space Leases, the Rents or the
Mortgaged Property, or to take any action hereunder or to expend
any money or incur any expenses or perform or discharge any
obligation, duty or liability under any Space Lease or to assume
any obligation or responsibility for any security deposits or
other deposits except to the extent such deposits are actually
received by Mortgagee, nor shall Mortgagee, prior to such entry
and taking, be liable in any way for any injury or damage to
person or property sustained by any Person in or about the
Mortgaged Property.
ARTICLE FIVE
MISCELLANEOUS PROVISIONS
5.1 HEIRS, SUCCESSORS AND ASSIGNS INCLUDED IN PARTIES.
Whenever one of the parties hereto is named or referred to
herein, the heirs, successors and assigns of such party shall be
included, and subject to the limitations set forth in Section
1.16, all covenants and agreements contained in this Leasehold
Mortgage, by or on behalf of Mortgagor or Mortgagee shall bind
and inure to the benefit of its heirs, successors and assigns,
whether so expressed or not.
5.2 NO MERGER. If both the lessor's and the lessee's
interests under any Facility Lease shall at any time become
vested in any one person, this Mortgage and the lien and security
interest created hereby shall not be destroyed or terminated by
the application of the doctrine of merger and, in such event,
Mortgagee shall continue to have and enjoy all of the rights and
privileges of Mortgagee hereunder as to the estate subject to the
lien of this Mortgage. If Mortgagor elects to acquire the fee
simple interest in any portion of the Land, then, as a condition
to such acquisition, Mortgagor shall deliver to Mortgagee an
opinion of independent legal counsel to the effect that the
ownership of lessee's interest under the Facility Lease and the
fee simple interest in the Land by Mortgagor shall not cause or
result in, by operation of law or otherwise, a merger of the
lessee's interest under the Facility Lease and the fee simple
interest in the Land and that Mortgagee shall be entitled to
continue to have and enjoy all of the rights of Mortgagee
hereunder as to the estate subject to the lien of the Mortgage.
Notwithstanding the foregoing, if Mortgagor elects to merge the
lessee's interest under the Facility Lease and the fee simple
interest in the Land, or otherwise, Mortgagor shall cause the
following items to be delivered to Mortgagee as a condition
thereto: (a) an opinion of independent legal counsel to Mortgagee
to the effect that Mortgagee has a valid and enforceable first
priority security interest in PARI PASSU in the Mortgaged
Property and in the fee simple interest in the Land, subject to
the Permitted Liens, which opinion may be given in reliance on
the search conducted by the title insurance company described in
clause (b) below, (b) a validly-issued and fully-paid title
insurance policy of a title insurance company reasonably
acceptable to Mortgagee, insuring Mortgagee's first priority
security interest in PARI PASSU in the Improvements and the fee
simple interest in the Land, subject to the Permitted Liens, and
(c) such other instruments, statements, agreements and documents,
including any supplements to this Mortgage as Mortgagee or its
counsel may require in order to (i) subject to the lien hereby
created the fee simple interest in the Land, and (ii) perfect and
maintain a first priority security interest in PARI PASSU in the
Mortgaged Property, subject
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to the Permitted Liens. Upon compliance with the foregoing
requirements, Mortgagee shall execute and deliver a written
instrument in recordable form to Mortgagor to confirm its consent
to the merger of such estates.
5.3 ADDRESSES FOR NOTICES, ETC.
(a) Any notice, report, demand or other instrument
authorized or required to be given or furnished under this
Leasehold Mortgage to Mortgagor or Mortgagee shall be deemed
given or furnished (i) when addressed to the party intended to
receive the same, at the address of such party set forth below,
and delivered at such address or (ii) three (3) days after the
same is deposited in the United States mail as first class
certified mail, return receipt requested, postage paid, whether
or not the same is actually received by such party:
Mortgagor: Showboat, Inc.
2800 Freemont Street
Las Vegas, Nevada 89104
Attention: Chief Financial Officer
With a copy to:
Atlantic City Showboat, Inc.
801 Boardwalk
Atlantic City, NJ 08401
Attn: General Counsel
Mortgagee: NatWest Bank, N.A.
22 Route 70 W
Cherry Hill, NJ 08002
Attn: John T. Harrison, V.P.
With a copy to:
Peter W. Leibundgut, Esq.
Clark, Ladner, Fortenbaugh & Young
Woodland Falls Corporate Park
200 Lake Drive East - Suite 300
Cherry Hill, NJ 08002
5.3.1 CHANGE OF ADDRESS. Any person may change the address
to which any such notice, report, demand or other instrument
is to be delivered or mailed to that person, by furnishing
written notice of such change to the other party, but no such
notice of change shall be effective unless and until received
by such other party.
5.4 HEADINGS. The headings of the articles, sections,
paragraphs and subdivisions of this Leasehold Mortgage are for
convenience of reference only, are not to be considered a part
hereof, and shall not limit or expand or otherwise affect any of
the terms hereof.
5.5 INVALID PROVISIONS TO AFFECT NO OTHERS. In the event
that any of the covenants, agreements, terms or provisions
contained herein or in the Promissory Note, the ACSI Guaranty or
any Loan Document shall be invalid, illegal or unenforceable in
any respect, the validity of the lien hereof and the remaining
covenants, agreements, terms or provisions contained herein or in
the Promissory Note, the Loan Agreement, the ACSI Guaranty or any
other Loan Document shall be in no way affected, prejudiced or
disturbed thereby. To the extent
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permitted by law, Mortgagor waives any provision of law which
renders any provision hereof prohibited or unenforceable in any
respect.
5.6 CHANGES AND PRIORITY OVER INTERVENING LIENS. Neither
this Leasehold Mortgage nor any term hereof may be changed,
waived, discharged or terminated orally, or by any action or
inaction, but only by an instrument in writing signed by the
party against which enforcement of the change, waiver, discharge
or termination is sought. Any agreement hereafter made by
Mortgagor and Mortgagee relating to this Leasehold Mortgage shall
be superior to the rights of the holder of any intervening lien
or encumbrance.
5.7 ESTOPPEL CERTIFICATES. Within ten (10) Business Days
after Mortgagee's written request, Mortgagor shall from time to
time execute a certificate, in recordable form (an "Estoppel
Certificate"), stating, except to the extent that it would be
inaccurate to so state: (a) the current amount of the Obligations
secured hereunder and all elements thereof, including principal,
interest, and all other elements; (b) Mortgagor has no defense,
offset, claim, counterclaim, right of recoupment, deduction, or
reduction against any of the Obligations secured hereunder; (c)
none of the Loan Documents have been amended, whether orally or
in writing; (d) Mortgagor has no claims against Mortgagee of any
kind; (e) any Power of Attorney granted to Mortgagee is in full
force and effect; and (f) such other matters relating to this
Leasehold Mortgage, any Loan Documents and the relationship of
Mortgagor and Mortgagee as Mortgagee shall request. In addition,
the Estoppel Certificate shall set forth the reasons why it would
be inaccurate to make any of the foregoing assurances ("a"
through "f").
5.8 GOVERNING LAW. This Leasehold Mortgage shall be
construed, interpreted, enforced and governed by and in
accordance with the laws of the State of New Jersey without
regard to its choice of law provisions.
5.9 REQUIRED NOTICES. Mortgagor shall notify Mortgagee
promptly of the occurrence of any of the following and shall
immediately provide Mortgagee a copy of the notice or documents
referred to: (a) receipt of notice from any Governmental
Authority relating to all or any material part of the Mortgaged
Property if such notice relates to a default or act, omission or
circumstance which would result in a default after notice or
passage of time or both; (b) receipt of any notice from any
tenant leasing all or any material portion of the Mortgaged
Property if such notice relates to a default or act, omission or
circumstance which would result in a default after notice or
passage of time or both; (c) receipt of notice from the holder of
any Permitted Lien relating to a default or act, omission or
circumstance which would result in a default after notice or
passage of time or both; (d) the commencement of any proceedings
or the entry of any judgment, decree or order materially
affecting all or any portion of the Mortgaged Property or which
involve the potential liability of Mortgagor or its Affiliates in
an amount in excess of $250,000.00 (other than for personal
injury actions and related property damage suits which have been
acknowledged by the insurer to be covered by such insurance); or
(e) commencement of any judicial or administrative proceedings or
the entry of any judgment, decree or order by or against or
otherwise affecting Mortgagor or any Affiliate of Mortgagor, a
material portion of the Mortgaged Property, or a material portion
of the Personal Property, or any other action by any creditor or
lessor thereof as a result of any default under the terms of any
lease.
5.10 CONTINUED PRIORITY OF LIEN. This Leasehold Mortgage,
the ASCI Guaranty, the Promissory Note, the other Loan Documents,
and the Obligations are subject to "modification" (as such term
is defined in Chapter 353 of the Public Laws of 1985, N.J.S.A.
46:9-8.1 et seq.), and the priority of the lien of this Mortgage
with respect to any and all modifications (as so defined) shall
relate back to and remain as it was at time of the recording of
this Mortgage (as if such modification were originally included
in this Mortgage or as if the modification occurred at the time
of the recording of this Mortgage), as provided in such statute.
5.11 ATTORNEYS' FEES. Without limiting any other provision
contained herein, Mortgagor agrees to pay all reasonable costs of
Mortgagee incurred in connection with the enforcement of this
Leasehold Mortgage or the taking of this Leasehold Mortgage as
security for the performance of SBI's obligations under the
Promissory Note,
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including without limitation all reasonable attorneys' fees
whether or not suit is commenced, and including, without
limitation, fees incurred in connection with any probate,
appellate, bankruptcy, deficiency or any other litigation
proceedings, all of which sums shall be secured hereby.
5.12 LATE CHARGES. By accepting payment of any sum secured
hereby after its due date, Mortgagee does not waive its right to
collect any late charge thereon or interest thereon at the
applicable interest rate on the Promissory Note, if so provided,
not then paid or its right either to require prompt payment when
due of all other sums so secured or to declare default for
failure to pay any amounts not so paid.
5.13 COST OF ACCOUNTING. Mortgagor shall pay to Mortgagee,
for and on account of the preparation and rendition of any
accounting, which Mortgagor may be entitled to require under any
law or statute now or hereafter providing therefor, the
reasonable costs thereof.
5.14 RIGHT OF ENTRY. Subject to compliance with applicable
Gaming Control Acts, Mortgagee may at any reasonable time or
times, upon no less than 24 hours advance notice (except in the
case of an emergency), make or cause to be made entry upon and
inspections of the Mortgaged Property or any part thereof in
person or by agent.
5.15 CORRECTIONS. Mortgagor shall, upon request of
Mortgagee, promptly correct any defect, error or omission which
may be discovered in the contents of this Leasehold Mortgage or
in the execution or acknowledgement hereof, and shall execute,
acknowledge and deliver such further instruments and do such
further acts as may be necessary or as may be reasonably
requested by Mortgagee to carry out more effectively the purposes
of this Leasehold Mortgage, to subject to the lien and security
interest hereby created any of Mortgagor's properties, rights or
interest covered or intended to be covered hereby, and to perfect
and maintain such lien and security interest. In the event that
there is a new Facility Lease, Mortgagor shall execute a
supplemental Mortgage if requested by Mortgagee.
5.16 STATUTE OF LIMITATIONS. To the fullest extent allowed
by the law, the right to plead, use or assert any statute of
limitations as a plea or defense or bar of any kind, or for any
purpose, to any debt, demand or obligation secured or to be
secured hereby, or to any complaint or other pleading or
proceeding filed, instituted or maintained for the purpose of
enforcing this Leasehold Mortgage or any rights hereunder, is
hereby waived by Mortgagor.
5.17 SUBROGATION. Should the proceeds of the Obligations
which are hereby secured, or any part thereof, or any amount paid
out or advanced by Mortgagee, be used directly or indirectly to
pay off, discharge, or satisfy, in whole or in part, any prior or
superior lien or encumbrance upon the Mortgaged Property, or any
part thereof, then, as additional security hereunder, Mortgagee
shall be subrogated to any and all rights, superior titles,
liens, and equities owned or claimed by any owner or holder of
said outstanding liens, charges, and indebtedness, however
remote, regardless of whether said liens, charges, and
indebtedness are acquired by assignment or have been released of
record by the holder thereof upon payment.
5.18 JOINT AND SEVERAL LIABILITY. All obligations of
Mortgagor hereunder, if more than one, are joint and several.
Recourse for deficiency after sale hereunder may be had against
the property of Mortgagor, without, however, creating a present
or other lien or charge thereon.
5.19 CONTEXT. In this Leasehold Mortgage, whenever the
context so requires, the neuter includes the masculine and
feminine, and the singular includes the plural, and vice versa.
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5.20 TIME. Time is of the essence of each and every term,
covenant and condition hereof. Unless otherwise specified
herein, any reference to "days" in this Leasehold Mortgage shall
be deemed to mean "calendar days."
5.21 INTERPRETATION. As used in this Leasehold Mortgage
unless the context clearly requires otherwise: The terms "herein"
or "hereunder" and similar terms without reference to a
particular section shall refer to the entire Leasehold Mortgage
and not just to the section in which such terms appear; the term
"lien" shall also mean a security interest, and the term
"security interest" shall also mean a lien.
5.22 EXHIBITS AND SCHEDULES. All Exhibits and Schedules
attached hereto shall be deemed a part hereof and incorporated
herein by reference.
5.23 INTEGRATION. This Leasehold Mortgage, the Exhibits
hereto, the Loan Documents and any other agreement or document
contemplated by the Loan Agreement or Loan Documents constitute
the entire agreement of the parties hereto and thereto with
respect to the subject matter hereof and thereof. There are no
oral agreements.
5.24 RECORDING OF MORTGAGE, ETC. Mortgagor forthwith upon
the execution and delivery of this Leasehold Mortgage and
thereafter, from time to time, shall cause this Leasehold
Mortgage, and any security instrument creating a lien or security
interest or evidencing the lien hereof upon the Mortgaged
Property and each instrument of further assurance, to be filed,
registered or recorded in such manner and in such places as may
be required by any present or future law in order to publish
notice of and fully to protect the lien or security interest
hereof upon, and the interest of Mortgagee in, the Mortgaged
Property. Mortgagor shall pay all filing, registration or
recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Leasehold Mortgage, any
modification of or supplement to this Leasehold Mortgage or the
Obligations, any security instrument with respect to the
Mortgaged Property and any instrument of further assurance, and
all federal, state, county and municipal, taxes, duties, imposts,
assessments and charges arising out of or in connection with the
execution and delivery of this Leasehold Mortgage, any
modification of or supplement to this Leasehold Mortgage or the
Obligations, any security instrument with respect to the
Mortgaged Property or any instrument of further assurance, except
where prohibited by law so to do. Mortgagor shall hold harmless
and indemnify Mortgagee, its successors and assigns, against any
liability incurred by reason of the imposition of any tax on the
making and recording of this Leasehold Mortgage.
5.25 CONSENTS. Whenever any provision of this Leasehold
Mortgage calls for the consent of Mortgagee, such consent shall
be deemed given, unless within twenty days after receiving
Mortgagor's request for such consent, Mortgagee informs Mortgagor
that such consent will not be forthcoming.
5.26 USURY LAWS. This Leasehold Mortgage and the
Promissory Note are subject to the express limitations that at no
time shall Mortgagor be obligated or required to pay interest on
the Promissory Note at a rate which could subject the holder of
the Promissory Note to either civil or criminal liability as a
result of being in excess of the maximum interest rate which
Mortgagee is permitted by applicable law (Federal or State,
whichever is more favorable to Mortgagee) to collect or receive.
If by the terms of this Leasehold Mortgage or the ACSI Promissory
Note, Mortgagor is at any time required or obligated to pay
interest at a rate in excess of such maximum rate, the rate of
interest under the same shall be deemed to be immediately reduced
to such maximum rate and the interest payable shall be computed
at such maximum rate and all prior interest payments in excess
of such maximum rate shall be applied and shall be deeded to
have been payments in reduction of the principal balance of the
Promissory Note.
5.27 GAMING CONTROL ACTS. Mortgagee acknowledges that
every provision of the Leasehold Mortgage and the other Loan
Documents is subject to and may be limited, restricted or
invalidated by Gaming Control Act(s),
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including the Act, notwithstanding anything to the contrary
contained or not contained in this Leasehold Mortgage or the
other Loan Documents.
ARTICLE SIX
POWER OF ATTORNEY
6.1 GRANT OF POWER. Mortgagor irrevocably appoints
Mortgagee and any successor thereto as its attorney-in-fact, with
full power and authority, including the power of substitution,
exercisable only during the continuance of an Event of Default
following the expiration of any applicable cure or grace period
to act, subject to all applicable Gaming Control Acts, for
Mortgagor in its name, place and stead as hereinafter provided:
6.2 POSSESSION AND COMPLETION. To take possession of the
Land and Atlantic City Showboat, remove all employees,
contractors and agents of Mortgagor therefrom and market, sell,
assign or lease the Mortgaged Property and the Atlantic City
Showboat.
6.3 EMPLOYMENT OF OTHERS. To employ such contractors,
subcontractors, suppliers, architects, inspectors, consultants,
property managers and other agents as Mortgagee, in its
discretion, deems proper for the completion of the restoration of
the Atlantic City Showboat, for the protection or clearance of
title to Mortgaged Property, or for the protection of Mortgagee's
interests with respect thereto.
6.4 SECURITY GUARDS. To employ watchmen to protect the
Land and Atlantic City Showboat from injury.
6.5 COMPROMISE CLAIMS. To pay, settle or compromise all
bills and claims then existing or thereafter arising against
Mortgagor, which Mortgagee, in its discretion, deems proper for
the completion of the Atlantic City Showboat, for the protection
or clearance of title to the Land or Personal Property, or for
the protection of Mortgagee's interests with respect thereto.
6.6 LEGAL PROCEEDINGS. To prosecute and defend all
actions and proceedings in connection with the Land or the
Atlantic City Showboat.
6.7 OTHER ACTS. To execute, acknowledge and deliver all
other instruments and documents in the name of Mortgagor that are
necessary or desirable, to exercise Mortgagor's rights under all
contracts concerning the Land or the Atlantic City Showboat,
including, without limitation, under any Facility Leases or Space
Leases, and to do all other acts with respect to the Land or
Atlantic City Showboat that Mortgagor might do on its own behalf,
as Mortgagee, in its reasonable discretion, deems proper.
48
<PAGE>
MORTGAGOR HEREBY ACKNOWLEDGES RECEIPT, WITHOUT CHARGE, OF A
TRUE COPY OF THIS MORTGAGE.
IN WITNESS WHEREOF, Mortgagor has executed this Leasehold
Mortgage, Assignment of Rents and Security Agreement the day and
year first above written.
ATLANTIC CITY SHOWBOAT, INC.
a New Jersey corporation,
as Mortgagor
By: /s/ Herbert R. Wolfe
Name: Herbert R. Wolfe
Title: President/CEO
Attest:
By: /s/ Luther Anderson
Name: Luther Anderson
Title: Asst. Secretary, Atlantic City Showboat, Inc.
49
<PAGE>
STATE OF NEVADA )
) ss.
COUNTY OF CLARK)
On this 14th day of July, 1995, before me, the undersigned,
personally appeared Herbert R. Wolfe, the President/CEO of
Atlantic City Showboat, Inc. who, I am satisfied, is the person
who signed the foregoing instrument, and he did acknowledge under
oath that he signed, sealed with the corporate seal, and
delivered the same in (his/her) capacity as such officer ad that
the foregoing instrument is the voluntary act and deed of such
corporation, made by virtue of the authority of its board of
directors.
/s/ Denise L. Perrone
Notary Public
50
<PAGE>
EXHIBIT "A"
FORM OF DISBURSEMENT REQUEST AND CERTIFICATE
[DATE]
ATTENTION___________________________
RE: DISBURSEMENT REQUEST OF $_____________
GENTLEMEN:
PURSUANT TO SECTION 1.5 (A)(3)(B) OF THAT CERTAIN DEED OF
TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT DATED AS OF
JULY 14, 1995, MADE BY SHOWBOAT, INC., A NEVADA CORPORATION
("TRUSTOR") IN FAVOR OF NATWEST BANK, N.A., TRUSTOR, REQUESTS
THAT A DISBURSEMENT OF $____________________________ (THE
"DISBURSEMENT") BE MADE TO ACCOUNT NO. ______________________ AT
________________________BANK (THE "SEGREGATED ACCOUNT"), FOR USE
BY TRUSTOR IN CONNECTION WITH THE CAPITALIZED TERMS USED HEREIN
SHALL HAVE THE MEANING AFFORDED THEM UNDER THE DEED OF TRUST. IN
CONNECTION WITH THE REQUESTED DISBURSEMENT, THE PARTIES SIGNING
BELOW HEREBY REPRESENT, WARRANT AND CERTIFY AS FOLLOWS:
1. THE DISBURSEMENT WILL BE APPLIED TO THE FOLLOWING LINE
ITEMS IN THE BUDGET IN THE FOLLOWING AMOUNT:
DESCRIPTION AMOUNT
___________________________ __________________
___________________________ __________________
___________________________ __________________
___________________________ __________________
___________________________ __________________
FOLLOWING DISBURSEMENT OF THE FUNDS REQUESTED PURSUANT TO
THIS DISBURSEMENT REQUEST, THE BALANCE OF THE SEGREGATED ACCOUNT
WILL NOT EXCEED $100,000 HEREUNDER. ALL FUNDS HERETOFORE
DISBURSED FROM THE SEGREGATED ACCOUNT HAVE BEEN USED ONLY TO PAY
EXPENSES DESCRIBED IN PREVIOUS DISBURSEMENT REQUESTS.
2. THE AMOUNT REQUESTED HEREUNDER RELATES ONLY TO AMOUNTS
THAT HAVE BEEN PAID TO MATERIALMEN, ENGINEERS, ARCHITECTS,
CONTRACTORS, AND SUBCONTRACTORS FOR WORK THAT IS PART OF THE
RESTORATION OF THE TRUST ESTATE. THE CONSTRUCTION PERFORMED AS
OF THE DATE HEREOF IS IN ACCORDANCE WITH THE PLANS AND ALL LEGAL
REQUIREMENTS FOR RESTORATION OF THE TRUST ESTATE AND THE
DISBURSEMENT IS APPROPRIATE IN LIGHT OF THE PERCENTAGE OF
CONSTRUCTION COMPLETED AND THE AMOUNT OF STORED MATERIALS.
3. APPROPRIATE EVIDENCE OF LIEN RELEASES OR TITLE
INSURANCE ENDORSEMENTS HAVE BEEN RECEIVED FOR ALL WORK, MATERIALS
AND/OR SERVICES PERFORMED AND/OR DELIVERED IN CONNECTION WITH THE
VARIOUS COMPONENTS OF THE RESTORATION OF THE DEED OF TRUST
PREMISES. THE TITLE ENDORSEMENTS REQUIRED BY SECTION
1.5(A)(3)(B) OF THE DEED OF TRUST ARE ATTACHED HERETO.
4. THE BUDGET IN EFFECT ACCURATELY SETS FORTH THE
ANTICIPATED COSTS OF RESTORING THE TRUST ESTATE, AND THERE ARE
SUFFICIENT FUNDS AVAILABLE FROM INSURANCE PROCEEDS, CONDEMNATION
PROCEEDS AND ADDITIONAL AMOUNTS PAID BY TRUSTOR TO BENEFICIARY IN
ACCORDANCE WITH SECTION 1.5(A)(3)(D) OF THE DEED OF TRUST TO
COMPLETE THE VARIOUS COMPONENTS OF THE RESTORATION OF THE DEED OF
TRUST PREMISES WITHIN THE LINE ITEM ALLOCATIONS ESTABLISHED FOR
THOSE COMPONENTS CONTAINED IN THE BUDGET.
5. THERE IS NO EVENT OF DEFAULT UNDER THE DEED OF TRUST
OR INDENTURE OR ANY EVENT, OMISSION OR FAILURE OF A CONDITION
WHICH WOULD CONSTITUTE AN EVENT OF DEFAULT UNDER THE DEED OF
TRUST OR INDENTURE AFTER NOTICE OR LAPSE OF TIME OR BOTH.
6. NO CIRCUMSTANCES HAVE OCCURRED WHICH WOULD PROVIDE
BENEFICIARY WITH ANY DEFENSES AGAINST ENFORCEMENT OF THE DEED OF
TRUST.
<PAGE>
THE FOREGOING REPRESENTATIONS, WARRANTIES AND CERTIFICATIONS
ARE TRUE AND CORRECT AND BENEFICIARY IS ENTITLED TO RELY ON THE
FOREGOING IN AUTHORIZING AND MAKING THE DISBURSEMENT.
SHOWBOAT, INC., A NEVADA CORPORATION
BY:________________________________
NAME:______________________________
TITLE:_____________________________
SHOWBOAT OPERATING COMPANY,
A NEVADA CORPORATION
BY:________________________________
NAME:______________________________
TITLE:_____________________________
<PAGE>
SCHEDULE "A"
DESCRIPTION OF THE LAND
PREMISES A
ALL THAT CERTAIN lot, tract or parcel of land and premises
situate, lying and being in the City of Atlantic City, County of
Atlantic and State of New Jersey, bounded and described as
follows:
Beginning at a point in the southerly line of Pacific Avenue
(50.00 feet wide), South 62 degrees, 32 minutes, 00 seconds West,
266.00 feet from the westerly line of New Jersey Avenue (50.00
feet wide), said beginning point being in the division line
between Lots 140 and 144.05 in Block 13 as shown on the Atlantic
City Tax Map, and extending from said beginning point; thence
1. South 27 degrees, 38 minutes, 00 seconds East, in and along
said division line, parallel with New Jersey Avenue, 1432.20
feet to the Interior or Inland Line of the Public Park;
thence
2. Southwestwardly in and along same in the arc of a circle
curving to the right having a radius of 1102.57 feet, the
arc length of 8.94 feet to a point of tangent; thence
3. Continuing in and along same, South 59 degrees, 24 minutes,
40 seconds West, 308.53 feet to the easterly line of Lot
128.03; thence
4. North 27 degrees, 28 minutes, 00 seconds West in and along
same, parallel with New Jersey Avenue, 1369.53 feet to a
point in the southerly line of Lot 130; thence
5. North 62 degrees, 32 minutes, 00 seconds East, parallel with
Pacific Avenue, 25.00 feet to a point in the easterly line
of Lot 129.02; thence
6. North 27 degrees, 28 minutes, 00 seconds West, in and along
same, parallel with New Jersey Avenue, 80.00 feet to the
southerly line of Pacific Avenue, said point being North 62
degrees, 32 minutes, 00 seconds East, 577.00 feet from the
easterly line of Virginia Avenue (80.00 feet wide); thence
7. North 62 degrees, 32 minutes, 00 seconds East in and along
the southerly line of Pacific Avenue, 292.00 feet to the
point and place of beginning.
TOGETHER WITH the following non-exclusive easements:
1. A non-exclusive easement for the construction, repair,
maintenance and use of the Common Facilities (as defined in
the Ground Lease).
2. A non-exclusive easement over, upon and across the
Pedestrian Passageway (as defined in the Ground Lease),
together with the 17-Foot Egressway, the Service Road and
the Service Road Extension (as such terms are defined in the
Ground Lease), as shown on a survey made by Arthur W. Ponzio
Co. and Associates, Inc. dated December 30, 1986 and being
more particularly described as Parcels A, B and C,
respectively, attached hereto.
SUBJECT to a portion of the fifty-foot wide service easement
lying within the Land and more particularly described as Parcel D
attached hereto.
BEING Block 13, Lot 140, Tax Map of the City of Atlantic City,
New Jersey.
1
<PAGE>
PARCEL A
DESCRIPTION OF THE SEVENTEEN-FOOT WIDE EGRESSWAY AT GRADE BETWEEN
THE SERVICE ROAD AND THE BOARDWALK.
ALL that certain lot, tract or parcel of land and premises
situate, lying and being in the City of Atlantic City, County of
Atlantic and State of New Jersey, bounded and described as
follows:
BEGINNING at a point distant 535.00 feet east of the easterly
line of Virginia Avenue (80 feet wide) and 868.00 feet south of
the southerly line of Pacific Avenue (60 feet wide), when
measured at right angles to said avenues respectively, and
extending from said beginning point the following courses and
distances:
1. South 27 degrees 28 minutes 00 seconds East, parallel with
Virginia Avenue, a distance of 582.45 feet to the Inland or
Interior Line of Public Park; thence
2. South 59 degrees 24 minutes 40 seconds West, in and along
the Inland or Interior Line of Public Park, a distance of
17.03 feet; thence
3. North 27 degrees 28 minutes 00 seconds West, parallel with
Virginia Avenue, a distance of 583.38 feet; thence
4. North 62 degrees 32 minutes 00 seconds East, parallel with
Pacific Avenue, a distance of 17.00 feet to the point and
place of BEGINNING.
PARCEL B
DESCRIPTION OF THE FIFTY-FOOT WIDE SERVICE ROAD
All that certain lot, tract or parcel of land and premises
situate, lying and being in the City of Atlantic City, County of
Atlantic and State of New Jersey, bounded and described as
follows:
BEGINNING at a point in the southerly side of Pacific Avenue (60
feet wide), said point being distant 577.00 feet east of the
easterly line of Virginia Avenue (80 feet wide) and extending
from said beginning point the following courses and distances:
1. South 27 degrees 28 minutes 00 seconds East, parallel with
Virginia Avenue, a distance of 86.00 feet; thence
2. South 07 degrees 48 minutes 46 seconds East, a distance of
74.33 feet; thence
3. South 27 degrees 28 minutes 00 seconds East, parallel with
Virginia Avenue, a distance of 712.00 feet, to a point
distant 868.00 feet south of the southerly line of Pacific
Avenue when measured at right angles thereto; thence
4. South 62 degrees 32 minutes 00 seconds West, parallel with
Pacific Avenue, a distance of 50.00 feet; thence
5. North 27 degrees 28 minutes 00 seconds West, parallel with
Virginia Avenue, a distance of 720.66 feet; thence
6. North 07 degrees 48 minutes 46 seconds West, a distance of
74.33 feet; thence
7. North 27 degrees 28 minutes 00 seconds West, parallel with
Virginia Avenue, a distance of 77.34 feet to the southerly
line of Pacific Avenue; thence
2
<PAGE>
8. North 62 degrees 32 minutes 00 seconds East, in and along
the southerly line of Pacific Avenue, a distance of 50.00
feet to the point and place of BEGINNING.
PARCEL C
DESCRIPTION OF THE SEVENTEEN-FOOT WIDE FIRE LANE BETWEEN THE
SERVICE ROAD AND THE BOARDWALK.
All that certain lot, tract or parcel of land and premises
situate, lying and being in the City of Atlantic City, County of
Atlantic and State of New Jersey, bounded and described as
follows:
BEGINNING at a point distant 552.00 feet east of the easterly
line of Virginia Avenue (80 feet wide) and 868.00 feet south of
the southerly line of Pacific Avenue (60 feet wide), when
measured at right angles to said avenues respectively, and
extending from said beginning point the following courses and
distances:
1. South 27 degrees 28 minutes 00 seconds East, parallel with
Virginia Avenue, a distance of 581.53 feet to the Inland or
Interior Line of Public Park; thence
2. South 59 degrees 24 minutes 40 seconds West, in and along
the Inland or Interior Line of Public Park, a distance of
17.03 feet; thence
3. North 27 degrees 28 minutes 00 seconds West, parallel with
Virginia Avenue, a distance of 582.45 feet; thence
4. North 62 degrees 32 minutes 00 seconds East, parallel with
Pacific Avenue, a distance of 17.00 feet to the point and
place of BEGINNING.
PARCEL D
DESCRIPTION FOR THE EASEMENT FOR THAT PORTION OF THE FIFTY-FOOT
WIDE SERVICE ROAD LYING WITHIN THE SHOWBOAT LANDS.
ALL that certain lot, tract or parcel of land and premises
situate, lying and being in the City of Atlantic City, County of
Atlantic and State of New Jersey, bounded and described as
follows:
BEGINNING at a point distant 577.00 feet east of the easterly
line of Virginia Avenue (80 feet wide) and 80.00 feet south of
the southerly line of Pacific Avenue (60 feet wide), and
extending from said beginning point the following courses and
distances:
1. South 27 degrees 28 minutes 00 seconds East, parallel with
Virginia Avenue, a distance of 6.00 feet; thence
2. South 07 degrees 48 minutes 46 seconds East, a distance of
74.23 feet; thence
3. North 27 degrees 28 minutes 00 seconds West, parallel with
Virginia Avenue, a distance of 76.00 feet; thence
4. North 62 degrees 32 minutes 00 seconds East, parallel with
Pacific Avenue, a distance of 25.00 feet to the point and
place of BEGINNING.
3
<PAGE>
PREMISES B
ALL THOSE CERTAIN, lots and parcels of land lying and being in
the City of Atlantic City, County of Atlantic and State of New
Jersey, being more particularly described as follows:
TRACT 1
Beginning at the intersection of the northerly line of Atlantic
Avenue (100 feet wide), with the easterly line of Maryland Avenue
(50 feet wide), and extending from said beginning point; thence
1. North 27 degrees, 28 minutes, 00 seconds west in and along
the easterly line of Maryland Avenue, 550.00 feet to the
southerly line of Arctic Avenue (60 feet wide); thence
2. North 62 degrees, 32 minutes, 00 seconds east in and along
same, 230.50 feet to the westerly line of lot 7 in block
109; thence
3. South 27 degrees, 28 minutes, 00 seconds east in and along
same, 105.00 feet to the north line of lot 68; thence
4. North 62 degrees, 32 minutes, 00 seconds east in and along
same, 25.00 feet to the westerly line of lot 8; thence
5. North 27 degrees, 28 minutes, 00 seconds west in and along
same, 105.00 feet to the southerly line of Arctic Avenue;
thence
6. North 62 degrees, 32 minutes, 00 seconds east in and along
same, 94.50 feet to the westerly line of Delaware Avenue (82
feet wide); thence
7. South 27 degrees, 28 minutes, 00 seconds east in and along
same, 400.00 feet to the northerly line of lot 62; thence
8. South 62 degrees, 32 minutes, 00 seconds west in and along
same, 60.00 feet to the easterly line of lot 61; thence
9. South 27 degrees, 28 minutes, 00 seconds east in and along
same, 25.00 feet to the northerly line of lot 72; thence
10. South 62 degrees, 32 minutes, 00 seconds west in and along
same, 40.00 feet to the westerly line of lot 61; thence
11. North 27 degrees, 28 minutes, 00 seconds west in and along
same, 25.00 feet to the southerly line of lot 80; thence
12. South 62 degrees, 32 minutes, 00 seconds west in and along
same, 7.00 feet to the easterly line of lot 74; thence
13. South 27 degrees, 28 minutes, 00 seconds east in and along
same, 150.00 feet to the northerly line of Atlantic Avenue;
thence
14. South 62 degrees, 32 minutes, 00 seconds west in and along
same, 243.00 feet to the point and place of beginning.
4
<PAGE>
BEING KNOWN AS LOTS 97, 98, 71, 96, 38, 39, 74, 61, 35, 34, 33,
53, 54, 31, 30, 29, 28, 27, 68, 49, 48, 82, 81, 8, 6, 5, 10, 95,
94, 84, 83, 65, 66, 11, 69, 87, 88, 89, 63, 64, 90, 91, 86, 85,
15, 16, 17, 92, 93, 19, 20, 26, 75, 76, 77, 78, 79, 80 and the
area of a former public alley in Block 109, Atlantic City Tax
Map, Atlantic City, New Jersey.
TRACT II:
BEGINNING at the intersection of the westerly line of Delaware
Avenue (82 feet wide) with the northerly line of Atlantic Avenue
(100 feet wide), and extending from said beginning point; thence
1. South 62 degrees, 32 minutes, 00 seconds west in and along
the northerly line of Atlantic Avenue, 71.10 feet to the
easterly line of lot 47 in block 109; thence
2. North 27 degrees, 28 minutes, 00 seconds in and along same,
100.00 feet to the southerly line of lot 72; thence
3. North 62 degrees, 32 minutes, 00 seconds east in and along
same and continuing in and along the southerly line of lot
62, 71.10 feet to the westerly line of Delaware Avenue;
4. South 27 degrees, 28 minutes, 00 seconds east in and along
same, 100.00 feet to the point and place of beginning.
BEING known as Lot 42 in Block 109 as shown on the Atlantic City
Tax Map, Atlantic City, New Jersey.
5
<PAGE>
RECITAL:
PREMISES A
BEING the same premises that were leased by Resorts International
Inc., a Delaware Corporation to Ocean Showboat Inc., a New Jersey
Corporation dated October 26, 1983 recorded January 18, 1984 in
Deed Book 3878 page 1.
ASSIGNMENT AND ASSUMPTION OF LEASE: by Ocean Showboat Inc., a New
Jersey Corporation to Atlantic City Showboat Inc., a New Jersey
Corporation to Atlantic City Showboat Inc., a New Jersey
Corporation dated December 3, 1984 recorded December 24, 1984 in
Deed Book 4004 page 310.
AMENDMENT TO SHORT FORM LEASE: between Resorts International
Inc., a Delaware Corporation and Atlantic City Showboat, Inc., a
New Jersey Corporation dated January 15, 1985 recorded August 16,
1985 in Deed Book 4107 page 141.
SECOND AMENDMENT TO LEASE AGREEMENT: between Resorts
International Inc., a Delaware Corporation and Atlantic City
Showboat, Inc., a New Jersey Corporation dated July 5, 1985
recorded November 25, 1985 in Deed Book 4158 page 221.
THIRD AMENDMENT TO LEASE AGREEMENT: between Resorts International
Inc., a Delaware Corporation and Atlantic City Showboat, Inc., a
New Jersey Corporation dated October 28, 1985 recorded November
25, 1985 in Deed Book 4158 page 227.
RESTATED THIRD AMENDMENT TO LEASE AGREEMENT: between Resorts
International Inc., a Delaware Corporation and Atlantic City
Showboat, Inc., a New Jersey Corporation dated October 28, 1985
recorded February 20, 1987 in Deed Book 4406 page 17.
FOURTH AMENDMENT TO LEASE AGREEMENT: between Resorts
International Inc., a Delaware Corporation and Atlantic City
Showboat, Inc., a New Jersey Corporation dated December 16, 1986
recorded February 20, 1987 in Deed Book 4406 page 37.
FIFTH AMENDMENT TO LEASE AGREEMENT: between Resorts International
Inc., a Delaware Corporation and Atlantic City Showboat, Inc., a
New Jersey Corporation dated March 2, 1987 recorded March 23,
1987 in Deed Book 4421 page 10.
SIXTH AMENDMENT TO LEASE AGREEMENT: between Resorts International
Inc., a Delaware Corporation and Atlantic City Showboat, Inc., a
New Jersey Corporation dated March 13, 1987 recorded March 23,
1987 in Deed Book 4421 page 17.
SEVENTH AMENDMENT TO LEASE AGREEMENT: between Resorts
International Inc., a Delaware Corporation and Atlantic City
Showboat, Inc., a New Jersey Corporation dated October 18, 1988
recorded December 19, 1988 in Deed Book 4814 page 231.
EIGHTH AMENDMENT TO LEASE: between Resorts International Inc.
(Delaware Corp.) and Atlantic City Showboat Inc. (New Jersey
Corp.) dated May 18, 1993 recorded May 18, 1993 in Deed Book 550
page 284.
RECITAL: (As To Fee Estate)
BEING the same premises which Resorts International, Inc. of New
Jersey, a New Jersey Corporation by a deed dated October 28, 1986
and recorded on December 24, 1986 in Atlantic County in Deed Book
4366 page 214 granted and conveyed unto Resorts International,
Inc., a Delaware Corporation in fee.
6
<PAGE>
SCHEDULE B
EXISTING ENCUMBRANCES
1. Lease by Resorts International Inc. a Delaware Corporation
to Ocean Showboat Inc. a New Jersey Corporation dated
October 26, 1983 recorded January 18, 1984 in Deed Book 3878
page 1.
DECLARATION OF COMMENCEMENT DATE OF LEASE: by Resorts
International Inc. a Delaware Corporation and Ocean Showboat
Inc. a New Jersey Corporation dated December 15, 1983
recorded May 1, 1984 in Deed Book 3911 page 63.
ASSIGNMENT AND ASSUMPTION OF LEASE: by Ocean Showboat Inc. a
New Jersey Corporation to Atlantic City Showboat, Inc. a New
Jersey Corporation dated December 3, 1984 recorded December
24, 1984 in Deed Book 4004 page 310.
FIRST AMENDMENT TO LEASE: between Resorts International Inc.
a Delaware Corporation and Atlantic City Showboat, Inc. a
New Jersey Corporation dated January 15, 1985 recorded
August 16, 1985 in Deed Book 4107 page 141.
SECOND AMENDMENT TO LEASE: between Resorts International
Inc. a Delaware Corporation and Atlantic City Showboat, Inc.
a New Jersey Corporation dated July 5, 1985 recorded
November 25, 1985 in Deed Book 4158 page 221.
THIRD AMENDMENT TO LEASE: between Resorts International Inc.
a Delaware Corporation and Atlantic City Showboat Inc. a New
Jersey Corporation dated October 28, 1985 recorded November
25, 1985 in Deed Book 4158 page 227.
RESTATED THIRD AMENDMENT TO LEASE: between Resorts
International Inc. a Delaware Corporation and Atlantic City
Showboat, Inc. a New Jersey Corporation dated October 28,
1985 recorded February 20, 1987 in Deed Book 4406 page 17.
FOURTH AMENDMENT TO LEASE: between Resorts International
Inc. a Delaware Corporation and Atlantic City Showboat Inc.
a New Jersey Corporation dated December 16, 1986 recorded
February 20, 1987 in deed Book 4406, page 37.
FIFTH AMENDMENT TO LEASE: between Resorts International Inc.
a Delaware Corporation and Atlantic City Showboat Inc. a New
Jersey Corporation dated March 2, 1987 recorded March 23,
1987 in Deed Book 4421 page 10.
SIXTH AMENDMENT TO LEASE: between Resorts International Inc.
a Delaware Corporation and Atlantic City Showboat, Inc. a
New Jersey Corporation dated March 13, 1987 recorded March
23, 1987 in Deed Book 4421 page 17.
SEVENTH AMENDMENT TO LEASE: between Resorts International
Inc. a Delaware Corporation and Atlantic City Showboat, Inc.
a New Jersey Corporation dated October 18, 1988 recorded
December 19, 1988 in Deed Book 4814 page 231.
<PAGE>
EIGHTH AMENDMENT TO LEASE: between Resorts International
Inc., a Delaware Corporation and Atlantic City Showboat,
Inc. a New Jersey Corporation dated May 18, 1993 recorded
May 18, 1993 in Deed Book 5500, page 284.
2. LEASEHOLD MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY
AGREEMENT: made by Atlantic City Showboat, Inc., a New
Jersey Corporation to IBJ Schroder Bank & Trust Company, a
New York Banking Corporation (as Trustee) dated May 18, 1993
recorded May 19, 1993 in Mortgage Book 5028 page 1; to
secure $275,000,000.00.
A. ASSIGNMENT OF RENTS AND LEASES by ACSI, Inc. to IBJ
dated May 18, 1993, recorded on May 19, 1993 in
Mortgage Book 5028, page 66.
B. FIRST AMENDMENT TO LEASEHOLD MORTGAGE, ASSIGNMENT OF
RENTS AND SECURITY AGREEMENT: dated July 9, 1993
recorded July 28, 1993 in Mortgage Book 5095 page 209.
C. SECOND AMENDMENT to the Leasehold Mortgage,
Assignment of Rents and Security Agreement between
Atlantic City Showboat, Inc. and Showboat, Inc., dated
as of July 6, 1995 and intended to be forthwith
recorded in the Atlantic County Clerk's Office.
3. LEASEHOLD MORTGAGE ASSIGNMENT OF RENTS AND SECURITY
AGREEMENT: made by Atlantic City Showboat, Inc., a New
Jersey Corporation to Showboat, Inc., a Nevada Corporation
dated May 18, 1993 recorded May 19, 1993 in Mortgage Book
5028 page 79; to secure $215,000,000.00.
A. ASSIGNMENT OF RENTS AND LEASES: by Atlantic City
Showboat, Inc., a New Jersey Corporation to Showboat,
Inc., a Nevada Corporation dated May 18, 1993 recorded
May 19, 1993 in Mortgage Book 5028 page 144.
B. ISSUER COLLATERAL ASSIGNMENT: by Showboat, Inc., a
Nevada Corporation to IBJ Schroder Bank & Trust
Company, a New York banking corporation dated May 18,
1993 recorded May 19, 1993 in Assignment Book 624 page
195.
C. FIRST AMENDMENT TO THE LEASEHOLD MORTGAGE,
ASSIGNMENT OF RENTS AND SECURITY AGREEMENT: dated July
9, 1993 recorded July 28, 1993 in Mortgage Book 5095
page 226.
D. SECOND AMENDMENT to the Leasehold Mortgage,
Assignment of Rents and Security Agreement between
Atlantic City Showboat, Inc. and IBJ Schroder Bank &
Trust Company as Trustee, dated as of July 6, 1995 and
intended to be forthwith recorded in the Atlantic
County Clerk's Office.
4. FINANCING STATEMENT: Atlantic City Showboat Inc. (New Jersey
Corp.) Debtor to IBJ Schroder Bank & Trust Company, as
trustee Secured Party filed May 19, 1993 #13205.
2
<PAGE>
A. Amended July 21, 1993 #13685
5. FINANCING STATEMENT: Atlantic City Showboat Inc. (New Jersey
Corp.) Debtor filed May 19, 1993 #13206.
A. Amended July 21, 1993 #13686
6. FINANCING STATEMENT: Atlantic City Showboat Inc., Debtor to
Bell Atlantic Tri-Con Leasing filed June 11, 1993 #13362.
7. FINANCING STATEMENT: Atlantic City Showboat Inc., Debtor to
Bell-Atlantic Tri-Con Leasing filed December 13, 1993
#14556.
8. FINANCING STATEMENT: Atlantic City Showboat Inc., Debtor, to
Bell-Atlantic Tri-Con Leasing filed December 13, 1993
#14557.
9. FINANCING STATEMENT: Atlantic City Showboat Inc., Debtor, to
Bell Atlantic Tri-Con Leasing filed December 13, 1993
#14558.
10. FINANCING STATEMENT: Atlantic City Showboat Inc., Debtor, to
Citi-Lease filed August 2, 1991 #1410565.
11. FINANCING STATEMENT: Atlantic City Showboat Inc., Debtor, to
Bell Atlantic Tri-Con filed June 16, 1993 #1515591.
12. FINANCING STATEMENT: Atlantic City Showboat Inc., Debtor, to
Bell Atlantic Tri-Con filed June 17, 1993 #1515700.
13. FINANCING STATEMENT: Atlantic City Showboat Inc., Debtor, to
Bell Atlantic Tri-Con filed February 15, 1994 #1554169.
14. FINANCING STATEMENT: Atlantic City Showboat Inc., Debtor, to
Bell Atlantic Tri-Con filed February 15, 1994 #1554172.
15. FINANCING STATEMENT: Atlantic City Showboat Inc., Debtor, to
Bell Atlantic Tri-Con filed February 15, 1994 #1554175.
16. FINANCING STATEMENT: Atlantic City Showboat Inc., Debtor, to
Bell Atlantic Tri-Con filed February 11, 1991 #1383827.
17. FINANCING STATEMENT: Atlantic City Showboat Inc., Debtor, to
Cannon Financial Services, Inc. dated December 8, 1994
#1607251.
18. FINANCING STATEMENT: Atlantic City Showboat Inc., Debtor, to
IBJ dated May 25, 1993 #1511984.
19. FINANCING STATEMENT: Atlantic City Showboat Inc., Debtor, to
IBJ dated May 25, 1993 #1511986.
3
<PAGE>
20. FINANCING STATEMENT: Atlantic City Showboat Inc., Debtor, to
[?] dated [?] #1430675.
21. FINANCING STATEMENT: Atlantic City Showboat Inc., Debtor, to
Bell Atlantic Tri-Con Leasing filed June 25, 1993 #13459.
22. AGREEMENT AS TO ASSUMPTION OF OBLIGATIONS WITH RESPECT TO
PROPERTIES: between Atlantic City Showboat Inc., a New
Jersey Corporation, Trump Taj Mahal Associates Limited
Partnership, a New Jersey Limited Partnership, Trump Taj
Mahal Realty Corp., a New Jersey Corporation and Resorts
International Inc., a Delaware Corporation dated September
21, 1988 and recorded November 17, 1988 in Deed Book 4795
page 243. (Lot 140)
23. AGREEMENT AS TO ASSUMPTION OF OBLIGATIONS WITH RESPECT TO
PROPERTIES: between Atlantic City Showboat, Inc., a New
Jersey Corporation, Trump Taj Mahal Associates Limited
Partnership, a New Jersey Limited Partnership, Trump Taj
Mahal Realty Corp., a New Jersey Corporation, and Resorts
International Inc. a Delaware Corporation dated September
21, 1988 recorded March 14, 1989 in Deed Book 4863 page 5.
(Lot 140)
24. Restrictions, covenants, agreements, and easements contained
in Deed Book 2436 page 110; Misc. Book 12 page 242; and
Misc. Book 12 page 377. (Lot 140)
25. Restrictions, covenants, agreements and easements,
contained in Deed Book 3978 page 219, Certification in Deed
Book 4524 page 192 as modified in Deed Book 4646 page 166
and in Deed Book 3846 page 199 as amended by Correction and
Confirmatory Deed in Deed Book 4636 page 218, and Deed Book
4016 page 70. (Lot 140)
NOTE: Certificate of Final Completion Showboat Parcel
dated March 20, 1987 recorded April 2, 1987 in
Deed Book 4426, page 331. Certificate of Final
Completion Service Road and Extension dated March
20, 1987 recorded April 2, 1987 in Deed Book 4426,
page 335.
26. Rights granted to the Atlantic City Electric Company in Deed
Book 1991 page 100. (Lots 140, 144.03, 144.06 and 144.04)
27. Subject to an easement within a portion of the fifty feet
wide service road lying within the insured premises and more
particularly described as Parcel D of Premises A set forth
in Schedule A to Commonwealth Land Title Insurance Company
title insurance commitment #L950152 (third revision) dated
June 30, 1995. (Lot 140)
28. Easement for Service Road (50 feet wide) (Parcel B) and
Easement within Showboat Lands (Parcel D) construction and
in use partially across lands and premises of adjoining
owner on Northwest, (City of Atlantic City). (Lot 140)
29. Terms and conditions contained in Riparian Grants from the
State of New Jersey to Benjamin Brown recorded March 28,
1882 in Deed Book 88, page 80, and to James B.
4
<PAGE>
Reilly, recorded August 11, 1899 in Deed Book 233, page 41.
(Lot 140)
30. Rights of the Federal Government to take, without
compensation, any land now or formerly flowed by tidal
waters for the purpose of commerce and navigation and its
authority to regulate and control navigation and in that
connection to establish and change bulkhead and pierhead
lines. (This exception is limited to the area southerly
side of the 1852 high water line on the survey made by
Arthur W. Ponzio dated January 8, 1985), last revised March
10, 1987. (Lot 140)
31. Declaration of Easement and Rights of Way Agreement between
Atlantic City Showboat Inc. a New Jersey Corporation and
Housing Authority and Redevelopment Agency of City of
Atlantic City recorded in Deed Book 4814 page 215. (Lot 140)
32. Rights granted to Atlantic City Electric Company and New
Jersey Bell Telephone Company in Deed Book 4903 page 245.
(Lot 140)
33. FEE MORTGAGE: made by Resorts International Inc. (Delaware
Corp.) to the Bank of New York dated September 14, 1990
recorded September 27, 1990 in Mortgage Book 4445 page 209;
to secure $105,333,000.00
A. ASSIGNMENT OF LEASES AND RENTS: by Resorts
International Inc. (Delaware Corp.) to the Bank of New
York dated September 14, 1990 recorded September 27,
1990 in Deed Book 5136 page 45.
B. LANDLORD'S WAIVER between Resorts International, Inc.
and Maryland National Leasing Corporation dated
September 18, 1986, recorded December 30, 1986 in Deed
Book 4372, page 282. (Lot 140)
BLOCK 109
34. RELEASE AND TERMINATION: dated May 28, 1993 recorded June
22, 1993 in Deed Book 5515 page 124.
35. Subject to conditions set forth in Vacation Ordinance No. 82
of 1993 recorded in Vacation Book 17 page 91. (Premises B)
36. Easement and right of way as set forth in Deed Book 1140
page 196. (Affects Lot 8)
37. Rights of the City of Atlantic and the public in, over and
along the westerly 3 feet of the premises as set forth in
Deed Book 177 page 138 and Deed Book 402 page 106. (Affects
Lot 61)
38. Rights granted to the Atlantic City Electric Company as in
Deed Book 3155 page 42. (Affects Lot 11)
39. Rights granted to Atlantic City Electric and New Jersey Bell
Telephone Company in Deed Book 5671 page 234.
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40. Rights granted to Atlantic City Electric Company in Deed
Book 5609 page 248.
6
<PAGE>
PREMISES B
Being the same premises which Paul Harris by a deed dated March
15, 1993 recorded March 17, 1993 in Atlantic County in Deed Book
5477 page 1 granted and conveyed unto Atlantic City Showboat Inc.
(N.J. Corp.) in fee.
BEING the same premises which the City of Atlantic City, a
Municipal Corporation of the State of New Jersey by a deed dated
February 28, 1994 recorded March 3, 1994 in Atlantic County in
Deed Book 5616 page 145 granted and conveyed unto Atlantic City
Showboat, Inc., in fee.
BEING the same premises which Paul Harris by a deed dated May 19,
1994 recorded May 27, 1994 in Atlantic County in Deed Book 5646
page 307 granted and conveyed unto Atlantic City Showboat Inc., a
New Jersey Corporation in fee.
ALSO including that portion of an alleyway (off Delaware Avenue)
that became vested in Atlantic City Showboat Inc. (NJ Corp.) by
virtue of Vacation Ordinance No. 82 of 1993 filed on September 9,
1994 in Vacation Book 17 page 91.
7
<PAGE>
[Original on Showboat Casino Hotel Atlantic City Letterhead]
July 26, 1995
Mr. John Harrison
Vice President
NatWest Bank N.A.
22 Route 70 West
Cherry Hill, NJ 08002
RE: NatWest to Showboat, Inc., $25,000,000.00
Revolving Credit Facility
Dear Mr. Harrison:
In connection with the above-captioned credit facility, Atlantic
City Showboat, Inc. ("ASCI") was required to grant you a mortgage
lien on certain premises (the "Tower Property") in the City of
Atlantic City, County of Atlantic and State of New Jersey known
and designated as Lot 144.03, Block 13 on the Tax Map of the City
of Atlantic City, which premises were acquired from the Housing
Authority and Redevelopment Agency of the City of Atlantic City
(the "Authority"). However, under and pursuant to that certain
deed dated July 7, 1993, and recorded July 14, 1993 in Deed Book
5524, Page 201, ACSI is prohibited from executing and delivering
a mortgage covering the Tower Property until issuance by the
Authority of a Certificate of Completion under and pursuant to
the terms of certain contracts between the Authority and ACSI.
Litigation (captioned ATLANTIC CITY SHOWBOAT, INC. V. HOUSING
AUTHORITY & URBAN REDEVELOPMENT AGENCY OF THE CITY OF ATLANTIC)
is currently pending in the Superior Court of New Jersey,
Atlantic County, pursuant to which ACSI is seeking, INTER ALIA to
overturn an Authority resolution whereby the Authority has
declared ACSI in default of the above-referenced contracts
between the Authority and ACSI. The Authority contends that such
declared default, if sustained, implicates reverter of the Tower
Property as well as other property acquired by ACSI from the
Authority (the "Undeveloped Authority Properties").
Under and pursuant to the Loan and Guaranty Agreement (the "Loan
Agreement") evidencing the above-referenced credit facility, the
Tower Property constitutes part of the Atlantic City Showboat as
defined in the Loan Agreement, as to which property ACSI is
required to execute and deliver a mortgage to you to secure
ACSI's obligation under the Loan Agreement. You have confirmed
that you are willing to close under the Loan Agreement
notwithstanding that ACSI is unable to execute and deliver a
mortgage covering the Tower Property as well as the Undeveloped
Authority Properties, acquired from the Authority. In
consideration thereof, the undersigned parties hereby agree as
follows:
<PAGE>
Mr. John Harrison -2- July 26, 1995
1. The mortgage granted under the Loan Agreement as to the
Atlantic City Showboat shall not include the Tower Property
and the Undeveloped Authority Properties.
2. Simultaneous with closing under the Loan Agreement, ACSI
will execute and deliver in escrow to the Lender's counsel a
mortgage spreader agreement (the "Spreader Agreement")
covering the Tower Property. Said instrument will be held in
escrow by Lender's counsel until the litigation is resolved
and a Certificate of Completion is issued by the Housing
Authority. Within five (5) Business Days after issuance of
a Certificate of Completion covering the Tower Property, you
will deliver the Spreader Agreement to the Clerk of Atlantic
County for recording. Notwithstanding the foregoing,
NatWest acknowledges that ACSI, as part of a settlement
relating to the litigation referenced above, may convey a
part of the Tower Property to the Housing Authority (the
"Tower Carve-out Property"). The conveyance by ACSI of the
Tower Carve-out Property shall consist of unimproved land
and shall not adversely affect the use and occupancy of the
remaining Tower Property which shall contain all of the
improvements presently part of the Tower Property (the
"Remaining Tower Property") or other Mortgaged Property. It
is further contemplated that the Remaining Tower Property
may be augmented by a conveyance by the Housing Authority of
real property contiguous to the Remaining Tower Property.
In the event of such conveyance by ACSI, the legal
description appended to the Spreader Agreement shall be
revised and a revised legal description of the Remaining
Tower Property, prepared by a licensed New Jersey surveyor,
shall be substituted therefor. Additionally, ACSI shall
deliver to NatWest a revised survey depicting the Remaining
Tower Property.
3. Upon recording of the Spreader Agreement, ACSI will execute
and deliver such other and further instruments as shall be
necessary or appropriate to grant to the Lender a first
mortgage lien on the Tower Property as required by the Loan
Agreement, in PARI PASSU with the lien of the Indenture
Trustee.
4. From time to time and upon request, we shall keep you
apprised of the status of the litigation and provide you
with copies of pleadings and other significant documents in
connection therewith.
5. Upon issuance of a Certificate of Completion covering any of
the Undeveloped Authority Property, ACSI will execute and
deliver to you a Mortgage Spreader Agreement substantially
in the form of the Spreader Agreement granting to you a
first mortgage lien on such property IN PARI PASSU with the
lien of the Indenture Trustee.
6. In the event we receive an adverse decision in the
litigation, paragraph 7 of the Loan Agreement shall govern.
7. All capitalized terms not otherwise defined herein shall
have the meaning set forth in the Loan Agreement.
Thank you for your cooperation.
<PAGE>
Mr. John Harrison -3- July 26, 1995
Very truly yours,
ATLANTIC CITY SHOWBOAT, INC.
By: /s/ Kathleen Caracciolo
Kathleen Caracciolo
Vice President Finance
THE UNDERSIGNED HEREBY
AGREE TO THE TERMS HEREOF:
BORROWER:
SHOWBOAT, INC.
By: /s/ R. Craig Bird
Name: R. Craig Bird
Title: V/P Finance and Administration
Address: 2800 Freemont Street
Las Vegas, NV 89104
GUARANTORS:
SHOWBOAT OPERATING COMPANY
By: /s/ Leann Schneider
Name: Leann Schneider
Title: Treasurer
Address: 2800 Freemont Street
Las Vegas, NV 89104
OCEAN SHOWBOAT, INC.
By: /s/ R. Craig Bird
Name:
Title: Vice President Finance and Adm
Address: 801 Boardwalk
Atlantic City, NJ 08401
<PAGE>
Mr. John Harrison -4- July 26, 1995
ATLANTIC CITY SHOWBOAT, INC.
By: /s/ Kathleen Caracciolo
Name: Kathleen Caracciolo
Title: Vice President Finance
Address: 801 Boardwalk
Atlantic City, NJ 08401
LENDER:
NATWEST BANK, N.A.
By: /s/ John Harrison
Name: John Harrison
Title: Vice President
Address: 1300 Atlantic Avenue
Mezzanine Level
Atlantic City, NJ 08401
<PAGE>
ADDENDUM #1
(attached to and forming a part of the Letter
dated July 26, 1995, from Atlantic City
Showboat, Inc. to NatWest Bank, N.A.)
8. This will confirm that, notwithstanding that the Lender
is not now receiving a mortgage on the Tower Property
and the Undeveloped Authority Properties, the Lender
is, however, receiving and ACSI is granting to Lender,
under the terms set forth in the Leasehold Mortgage, a
security interest in any Collateral (as defined in the
Leasehold Mortgage) which is located on or used in
connection with the Tower Property and the Undeveloped
Authority Properties, provide said Collateral does not
constitute real estate, and the Leasehold Mortgage
shall be deemed to be amended hereby to said effect.
9. The Letter dated July 26, 1995, together with this
Addendum #1 thereto, shall be attached to and form a
part of the Loan Agreement and the Leasehold Mortgage.
THE UNDERSIGNED HEREBY AGREE TO THE TERMS HEREOF:
BORROWER: GUARANTORS:
SHOWBOAT, INC. SHOWBOAT OPERATING COMPANY
By: /s/ R. Craig Bird By: /s/ Leann Schneider
R. Craig Bird, Exec. V.P. Leann Schneider, Treasurer
Finance & Adm. 2800 Fremont Street
2800 Fremont Street Las Vegas, NV 89104
Las Vegas, NV 89104
LENDER: ATLANTIC CITY SHOWBOAT, INC.
NATWEST BANK, N.A.
By: /s/ Kathleen Caracciolo
By: /s/ John T. Harrison Kathleen Caracciolo, V.P.
John T. Harrison Finance
Vice President 801 Boardwalk
1300 Atlantic Avenue Atlantic City, NJ 08401
Atlantic city, NJ 08401
OCEAN SHOWBOAT, INC.
By: /s/ R. Craig Bird
R. Craig Bird, V.P.
Financial Administration
801 Boardwalk
Atlantic City, NJ 08401
<PAGE>
Record and return to:
Peter W. Leibundgut, Esquire
Clark, Ladner, Fortenbaugh & Young
Woodland Falls Corporate Park
200 Lake Drive East
Cherry Hill, NJ 08002
IN PARI PASSU ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT OF LEASES AND RENTS (the "Assignment") is
dated as of July 14, 1995 by ATLANTIC CITY SHOWBOAT, INC., a New
Jersey corporation ("Assignor"), in favor of NATWEST BANK, N.A a
national banking association ("Assignee").
RECITALS
WHEREAS, under that certain Loan and Guaranty Agreement
dated as of July 14, 1995 (as it may be amended from time to
time, the "Loan Agreement"), among Assignee as lender ("Lender"),
Showboat, Inc., a Nevada corporation as borrower ("Borrower" or
"SBI") and Assignor, Ocean Showboat, Inc., a New Jersey
corporation ("0SI"), and Showboat Operating Company, a Nevada
corporation, as guarantors, Borrower will issue to Assignee a
$25,000,000.00 principal amount Revolving Note as may be amended
pursuant to the Loan Agreement (the "Promissory Note").
WHEREAS, Assignor is the lessee under that certain Lease
Agreement (the "Resorts Lease") dated as of October 26, 1983
between Resorts International, Inc. ("Resorts") and OSI, recorded
January 18, 1984 in Deed Book 3878, page 1, as assigned to
Assignor pursuant to that certain Assignment and Assumption of
Lease made December 3, 1984 between OSI and Assignor, recorded
December 24, 1984 in Deed Book 4004, page 310, and as amended by
(i) that certain First Amendment to Lease Agreement dated as of
January 15, 1985 between Resorts and Assignor, recorded August
16, 1985 in Deed Book 4107, page 141; (ii) that certain Second
Amendment to Lease Agreement dated as of July 5, 1985 between
Resorts and Assignor, recorded November 25, 1985 in Deed Book
4158, page 221; (iii) that certain Third Amendment to Lease
Agreement dated as of October 28, 1985 between Resorts and
Assignor, recorded November 25, 1985 in Deed Book 4158 page 227;
(iv) that certain Restated Third Amendment to Lease Agreement
dated as of August 28, 1986 between Resorts and Assignor,
recorded February 20, 1987 in Deed Book 4406 page 17; (v) the
certain Fourth Amendment to Lease Agreement dated as of December
16, 1986 between Resorts and Assignor, recorded February 20, 1987
in Deed Book 4406, page 37; (vi) that certain Fifth Amendment to
Lease Agreement dated as of March 2, 1987 between Resorts and
Assignor, recorded March 23, 1987 in Deed Book 4421, page 10;
(vii)
<PAGE>
that certain Sixth Amendment to Lease Agreement dated as of
March 13, 1987 between Resorts and Assignor, recorded March 23,
1987 in Deed Book 4421, page 17; (viii) that certain Seventh
Amendment to Lease Agreement dated as of October 18, 1988 between
Resorts and Assignor, recorded December 19, 1988 in Deed Book
4814, page 231; and (ix) that certain Eighth Amendment to Lease
Agreement dated as of May 18, 1993 between Resorts and Assignor,
recorded May 18, 1993 in Deed Book 5500 page 284. The Resorts
Lease covers, among other things, that certain real property
located in Atlantic City, New Jersey, more particularly described
in Schedule "A" attached hereto (the "Land").
WHEREAS, Assignee has agreed to loan $25,000,000.00 of the
proceeds of the Promissory Note to SBI (the "SBI Loan"). Assignor
has agreed to execute certain additional documents to evidence
and secure the SBI Loan, including, without limitation, (1) that
certain Leasehold Mortgage, Assignment of Rents and Security
Agreement (the "Mortgage") made by Assignor in favor of Assignee,
dated as of even date herewith, encumbering, among other things,
all of Assignor's interests in and to the Resorts Lease; and (2)
this Assignment. The Promissory Note, the Mortgage, this
Assignment and all other documents now or hereafter evidencing,
guaranteeing or securing the SBI Loan shall be referred to
collectively herein as the "Loan Documents." All amounts owing
to Assignee under the Promissory Note shall be referred to
collectively herein as the "Debt." Capitalized terms not
otherwise defined herein shall have the meanings set forth for
such terms in the Loan Agreement and Promissory Note.
WHEREAS, Assignor has previously assigned all of its right,
title and interest in the Resorts Lease to SBI which assignment
was recorded on May 19, 1993, in Mortgage Book 5028, page 144.
SBI then collaterally assigned, with Assignor's consent, all of
its rights, title and interest in said assignment to IBJ Schroder
Bank & Trust Company ("Trustee") which assignment was recorded on
May 19, 1993 in Assignment of Mortgage Book 624, page 195. Said
collateral assignment was given in order to induce the issuance
of $275,000,000.00 9-1/4% First Mortgage Bonds under a certain
Indenture, which Indenture provides for additional secured
lending on a PARI PASSU basis with the Trustee.
WHEREAS, to induce Assignee to make the SBI Loan and to
secure its guaranty thereof, and subject to (i) the terms of an
intercreditor agreement between Assignee and Trustee of even date
herewith (the "Intercreditor Agreement") and (ii) the provisions
of the New Jersey Casino Control Act, as amended from time to
time and the regulations promulgated thereunder from time to time
(collectively, the "Act"), Assignor wishes to assign, pledge and
encumber, as security for the Debt, all of Assignor's right,
title and interest in and to any and all leases, subleases,
lettings, licenses, concessions, operating agreements, management
agreements, and all other agreements affecting the Land and the
improvements now or in the future located or constructed thereon
(the "Improvements") that Assignor has entered into, taken by
assignment, taken subject to, or assumed, or has otherwise become
bound by, now or in the future, that give any person the right to
conduct
2
<PAGE>
its business on, or otherwise use, operate or occupy, all or any
portion of the Land or Improvements and any leases, agreements or
arrangements permitting anyone to enter upon or use any of
the Land to extract or remove natural resources of any kind
(together with all amendments, extensions, and renewals of the
foregoing and all rental, occupancy, service, maintenance or any
other similar agreements pertaining to use or occupation of, or
the rendering of services at the Land, the Improvements or any
part hereof, the "Space Leases").
AGREEMENT
NOW THEREFORE, in consideration of Assignee making the SBI
Loan and to secure its guaranty thereof, Assignor hereby agrees
as follows:
ASSIGNOR hereby assigns, grants and transfers to Assignee
Assignor's entire interest in and to all Space Leases;
TOGETHER WITH the immediate and continuing right to collect
and receive all of the rents, income, issues and profits arising
from the Space Leases or otherwise from the use or occupancy of
the Land and the Improvements, now or hereafter due (herein
called collectively the "Rents"), including (without limitation)
base rents, minimum rents, additional rents, percentage rents;
charges for parking, maintenance, taxes and insurance; deficiency
rents for damages following default; the premium payable by any
lessee upon the exercise of a cancellation privilege originally
provided in any Space Leases; all proceeds payable under any
policy of insurance covering loss of rent resulting from any
destruction or damage to the Land and the Improvements; and all
other rights and claims of any kind which Assignor may have
against any lessee or any other occupant of the Land and the
Improvements in respect of the Land and the Improvements.
SUBJECT, however, to the terms of the Intercreditor
Agreement and the provisions of the Act.
THIS ASSIGNMENT is an absolute, unconditional and present
assignment by Assignor to Assignee of the Leases and Rents, and
not merely the passing of a security interest. Upon the execution
and delivery of this Assignment, title to the Rents shall vest in
Assignee, and no further act shall be required to effectuate such
conveyance.
THIS ASSIGNMENT is made on the following terms, covenants
and conditions:
3
<PAGE>
l. REPRESENTATIONS AND WARRANTIES. Assignor represents
and warrants, as to the Leases now existing, that except for the
assignments to SBI, as subsequently collaterally assigned to
Trustee, and the Lender, (a) Assignor is the sole owner of the
entire lessor's interest in the Space Leases; (b) the Space
Leases are valid and enforceable and have not been altered or
amended in any manner whatsoever, except for such amendments as
have been delivered to Assignee; (c) except as provided herein,
none of the Rents has been assigned or otherwise pledged or
hypothecated; (d) none of the Rents has been collected for more
than one (1) month in advance; (e) the premises demised under the
Space Leases have been completed and the tenants under the Space
Leases have accepted the same and have taken possession of the
same on a rent-paying basis; (f) there exists no offset or
defense to the payment of any portion of the Rents; and (g)
Assignor has the power to execute and deliver, and hereby does
voluntarily execute and deliver, this Assignment.
2. CERTAIN COVENANTS. Assignor shall perform and observe
all the covenants contained in the Mortgage relating to the Space
Leases and the Rents.
3. LICENSE TO COLLECT. This Assignment constitutes a
present, absolute assignment of the Space Leases and the Rents.
Nevertheless, subject to the terms of this Section 3, Assignee
grants to Assignor a revocable license to collect (but not prior
to accrual) the Rents. After an Event of Default, Assignor shall
hold the Rents in trust for Assignee for the payment of such
sums. Upon or at any time after an Event of Default (as such term
is defined in the Mortgage) and the expiration of any applicable
cure or grace period, the license granted to Assignor herein
shall be, at the election of Assignee, automatically revoked.
4. REMEDIES OF ASSIGNEE. Subject to compliance with
applicable Gaming Control Acts and the Intercreditor Agreement,
upon or at any time after an Event of Default and the expiration
of any applicable cure or grace period, Assignee may, at its
option, without waiving such Event of Default, without notice and
without regard to the adequacy of the security for the Debt,
either in person or by agent, with or without bringing any action
or proceeding, or by a receiver appointed by a court, take any or
all of the following actions:
(a) revoke the license granted in the immediately
preceding Section of this Assignment;
(b) take possession of the Land and the Improvements
and have, hold, manage, lease and operate the Land and the
Improvements on such terms and for such period of time as
Assignee may deem proper, with full power to make from time
to time all alterations, renovations, repairs or
replacements thereto or thereof as may seem proper to
Assignee;
4
<PAGE>
(c) either with or without taking possession of the
Land and the Improvements, in its own name, demand, sue for
and otherwise collect and receive all Rents, including
those past due and unpaid, and may apply the Rents to the
payment of the following in such order and proportion as
Assignee in its sole discretion may determine, any law,
custom or use to the contrary notwithstanding: (i) all
expenses of managing and securing the Land and the
Improvements, including (without limitation) the salaries,
fees and wages of a managing agent and such other employees
or agents as Assignee may deem necessary or desirable, and
all reasonable expenses of operating and maintaining the
Land and the Improvements, including (without limitation)
all taxes, charges, claims, assessments, water charges,
sewer rents ,and premiums for all insurance which Assignee
may deem necessary or desirable, and the cost of all
alterations, renovations, repairs or replacements, and all
reasonable expenses incident to taking and retaining
possession of the Land and the Improvements; and (ii) the
Debt, including (without limitation) all costs and
reasonable attorneys' fees.
In addition to the rights which Assignee may have herein
and subject to the Intercreditor Agreement upon the occurrence of
an Event of Default and the expiration of any applicable cure or
grace period, Assignee, at its option, either may require
Assignor to pay monthly in advance to Assignee, or any receiver
appointed to collect the Rents, the fair and reasonable rental
value for the use and occupation of such part of the Land and the
Improvements as may be in possession of Assignor, or may require
Assignor to vacate and surrender possession of the Land and the
Improvements to Assignee or to such receiver and, in default
thereof, Assignor may be evicted by summary proceedings or
otherwise.
For purposes of this Section 4, Assignor grants to Assignee
its irrevocable power of attorney, coupled with an interest, to
take any and all of the aforementioned actions and any or all
other actions designated by Assignee for the proper management
and preservation of the Land and the Improvements. The exercise
by Assignee of the remedies granted it in this Section 4 and the
collection of the Rents and the application thereof as herein
provided shall not be considered a waiver of any Event of
Default.
5. NO LIABILITY OF ASSIGNEE. Assignee shall not be liable
for any loss sustained by Assignor resulting from Assignee's
failure to let the Land and the Improvements after an Event of
Default and the expiration of any applicable cure or grace period
or from any other act or omission of Assignee in managing the
Land and the Improvements after an Event of Default and the
expiration of any applicable cure or grace period, unless such
loss is caused by the willful misconduct, gross negligence or bad
faith of Assignee. Assignee shall not be obligated to perform or
discharge any obligation, duty or liability under the Space
Leases or under or by reason of this Assignment. Without limiting
5
<PAGE>
the generality of the immediately preceding sentence, Assignee
shall not be bound by or liable under any covenant of quiet
enjoyment contained in any Space Lease in the event that the
lessee thereunder is joined as a party defendant in any action to
foreclose the Mortgage and is barred and foreclosed thereby
of its interest in the Land and the Improvements. Except for the
gross negligence, willful misconduct or bad faith of Assignee,
Assignor shall indemnify Assignee and hold Assignee harmless from
and against any and all liability, loss or damage which may or
might be incurred under the Space Leases or under or by reason of
this Assignment and from any and all claims and demands
whatsoever, including the defense of any such claims or demands
which may be asserted against Assignee by reason of any alleged
obligations and undertakings on its part to perform or discharge
any of the terms, covenants or agreements contained in the
Leases. Should Assignee incur any such liability, loss or damage,
the amount thereof, including reasonable costs, expenses and
reasonable attorneys' fees, together with interest thereon at the
interest rate on the SBI Promissory Note, shall be secured hereby
and by the Mortgage,and Assignor shall pay Assignee therefor
immediately upon demand and upon the failure of Assignor so to do
Assignee may, at its option, declare the Note and all other sums
secured by the Mortgage immediately due and payable. Except for
the gross negligence, willful misconduct or bad faith of
Assignee, this Assignment shall not operate to place any
obligation or liability for the control, care, management or
repair of the Land and the Improvements upon Assignee, nor for
the carrying out of any of the terms and conditions of the
leases; nor shall it operate to make Assignee responsible or
liable for any waste committed on the Land and the Improvements
by the tenants or any other parties, or for any dangerous or
defective condition of the Land and the Improvements, including
without limitation the presence of any Hazardous Materials (as
defined in the Mortgage), or for any negligence in the
management, upkeep, repair or control of the Land and the
Improvements resulting in loss or injury or death to any tenant,
licensee, employee or stranger.
6. NOTICE TO LESSEES. Upon an uncured event of default,
Assignor hereby irrevocably authorizes and directs the lessees
and other occupants under the Space Leases, upon receipt from
Assignee of an express written notice, to pay over to Assignee
all Rents and to continue so to do until otherwise notified by
Assignee. Assignor agrees that lessees shall have the right to
rely upon any such notice from Assignee, and that lessees shall
pay the Rents to Assignee without any obligation and without any
right to inquire as to whether an Event of Default has occurred,
notwithstanding any claim of Assignor to the contrary. Assignor
shall have no claim against lessees for any Rents paid by them to
Assignee.
7. FUTURE SPACE LEASES. This Assignment is and shall be
automatically effective as to each and every Space Lease entered
into after the date hereof, without any necessity of any further
or supplemental assignment.
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8. RELEASE OF SECURITY. Assignee may take or release
security for the payment of the Promissory Note, may release any
party primarily or secondarily liable therefor and may apply any
security held by it to the reduction or satisfaction of the Debt
without prejudice to any of its rights under this Assignment.
9. OTHER REMEDIES. Nothing contained in this Assignment
and no act done or omitted by Assignee pursuant to the powers and
rights granted to Assignee hereunder shall be deemed to be a
waiver by Assignee of its rights and remedies under any of the
Loan Documents, and this Assignment is made and accepted without
prejudice to any of the rights and remedies possessed by Assignee
under the terms thereof. The right of Assignee to collect the
debt and to enforce any other security therefor held by it may be
exercised by Assignee either prior to, simultaneously with, or
subsequent to any action taken by it hereunder.
10. NO MORTGAGEE IN POSSESSION. Nothing herein contained
shall be construed as constituting Assignee a "mortgagee in
possession" in the absence of the taking of actual possession of
the Land and the Improvements by Assignee. In the exercise of
the powers herein granted to Assignee, no liability shall be
asserted or enforced against Assignee, all such liability being
expressly waived and released by Assignor.
11. CONFLICT OF TERMS. In case of any conflict between the
terms of this Assignment and the terms of the Mortgage, the terms
of the Mortgage shall prevail.
12. NO ORAL CHANGES. This Assignment and any provisions
hereof may not be modified, amended, waived, extended, changed,
discharged or terminated orally, or by any act or failure to act
on the part of Assignor or Assignee, but only by an agreement
in writing signed by the party against whom the enforcement of
any modification, amendment, waiver, extension, change,
discharge or termination is sought.
13. NO IMPAIRMENT
(a) The failure of Assignee to insist upon strict
performance of any term hereof shall not be deemed to be a waiver
of any term of this Assignment.
(b) Assignor shall not be relieved of Assignor's
obligations hereunder or in respect of the Debt by reason of any
or all of the following:
(i) the failure of Assignee to comply with any
request of Assignor or any guarantor to take any action to
realize upon this Assignment or otherwise enforce any of
the provisions hereof or of the Debt; or
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(ii) the release, regardless of consideration,
of the whole or any part of the Land and the Improvements
or any other security for the SBI Promissory Note, or of
any person liable for the First Mortgage Bonds or any
portion thereof; or
(iii) any agreement or stipulation by Assignee
with Assignor or (without any necessity of notice to or
consent by Assignor) with any subsequent owner of the Land
and the Improvements, extending the time of payment or
otherwise modifying or supplementing the terms of the Debt,
this Assignment or of any instrument or agreement executed
in connection herewith;
any and all of which may be done by Assignee without any
necessity of notice to or consent by the holder of any
subordinate lien or encumbrance or any other person, and without
in any manner impairing this Assignment of its priority.
(c) Assignee may resort for the payment of the Debt
to any other security held by Assignee in such order and manner
as Assignee, in its discretion, may elect.
(d) Assignee may take action to recover the Debt, or
any portion thereof, without prejudice to the right of Assignee
thereafter to enforce this Assignment.
(e) No omission on the part of Assignee to name any
tenant as a defendant in any foreclosure proceeding shall impair
in any way whatsoever the entitlement of Assignee to a deficiency
judgment or diminish the amount of the deficiency.
(f) Acceptance of any payment after the occurrence
of any default or Event of Default shall not be deemed a waiver
or cure of such default or Event of Default and shall not impair
any acceleration of the maturity of the Debt or any other right
or remedy to enforce the Debt or this Assignment. Acceptance of
any payment less than any amount then due shall be deemed an
acceptance on account only.
(g) The rights of Assignee under this Assignment and
under the Loan Documents shall be separate, distinct and
cumulative and none shall be given effect to the exclusion of the
others. No act of Assignee shall be construed as an election to
proceed under any one provision hereof or thereof to the
exclusion of any other provision. Assignee shall not be limited
exclusively to the rights and remedies herein or therein stated
but shall be entitled to every right and remedy now or hereafter
afforded at law or in equity.
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14. INAPPLICABLE PROVISIONS. If any term, covenant or
condition of this Assignment is held to be invalid, illegal or
unenforceable in any respect, this Assignment shall be construed
without such provision.
15. GOVERNING LAW. This Assignment shall be construed and
enforced in accordance with the laws of the state of New Jersey.
16. TERMINATION OF ASSIGNMENT. This Assignment shall
continue to be effective until payment in full of the Debt and
the delivery and recording of a satisfaction or discharge of the
Mortgage duly executed by Assignee, whereupon this Assignment
shall be terminated. The affidavit, certificate, letter or
statement of any officer of Assignee showing any part of the Debt
to remain unpaid shall, absent manifest error, constitute
conclusive evidence of the continuing effectiveness of this
Assignment, and any person is hereby authorized to rely thereon.
THIS ASSIGNMENT, including the covenants, warranties,
powers and other provisions herein contained, shall inure to the
benefit of Assignee and any subsequent holder of the Mortgage,
and shall be binding upon Assignor, its heirs, successors and
assigns, including any subsequent lessee under the Resorts Lease.
IN WITNESS WHEREOF, Assignor has executed this instrument
the day and year first above written.
Attest witness: ATLANTIC CITY SHOWBOAT, INC.,
a New Jersey corporation
/s/ Luther G. Anderson By: /s/ Herbert R. Wolfe
Luther G. Anderson Name: Herbert R. Wolfe
Assistant Secretary Title: President/CEO
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STATE OF NEW JERSEY )
) ss:
COUNTY OF ATLANTIC )
On this 2nd day of August, 1995, before me, the
undersigned, personally appeared Herbert R. Wolfe, the President/
CEO of Atlantic City Showboat, Inc., who, I am satisfied, is the
person who signed the foregoing instrument, and he did
acknowledge under oath that he signed, sealed with the corporate
seal, and delivered the same in (his/her) capacity as such
officer and that the foregoing instrument is the voluntary act
and deed of such corporation, made by virtue of the authority of
its board of directors.
/s/ Denise L. Perrone
Notary Public
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SCHEDULE "A"
DESCRIPTION OF THE LAND
PREMISES A
ALL THAT CERTAIN lot, tract or parcel of land and premises
situate, lying and being in the City of Atlantic City, County of
Atlantic and State of New Jersey, bounded and described as
follows:
Beginning at a point in the southerly line of Pacific Avenue
(50.00 feet wide), South 62 degrees, 32 minutes, 00 seconds West,
266.00 feet from the westerly line of New Jersey Avenue (50.00
feet wide), said beginning point being in the division line
between Lots 140 and 144.05 in Block 13 as shown on the Atlantic
City Tax Map, and extending from said beginning point; thence
1. South 27 degrees, 38 minutes, 00 seconds East, in and along
said division line, parallel with New Jersey Avenue, 1432.20
feet to the Interior or Inland Line of the Public Park;
thence
2. Southwestwardly in and along same in the arc of a circle
curving to the right having a radius of 1102.57 feet, the
arc length of 8.94 feet to a point of tangent; thence
3. Continuing in and along same, South 59 degrees, 24 minutes,
40 seconds West, 308.53 feet to the easterly line of Lot
128.03; thence
4. North 27 degrees, 28 minutes, 00 seconds West in and along
same, parallel with New Jersey Avenue, 1369.53 feet to a
point in the southerly line of Lot 130; thence
5. North 62 degrees, 32 minutes, 00 seconds East, parallel with
Pacific Avenue, 25.00 feet to a point in the easterly line
of Lot 129.02; thence
6. North 27 degrees, 28 minutes, 00 seconds West, in and along
same, parallel with New Jersey Avenue, 80.00 feet to the
southerly line of Pacific Avenue, said point being North 62
degrees, 32 minutes, 00 seconds East, 577.00 feet from the
easterly line of Virginia Avenue (80.00 feet wide); thence
7. North 62 degrees, 32 minutes, 00 seconds East in and along
the southerly line of Pacific Avenue, 292.00 feet to the
point and place of beginning.
TOGETHER WITH the following non-exclusive easements:
1. A non-exclusive easement for the construction, repair,
maintenance and use of the Common Facilities (as defined in
the Ground Lease).
2. A non-exclusive easement over, upon and across the
Pedestrian Passageway (as defined in the Ground Lease),
together with the 17-Foot Egressway, the Service Road and
the Service Road Extension (as such terms are defined in the
Ground Lease), as shown on a survey made by Arthur W. Ponzio
Co. and Associates, Inc. dated December 30, 1986 and being
more particularly described as Parcels A, B and C,
respectively, attached hereto.
SUBJECT to a portion of the fifty-foot wide service easement
lying within the Land and more particularly described as Parcel D
attached hereto.
BEING Block 13, Lot 140, Tax Map of the City of Atlantic City,
New Jersey.
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PARCEL A
DESCRIPTION OF THE SEVENTEEN-FOOT WIDE EGRESSWAY AT GRADE BETWEEN
THE SERVICE ROAD AND THE BOARDWALK.
ALL that certain lot, tract or parcel of land and premises
situate, lying and being in the City of Atlantic City, County of
Atlantic and State of New Jersey, bounded and described as
follows:
BEGINNING at a point distant 535.00 feet east of the easterly
line of Virginia Avenue (80 feet wide) and 868.00 feet south of
the southerly line of Pacific Avenue (60 feet wide), when
measured at right angles to said avenues respectively, and
extending from said beginning point the following courses and
distances:
1. South 27 degrees 28 minutes 00 seconds East, parallel with
Virginia Avenue, a distance of 582.45 feet to the Inland or
Interior Line of Public Park; thence
2. South 59 degrees 24 minutes 40 seconds West, in and along
the Inland or Interior Line of Public Park, a distance of
17.03 feet; thence
3. North 27 degrees 28 minutes 00 seconds West, parallel with
Virginia Avenue, a distance of 583.38 feet; thence
4. North 62 degrees 32 minutes 00 seconds East, parallel with
Pacific Avenue, a distance of 17.00 feet to the point and
place of BEGINNING.
PARCEL B
DESCRIPTION OF THE FIFTY-FOOT WIDE SERVICE ROAD
All that certain lot, tract or parcel of land and premises
situate, lying and being in the City of Atlantic City, County of
Atlantic and State of New Jersey, bounded and described as
follows:
BEGINNING at a point in the southerly side of Pacific Avenue (60
feet wide), said point being distant 577.00 feet east of the
easterly line of Virginia Avenue (80 feet wide) and extending
from said beginning point the following courses and distances:
1. South 27 degrees 28 minutes 00 seconds East, parallel with
Virginia Avenue, a distance of 86.00 feet; thence
2. South 07 degrees 48 minutes 46 seconds East, a distance of
74.33 feet; thence
3. South 27 degrees 28 minutes 00 seconds East, parallel with
Virginia Avenue, a distance of 712.00 feet, to a point
distant 868.00 feet south of the southerly line of Pacific
Avenue when measured at right angles thereto; thence
4. South 62 degrees 32 minutes 00 seconds West, parallel with
Pacific Avenue, a distance of 50.00 feet; thence
5. North 27 degrees 28 minutes 00 seconds West, parallel with
Virginia Avenue, a distance of 720.66 feet; thence
6. North 07 degrees 48 minutes 46 seconds West, a distance of
74.33 feet; thence
7. North 27 degrees 28 minutes 00 seconds West, parallel with
Virginia Avenue, a distance of 77.34 feet to the southerly
line of Pacific Avenue; thence
2
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8. North 62 degrees 32 minutes 00 seconds East, in and along
the southerly line of Pacific Avenue, a distance of 50.00
feet to the point and place of BEGINNING.
PARCEL C
DESCRIPTION OF THE SEVENTEEN-FOOT WIDE FIRE LANE BETWEEN THE
SERVICE ROAD AND THE BOARDWALK.
All that certain lot, tract or parcel of land and premises
situate, lying and being in the City of Atlantic City, County of
Atlantic and State of New Jersey, bounded and described as
follows:
BEGINNING at a point distant 552.00 feet east of the easterly
line of Virginia Avenue (80 feet wide) and 868.00 feet south of
the southerly line of Pacific Avenue (60 feet wide), when
measured at right angles to said avenues respectively, and
extending from said beginning point the following courses and
distances:
1. South 27 degrees 28 minutes 00 seconds East, parallel with
Virginia Avenue, a distance of 581.53 feet to the Inland or
Interior Line of Public Park; thence
2. South 59 degrees 24 minutes 40 seconds West, in and along
the Inland or Interior Line of Public Park, a distance of
17.03 feet; thence
3. North 27 degrees 28 minutes 00 seconds West, parallel with
Virginia Avenue, a distance of 582.45 feet; thence
4. North 62 degrees 32 minutes 00 seconds East, parallel with
Pacific Avenue, a distance of 17.00 feet to the point and
place of BEGINNING.
PARCEL D
DESCRIPTION FOR THE EASEMENT FOR THAT PORTION OF THE FIFTY-FOOT
WIDE SERVICE ROAD LYING WITHIN THE SHOWBOAT LANDS.
ALL that certain lot, tract or parcel of land and premises
situate, lying and being in the City of Atlantic City, County of
Atlantic and State of New Jersey, bounded and described as
follows:
BEGINNING at a point distant 577.00 feet east of the easterly
line of Virginia Avenue (80 feet wide) and 80.00 feet south of
the southerly line of Pacific Avenue (60 feet wide), and
extending from said beginning point the following courses and
distances:
1. South 27 degrees 28 minutes 00 seconds East, parallel with
Virginia Avenue, a distance of 6.00 feet; thence
2. South 07 degrees 48 minutes 46 seconds East, a distance of
74.23 feet; thence
3. North 27 degrees 28 minutes 00 seconds West, parallel with
Virginia Avenue, a distance of 76.00 feet; thence
4. North 62 degrees 32 minutes 00 seconds East, parallel with
Pacific Avenue, a distance of 25.00 feet to the point and
place of BEGINNING.
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PREMISES B
ALL THOSE CERTAIN, lots and parcels of land lying and being in
the City of Atlantic City, County of Atlantic and State of New
Jersey, being more particularly described as follows:
TRACT 1
Beginning at the intersection of the northerly line of Atlantic
Avenue (100 feet wide), with the easterly line of Maryland Avenue
(50 feet wide), and extending from said beginning point; thence
1. North 27 degrees, 28 minutes, 00 seconds west in and along
the easterly line of Maryland Avenue, 550.00 feet to the
southerly line of Arctic Avenue (60 feet wide); thence
2. North 62 degrees, 32 minutes, 00 seconds east in and along
same, 230.50 feet to the westerly line of lot 7 in block
109; thence
3. South 27 degrees, 28 minutes, 00 seconds east in and along
same, 105.00 feet to the north line of lot 68; thence
4. North 62 degrees, 32 minutes, 00 seconds east in and along
same, 25.00 feet to the westerly line of lot 8; thence
5. North 27 degrees, 28 minutes, 00 seconds west in and along
same, 105.00 feet to the southerly line of Arctic Avenue;
thence
6. North 62 degrees, 32 minutes, 00 seconds east in and along
same, 94.50 feet to the westerly line of Delaware Avenue (82
feet wide); thence
7. South 27 degrees, 28 minutes, 00 seconds east in and along
same, 400.00 feet to the northerly line of lot 62; thence
8. South 62 degrees, 32 minutes, 00 seconds west in and along
same, 60.00 feet to the easterly line of lot 61; thence
9. South 27 degrees, 28 minutes, 00 seconds east in and along
same, 25.00 feet to the northerly line of lot 72; thence
10. South 62 degrees, 32 minutes, 00 seconds west in and along
same, 40.00 feet to the westerly line of lot 61; thence
11. North 27 degrees, 28 minutes, 00 seconds west in and along
same, 25.00 feet to the southerly line of lot 80; thence
12. South 62 degrees, 32 minutes, 00 seconds west in and along
same, 7.00 feet to the easterly line of lot 74; thence
13. South 27 degrees, 28 minutes, 00 seconds east in and along
same, 150.00 feet to the northerly line of Atlantic Avenue;
thence
14. South 62 degrees, 32 minutes, 00 seconds west in and along
same, 243.00 feet to the point and place of beginning.
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BEING KNOWN AS LOTS 97, 98, 71, 96, 38, 39, 74, 61, 35, 34, 33,
53, 54, 31, 30, 29, 28, 27, 68, 49, 48, 82, 81, 8, 6, 5, 10, 95,
94, 84, 83, 65, 66, 11, 69, 87, 88, 89, 63, 64, 90, 91, 86, 85,
15, 16, 17, 92, 93, 19, 20, 26, 75, 76, 77, 78, 79, 80 and the
area of a former public alley in Block 109, Atlantic City Tax
Map, Atlantic City, New Jersey.
TRACT II:
BEGINNING at the intersection of the westerly line of Delaware
Avenue (82 feet wide) with the northerly line of Atlantic Avenue
(100 feet wide), and extending from said beginning point; thence
1. South 62 degrees, 32 minutes, 00 seconds west in and along
the northerly line of Atlantic Avenue, 71.10 feet to the
easterly line of lot 47 in block 109; thence
2. North 27 degrees, 28 minutes, 00 seconds in and along same,
100.00 feet to the southerly line of lot 72; thence
3. North 62 degrees, 32 minutes, 00 seconds east in and along
same and continuing in and along the southerly line of lot
62, 71.10 feet to the westerly line of Delaware Avenue;
4. South 27 degrees, 28 minutes, 00 seconds east in and along
same, 100.00 feet to the point and place of beginning.
BEING known as Lot 42 in Block 109 as shown on the Atlantic City
Tax Map, Atlantic City, New Jersey.
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RECITAL:
PREMISES A
BEING the same premises that were leased by Resorts International
Inc., a Delaware Corporation to Ocean Showboat Inc., a New Jersey
Corporation dated October 26, 1983 recorded January 18, 1984 in
Deed Book 3878 page 1.
ASSIGNMENT AND ASSUMPTION OF LEASE: by Ocean Showboat Inc., a New
Jersey Corporation to Atlantic City Showboat Inc., a New Jersey
Corporation to Atlantic City Showboat Inc., a New Jersey
Corporation dated December 3, 1984 recorded December 24, 1984 in
Deed Book 4004 page 310.
AMENDMENT TO SHORT FORM LEASE: between Resorts International
Inc., a Delaware Corporation and Atlantic City Showboat, Inc., a
New Jersey Corporation dated January 15, 1985 recorded August 16,
1985 in Deed Book 4107 page 141.
SECOND AMENDMENT TO LEASE AGREEMENT: between Resorts
International Inc., a Delaware Corporation and Atlantic City
Showboat, Inc., a New Jersey Corporation dated July 5, 1985
recorded November 25, 1985 in Deed Book 4158 page 221.
THIRD AMENDMENT TO LEASE AGREEMENT: between Resorts International
Inc., a Delaware Corporation and Atlantic City Showboat, Inc., a
New Jersey Corporation dated October 28, 1985 recorded November
25, 1985 in Deed Book 4158 page 227.
RESTATED THIRD AMENDMENT TO LEASE AGREEMENT: between Resorts
International Inc., a Delaware Corporation and Atlantic City
Showboat, Inc., a New Jersey Corporation dated October 28, 1985
recorded February 20, 1987 in Deed Book 4406 page 17.
FOURTH AMENDMENT TO LEASE AGREEMENT: between Resorts
International Inc., a Delaware Corporation and Atlantic City
Showboat, Inc., a New Jersey Corporation dated December 16, 1986
recorded February 20, 1987 in Deed Book 4406 page 37.
FIFTH AMENDMENT TO LEASE AGREEMENT: between Resorts International
Inc., a Delaware Corporation and Atlantic City Showboat, Inc., a
New Jersey Corporation dated March 2, 1987 recorded March 23,
1987 in Deed Book 4421 page 10.
SIXTH AMENDMENT TO LEASE AGREEMENT: between Resorts International
Inc., a Delaware Corporation and Atlantic City Showboat, Inc., a
New Jersey Corporation dated March 13, 1987 recorded March 23,
1987 in Deed Book 4421 page 17.
SEVENTH AMENDMENT TO LEASE AGREEMENT: between Resorts
International Inc., a Delaware Corporation and Atlantic City
Showboat, Inc., a New Jersey Corporation dated October 18, 1988
recorded December 19, 1988 in Deed Book 4814 page 231.
EIGHTH AMENDMENT TO LEASE: between Resorts International Inc.
(Delaware Corp.) and Atlantic City Showboat Inc. (New Jersey
Corp.) dated May 18, 1993 recorded May 18, 1993 in Deed Book 550
page 284.
RECITAL: (As To Fee Estate)
BEING the same premises which Resorts International, Inc. of New
Jersey, a New Jersey Corporation by a deed dated October 28, 1986
and recorded on December 24, 1986 in Atlantic County in Deed Book
4366 page 214 granted and conveyed unto Resorts International,
Inc., a Delaware Corporation in fee.
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PREMISES B
Being the same premises which Paul Harris by a deed dated March
15, 1993 recorded March 17, 1993 in Atlantic County in Deed Book
5477 page 1 granted and conveyed unto Atlantic City Showboat Inc.
(N.J. Corp.) in fee.
BEING the same premises which the City of Atlantic City, a
Municipal Corporation of the State of New Jersey by a deed dated
February 28, 1994 recorded March 3, 1994 in Atlantic County in
Deed Book 5616 page 145 granted and conveyed unto Atlantic City
Showboat, Inc., in fee.
BEING the same premises which Paul Harris by a deed dated May 19,
1994 recorded May 27, 1994 in Atlantic County in Deed Book 5646
page 307 granted and conveyed unto Atlantic City Showboat Inc., a
New Jersey Corporation in fee.
ALSO including that portion of an alleyway (off Delaware Avenue)
that became vested in Atlantic City Showboat Inc. (NJ Corp.) by
virtue of Vacation Ordinance No. 82 of 1993 filed on September 9,
1994 in Vacation Book 17 page 91.
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INTERCREDITOR AGREEMENT FOR PARI PASSU INDEBTEDNESS
RELATING TO ATLANTIC CITY SHOWBOAT
INTERCREDITOR AGREEMENT, dated July 14, 1995, among
Showboat, Inc., a Nevada corporation (the "Company"), Atlantic
City Showboat, Inc., a New Jersey corporation, ("ACSI"), IBJ
Schroder Bank & Trust Company (the "Trustee") and NatWest Bank,
N.A., (the "Lender"). The term "Collateral" as used herein means
the following: all of the properties and assets in which the
Trustee has a lien or security interest pursuant to the Indenture
(as defined below) or any other Related Document, in which the
Company has a lien or security interest pursuant to the ACSI
Intercompany Note (as hereinafter defined), and which properties
and assets are to be subject to a lien or security interest in
favor of the Lender of the priority specified in this
Intercreditor Agreement.
WHEREAS, the Company has issued its 9-1/4% First Mortgage
Bonds due May 1, 2008 (the "First Mortgage Bonds") under that
certain indenture, (the "Indenture"), dated as of May 18, 1993,
among the Company, Ocean Showboat, Inc., ACSI, and Showboat
Operating Company, as guarantors, and the Trustee, as amended or
supplemented from time to time;
WHEREAS, the First Mortgage Bonds are secured by, INTER
ALIA a Deed of Trust, Assignment of Rents and Security Agreement
(the "Deed of Trust") in favor of Trustee on certain real
property situated in the City of Las Vegas, County of Clark,
State of Nevada and assets of the Company and are guaranteed by
ACSI (the "Guaranty") and such guaranty is secured by a Leasehold
Mortgage, Assignment of Rents and Security Agreement (the
"Leasehold Mortgage") on the Showboat Hotel Casino in Atlantic
City, New Jersey (the "Atlantic City Showboat");
WHEREAS, ACSI has issued an intercompany note ("the ACSI
Intercompany Note") in favor of the Company in the principal
amount of $215,000,000 representing a loan made to ACSI by the
Company with the proceeds from the sale of the First Mortgage
Bonds;
WHEREAS, the ACSI Intercompany Note is secured by a
Leasehold Mortgage, Assignment of Rents and Security Agreement
(the "Intercompany Leasehold Mortgage," and together with the
Leasehold Mortgage, collectively the "Leasehold Mortgages") on
the Atlantic City Showboat;
WHEREAS, the Company has collaterally assigned all of its
interest in the ACSI Intercompany Note and the Intercompany
Leasehold Mortgage to the Trustee as security
<PAGE>
for the Company's obligations under the First Mortgage Bonds;
WHEREAS, the Company and ACSI propose to provide the Lender
with a lien or security interest in the Collateral as security
for Indebtedness of the Company and ACSI as guarantor thereof;
WHEREAS, it has been agreed by the Trustee, that the
Company and its Subsidiaries, subject to the terms and provisions
of the Indenture, be permitted to obtain additional financing
from other lenders to finance the costs of various improvements
and for other purposes;
WHEREAS, the Indenture permits the Company and its
Subsidiaries, subject to certain limitations, to create or cause
to be created additional liens and security interests in the
Collateral in favor of Persons other than the Trustee and the
Company which will have equal priority with the lien of the
Leasehold Mortgages or any other applicable Related Document
pursuant to an Intercreditor Agreement and requires the Trustee
and the Company, upon fulfillment of certain conditions
precedent, to execute and deliver an Intercreditor Agreement in
substantially the form hereof to the holder of the Indebtedness
to be secured by such additional liens and security interests (or
such holder's agent, trustee or other authorized representative);
WHEREAS, the Company and/or ACSI have entered into a
Revolving Note, Loan and Guaranty Agreement, In PARI PASSU
Leasehold Mortgage, Assignment of Rents and Security Agreement,
In PARI PASSU Deed of Trust, Assignment of Rents and Security
Agreement, In PARI PASSU Assignment of Leases and Rents and
certain other documents and agreements all of even date herewith,
providing for the grant to the Lender of liens, mortgages and
security interests in certain of the property and assets
constituting the Collateral (" Lender's Documents") (the property
and assets constituting the Collateral in which each of the
Trustee, the Company and the Lender have obtained liens,
mortgages or security interests being referred to herein as the
"PARI PASSU Collateral");
WHEREAS, the aggregate outstanding principal amount of the
First Mortgage Bonds at the date hereof is $275,000,000.00;
WHEREAS, the aggregate outstanding principal amount of the
ACSI Intercompany Note at the date hereof is $215,000,000.00;
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WHEREAS, the maximum aggregate principal amount of
Indebtedness to be provided by Lender is $25,000,000.00;
WHEREAS, the parties hereto desire to set forth their
agreement as to the nature of priority of the liens, mortgages
and security interests held by the Trustee, the Company and the
Lender in the PARI PASSU Collateral and certain other matters
related thereto.
NOW, THEREFORE, in consideration of the mutual premises and
agreements herein contained it is hereby agreed as follows:
1. DEFINITIONS.- As used in this Agreement, the following
terms have the meanings hereinafter set forth:
"Bankruptcy Code" means the United States Bankruptcy
Code, 11 U.S.C. Sec. 101 et seq.
"Bankruptcy Law" means Title 11, United States Code,
and any other state or federal insolvency, reorganization,
moratorium or similar law for the relief of debtors.
"Bankruptcy Proceeding" means any proceeding commenced
under any Bankruptcy Law.
"PARI PASSU PARTIES" means, collectively, the Trustee
and the Lender.
All capitalized terms used herein which are not
otherwise defined herein shall have the meaning ascribed to such
terms in the Indenture.
2. LIEN ACKNOWLEDGMENT. (a) The Trustee hereby agrees
that each lien, mortgage, and security interest of the Trustee in
the property and assets constituting the PARI PASSU
Collateral pursuant to the Indenture and Related Documents to the
extent of the obligations secured by such lien, mortgage or
security interest (provided that the aggregate principal
amount of Indebtedness secured by such lien, mortgage or
security interest shall not exceed $275,000,000.00), shall be
equal in priority with (i) each lien, mortgage or security
interest of the Company in the property and assets constituting
the PARI PASSU Collateral pursuant to the Intercompany Leasehold
Mortgage, to the extent of the obligations secured by such
lien, mortgage or security interest (provided that the
aggregate principal amount of Indebtedness secured by such lien,
mortgage or security interest shall not exceed $215,000,000.00)
(which represents the principal amount of Indebtedness under the
ACSI Intercompany Note on the date of this Intercreditor
Agreement) and (ii) each lien, mortgage, or security interest
of the Lender in the property and assets constituting the PARI
PASSU Collateral pursuant to the Lender's Documents, to the
extent of the obligations secured by such liens, mortgages or
security interests (provided that the aggregate principal
3
<PAGE>
amount of the indebtedness secured by such liens, mortgages or
security interests shall not exceed the lesser of
$25,000,000.00 or the principal amount extended by Lender under
the Lender's Documents and not repaid by the Company and/or ACSI
(which represents the principal amount of Indebtedness to
be provided by Lender's Documents).
(b) The Company hereby agrees that each lien, mortgage
or security interest of the Company in the property and assets
constituting the PARI PASSU Collateral pursuant to the
Intercompany Leasehold Mortgage, to the extent of the obligations
secured by such lien, mortgage or security interest (provided
that the aggregate principal amount of Indebtedness secured by
such lien, mortgage or security interest shall not exceed
$215,000,000.00) (which represents the principal amount of
Indebtedness under the ACSI Intercompany Note on the date of this
Intercreditor Agreement), shall be equal in priority with, (i)
each lien, mortgage or security interest of the Trustee in the
property and assets constituting the PARI PASSU Collateral
pursuant to the Deed of Trust and the Related Documents, to the
extent of the obligations secured by such lien, mortgage or
security interest (provided that the aggregate principal amount
of Indebtedness secured by such lien, mortgage or security
interest shall not exceed $275,000,000.00) (which represents the
principal amount of Indebtedness under the Indenture on the date
of this Intercreditor Agreement) and (ii) each lien, mortgage, or
security interest of the Lender in the property and assets
constituting the PARI PASSU Collateral pursuant to the Lender's
Documents, to the extent of the obligations secured by such
liens, mortgages or security interests (provided that the
aggregate principal amount of the indebtedness secured by such
liens, mortgages or security interests shall not exceed the
lesser of $25,000,000.00 or the principal amount extended by
Lender under the Lender's Documents and not repaid by the Company
and/or ACSI) (which represents the principal amount of
Indebtedness to be provided by Lender's Documents).
(c) The Lender hereby agrees that each lien, mortgage
or security interest of the Lender in the property and assets
constituting the PARI PASSU Collateral pursuant to the Lender's
Documents, to the extent of the obligations secured by such lien,
mortgage or security interest (provided that the aggregate
principal amount of the Indebtedness secured by such lien,
mortgage or security interest shall not exceed the lesser of
$25,000,000.00 or the principal amount extended by Lender under
the Lender's Documents and not repaid by the Company and/or ACSI
(which represents the principal amount of Indebtedness to be
provided by Lender's Documents) shall be equal in priority with
(i) each lien, mortgage or security interest of the Trustee in
the property and assets constituting the PARI PASSU Collateral
pursuant to the Deed of Trust and the Related Documents, to the
extent of the obligations secured by such lien, mortgage or
security interest (provided that the aggregate principal amount
of Indebtedness secured by such lien, mortgage or security
interest shall not exceed $275,000,000.00) (which represents the
principal amount of Indebtedness under the Indenture on the date
of this Intercreditor Agreement) and (ii) each lien, mortgage, or
security interest of the Company in the property and assets
constituting the PARI PASSU Collateral pursuant to the
Intercompany Leasehold Mortgage, to the extent of the obligations
secured by such lien, mortgage, or security interest (provided
that the aggregate
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principal amount of Indebtedness secured by such lien, mortgage
or security interest shall not exceed $215,000,000.00) (which
represents the principal amount of Indebtedness under the ACSI
Intercompany Note on the date of this Intercreditor Agreement).
3. LIEN PRIORITY. The priorities of the liens, mortgages
or security interests established, altered or specified herein
are applicable irrespective of:
(i) the time or order of attachment or
perfection thereof;
(ii) the method of perfection;
(iii) the time or order of filing or
recording of financing statements, mortgages or
other instruments; or
(iv) any amendments to the liens, mortgages
or security interests established, altered or specified
herein, provided that such amendments do not alter the
aggregate principal amount of the Indebtedness secured
by such lien, mortgage or security interest; and
(v) the time or order of foreclosure,
taking of possession or the exercise of any remedy;
PROVIDED, HOWEVER that the priorities of any liens, mortgages or
security interests which are not established, altered or
specified herein shall be unaffected and shall exist and continue
in accordance with applicable law. The agreements in paragraph 2
hereof are solely for the purpose of establishing the relative
priorities of the interests of the PARI PASSU Parties in the PARI
PASSU Collateral and shall not inure to the benefit of any other
Person.
4. CONTROLLING PARTY. The PARI PASSU Party or Parties
holding a majority in principal amount of Indebtedness of the
Company and ACSI secured by the PARI PASSU Collateral (the
"Controlling Party") shall have the sole right, without the
affirmative consent of any of the other PARI PASSU Parties (the
"Minority Party"), and on behalf of itself and each PARI PASSU
Party, to (i) request to take any action, or fail to request to
take any action, to enforce or exercise any right or remedy with
respect to the PARI PASSU Collateral and to foreclose upon,
collect, dispose of the PARI PASSU Collateral or any portion
thereof; and (ii) exercise any right or remedy, or decline to
exercise any right or remedy, with respect to the PARI PASSU
Collateral in any Bankruptcy Proceeding, including, without
limitation, any right of election under Sections 1111(b) or
365(h) of the Bankruptcy Code, any other rights of election,
determinations, proofs of claims or other rights or remedies in
connection with any Bankruptcy Proceeding; PROVIDED that each
Minority Party shall have the right to file its own proof(s) of
claim in any Bankruptcy Proceeding; and PROVIDED FURTHER that the
Company agrees that irrespective of the amount of Indebtedness of
ACSI held by the Company, it shall not be a Controlling Party
hereunder and the Company and the Lender agree that the Trustee
shall act as the Controlling Party on behalf of the Company in
the event that the
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Company would be the Controlling Party hereunder except for the
operation of this clause.
5. MINORITY PARTY AGREEMENTS. In accordance with
paragraph 4 hereof, the Minority Party agrees (regardless of
whether any individual PARI PASSU Party agrees, disagrees or
abstains with respect to any action or failure to act by the
Controlling Party) that the Controlling Party shall have the
authority to act or fail to act, as it deems necessary in its
sole discretion, with respect to the rights and remedies of all
of the PARI PASSU Parties and that the Controlling Party shall
have no liability for acting or failing to act (provided such
action or failure to act does not conflict with the express terms
of this Agreement). Each PARI PASSU Party further acknowledges
and agrees that, until the obligations under the Indenture and
the Guaranty are no longer outstanding, the only right of such
PARI PASSU Party with respect to the PARI PASSU Collateral is to
be secured by the PARI PASSU Collateral as and to the extent
provided in its respective loan document or agreement and as
provided herein and to receive a share of the proceeds of the
PARI PASSU Collateral, if any, to the extent provided under
paragraph 6 hereof; PROVIDED HOWEVER that, until the obligations
under the Indenture and the Guaranty are no longer outstanding,
in no event shall any rights or benefits accorded any PARI
PASSU Party include any right to challenge, contest or dispute
any action taken or not taken, by the Controlling Party, the
Collateral Agent (as hereinafter defined) or any other PARI
PASSU Party in accordance with this Agreement, and, until the
obligations under the Indenture and the Guaranty are no longer
outstanding, in no event shall the security interest granted
to the Lender under this Agreement entitle any PARI PASSU Party
to enforce its respective rights in respect of the PARI PASSU
Collateral except through the Controlling Party and the
Collateral Agent (as hereinafter defined) in accordance with
this Agreement. In addition, the Minority Party agrees that it
(i) shall not attack nor challenge the validity, perfection or
priority of the Controlling Party's lien with respect to the
PARI PASSU Collateral; (ii) will release all liens, mortgages and
security interests in all or any portion of the PARI PASSU
Collateral (to the extent of its respective interest therein) in
the event that the Controlling Party elects to sell all or any
portion of the PARI PASSU Collateral in exercising any right or
remedy with respect to the PARI PASSU Collateral; and (iii)
waives any right of election it may have under Sections 1111(b)
or 365(h) of the Bankruptcy Code, or any other rights of
election, determinations, proofs of claims or other rights or
remedies in connection with any Bankruptcy Proceeding with
respect to the PARI PASSU Collateral.
6. ALLOCATION OF PAYMENTS. The PARI PASSU Parties each
agree that all money or funds collected with respect to the PARI
PASSU Collateral (including, without limitation, any net
condemnation proceeds or other awards, insurance or other loss
recoveries which are required or permitted under each of the
documents and agreements governing the PARI PASSU Collateral, and
any property (real and personal) and any amounts in respect of
any deficiency recoveries) in connection with the enforcement or
exercise of any right or remedy with respect to the PARI PASSU
Collateral following the acceleration of the Indebtedness of ACSI
to any of the PARI PASSU Parties, shall be directed to a
collateral agent appointed by the Controlling Party on behalf of
all of the PARI PASSU Parties (the "Collateral Agent"), which
Collateral Agent shall be instructed by the Controlling Party to
distribute such money,
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<PAGE>
funds or other property in the following order of priority:
FIRST: to the payment to each PARI PASSU Party in respect of all
reasonable expenses in connection with the collection or
realization of such cash or funds or the administration of this
Agreement in connection with the collection or realization of
such cash or funds; SECOND: to each such PARI PASSU Party a
proportion of such remaining money or funds as the total
outstanding obligations secured by a lien, mortgage or security
interest on the PARI PASSU Collateral held by such PARI PASSU
Party bears to the total amount of outstanding obligations
secured by liens, mortgages or security interests on the PARI
PASSU Collateral held by all PARI PASSU Parties until all such
secured obligations of such PARI PASSU Party have been paid in
full (disregarding any reduction of any such secured obligations
arising or occurring because of a foreclosure sale or the
exercise of any other right or remedy with respect to the PARI
PASSU Collateral); provided, however, that in no event shall the
principal amount received by the Trustee with respect to the
Guaranty and the ACSI Intercompany Note exceed $275,000,000;
THIRD: to the Trustor under the Leasehold Mortgages or other
obligor under any other applicable Related Document or to
whosoever may be lawfully entitled to receive the same as a court
of competent jurisdiction may direct.
7. ENFORCING RIGHTS. Each PARI PASSU Party agrees not to
take any action whatsoever to enforce any term or provision of
its respective security document or this Agreement or to enforce
any of its rights in respect of the PARI PASSU Collateral, except
through the Controlling Party in accordance with paragraphs 5 and
6 hereof; PROVIDED HOWEVER that this Agreement shall not prevent
any PARI PASSU Party from enforcing or exercising any right or
remedy with respect to the PARI PASSU Collateral granted to it by
its respective documents and agreements to the extent that such
enforcement or exercise of rights or remedies does not impair the
security interest of the Controlling Party or any other PARI
PASSU Party in the PARI PASSU Collateral; nor shall this
Agreement grant any of the PARI PASSU Parties any right or remedy
under the documents or agreements of the other PARI PASSU
Parties.
8. DISTRIBUTIONS. The Company, ACSI, the Trustee and the
Lender each agree that if any PARI PASSU Party receives any
money, funds or other property that are distributed pursuant to
paragraph 7 above (or any similar provision in any other
Intercreditor Agreement substantially in the form of this
Agreement), such money, funds or other property shall not
discharge any secured obligation held by the Person receiving
such money, funds or other property to the extent such money,
funds or other property were distributed to any other Person. In
the event that any payment in respect of, or distribution of, the
PARI PASSU Collateral, of any kind or character, whether in cash,
property or securities, shall be received by any PARI PASSU Party
before all Indebtedness secured by PARI PASSU Collateral is paid
in full, such payment or distribution shall be held in trust for
the benefit of, and shall be paid over to, the PARI PASSU Parties
in accordance with paragraph 6 above.
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<PAGE>
9. COMMUNICATIONS TO THE COMPANY AND ACSI. Each of the
PARI PASSU Parties agrees to transmit to the Controlling Party a
copy of any communication sent by such PARI PASSU Party to the
Company, ACSI or any other Person (contemporaneously with the
transmittal of any such communication) with respect to any event
of default, any acceleration of Indebtedness, or any notice of
sale of any PARI PASSU Collateral as a result of a default. The
Controlling Party will then transmit a copy of same to the other
PARI PASSU Parties. Any failure by any PARI PASSU Party to
furnish a notice pursuant to this paragraph 9 shall in no way
diminish the rights of such party hereunder.
10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey,
without regard to its choice of law provisions, and shall be
binding upon and inure to the benefit of the PARI PASSU Parties,
and their respective successors, designees and assigns.
11. DEFINED TERMS. All terms used herein which are defined
in the New Jersey Uniform Commercial Code shall have the meanings
therein stated, unless the context otherwise requires.
12. NOTICES. All notices or other communications required
or permitted hereunder shall be in writing and shall be given by
personal delivery or United States mail, first class, registered
or certified, postage prepaid, return receipt requested,
addressed to the parties at the addresses indicated on the
signature pages hereof. Each such notice or other communication
shall be deemed given on (a) the date of receipt of personal
delivery thereof, or (b) if not by mail (as aforesaid), the date
which is three (3) business days after such communication is
deposited in the mail (postage prepaid as aforesaid). Any party
may change its address for notice by notice to the other parties
hereto in accordance with the foregoing.
13. FURTHER ASSURANCES. Each of the PARI PASSU Parties
(including the Trustee), upon the request of any PARI PASSU
Party, shall execute and deliver and cause to be recorded with
the appropriate authorities an Intercreditor Agreement
substantially in the form of this Agreement, which Intercreditor
Agreement shall be effective if and only if all PARI PASSU
Parties shall have executed and delivered the same or a
counterpart thereof. Simultaneously with the repayment or other
discharge of Indebtedness secured by any PARI PASSU Collateral,
the PARI PASSU Party whose Indebtedness is so repaid or
discharged shall execute and deliver such instruments as may be
reasonably required by any of the other PARI PASSU Parties to
release or extinguish such PARI PASSU Party's interest in the
PARI PASSU Collateral.
14. LIABILITY. No PARI PASSU Party shall be liable to any
other PARI PASSU Party for any action taken by it, including the
payment of any monies hereunder, in connection with this
Agreement, provided the same was taken in good faith and did not
constitute gross negligence or willful misconduct.
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<PAGE>
15. AMENDMENTS. Each PARI PASSU Party shall have the right
to alter or amend its respective loan agreements and documents
and to release or take additional collateral pursuant thereto.
Nothing in this agreement is intended to alter or amend the
obligations of any PARI PASSU Party with respect to the Company
or any of its Subsidiaries under its respective loan agreements
and documents. Nothing herein is intended to confer upon the
Company or any of its Subsidiaries any right or benefit with
respect to any PARI PASSU Party and the Company and its
Subsidiaries hereby acknowledge that they have no right to
enforce the terms hereunder against any PARI PASSU Party. Their
signatures hereto are merely to acknowledge this agreement, which
is for the sole benefit of the PARI PASSU Parties.
16. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same
instrument.
17. SEVERABILITY. In the event any provision hereof is
determined to be unenforceable or invalid, such provision or such
part thereof which may be unenforceable shall be deemed severed
from this Agreement and the remaining provisions carried out with
the same force and effect as if the severed provision or part
thereof had not been made a part hereof.
IN WITNESS WHEREOF, the Company, ACSI, Lender and the
Trustee, as trustee, have caused this Agreement to be duly
executed as of the date first above written.
COMPANY:
ATTEST: SHOWBOAT, INC., a Nevada corporation
2800 Fremont Street
Las Vegas, Nevada 89104
/s/ John N. Brewer By: /s/ R. Craig Bird
Assistant Secretary
ACSI:
ATLANTIC CITY SHOWBOAT, INC., a New
Jersey corporation
801 Boardwalk
Atlantic City, NJ 08401
/s/ John N. Brewer By: /s/ Herbert R. Wolfe
Assistant Secretary
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<PAGE>
LENDER:
NATWEST BANK, N.A.
1300 Atlantic Avenue
Atlantic City, New Jersey 08401
/s/ Susan D. Hanratty By: /s/ John T. Harrison
Attorney at Law of John T. Harrison
New Jersey Vice President
TRUSTEE:
IBJ SCHRODER BANK & TRUST COMPANY
One State Street
New York, New York 10004
/s/ Susan Lavelle By: /s/ Max Volman
Assistant Secretary Max Volman
Vice President
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<PAGE>
INTERCREDITOR AGREEMENT FOR PARI PASSU INDEBTEDNESS
RELATING TO LAS VEGAS SHOWBOAT
INTERCREDITOR AGREEMENT, dated July 14, 1995, among IBJ
Schroder Bank & Trust Company as trustee (the "Trustee") under
the Indenture (as hereinafter defined), Showboat, Inc., a Nevada
corporation (the "Company"), and NatWest Bank, N.A. (the
"Lender"). The term "Collateral" as used herein means the
following: all of the property, real and personal, and other
assets of the Company in which the Trustee has a lien or security
interest pursuant to the Indenture or any other Related Document.
WHEREAS, the Company has issued its 9-1/4% First Mortgage
Bonds due May 1, 2008 (the "First Mortgage Bonds") under that
certain indenture, (the "Indenture"), dated as of May 18, 1993,
among the Company, Ocean Showboat, Inc., Atlantic City Showboat,
Inc. ("ACSI"), and Showboat Operating Company, as guarantors, and
the Trustee, as amended or supplemented from time to time;
WHEREAS, the First Mortgage Bonds are secured by, INTER
ALIA, a Deed of Trust, Assignment of Rents and Security Agreement
(the "Deed of Trust") on the Showboat Hotel, Casino and Bowling
Center in Las Vegas, Nevada (the "Las Vegas Showboat") and other
assets of the Company;
WHEREAS, the Company proposes to provide the Lender with a
lien or security interest in the Collateral as security for
Indebtedness of the Company;
WHEREAS, it has been agreed by the Trustee, that the Company
and its Subsidiaries, subject to the terms and provisions of the
Indenture, be permitted to obtain additional financing from other
lenders to finance the costs of various improvements and for
other purposes;
WHEREAS, the Indenture permits the Company, subject to
certain limitations, to create or cause to be created additional
liens and security interests in the Collateral in favor of
Persons other than the Trustee and the Company which will have
equal priority with the lien of the Deed of Trust or any other
applicable Related Document pursuant to an Intercreditor
Agreement and requires the Trustee and the Company, upon
fulfillment of certain conditions precedent, to execute and
deliver an Intercreditor Agreement in substantially the form
hereof to the holder of the Indebtedness to be secured by such
additional liens and security interests (or such holder's agent,
trustee or other authorized representative);
WHEREAS, the Company and/or ACSI have entered into a
Revolving Note, Loan and Guaranty Agreement, In PARI PASSU
Leasehold Mortgage, Assignment of Rents and Security Agreement,
In PARI PASSU Deed of Trust, Assignment of Rents and Security
<PAGE>
Agreement, In PARI PASSU Assignment of Leases and Rents and
certain other documents and agreements all of even date herewith,
providing for the grant to the Lender of liens, mortgages and
security interests in certain of the property and assets
constituting the Collateral (" Lender's Documents") (the property
and assets constituting the Collateral in which each of the
Trustee, the Company and the Lender have obtained liens,
mortgages or security interests being referred to herein as the
"PARI PASSU Collateral");
WHEREAS, the aggregate outstanding principal amount of the
First Mortgage Bonds at the date hereof is $275,000,000.00;
WHEREAS, the parties hereto desire to set forth their
agreement as to the nature of priority of the liens, mortgages
and security interests held by the Trustee and the Lender in the
PARI PASSU Collateral and certain other matters related thereto;
NOW, THEREFORE, in consideration of the mutual premises and
agreements herein contained it is hereby agreed as follows:
1. DEFINITIONS. As used in this Agreement, the following
terms have the meanings hereinafter set forth:
"Bankruptcy Code" means the United States Bankruptcy
Code, 11 U.S.C Sec. 101 et seq.
"Bankruptcy Law" means Title 11, United States Code,
and any other state or federal insolvency, reorganization,
moratorium or similar law for the relief of debtors.
"Bankruptcy Proceeding" means any proceeding commenced
under any Bankruptcy Law.
"PARI PASSU Parties means, collectively, the Trustee
and the Lender.
All capitalized terms used herein which are not
otherwise defined herein shall have the meaning ascribed in such
terms in the Indenture.
2. LIEN ACKNOWLEDGMENT. (a) The Trustee hereby agrees
that each lien, mortgage, and security interest of the Trustee in
the property and assets constituting the PARI PASSU Collateral
pursuant to the Deed of Trust and the Related Documents, to the
extent of the obligations secured by such lien, mortgage or
security interest (provided that the aggregate principal amount
of Indebtedness secured by such lien, mortgage or security
interest shall not exceed $275,000,000.00), shall be equal in
priority with each lien, mortgage, or security interest of the
Lender in the property and assets constituting the PARI PASSU
Collateral pursuant to the Lender's Documents, to the extent of
the obligations secured by such liens, mortgages or security
interests (provided that the aggregate principal amount of the
Indebtedness secured by such liens, mortgages or security
interests shall not exceed the
2
<PAGE>
lesser of $25,000,000.00 or the principal amount extended by
Lender to the Company under the Lender's Documents and not repaid
by the Company or ACSI).
(b) The Lender hereby agrees that each lien, mortgage
or security interest of the Lender in the property and assets
constituting the PARI PASSU Collateral pursuant to the Lender's
Documents, to the extent of the obligations secured by such lien,
mortgage or security interest (provided that the aggregate
principal amount of the Indebtedness secured by such lien,
mortgage or security interest shall not exceed the lesser of
$25,000,000.00 or the principal amount extended by Lender under
the Lender's Documents and not repaid by the Company and/or ACSI
) shall be equal in priority with each lien, mortgage or security
interest of the Trustee in the property and assets constituting
the PARI PASSU Collateral pursuant to the Deed of Trust and the
Related Documents, to the extent of the obligations secured by
such lien, mortgage or security interest (provided that the
aggregate principal amount of Indebtedness secured by such lien,
mortgage or security interest shall not exceed $275,000,000.00.
3. LIEN PRIORITY. The priorities of the liens, mortgages
or security interests established, altered or specified herein
are applicable irrespective of:
(i) the time or order of attachment or
perfection thereof;
(ii) the method of perfection;
(iii) the time or order of filing or recording of
financing statements, mortgages or other
instruments; or
(iv) any amendments to the liens, mortgages or
security interest established, altered or
specified herein, provided that such
amendment does not alter the aggregate
principal amount of the Indebtedness
secured by such lien, mortgage or security
interest; and
(v) the time or order of foreclosure, taking of
possession or the exercise of any remedy;
PROVIDED, HOWEVER, that the priorities of any liens, mortgages or
security interests which are not established, altered or
specified herein shall be unaffected and shall exist and continue
in accordance with applicable law. The agreements in paragraph 2
hereof are solely for the purpose of establishing the relative
priorities of the interests of the PARI PASSU Parties in the PARI
PASSU Collateral and shall not inure to the benefit of any other
Person.
4. CONTROLLING PARTY. The PARI PASSU Party or Parties
holding a majority in principal amount of Indebtedness of the
Company secured by the PARI PASSU Collateral (the "Controlling
Party") shall have the sole right, without the affirmative
consent of any of the other PARI PASSU Parties (the "Minority
Party"), and on behalf of itself and each PARI
3
<PAGE>
PASSU Party, to (i) request to take any action, or fail to
request to take any action, to enforce or exercise any right or
remedy with respect to the PARI PASSU Collateral and to foreclose
upon, collect, dispose of the PARI PASSU Collateral or any
portion thereof; and (ii) exercise any right or remedy, or
decline to exercise any right or remedy, with respect to the PARI
PASSU Collateral in any Bankruptcy Proceeding, including, without
limitation, any right of election under Sections 1111(b) or
365(h) of the Bankruptcy Code, any other rights of election,
determinations, proofs of claims or other rights or remedies in
connection with any Bankruptcy Proceeding; PROVIDED that each
Minority Party shall have the right to file its own proof(s) of
claim in any Bankruptcy Proceeding.
5. MINORITY PARTY AGREEMENTS. In accordance with
paragraph 4 hereof, the Minority Party agrees (regardless of
whether any individual PARI PASSU Party agrees, disagrees or
abstains with respect to any action or failure to act by the
Controlling Party) that the Controlling Party shall have the
authority to act or fail to act, as it deems necessary in its
sole discretion, with respect to the rights and remedies of all
of the PARI PASSU Parties and that the Controlling Party shall
have no liability for acting or failing to act (provided such
action or failure to act does not conflict with the express terms
of this Agreement). Each PARI PASSU Party further acknowledges
and agrees that, until the obligations under the Indenture are no
longer outstanding, the only right of such PARI PASSU Party with
respect to the PARI PASSU Collateral is to be secured by the PARI
PASSU Collateral as and to the extent provided in its respective
loan document or agreement and as provided herein and to receive
a share of the proceeds of the PARI PASSU Collateral, if any, to
the extent provided under paragraph 6 hereof; PROVIDED, HOWEVER,
that, until the obligations under the Indenture are no longer
outstanding, in no event shall any rights or benefits accorded
any PARI PASSU Party include any right to challenge, contest or
dispute any action taken or not taken, by the Controlling Party,
the Collateral Agent (as hereinafter defined) or any other PARI
PASSU Party in accordance with this Agreement, and, until the
obligations under the Indenture are no longer outstanding, in no
event shall the security interest granted to the Lender under
this Agreement entitle any PARI PASSU Party to enforce its
respective rights in respect of the PARI PASSU Collateral except
through the Controlling Party and the Collateral Agent (as
hereinafter defined) in accordance with this Agreement. In
addition, the Minority Party agrees that it (i) shall not attack
nor challenge the validity, perfection or priority of the
Controlling Party's lien with respect to the PARI PASSU
Collateral; (ii) will release all liens, mortgages and security
interests in all or any portion of the PARI PASSU Collateral (to
the extent of its respective interest therein) in the event that
the Controlling Party elects to sell all or any portion of the
PARI PASSU Collateral in exercising any right or remedy with
respect to the PARI PASSU Collateral; and (iii) waives any right
of election it may have under Sections 1111(b) or 365(h) of the
Bankruptcy Code, or any other rights of election, determinations,
proofs of claims or other rights or remedies in connection with
any Bankruptcy Proceeding with respect to the PARI PASSU
Collateral.
6. ALLOCATION OF PAYMENTS. The PARI PASSU Parties each
agree that all money or funds collected with respect to the PARI
PASSU Collateral (including; without limitation, any net
condemnation proceeds or other awards, insurance or other loss
recoveries which
4
<PAGE>
are required or permitted under each of the documents and
agreements governing the PARI PASSU Collateral, and any property
(real and personal) and any amounts in respect of any deficiency
recoveries) in connection with the enforcement or exercise of any
right or remedy with respect to the PARI PASSU Collateral
following the acceleration of the Indebtedness of the Company
to any of the PARI PASSU Parties, shall be directed to a
collateral agent appointed by the Controlling Party on behalf of
all of the PARI PASSU Parties (the "Collateral Agent"), which
Collateral Agent shall be instructed by the Controlling Party to
distribute such money, funds or other property in the following
order of priority: FIRST: to the payment to each PARI PASSU Party
in respect of all reasonable expenses in connection with the
collection or realization of such cash or funds or the
administration of this Agreement in connection with the
collection or realization of such cash or funds; SECOND: to each
such PARI PASSU Party a proportion of such remaining money or
funds as the total outstanding obligations secured by a lien,
mortgage or security interest on the PARI PASSU Collateral held
by such PARI PASSU Party bears to the total amount of outstanding
obligations secured by liens, mortgages or security interests on
the PARI PASSU Collateral held by all PARI PASSU Parties until
all such secured obligations of such PARI PASSU Party have been
paid in full (disregarding any reduction of any such secured
obligations arising or occurring because of a foreclosure sale or
the exercise of any other right or remedy with respect to the
PARI PASSU Collateral); THIRD: to the Trustor under the Deed of
Trust or other obligor under any other applicable Related
Document or to whosoever may be lawfully entitled to receive the
same as a court of competent jurisdiction may direct.
7. ENFORCING RIGHTS. Each PARI PASSU Party agrees not to
take any action whatsoever to enforce any term or provision of
its respective security document or this Agreement or to enforce
any of its rights in respect of the PARI PASSU Collateral, except
through the Controlling Party in accordance with paragraphs 5 and
6 hereof; PROVIDED, HOWEVER, that this Agreement shall not
prevent any PARI PASSU Party from enforcing or exercising any
right or remedy with respect to the PARI PASSU Collateral granted
to it by its respective documents and agreements to the extent
that such enforcement or exercise of rights or remedies does not
impair the security interest of the Controlling Party or any
other PARI PASSU Party in the PARI PASSU Collateral; nor shall
this Agreement grant any of the PARI PASSU Parties any right or
remedy under the documents or agreements of the other PARI PASSU
Parties.
8. DISTRIBUTIONS. The Company, the Trustee and the Lender
each agree that if any PARI PASSU Party receives any money, funds
or other property that are distributed pursuant to paragraph 7
above (or any similar provision in any other Intercreditor
Agreement substantially in the form of this Agreement), such
money, funds or other property shall not discharge any secured
obligation held by the Person receiving such money, funds or
other property to the extent such money, funds or other property
were distributed to any other Person. In the event that any
payment in respect of, or distribution of, the PARI PASSU
Collateral, of any kind or character, whether in cash, property
or securities, shall be received by any PARI PASSU Party before
all Indebtedness secured by PARI PASSU Collateral
5
<PAGE>
is paid in full, such payment or distribution shall be held in
trust for the benefit of, and shall be paid over to, the PARI
PASSU Parties in accordance with paragraph 6 above.
9. COMMUNICATIONS. Each of the PARI PASSU Parties agrees
to transmit to the Controlling Party a copy of any communication
sent by such PARI PASSU Party to the Company, or any other Person
(contemporaneously with the transmittal of any such
communication) with respect to any event of default, any
acceleration of Indebtedness, or any notice of sale of any PARI
PASSU Collateral as a result of a default. The Controlling Party
will transmit a copy of said notice to the other PARI PASSU
Parties. Any failure by any PARI PASSU Party to furnish a notice
pursuant to this paragraph 9 shall in no way diminish the rights
of such party hereunder.
10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada,
without regard to its choice of law provisions, and shall be
binding upon and inure to the benefit of the PARI PASSU Parties,
and their respective successors, designees and assigns.
11. DEFINED TERMS. All terms used herein which are defined
in the Nevada Uniform Commercial Code shall have the meanings
therein stated, unless the context otherwise requires.
12. NOTICES. All notices or other communications required
or permitted hereunder shall be in writing and shall be given by
personal delivery or United States mail, first class, registered
or certified, postage prepaid, return receipt requested,
addressed to the parties at the addresses indicated on the
signature pages hereof. Each such notice or other communication
shall be deemed given on (a) the date of receipt of personal
delivery thereof, or (b) if not by mail (as aforesaid), the date
which is three (3) business days after such communication is
deposited in the mail (postage prepaid as aforesaid). Any party
may change its address for notice by notice to the other parties
hereto in accordance with the foregoing.
13. FURTHER ASSURANCES. Each of the PARI PASSU Parties
(including the Trustee), upon the request of any PARI PASSU
Party, shall execute and deliver and cause to be recorded with
the Clerk of Clark County, Nevada an Intercreditor Agreement
substantially in the form of this Agreement, which Intercreditor
Agreement shall be effective if and only if all PARI PASSU
Parties shall have executed and delivered the same or a
counterpart thereof. Simultaneously with the repayment or other
discharge of Indebtedness secured by any PARI PASSU Collateral,
the PARI PASSU Party whose Indebtedness is so repaid or
discharged shall execute and deliver such instruments as may be
reasonably required by any of the other PARI PASSU Parties to
release or extinguish such PARI PASSU Party's interest in the
PARI PASSU Collateral.
14. LIABILITY. No PARI PASSU Party shall be liable to any
other PARI PASSU Party for any action taken by it, including the
payment of any monies hereunder, in connection
6
<PAGE>
with this Agreement, provided the same was taken in good faith
and did not constitute gross negligence or willful misconduct.
15. AMENDMENTS. Each PARI PASSU Party shall have the right
to alter or amend its respective loan agreements and documents
and to release or take additional collateral pursuant thereto.
Nothing in this agreement is intended to alter or amend the
obligations of any PARI PASSU Party with respect to the Company
or any of its Subsidiaries under its respective loan agreements
and documents. Nothing herein is intended to confer upon the
Company or any of its Subsidiaries any right or benefit with
respect to any PARI PASSU Party and the Company and its
Subsidiaries hereby acknowledge that they have no right to
enforce the terms hereunder against any PARI PASSU Party. Their
signatures hereto are merely to acknowledge this agreement, which
is for the sole benefit of the PARI PASSU Parties.
16. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same
instrument.
17. SEVERABILITY. In the event any provision hereof is
determined to be unenforceable or invalid, such provision or such
part thereof which may be unenforceable shall be deemed severed
from this Agreement and the remaining provisions carried out with
the same force and effect as if the severed provision or part
thereof had not been made a part hereof.
IN WITNESS WHEREOF, the Trustee, the Company, Lender and
the Trustee, as trustee, have caused this Agreement to be duly
executed as of the date first above written.
ATTEST: SHOWBOAT, INC., a Nevada corporation
2800 Fremont Street
Las Vegas, Nevada 89104
/s/ John N. Brewer By: /s/ R. Craig Bird
Assistant Secretary Name: R. Craig Bird
Title: Exec. VP Finance & Administration
7
<PAGE>
IBJ SCHRODER BANK & TRUST COMPANY
One State Street
New York, New York 10004
/s/ Susan Lavelle By: /s/ Max Volmar
Susan Lavelle Name: Max Volmar
Assistant Secretary Title: Vice President
NATWEST BANK, N.A.
1300 Atlantic Avenue
Atlantic City, New Jersey 08401
/s/ Susan D. Hanratty By: /s/ John Harrison
Susan D. Hanratty Name: John Harrison
Attorney at Law of Title: Vice President
New Jersey
8
<PAGE>
EXHIBIT 10.39
<PAGE>
PROMISSORY NOTE
$51,314,535.94 January 1, 1996
FOR VALUE RECEIVED, Showboat Fifteen, Inc., a
corporation organized and existing under the laws of the State of
Nevada ("Maker"), promises to pay to Showboat, Inc., a
corporation organized and existing under the laws of the State of
Nevada, or order ("Holder"), at 3720 Howard Hughes Parkway, Ste.
200, Las Vegas, NV 89109, or at such other place as Holder may
designate in writing, up to the principal balance of Fifty-One
Million Three Hundred Fourteen Thousand Five Hundred Thirty-Five
and 94/One Hundredths Dollars ($51,314,535.94), plus interest as
hereinafter provided. Interest shall be calculated on a daily
basis (based on a 365-day year), at 10.25% ("Base Rate").
Principal and interest shall be payable upon the earlier to occur
of (i) demand or (ii) December 31, 1996 (the "Maturity Date").
All payments on this Promissory Note shall be applied
first to discharge all accrued but unpaid interest on the unpaid
principal balance hereof, and the remainder to be applied to the
principal balance. The Holder's acceptance of any payment less
than the amount then due shall not, in any manner, effect or
prejudice the rights of the Holder to receive the unpaid balance
then due and payable.
The failure to pay the unpaid principal sum on the
Maturity Date or the failure to pay any other sum when the same
shall become due and payable shall constitute an event of default
("Event of Default") hereunder, and upon the occurrence of an
Event of Default, all sums evidenced hereby, including the entire
principal balance, all accrued and unpaid interest and all other
amounts due hereunder shall, at the election of the Holder, and
without demand or notice to maker, become immediately due and
payable and the Holder may exercise its rights under this Note,
and other rights under applicable law.
Upon the occurrence of an Event of Default by Maker,
the unpaid principal balance, and all accrued and unpaid interest
due hereunder and all other costs shall together be treated as
the principal balance of this Promissory Note and shall bear
interest at the rate of three (3) percentage points per annum
greater than the Base Rate (the "Default Rate"), from the date of
the Event of Default until the entire principal sum and such
interest and costs have been paid in full.
<PAGE>
Maker shall have the right to prepay at any time all or
any portion of this Promissory Note without penalty.
It is not the intent of Holder to collect interest or
other loan charges in excess of the maximum amount permitted by
Nevada law. If interest or other loan charges collected or to be
collected by the Holder exceed any applicable permitted limits
then (i) any such interest or other loan charges shall be reduced
by the amount necessary to reduce the interest or other loan
charges to the permitted limits, and (ii) any sums already
collected from the Maker which exceeded permitted limits will be
refunded to the Maker. The Holder may choose to make such refund
by reducing the principal balance of the indebtedness hereunder
or by making a direct payment to the Maker.
Maker agrees to waiver demand, diligence, presentment
for payment and protest, notice of acceleration, extension,
dishonor, maturity, protest, and default hereunder. The Holder
may accept late or partial payments even though they are marked
"payment in full," without losing, prejudicing or waiving any
rights hereunder.
Maker agrees to pay all costs of collection, and all
costs of suit and preparation for such suit (whether at trial or
appellate level), in the event the unpaid principal sum of this
Promissory Note, or any payment of principal or interest is not
paid when due.
No amendment, modification, change, waiver or discharge
shall be effective unless evidenced by an instrument in writing
and signed by the party against whom enforcement of any waiver,
amendment, change, modification or discharge is sought. If any
provision hereof is invalid, or unenforceable, the other
provisions hereof shall remain in full force and effect and shall
be construed to effectuate the provisions hereof. The provisions
of this Promissory Note shall be binding and inure to the benefit
of the successors and assigns of the parties hereto.
A waiver by Holder of failure to enforce any covenant
or condition of this Promissory Note, or to declare any default
hereunder, shall not operate as a waiver of any subsequent
default or affect the right of Holder to exercise any right or
remedy not expressly waived in writing.
This Promissory Note shall be construed in accordance
with and governed by Nevada law.
All payments of principal and interest are hereby
required to be made in the form of lawful money of the United
States of America.
<PAGE>
Time is of the essence with respect to this Promissory
Note and each and every covenant, condition, term and provision
hereof.
Whenever the context requires or permits, the singular
shall include the plural, plural shall include the singular and
the masculine, feminine and neuter shall be freely
interchangeable.
IN WITNESS WHEREOF, Maker has executed this Promissory
Note at Las Vegas, Nevada as of the day first above written.
Maker:
SHOWBOAT FIFTEEN, INC., a
Nevada corporation
By:
Its:
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 21.01
LIST OF SUBSIDIARIES
STATE OF
NAME INCORPORATION/ NAMES USED IN DOING
ORGANIZATION BUSINESS
<S> <C> <C>
Atlantic City Showboat, New Jersey Showboat; Showboat Hotel
Inc. and Casino; Atlantic
City Showboat
Ocean Showboat, Inc. New Jersey Ocean Showboat
Ocean Showboat Finance New Jersey Ocean Showboat Finance
Corporation Corporation
Showboat Operating Company Nevada Showboat; Showboat
Hotel, Casino & Bowling
Center; Las Vegas
Showboat
Showboat Development Nevada Showboat Development
Company Company
Showboat Australia Pty Australia Not applicable
Limited
Sydney Harbour Casino Australia Not applicable
Holdings Limited
Sydney Casino Management Australia Not applicable
Pty Limited
Sydney Harbour Casino Australia Sydney Harbour Casino
Properties Pty Limited
Showboat Indiana, Inc. Nevada Not applicable
Showboat Indiana Nevada Not applicable
Investment, L.P.
Showboat Marina Partnership Indiana Showboat Marina; East
Chicago Showboat
Showboat Marina Casino Indiana Showboat Marina; East
Partnership Chicago Showboat
Showboat Marina Finance Indiana Not applicable
Corporation
Showboat Marina Investment Indiana Not applicable
Partnership
Showboat New Hampshire, Nevada Not applicable
Inc.
Showboat Rockingham New Hampshire Not applicable
Company, L.L.C.
Showboat Missouri, Inc. Nevada Not applicable
</TABLE>
<PAGE>
EXHIBIT 23.01
<PAGE>
ACCOUNTANTS' CONSENT
The Board of Directors
Showboat, Inc.
We consent to incorporation by reference in the registration
statements (Nos. 33-36048, 33-56044, 33-47945 and 33-58315) on
Form S-8 and (No. 33-62431) on Form S-3 of Showboat, Inc. of our
report dated March 11, 1996, relating to the consolidated balance
sheets of Showboat, Inc. and subsidiaries as of December 31, 1995
and 1994, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1995, which report appears
in the December 31, 1995 annual report on Form 10-K of Showboat,
Inc.
Our report refers to a change in the method of accounting for
income taxes in 1993 to adopt the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting
Standards No. 109, ACCOUNTING FOR INCOME TAXES.
/s/ KPMG Peat Marwick LLP
Las Vegas, Nevada
March 19, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 29605
<SECURITIES> 77322
<RECEIVABLES> 11129
<ALLOWANCES> 2681
<INVENTORY> 2808
<CURRENT-ASSETS> 134731
<PP&E> 541786
<DEPRECIATION> 186872
<TOTAL-ASSETS> 649395
<CURRENT-LIABILITIES> 53716
<BONDS> 392369
0
0
<COMMON> 15795
<OTHER-SE> 158145
<TOTAL-LIABILITY-AND-EQUITY> 649395
<SALES> 423213
<TOTAL-REVENUES> 428592
<CGS> 0
<TOTAL-COSTS> 210339
<OTHER-EXPENSES> 171556
<LOSS-PROVISION> 1605
<INTEREST-EXPENSE> 29692
<INCOME-PRETAX> 24610
<INCOME-TAX> 11435
<INCOME-CONTINUING> 13175
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13175
<EPS-PRIMARY> .84
<EPS-DILUTED> .84
</TABLE>
