UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended
---------------------------------
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
to
For the transition period from ------------ -----------------
Commission file number 1-7123
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SHOWBOAT, INC.
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(Exact name of registrant as specified in its charter)
NEVADA 88-0090766
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(State or other jurisdiction
of incorporation or organization)
2800 FREMONT STREET, LAS VEGAS NEVADA 89104-4035
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(Address of principal executive offices) (Zip Code)
(702) 385-9123
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PAST FIVE YEARS
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock - $1 Par Value,
and Preferred Stock Purchase Rights 16,183,950 shares outstanding
-------------------------------- ----------------------------------
SHOWBOAT, INC. AND SUBSIDIARIES
INDEX
PART I FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Condensed Consolidated Balance Sheets-
June 30, 1996 and December 31, 1995 1-2
Condensed Consolidated Statements of Income-
For the three months ended June 30,
1996 and 1995 3-4
Condensed Consolidated Statements of Income-
For the six months ended June 30,
1996 and 1995 5-6
Condensed Consolidated Statements of Cash Flows -
For the six months ended June 30,
1996 and 1995 7
Notes to the Condensed Consolidated Financial
Statements 8-9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 10-23
PART II OTHER INFORMATION
ITEMS 1 - 6 24-28
SIGNATURES 29
EXHIBIT INDEX 30
Item Financial Statements
SHOWBOAT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
Assets 1996 1995
---------
(unaudited)
(In thousands)
Current assets:
$72,967 $106,927
8,631 8,448
6,418 2,076
2,863 2,808
6,532 4,728
7,524 9,744
----------- -----------
Total current assets 104,935 134,731
----------- -----------
584,772 541,786
and amortization (197,951) (186,872)
--------------------------
386,821 354,914
--------------------------
Other assets:
141,796
128,665 120,090
29,906 28,911
accumulated amortization of $2,401,000
and $1,860,000 at June 30, 1996 and
December 31, 1995, respectively 10,208 10,749
--------------------------
310,575 159,750
--------------------------
$802,331 $649,395
==========================
See accompanying notes to condensed consolidated financial statements.
1
SHOWBOAT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
(continued)
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------ 1996 1995
(unaudited)
Current liabilities: (In thousands)
$24 $22
$12,686 15,143
404 392
40,739 37,524
--------------------------
Total current liabilities 53,853 53,081
--------------------------
Long-term debt, excluding current maturities 532,545 392,369
--------------------------
Other liabilities 6,260 5,662
--------------------------
Deferred income taxes 22,191 22,319
--------------------------
Minority Interest 1,265 2,023
--------------------------
Shareholders' equity:
shares authorized; none issued
shares authorized; issued 16,182,099
shares at June 30, 1996 and 15,794,578
at December 31, 1995 16,182 15,795
87,781 80,078
79,969 80,434
--------------------------
183,932 176,307
translation adjustment 4,355 285
-0- shares at June 30, 1996 and
74,333 shares at December 31, 1995 (587)
(2,070) (2,064)
--------------------------
Total shareholders' equity 186,217 173,941
--------------------------
Total liabilities & shareholders' equity $802,331 $649,395
==========================
See accompanying notes to condensed consolidated financial statements.
2
SHOWBOAT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995
1996 1995
--------------------------
Revenues:
$95,858 $99,250
14,119 14,062
6,632 6,506
855 890
1,898 1,330
--------------------------
119,362 122,038
10,137 10,174
--------------------------
Net revenues 109,225 111,864
--------------------------
Operating costs and expenses:
47,876 46,370
8,181 8,284
1,870 2,093
630 675
29,407 29,234
2,871 2,827
8,308 8,107
--------------------------
99,143 97,590
--------------------------
Income from operations 10,082 14,274
--------------------------
3
SHOWBOAT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995
(continued)
1996 1995
--------------------------
Income from operations $10,082 $14,274
--------------------------
Other (income) expense:
(3,016) (1,691)
15,601 10,620
(3,863) (3,321)
(18)
--------------------------
8,704 5,608
--------------------------
Income before income taxes
1,378 8,666
Minority interest (income) (828)
--------------------------
Income before income
2,206 8,666
--------------------------
Income tax expense 1,070 3,707
--------------------------
Net income $1,136 $4,959
==========================
Weighted average shares outstanding 16,428,966 15,556,514
Net income per common and equivalent share $0.07 $0.32
==========================
See accompanying notes to condensed consolidated financial statements.
4
SHOWBOAT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
1996 1995
--------------------------
Revenues:
$185,848 $186,097
27,110 26,368
12,428 12,133
1,903 1,945
190
2,911 2,553
--------------------------
230,200 229,286
18,385 18,743
--------------------------
Net revenues 211,815 210,543
--------------------------
Operating costs and expenses:
92,101 88,237
16,267 16,050
4,007 4,347
1,451 1,626
57,782 57,127
5,360 5,173
16,326 16,263
--------------------------
193,294 188,823
--------------------------
Income from operations from
18,521 21,720
Equity in (loss) of
(22)
--------------------------
Income from operations 18,521 21,698
--------------------------
5
SHOWBOAT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(continued)
1996 1995
--------------------------
Income from operations $18,521 $21,698
--------------------------
Other (income) expense:
(4,346) (2,890)
26,510 21,251
(7,235) (6,567)
(2,558)
3,902
(84)
--------------------------
18,747 9,236
--------------------------
Income (loss) before income taxes
(226) 12,462
Minority interest (income) (835)
--------------------------
Income before income
609 12,462
--------------------------
Income tax expense 274 5,720
--------------------------
Net income $335 $6,742
==========================
Weighted average shares outstanding 16,213,182 15,522,432
Net income per common and equivalent share $0.02 $0.43
==========================
See accompanying notes to condensed consolidated financial statements.
6
SHOWBOAT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
1996 1995
-----------------------
Cash flows from operating activities: (In thousands)
Net cash provided by operating activities $20,038 $28,606
--------------------------
Cash flows from investing activities:
(39,424) (20,394)
307 130
(5,823) (35,965)
(123) (435)
- 51,366
(145,639) -
other assets 165 (2,665)
Development Authority obligation (1,964) (1,773)
Other - 146
--------------------------
Net cash used in investing activities (192,501) (9,590)
--------------------------
Cash flows from financing activities:
$ $
140,000 -
5,331 127
(6,105) (25)
(788) (769)
77 1,509
- (142)
--------------------------
Net cash provided (used) by financing
activities 138,503 690
--------------------------
Net increase (decrease) in cash and
(33,960) 19,706
Cash and cash equivalents at
106,927 90,429
Cash and cash equivalents at --------------------------
$72,967 $110,135
==========================
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest, net of amounts capitalized 13,669 13,704
Income taxes 2,524 6,876
Foreign currency translation adjustment 4,070 (5,957)
See accompanying notes to condensed consolidated financial statements.
7
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
The condensed consolidated financial statements include all
domestic and foreign subsidiaries which are more than 50% owned and
controlled. Investments in unconsolidated affiliates which are at least
20% owned are carried at cost plus equity in undistributed earnings or
loss since acquisition. All material intercompany balances have been
eliminated in consolidation.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These condensed
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's December 31, 1995
Annual Report on Form 10-K.
The accompanying unaudited condensed consolidated financial statements
contain all adjustments which are only of a recurring nature, in the
opinion of management, necessary for a fair statement of the results of
the interim periods. The results of operations for the interim periods
are not indicative of results of operations for an entire year. Certain
prior period balances have been reclassified to conform to the current
period's presentation.
On March 28, 1996 the Company's 55% owned affiliates, Showboat
Marina Casino Partnership(SMCP) and Showboat Marina Finance Corporation
(SMFC), issued $140.0 million, 13 1/2% First Mortgage Notes due 2003,
(the First Mortgage Notes). The net proceeds of the First Mortgage
Notes plus cash contributions by the Company are classified as
restricted cash and investments in the Company's Condensed Consolidated
Balance Sheet. These funds are being used to develop a riverboat casino
complex in East Chicago, Indiana to be operated on Lake Michigan.
8
SHOWBOAT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
2LONG-TERM DEBT
Long-term debt increased by approximately $140.0 million from
December 31, 1995 to June 30, 1996. This increase is due to the
issuance of $140.0 million, 13 1/2% First Mortgage Notes, by SMCP and
SMFC. SMCP and SMFC are effectively owned 55% by the Company and
therefore are consolidated for financial reporting purposes. The First
Mortgage Notes are due 2003 and pay interest semiannually on March 15,
and September 15, of each year commencing September 15, 1996.
3WRITE-DOWN OF INVESTMENT IN AFFILIATE
In March 1995, the Company, with an unrelated corporation (the
majority member), formed Showboat Mardi Gras, L.L.C. (SMG), to own and
operate, subject to licensing, a riverboat casino near Kansas City,
Missouri. The Company owns 35% of the equity of SMG. SMG was not
selected by the Missouri Gaming Commission for investigation for a
license. Due to a decline in the market value of the assets of SMG,
principally a riverboat, the Company has recorded a pre-tax write-down
of $3,902,000 which is included in the 1996 Condensed Consolidated
Statement of Income as write-down of investment in affiliate.
This write-down includes the Company's remaining investment in SMG.
9
Item Management's Discussion and Analysis of Financial Condition
and Results of Operations
GENERAL
Showboat, Inc., and subsidiaries, collectively the Company or SBO, is
an international gaming company with over 40 years of gaming experience
that owns and operates the Atlantic City Showboat Casino and Hotel in
Atlantic City, New Jersey, (Atlantic City Showboat), the Las Vegas
Showboat, Hotel, Casino and Bowling Center in Las Vegas, Nevada (Las
Vegas Showboat), owns an interest in, and manages through subsidiaries,
the Sydney Harbour Casino located in Sydney, Australia and owns through
subsidiaries a 55% interest in, and will manage, the East Chicago
Showboat riverboat casino project in East Chicago, Indiana (East Chicago
Showboat), which is under construction and scheduled to open in July
1997. Until March 31, 1995, the Company owned an equity interest in and
managed a riverboat casino on Lake Pontchartrain in New Orleans,
Louisiana (Star Casino).
Information contained in this quarterly report is supplemental to
disclosures in the Company's year end financial reports. This
management's discussion and analysis of financial condition and results
of operations should be read in conjunction with the management's
discussion and analysis of financial condition and results of operations
included in the Company's December 31, 1995 Annual Report on Form 10-K.
As used in this management's discussion and analysis of financial
condition and results of operations, amounts in Australian dollars are
denoted as "A$". As of June 30, 1996, the exchange rate was
approximately $0.7895 for each A$1.00.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Quarter Ended June 30, 1996 Compared to Quarter Ended June 30, 1995
Revenues
Net revenues for the Company decreased $2.6 million or 2.4% in the
second quarter 1996 compared to the same period in 1995. This decrease
was principally due to the $3.4 million or 3.4% decline in casino
revenues in the quarter ended June 30, 1996. Non casino revenues,
which consist principally of food, beverage and room revenues were up
$.7 million or 3.1% in the second quarter 1996. Due to the Company's
agreement to forgive the first A$19.1 million of management fees due
it from Sydney Harbour Casino, the Company has not yet received
management fees from Sydney Harbour Casino. For the quarter ended
June 30, 1996, approximately A$2.7 million of management fees were
forgiven and approximately A$9.7 million in management fees still
remain to be forgiven.
10
Revenues
Quarter ended June 30,
(Unaudited)
(in thousands)
1996 1995 Variance Percent
--------------------------------------------------
Casino revenues $ 95,8 $ 99,2 $ (3 -3.4%
Non casino revenues 23, 22, 3.1%
Less complimentaries 10, 10, -0.4%
--------------------------------------------------
$ 109,22 $ 111,86 $ (2 -2.4%
--------------------------------------------------
Table game revenues $ 19,2 $21,715 $ (2 -11.5%
Slot revenues 65, 64,207 2.3%
Other gaming revenues 768 -36.6%
--------------------------------------------------
$ 85,3 $ 86,6 $ (1 -1.5%
--------------------------------------------------
17, 17,329 0.3%
9 9,024 0.5%
--------------------------------------------------
$ 93,6 $ 94,9 $ (1 -1.4%
--------------------------------------------------
Table game revenues $ 1, $1,244 $ -0.7%
Slot revenues 9 10,654 ( -15.4%
Other gaming revenues 662 -67.5%
--------------------------------------------------
10, 12, ( -16.7%
--------------------------------------------------
6 5,459 12.3%
1 1,150 -7.1%
--------------------------------------------------
$ 15,5 $ 16,8 $ (1 -7.9%
--------------------------------------------------
11
Revenues
The Atlantic City Showboat's net revenues declined $1.3 million or
1.4% in the second quarter 1996 compared to the second quarter of 1995.
This decline was principally due to a $2.5 million or 11.5% decrease
in table game revenues. The decline in table game revenues is
attributable to a decline in drop and the lower hold percent experienced
of 15.3% in the second quarter of 1996 compared to 16.2% in the same
period in 1995. The decline in table game revenues was partially offset
by the $1.5 million increase in slot revenues in the second quarter 1996.
The increase in slot revenues is attributable to approximately 450
additional slot units, an industry growth rate of 4.6% and an increase in
slot marketing in the second quarter 1996 compared to the second quarter
1995. The decline in other gaming revenues of $.3 million or 36.6% is
principally due to the decline in keno revenues during the quarter ended
June 30, 1996.
The Las Vegas Showboat's net revenues declined $1.3 million or 7.9%
in the second quarter 1996 compared to the second quarter of 1995. This
decline was principally due to a decline in slot revenue of $1.6
million or 15.4%. Management believes the decline is partially due to the
loss of slot customers due to the increased competition for the local
market and customers lost during the renovation project from July to
December 1995. The Company is continuing to focus its efforts on the
establishment of viable marketing programs to reestablish the customer
base lost during the construction period and to attract new customers.
Other gaming revenues declined $.4 million or 67.5% in the second quarter
1996, principally due to the decrease in bingo revenues resulting from
increased competition added by a local casino during the second quarter
of 1996. Non casino revenues, consisting principally of room, food,
beverage and bowling increased $.7 million or 12.3%. This was primarily
due to increased food and beverage revenues which coincided with new
marketing programs implemented to attract patrons.
Income From Operations
The Company's income from operations declined $4.2 million or 29.4%
in the quarter ended June 30, 1996 compared to the same period in the
prior year. The decrease was due principally to a decline in income from
operations at both the Atlantic City Showboat and Las Vegas Showboat.
These declines were partially offset by lower operating costs for the
Company's corporate and development functions.
12
Income From Operations
Quarter ended June 30,
(Unaudited)
(in thousands)
1996 1995 Variance Percent
--------------------------------------------------
Atlantic City $ 16,7 $ 19,1 $ (2 -12.6%
Las Vegas (2 355 ( -794.9%
Corporate and
development (4 (5,213) -20.9%
Other 11 -436.4%
--------------------------------------------------
Consolidated $ 10,0 $14,274 $ (4 -29.4%
--------------------------------------------------
Atlantic City $ 23,3 $ 26,1 $ (2 -10.6%
Las Vegas 1,398 ( -163.7%
Corporate and
development (4 (5,154) -21.5%
Other 11 -436.4%
--------------------------------------------------
Consolidated $ 18,3 $22,381 $ (3 -17.8%
--------------------------------------------------
*EBITDA is defined as income from operations before depreciation and
amortization. EBITDA should not be construed as a substitute for income
from operations, net earnings (loss) and cash flows from operating
activities determined in accordance with Generally Accepted Accounting
Principles ("GAAP"). The Company has included EBITDA because it believes
it is commonly used by certain investors and analysts to analyze and
compare gaming companies on the basis of operating performance, leverage
and liquidity and to determine a company's ability to service debt.
The Atlantic City Showboat's income from operations, before management
fees, decrease of $2.4 million or 12.6% is attributable to the decline
in table game revenues and increased marketing expenditures during the
quarter ended June 30, 1996 as compared to the quarter ended June 30,
1995. Operating expenses increased $1.1 million or 1.4% to $77.0 million
for the June 30, 1996 quarter up from $75.9 million for the same period in
the prior year. The increase in operating expenses is primarily attributed
to increased marketing costs of $2.0 million in response to aggressive
competition for slot patrons in the Atlantic City market during the second
quarter of 1996.
13
Income From Operations
The $2.8 million decline in income from operations at the Las Vegas
Showboat before management fees and inter-company rent, was due
principally to the decline in slot revenues and other gaming revenues
during the second quarter 1996. Operating expenses increased $.9
million during the second quarter 1996 to $16.4 million compared to $15.5
million for the same period in 1995. The increased operating expense is
due primarily to increases in advertising and marketing promotions for the
casino, and an increase in depreciation due to the completion of the
construction project.
The $1.1 million decline in operating expenses for corporate and
development is attributed to a reduction in the scope of development
activities in the second quarter of 1996 compared to 1995. The Company
capitalized $.4 million of costs related to the Company's St. Louis
project in the second quarter of 1996 compared to $2.1 million capitalized
for the Company's East Chicago and Randolph riverboat projects in the
same quarter of 1995.
The decrease in other income from operations for the quarter ended
June 30, 1996 compared to the same period in 1995 is attributed to
administrative expenses incurred for the Company's wholly owned subsidiary
in Australia. The Company realized no earnings during the quarter ended
June 30, 1996, from its investment in the Sydney Harbour Caisno as a
result of the write-off of preopening costs related to the interim casino.
Approximately A$11.5 million of preopening costs were written-off in the
three months ended June 30, 1996 and all preopening costs have been
written-off as of June 30, 1996.
14
Net income
In the quarter ended June 30, 1996 the Company recorded net income
of $1.1 million or $.07 per share compared to net income of $5.0 million
or $.32 per share for the quarter ended June 30, 1995. The second
quarter 1996 results reflect net interest expense for the East
Chicago, Indiana project of $.6 million or $.03 per share and a reduction
of interest income of $.4 million or $.02 per share due to the investment
of corporate cash in the East Chicago subsidiary.
Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995
Revenues
Net revenues for the Company increased $1.3 million or .6% in the
first six months of 1996 compared to the same period in 1995. This
increase was principally due to the $1.4 million or 3.1% increase in non
casino revenues, which consist principally of food, beverage and room
revenues, in the six months ended June 30, 1996 compared to the same
period in 1995. The $.2 million decline in management fees in the first
six months of 1996 is attributed to the sale of the Star Casino in
March, 1995 which paid management fees to the Company. Due to the
Company's agreement to forgive the first A$19.1 million of management
fees due it from Sydney Harbour Casino, the Company has not yet received
management fees from the Sydney Harbour Casino. For the six months
ended June 30, 1996, approximately A$5.4 million of management fees were
forgiven and approximately A$9.7 million in management fees still
remain to be forgiven.
15
Revenues
Six months ended June 30,
(Unaudited)
(in thousands)
1996 1995 Variance Percent
--------------------------------------------------
Casino revenues $ 185,84 $186,097 $ -0.1%
Non casino revenues 44, 42,999 3.1%
Management fees 190 -100.0%
Less complimentaries 18, 18,743 -1.9%
--------------------------------------------------
$ 211,81 $210,543 $ 1 0.6%
--------------------------------------------------
$ 37,5 $40,378 $ (2 -7.1%
125,0 118,723 5.3%
1 1,517 -33.9%
--------------------------------------------------
163,5 160,618 1.8%
--------------------------------------------------
31, 31,644 0.8%
16, 16,355 -1.2%
--------------------------------------------------
$ 179,28 $175,907 $ 3 1.9%
--------------------------------------------------
$ 2, $2,651 $ 1.0%
18, 21,433 ( -13.6%
1 1,395 -19.6%
--------------------------------------------------
22, 25,479 ( -12.4%
--------------------------------------------------
12, 11,355 9.6%
2 2,388 -6.7%
--------------------------------------------------
$ 32,5 $34,446 $ (1 -5.6%
--------------------------------------------------
16
Revenues
The Atlantic City Showboat's net revenues were up $3.4 million or
1.9%, principally due to a $6.3 million or 5.3% increase in slot revenue
in the six months ended June 30, 1996 over the same period in 1995. The
increase in slot revenues is attributable to the addition of
approximately 370 slot units and an increase in slot marketing in the
first half 1996. The Atlantic City industry's slot revenue increased
3.7% by comparison and there was a 7.8% increase in slot units in
the first half of 1996 compared to 1995. The increase in slot
revenues was partially offset by a $2.9 million or 7.1% decline in table
game revenues. This decline is attributable to a decline in the Company's
table game market share in Atlantic City during the six months ended
June 30, 1996. The decline in other gaming revenues of $.5 million or
33.9% is principally due to the decline in keno revenues during the six
months ended June 30, 1996.
The Las Vegas Showboat's net revenues declined $1.9 million or 5.6% in
the first six months of 1996 compared to the first half of 1995. This
decline was principally due to a decline in slot revenues of $2.9
million or 13.6%. Management believes the decline is partially due to the
loss of slot customers due to the increased competition for the local
market and customers lost during the renovation project from July to
December 1995. The Company is continuing to focus its efforts on the
establishment of viable marketing programs to reestablish the customer
base lost during the construction period and to attract new customers.
The decline in other gaming revenues of $.3 million or 19.6% in the first
half of 1996 compared to 1995 is principally due to the decrease in bingo
revenue during the second quarter of 1996 resulting from new competition
for that market segment.
Income From Operations
The Company's income from operations decreased $3.2 million or 14.6%
in the six months ended June 30, 1996 compared to the same period in the
prior year. The decrease was due principally to a decline in income from
operations at both the Atlantic City Showboat and Las Vegas Showboat.
These declines were partially offset by lower operating costs for the
Company's corporate and development functions.
17
Income From Operations
Six Months ended June 30,
(Unaudited)
(in thousands)
1996 1995 Variance Percent
--------------------------------------------------
Atlantic City $ 30,1 $ 31,5 $ (1 -4.6%
Las Vegas (3 ( -1199.7%
Corporate and
development (8 (9 -17.3%
Other -69.7%
--------------------------------------------------
Consolidated $ 18,5 $ 21,6 $ (3 -14.6%
--------------------------------------------------
Atlantic City $ 43,4 $ 45,6 $ (2 -4.8%
Las Vegas 2 ( -118.9%
Corporate and
development (8 (9 -18.1%
Other (71) (233) -69.5%
--------------------------------------------------
Consolidated $ 34,8 $ 37,9 $ (3 -8.2%
--------------------------------------------------
*EBITDA is defined as income from operations before depreciation and
amortization. EBITDA should not be construed as a substitute for income
from operations, net earnings (loss) and cash flows from operating
activities determined in accordance with Generally Accepted Accounting
Principles ("GAAP"). The Company has included EBITDA because it believes
it is commonly used by certain investors and analysts to analyze and
compare gaming companies on the basis of operating performance, leverage
and liquidity and to determine a company's ability to service debt.
The Atlantic City Showboat's income from operations, before management
fees, decreased $1.4 million or 4.6% in the first half of 1996 compared
to 1995. This decrease is attributed to the increased operating expenses
of $4.8 million or 3.3% to $149.1 million for the first half of 1996 up
from $144.3 million for the same period in the prior year. This was
partially offset by the $3.4 million increase in net revenue during the
first half of 1996. The increase in operating expenses is attributable
to increased marketing expenses for slot patrons of $4.3 million in
response to aggressive competition for slot patrons in the Atlantic City
market during the first half of 1996.
18
Income From Operations
The $3.6 million decline in income from operations at the Las Vegas
Showboat, before management fees and inter-company rent, was due
principally to the decline in slot revenues and other gaming revenues
during the six months ended June 30, 1996 compared to the same period in
1995. Operating expenses increased $1.7 million during the second half
of 1996 to $35.8 million compared to $34.1 million for the same period in
1995. The increased operating expense is due primarily to increases in
advertising and marketing promotions for the casino and an increase in
depreciation expense due to the completion of the construction project.
The $1.7 million decline in operating expenses for corporate and
development is attributed to a reduction in the scope of development
activities for the six months ended June 30, 1996 compared to 1995.
The Company capitalized $1.1 million of costs related to the Company's
St. Louis project in the first half of 1996 compared to $3.4 million
capitalized for the Company's East Chicago and Randolph riverboat
projects in the same period in 1995.
The increase in other income from operations for the six months ended
June 30, 1996 compared to the same period in 1995 is attributed to the
elimination of expenses for the Star Casino when it was sold in March
of 1995. The Company realized no earnings during the six months ended
June 30, 1996, from its investment in the Sydney Harbour Casino as a
result of the write-off of preopening costs. Approximately A$20.7
million of preopening costs were written-off in the six months ended
June 30, 1996 and all propening costs have been written-off as of June 30,
1996.
Net income
In the six months ended June 30, 1996 the Company recorded net income
of $.3 million or $.02 per share compared to net income of $6.7 million
or $.43 per share for the six months ended June 30, 1995. Unusual items
totaling $4.3 million are contributing factors to the decline in net
income for the six months ended June 30, 1996 compared to June 30, 1995.
The 1996 results reflect an after tax loss of $2.0 million or $.12 per
share for the write down of the Company's investment in Showboat Mardi
Gras, L.L.C. (SMG). SMG was formed to develop a riverboat casino
operation in Randolph, Missouri. The 1996 results also reflect net
interest expense for the East Chicago, Indiana project of $.6 million
or $.03 per share and a reduction of interest income of $.4 million
or $.02 per share due to the investment of corporate cash in the East
Chicago Subsidiary. In comparison, the first six months of 1995 net
income results included an after tax gain of $1.4 million or $.09 per
share on the sale of the Star Casino.
19
MATERIAL CHANGES IN FINANCIAL CONDITION
As of June 30, 1996 the Company held cash and cash equivalents of
$74.4 million compared to $106.9 million at December 31, 1995. This
decline is due principally to the funding of the East Chicago project.
On March 28, 1996 the Company's 55% owned subsidiaries, Showboat
Marina Casino Partnership (SMCP) and Showboat Marina Finance
Corporation (SMFC), sold $140.0 million, 13 1/2% First Mortgage Notes
due 2003 (the "First Mortgage Notes"). The funds were raised to
support the development of the $195.0 million East Chicago Showboat
riverboat casino project in East Chicago, Indiana (the "East Chicago
Showboat"). Interest expense incurred on the First Mortgage Notes
will be capitalized to the extent permitted under generally accepted
accounting principles and as a result the Company anticipates that
a portion of this expense will impact results in reporting periods
preceding the opening of the East Chicago Showboat project, currently
anticipated for July, 1997. As a result, for the period ended
December 31, 1996, the Company anticipates that net interest expense
of approximately $2.0 million to $3.0 million will be recorded.
The First Mortgage Notes are senior secured obligations of SMCP and
rank senior in right of payment to all existing and future subordinated
indebtedness of SMCP and pari passu with SMCP's senior indebtedness.
Terms not otherwise defined herein have the meanings assigned to them
in the First Mortgage Note Indenture. The First Mortgage Notes are
secured by a first lien on substantially all of SMCP's assets. The
First Mortgage Note Indenture places significant restrictions on SMCP
for the incurrence of additional Indebtedness, the creation of
additional Liens on the Collateral securing the First Mortgage Notes,
transactions with Affiliates and making Restricted Payments unless
certain conditions are met. Restricted Payments include paying a
management fee to the Manager of the East Chicago Showboat, an entity
which is 55% owned by the Company, unless among other things, SMCP's
Fixed Charge Coverage Ratio for the most recently ended four full
fiscal quarters, after giving effect to such Restricted Payment must be
greater than 1.5 to 1.0. To make any other Restricted Payment SMCP
must meet, among other things, a Fixed Charge Coverage Ratio for the
most recently ended four full fiscal quarters, after giving effect to
such Restricted Payment, must be greater than 2.0 to 1.0.
20
In addition, subject to certain qualifications and exceptions, the
Company entered into a standby equity commitment with SMCP, pursuant to
which it will cause to be made up to an aggregate of $30.0 million in
additional capital contributions to SMCP if, during the first three
full four fiscal quarters following the commencement of operations at
the East Chicago Showboat, the project's combined cash flow (defined) is
less than $35.0 million for any one such full four quarter period.
However, in no event will the Company be required to cause to be
contributed to SMCP more than $15.0 million in respect of any such
full four quarter period. In addition, subject to certain
qualifications and exceptions, the Company entered into a completion
guarantee with SMCP to complete the East Chicago project so that it
becomes operational, including the payment of all costs owing prior to
such completion, up to a maximum aggregate amount of $30.0 million.
The Company's obligation to complete the East Chicago project will be
suspended during the pendency of any force majeure event or other event
outside the control of the Company. Currently, the Company believes that
SMCP has sufficient resources to complete the East Chicago Showboat.
However, no assurance can be given that SMCP will be able to complete
the East Chicago Showboat from its available financing resources.
During the six months ended June 30, 1996 the Company expended
approximately $39.4 million on capital improvements at its Las Vegas
and Atlantic City facilities (which were funded from operations) and
construction costs at the East Chicago Showboat(which were principally
funded from the proceeds of the First Mortgage Notes). Approximately
$22.1 million of the $39.4 million related to the East Chicago Showboat.
On April 1, 1996, an affiliate of the Company, Sydney Harbour Casino
Holdings Limited, ("SHCH") through its wholly owned subsidiary, Sydney
Harbour Casino Properties Pty Limited, ("SHCP") renegotiated its
agreement with Leighton Properties Pty Limited ("Leighton Properties")
for the design and construction of the interim and permanent Sydney
Harbour Casino. The renegotiated project cost is approximately A$867.2
million, a A$176.1 million increase over the April 1994 projected
project cost of A$691.1 million, and includes the administration and
management of the project, an accelerated completion date of December
1997, the firming up of monetary allowances and resolution of certain
claims by Leighton Properties to SHCP. The design element changes
incorporated in the renegotiated contract for the permanent casino were
made with a view toward improving its operational efficiency and product
quality and to match the changing competitive environment. The increased
project cost is being funded in part by the sale of 35,250,000 preferred
ordinary shares of stock by SHCH on May 13, 1996, providing net proceeds
21
of approximately A$64.0 million. Additional financing of A$150.0 million
has been negotiated with local banks and is subject to finalizing the
bank documents and obtaining required approvals. As with any
construction contract, the final amount of such contract will be subject
to modification based upon change orders and the occurrence of events
such as costs associated with certain types of construction delays. No
assurance can be given that the construction costs for the Sydney Harbour
will not exceed the announced project cost estimate. The sale of the
additional equity by SHCH reduced the Company's equity in the project to
24.6% from 26.3%.
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. Pursuant to the limited partnership agreement, Showboat Lemay
is responsible for borrowing up to $75.0 million (the "Development
Financing') on behalf of SLP. The Company has committed to use its best
efforts to obtain a commitment letter for the Development Financing
within 60 days after SLP is selected for investigation for a gaming
license by the Missouri Gaming Commission or obtain the Development
Financing within a commercially reasonable time following such selection.
The Company's commitment replaced a previous commitment letter from an
unrelated party. No assurance can be given that SLP will be successful in
obtaining the necessary funds to finance its gaming project or that SLP
will successfully obtain a casino license.
The Company continues to examine, and if appropriate, may pursue
potential gaming opportunities in jurisdictions where gaming is legalized
and in other jurisdictions that, in the future, may legalize private for
profit casino gaming. There can be no assurance that legislation will be
enacted in any additional jurisdictions, that any properties in which the
Company may have invested will be compatible with any gaming legislation
so enacted, that legalized gaming will continue to be authorized in any
jurisdictions or the Company will be able to obtain the required licenses
in any jurisdiction. Further, no assurance can be given that any of the
announced or unannounced projects under development will be completed,
licensed or result in any significant contribution to the Company's cash
flow or earnings. Casino gaming operations are highly regulated and new
casino developments are subject to a number of risks and uncertainties,
many of which are beyond the Company's control.
22
The Company believes that it has sufficient capital resources,
including its existing cash balances, cash provided by operations and
existing borrowing capacity, to cover the cash requirements of its
existing operations. The ability of the Company to satisfy its cash
requirements, will be dependent upon the future performance of its
casino hotels which will continue to be influenced by prevailing
economic conditions and financial, business and other factors, certain
of which are beyond the control of the Company. As the Company realizes
expansion opportunities, the Company will need to make significant
capital investments in such opportunities and additional financing will
be required. The Company anticipates that additional funds will be
obtained through loans or public offerings of equity or debt
securities. Although no assurance can be made that such funds will be
available or at interest rates acceptable to the Company.
All statements contained herein that are not historical facts,
including but not limited to, statements regarding the Company's
current business strategy, the Company's prospective joint ventures,
expansions of existing projects, and the Company's plans for future
development and operations, are based upon current expectations. These
statements are forward-looking in nature and involve a number of risks
and uncertainties. Actual results may differ materially. Among the
factors that could cause actual results to differ materially are the
following: the availability of sufficient capital to finance the
Company's business plan on terms satisfactory to the Company;
competitive factors, such as legalization of gaming in jurisdictions
from which the Company draws significant numbers of patrons and an
increase in the number of casinos serving the markets in which the
Company's casinos are located; changes in labor, equipment and capital
costs; the ability of the Company to consummate its contemplated joint
ventures on terms satisfactory to the Company and to obtain necessary
regulatory approvals therefore; changes in regulations affecting the
gaming industry; the ability of the Company to comply with its
Indentures for its 9 1/4% First Mortgage Bonds and 13% Senior
Subordinated Indebtedness; future acquisitions or strategic
partnerships; general business and economic conditions; and other
factors described from time to time in the Company's reports filed with
the Securities and Exchange Commission. The Company wishes to caution
the readers not to place undue reliance on any such forward-looking
statements, which statements are made pursuant to the Private
Litigation Reform Act of 1995 and, as such, speak only as of the date
made.
23
SHOWBOAT, INC. AND SUBSIDIARIES
PART II, OTHER INFORMATION
Item Legal Proceedings.
24
SHOWBOAT, INC. AND SUBSIDIARIES
PART II, OTHER INFORMATION
(continued)
"Hyland, et al. v. Griffin Investigations, 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 May 30, 1996, the Court granted defendants' motions to dismiss the
plaintiffs' complaint in its entirety.
"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 numerous hotel-casinos, including the Company, infringed on the
plaintiff's copyright by displaying to sports book customers certain
horse race broadcasts. The plaintiff seeks to recover damages for
copyright infringement in an unknown amount. The same factual issues
were raised in an action filed in the United States District Court for
the Eastern District of California (the "California action') in which
the Company was not a party. The United States District Court for the
District of Nevada stayed and administratively stayed the Nevada action
pending resolution of the liability issues in the 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 plaintiff appealed the decision of the trial court
in the California action and the Ninth Circuit Court of Appeals recently
affirmed that decision. No action has been taken with respect to the
administrative stay imposed by the Nevada District Court in the Nevada
action. Management believes that the plaintiff is not entitled to
damages and intends to defend vigorously the allegations.
25
SHOWBOAT, INC. AND SUBSIDIARIES
PART II, OTHER INFORMATION
(continued)
Item Changes in Securities
Not Applicable
Item Defaults Upon Senior Securities.
Not Applicable
26
SHOWBOAT, INC. AND SUBSIDIARIES
PART II, OTHER INFORMATION
(continued)
Item Submission of Matters to a Vote of Security Holders
(a) The Company's annual meeting of shareholders was held on
May 30, 1996.
(b) Directors elected at the annual meeting for a term expiring
in 1999 are as follows: George A. Zettler and Carolyn M. Sparks.
The Directors continuing in office after the annual meeting are
as follows: J.K. Houssels (term expires in 1998); William C.
Richardson (term expires in 1998); John D. Gaughan (term expires
in 1997); Jeanne S. Stewart (term expires in 1998); Frank A.
Modica (term expires in 1997); H. Gregory Nasky (term expires in
1997); and J. Kell Houssels, III (term expires in 1997).
(c) Votes for the election of directors:
Nominees For Withheld Abstain
--------------- ------------ ----------- ---------
George A. Zettler 10,520,078 1,878,513 0
Carolyn M. Sparks 10,513,193 1,885,398 0
Votes for approval of amendments to the 1889 Directors' Stock
Option Plan:
For Against Abstain
------------ ----------
9,855,805 2,500,712 42,074
Votes for ratification and selection of auditors for the year ended
December 31, 1996:
Broker
For Against Abstain Non-Votes
----------- ------- --------- ----------
KPMG Peat Marwick 12,066,792 5,671 14,152 311,976
Item Other Information
Not applicable
27
SHOWBOAT, INC. AND SUBSIDIARIES
PART II, OTHER INFORMATION
(continued)
Item Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
---------- ----------------------------------
4.01 Indenture dated as of March 28, 1996, among
Showboat Marina Casino Partnership, Showboat
Marina Fiance Corporation, Donaldson, Lufkin
& Jenrette Securities Corporation, Nomura
Securities International, Inc., Bear, Stearns
& Co., Inc. and American Bank National
Association, as trustee, relating to the 13 1/2
Series A and Series B First Mortgage Notes due
2003.
10.01 Escrow and Disbursement Agreement dated March
28, 1996, by and among Showboat Marina Casino
Partnership, Showboat Marina Finace Corporation
and Showboat, Inc.(as escrow agent and
disbursement agent) and American Bank National
Association, as trustee.
(b) Reports on Form 8-K
None
28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Showboat, Inc.
Registrant
DateAugust 14, 1996 s/ J. Kell Houssels, III
--------------------- --------------------------------------
J. KELL HOUSSELS, III,
President and Chief Executive
Officer
DateAugust 14, 1996 s/ R. Craig Bird
--------------------- --------------------------------------
R. CRAIG BIRD, Executive Vice
President - Finance and
Administration and Chief
Financial Officer
29
EXHIBIT INDEX
Exhibit No. Description
------------ ----------------------------------
4.01 Indenture dated as of March 29,1 996, among Showboat
Marina Casino Partnership, Showboat Marina Fiance
Corporation, Donaldson, Lufkin & Jenrette Securities
Corporation, Nomura Securities International, Inc.,
Bear, Stearns & Co., Inc. and American Bank National
Association, as trustee, relating to the 13 1/2 Series
A and Series B First Mortgage Notes due 2003.
10.01 Escrow and Disbursement Agreement dated March 28,
1996, by amd among Showboat Marina Casino Partnership,
Showboat Marina Finance Corporation and Showboat, Inc.
(as escrow agent and disbursement agent) and American
Bank National Association, as trustee.
27.1 Financial Data Schedules
30
EXHIBIT 4.01
<PAGE>
EXECUTION COPY
SHOWBOAT MARINA CASINO PARTNERSHIP
SHOWBOAT MARINA FINANCE CORPORATION
ISSUERS
$140,000,000
SERIES A AND SERIES B
13 1/2% FIRST MORTGAGE NOTES DUE 2003
___________________
INDENTURE
Dated as of March 28, 1996
___________________
AMERICAN BANK NATIONAL ASSOCIATION
TRUSTEE
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions 1
Section 1.02. Other Definitions 17
Section 1.03. Incorporation by Reference of Trust Indenture Act 17
Section 1.04. Rules of Construction 18
ARTICLE 2
THE FIRST MORTGAGE NOTES
Section 2.01. Form and Dating 19
Section 2.02. Execution and Authentication 19
Section 2.03. Registrar and Paying Agent 20
Section 2.04. Paying Agent to Hold Money in Trust 21
Section 2.05. Holder Lists 21
Section 2.06. Transfer and Exchange 21
Section 2.07. Replacement First Mortgage Notes 27
Section 2.08. Outstanding First Mortgage Notes 27
Section 2.09. Treasury First Mortgage Notes 27
Section 2.10. Temporary First Mortgage Notes 28
Section 2.11. Cancellation 28
Section 2.12. Defaulted Interest 28
Section 2.13. Record Date 29
ARTICLE 3
OFFERS TO PURCHASE OR REDEMPTION
Section 3.01. Notices to Trustee 29
Section 3.02. Selection of First Mortgage Notes to Be
Purchased or Redeemed 29
Section 3.03. Notice of Redemption 30
Section 3.04. Effect of Notice of Redemption 31
Section 3.05. Deposit of Purchase or Redemption Price 31
Section 3.06. First Mortgage Notes Purchased or Redeemed in Part 32
Section 3.07. Optional Redemption 32
Section 3.08. Redemption Pursuant to Gaming Law 32
Section 3.09. Mandatory Redemption 33
Section 3.10. Repurchase Offers 33
ARTICLE 4
COVENANTS
Section 4.01. Payment of First Mortgage Notes 35
Section 4.02. Maintenance of Office or Agency 35
Section 4.03. Reports 35
Section 4.04. Compliance Certificate 36
Section 4.05. Taxes 37
Section 4.06. Stay, Extension and Usury Laws 37
Section 4.07. Restricted Payments 37
i
<PAGE>
PAGE
Section 4.08. Dividend and Other Payment Restrictions
Affecting Subsidiaries 40
Section 4.09. Limitations on Incurrence of Indebtedness and
Issuance of Disqualified Stock 41
Section 4.10. Asset Sales 42
Section 4.11. Event of Loss 43
Section 4.12. Transactions with Affiliates 44
Section 4.13. Liens 45
Section 4.14. Line of Business 45
Section 4.15. Corporate or Partnership Existence 45
Section 4.16. Change of Control 46
Section 4.17. Designation of Unrestricted Subsidiary 46
Section 4.18. Maintenance of Insurance 47
Section 4.19. Limitation on Status as Investment Company 48
Section 4.20. Collateral Documents 48
Section 4.21. Further Assurances 48
Section 4.22. Restrictions on Leasing and Dedication of Property 48
Section 4.23. Note Guarantees 50
Section 4.24. Excess Cash Flow Offers 50
Section 4.25. Use of Proceeds 50
Section 4.26. Disbursement and Escrow Agreement 50
Section 4.27. Gaming Licenses 50
Section 4.28. Construction 51
Section 4.29. Filing of First Preferred Ship Mortgage 51
Section 4.30. Payment and Performance Bond 51
Section 4.31. Transfer of Certificate of Suitability 51
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation or Sale of Assets 52
Section 5.02. Successor Corporation Substituted 52
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default and Remedies 53
Section 6.02. Acceleration 54
Section 6.03. Other Remedies 55
Section 6.04. Waiver of Past Defaults 56
Section 6.05. Control by Majority 56
Section 6.06. Limitation on Suits 56
Section 6.07. Rights of Holders of First Mortgage Notes to
Receive Payment 57
Section 6.08. Collection Suit by Trustee 57
Section 6.09. Trustee May File Proofs of Claim 57
Section 6.10. Priorities 57
Section 6.11. Undertaking for Costs 58
Section 6.12. Management of Casinos 58
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee 58
Section 7.02. Rights of Trustee 59
ii
<PAGE>
PAGE
Section 7.03. Individual Rights of Trustee 60
Section 7.04. Trustee's Disclaimer 60
Section 7.05. Notice of Defaults 60
Section 7.06. Reports by Trustee to Holders of the First
Mortgage Notes 61
Section 7.07. Compensation and Indemnity 61
Section 7.08. Replacement of Trustee 62
Section 7.09. Successor Trustee by Merger, etc. 63
Section 7.10. Eligibility; Disqualification 63
Section 7.11. Preferential Collection of Claims Against Company 64
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Legal Defeasance or Covenant Defeasance 64
Section 8.02. Legal Defeasance and Discharge 64
Section 8.03. Covenant Defeasance 65
Section 8.04. Conditions to Legal or Covenant Defeasance 65
Section 8.05. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions 66
Section 8.06. Repayment to Company 67
Section 8.07. Reinstatement 67
Section 8.08. First Mortgage Note Collateral 67
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of First Mortgage Notes 68
Section 9.02. With Consent of Holders of First Mortgage Notes 68
Section 9.03. Compliance with Trust Indenture Act 70
Section 9.04. Revocation and Effect of Consents 70
Section 9.05. Notation on or Exchange of First Mortgage Notes 70
Section 9.06. Trustee to Sign Amendments, etc. 70
ARTICLE 10
COLLATERAL AND SECURITY
Section 10.01. Security 71
Section 10.02. Recording and Opinions 72
Section 10.03. Release of Collateral 73
Section 10.04. Protection of the Trust Estate 74
Section 10.05. Certificates of the Company 74
Section 10.06. Certificates of the Trustee 74
Section 10.07. Authorization of Actions to Be Taken by the
Trustee Under the Collateral Documents 75
Section 10.08. Priority of Application of Cash Proceeds by Trustee 75
Section 10.09. Termination of Security Interest 76
Section 10.10. Cooperation of Trustee 76
Section 10.11. Collateral Agent 76
ARTICLE 11
NOTE GUARANTEES
Section 11.01. Note Guarantee 76
iii
<PAGE>
PAGE
Section 11.02. Additional Note Guarantees 78
Section 11.03. Limitation of Guarantors' Liability 78
Section 11.04. Guarantors May Consolidate, etc., on Certain Terms 78
Section 11.05. Releases of Note Guarantees 79
Section 11.06. "Trustee" to Include Paying Agent 79
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls 80
Section 12.02. Notices 80
Section 12.03. Communication by Holders of First Mortgage Notes
with Other Holders of First Mortgage Notes 81
Section 12.04. Certificate and Opinion as to Conditions Precedent 81
Section 12.05. Statements Required in Certificate or Opinion 81
Section 12.06. Rules by Trustee and Agents 82
Section 12.07. No Personal Liability of Directors, Officers,
Employees and Stockholders and Partners 82
Section 12.08. Governing Law 82
Section 12.09. No Adverse Interpretation of Other Agreements 82
Section 12.10. Successors 82
Section 12.11. Severability 83
Section 12.12. Counterpart Originals 83
Section 12.13. Table of Contents, Headings, etc. 83
EXHIBITS
Exhibit A. Form of First Mortgage Note
Exhibit B. Form of Certificate to Be Delivered Upon Exchange
or Registration of Transfer of First Mortgage
Notes
Exhibit C. Form of Intercreditor Agreement
Exhibit D. Form of First Preferred Ship Mortgage
iv
<PAGE>
CROSS-REFERENCE TABLE*
TRUST INDENTURE
ACT SECTION INDENTURE SECTIONS
310 (a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.10
(b) 7.10
(c) N.A.
311 (a) 7.11
(b) 7.11
(c) N.A.
312 (a) 2.05
(b) 12.03
(c) 12.03
313 (a) 7.06
(b)(1) 10.03
(b)(2) 7.07
(c) 7.06;12.02
(d) 7.06
314 (a) 12.05
(b) N.A.
(c)(1) N.A.
(c)(2) N.A.
(c)(3) N.A.
(d) 10.02;10.03;10.05;10.06
(e) 10.02;12.05
(f) N.A.
315 (a) N.A.
(b) N.A.
(c) N.A.
(d) N.A.
(e) N.A.
316 (a)(last sentence) N.A.
(a)(1)(A) N.A.
(a)(1)(B) N.A.
(a)(2) N.A.
(b) N.A.
(c) 2.13
317 (a)(1) N.A.
(a)(2) N.A.
(b) N.A.
318 (a) N.A.
(b) N.A.
(c) 12.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
v
<PAGE>
vi
<PAGE>
INDENTURE (this "Indenture"), dated as of March 28, 1996,
by and among Showboat Marina Casino Partnership, an Indiana
general partnership ("SHOWBOAT PARTNERSHIP"), Showboat Marina
Finance Corporation, a Nevada corporation ("FINANCE CORPORATION"
and, together with Showboat Partnership, the "COMPANY") and
American Bank National Association, a national banking
association, as trustee (the "TRUSTEE").
The Company and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of
the holders (the "Holders") of the Company's 13 1/2% Series A
First Mortgage Notes due 2003 (the "SERIES A FIRST MORTGAGE
NOTES") and the Company's 13 1/2% Series B First Mortgage Notes
due 2003 (the "SERIES B FIRST MORTGAGE NOTES" and, together with
the Series A First Mortgage Notes, the "FIRST MORTGAGE NOTES"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"ACCRUAL PERIOD" shall have the meaning specified in paragraph
1 of the First Mortgage Notes.
"ACQUIRED INDEBTEDNESS" means, with respect to any specified
Person, (i) Indebtedness of any other Person existing at the time
such other Person merged with or into or became a Restricted
Subsidiary of such specified Person, including Indebtedness
incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Restricted Subsidiary
of such specified Person and (ii) Indebtedness encumbering any
asset acquired by such specified Person.
"ADDITIONAL PROJECT FINANCING" shall have the meaning
specified in the Escrow and Disbursement Agreement.
"AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling, controlled by or under
direct or indirect common control with such specified Person.
For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "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, by agreement or otherwise; PROVIDED, HOWEVER, that
beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"ASSET SALE" means (i) the sale, conveyance, transfer or other
disposition (whether in a single transaction or a series of
related transactions) of property or assets (including by way of
a sale and leaseback) of the Company or any Restricted Subsidiary
(each referred to in this definition as a "disposition") or (ii)
the issuance or sale of Equity Interests of any Restricted
Subsidiary (whether in a single transaction or a series of
related transactions), in each case, other than (a) a disposition
of inventory in the ordinary course of business, (b) the
disposition of all or substantially all of the assets of the
Company in a manner permitted pursuant to Section 5.01 hereof or
any disposition that constitutes a Change of Control pursuant to
this Indenture, (c) any disposition that is a Restricted Payment
or that is a dividend or distribution permitted under
<PAGE>
Section 4.07 hereof or any Investment that is not prohibited
thereunder or any disposition of cash or Cash Equivalents to an
Unrestricted Subsidiary, (d) any single disposition, or related
series of dispositions, of assets with an aggregate fair market
value of less than $500,000, (f) any Event of Loss and (g) any
Lease Transaction.
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
"BOARD OF DIRECTORS" means the board of directors of Showboat
Indiana so long as Showboat Indiana is the controlling entity of
the managing general partner of Showboat Partnership, and
thereafter means the board of directors of the entity controlling
the managing general partner of Showboat Partnership.
"CAPITAL CONTRIBUTION" means $39.0 million in cash contributed
to Showboat Partnership by the Parent Partnership and SMIP in
connection with the purchase by the Parent Partnership and SMIP
of Capital Stock of the Company.
"CAPITAL LEASE OBLIGATION" means, at the time any
determination thereof is to be made, the amount of the liability
in respect of a capital lease that would at such time be required
to be capitalized and reflected as a liability on the balance
sheet in accordance with GAAP.
"CAPITAL STOCK" means, with respect to any Person, (i) any and
all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock of such
Person, or (ii) if such Person is a partnership, partnership
interests (whether general or limited) and any other interest or
participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets
of, such partnership (excluding any contingent interest on
Indebtedness).
"CASH EQUIVALENTS" means (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality
thereof having maturities of not more than six months from the
date of acquisition, (iii) certificates of deposit and eurodollar
time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not
exceeding six months and overnight bank deposits, in each case
with any commercial bank having capital and surplus in excess of
$300.0 million, (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any
financial institution meeting the qualifications specified in
clause (iii) above, (v) commercial paper rated A-1 or the
equivalent thereof by Moody's Investors Service, Inc. or Standard
& Poor's Corporation, in each case maturing within one year after
the date of acquisition and (vi) investment funds investing
solely in securities of the types described in clauses (ii)-(v)
above.
"CASINO" means the riverboat casino to be located in East
Chicago, Indiana on Lake Michigan.
"CASINO VESSEL CONSTRUCTION CONTRACT" means that certain
Casino Vessel Construction Contract entered into as of March 8,
1996, between Showboat Partnership and Atlantic Marine, Inc., and
any amendments, modifications or supplements thereto.
"CERTIFICATE OF SUITABILITY" means the certificate of
suitability issued to the Parent Partnership by the Indiana
Commission on January 8, 1996, as in effect on the date of the
Indenture, as replaced by the certificate of suitability issued
to Showboat Partnership.
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"CHANGE OF CONTROL" means the occurrence of any of the
following: (i) the sale, lease or transfer, in one or a series of
transactions, of all or substantially all of the assets of the
Company and its Subsidiaries, taken as a whole, or the sale,
lease or transfer of the Casino (except, in either case, in
connection with an Event of Loss); (ii) the consummation of any
transaction or series of transactions the result of which is that
the Permitted Holder and its Related Parties beneficially owns
less than 50% of the general partnership interests of the Parent
Partnership or the manager or less than 50% of the total Equity
Interests of Showboat Partnership; (iii) the consummation of any
transaction or series of transactions the result of which is that
the Parent Partnership owns less than 99% of the total Equity
Interests of the Company; (iv) the Company ceases to own,
directly or through Wholly Owned Restricted Subsidiaries, either
(1) 100% of the Capital Stock of each entity that operates or
holds a Gaming License or (2) all or substantially all of the
Project Assets of the East Chicago Showboat; or (v) the adoption
of a plan relating to liquidation, dissolution or winding up of
the Company.
"CLOSING DATE" means March 28, 1996.
"COAST GUARD" means the United States Coast Guard.
"COLLATERAL" means all assets, now owned or hereafter
acquired, of Showboat Partnership or any Guarantor defined as
Collateral in the Collateral Documents, which shall initially
include all real estate, leaseholds, estates, improvements and
all personal property owned by Showboat Partnership and any
Restricted Subsidiary with certain exceptions as provided in the
Collateral Documents and this Indenture, and which shall include,
without limitation, upon its completion, the Casino.
"COLLATERAL AGENT" shall have the meaning assigned to it in
the Security Agreement.
"COLLATERAL ASSIGNMENT" means that certain Assignment of
Contracts and Documents dated as of the Closing Date executed by
the Company in favor of the Trustee.
"COLLATERAL DOCUMENTS" means, collectively, the Leasehold
Mortgage, the First Preferred Ship Mortgage, Pledge Agreement,
Security Agreement, Collateral Assignment, Payment and
Performance Bond, Financing Statements, Escrow and Disbursement
Agreement, Project Title Insurance, the Completion Guarantee, the
Completion Guarantor Subordination Agreement, the Standby Equity
Commitment, the Consent and Subordination Agreement, the
Environmental Indemnity Agreement, the Casino Vessel Construction
Contract, the Management Agreement, the License Agreement, the
Lease Agreement and any other agreements, instruments, financing
statements or other documents that evidence, guarantee, secure,
set forth or limit the Lien of the Trustee in the Collateral.
"COMBINED CASH FLOW" means, with respect to any Person for any
period, the Combined Net Income After Tax Distributions (assuming
all required payments to Second Century are accounted for as an
operating expense) of such Person for such period plus (a) an
amount equal to any extraordinary loss plus any net loss realized
in connection with any Asset Sale (to the extent such losses were
deducted in computing Combined Net Income), plus (b) Combined
Interest Expense of such Person for such period, plus (c)
Combined Depreciation and Amortization Expense of such Person for
such period to the extent such depreciation and amortization were
deducted in computing Combined Net Income, plus (d) the amount
distributed in respect of the same period under clause (z) of
Section 4.07 hereof in respect of income taxes, in each case, on
a combined basis for such Person and its Restricted Subsidiaries
and determined in accordance with GAAP.
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"COMBINED DEPRECIATION AND AMORTIZATION EXPENSE" means, with
respect to any Person for any period, the total amount of
depreciation and amortization expense and other noncash charges
(excluding any noncash item that represents an accrual, reserve
or amortization of a cash expenditure for a present or future
period) of such Person and its Restricted Subsidiaries for such
period on a combined basis as determined in accordance with GAAP.
"COMBINED INTEREST EXPENSE" means, with respect to any period,
the sum of (a) combined interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued,
to the extent such expense was deducted in computing Combined Net
Income (including amortization of original issue discount and non
cash interest payments, the interest component of Capital Lease
Obligations, and net payments (if any) pursuant to Hedging
Obligations, and excluding amortization of deferred financing
fees) and (b) commissions, discounts and other fees and charges
paid or accrued with respect to letters of credit and bankers'
acceptance financing.
"COMBINED NET INCOME AFTER TAX DISTRIBUTIONS" means, with
respect to any Person for any period, the aggregate of the Net
Income of such Person and its Restricted Subsidiaries for such
period, on a combined basis, determined in accordance with GAAP,
less all distributions in respect of such period under clause (z)
of Section 4.07 hereof; PROVIDED, HOWEVER, that (i) the Net
Income for such period of any Person that is not a Subsidiary, or
is an Unrestricted Subsidiary, or that is accounted for by the
equity method of accounting, shall be included only to the extent
of the amount of dividends or distributions paid in cash (or to
the extent converted into cash) to the referent Person or a
Wholly Owned Subsidiary thereof in respect of such period,
(ii) the Net Income of any Person acquired in a pooling of
interests transaction shall not be included for any period prior
to the date of such acquisition, (iii) the Net Income for such
period of any Restricted Subsidiary that is not a Guarantor shall
be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary
of its Net Income is not at the date of determination permitted
without any prior governmental approval (which has not been
obtained) or, directly or indirectly, by the operation of the
terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders,
unless such restriction with respect to the payment of dividends
or in similar distributions has been legally waived, and (iv) the
cumulative effect of a change in accounting principles shall be
excluded.
"COMBINED NET WORTH" means, with respect to any Person at any
time, the sum of the following items, as shown on the combined
balance sheet of such Person and its Restricted Subsidiaries as
of such date: (i) the common equity of such Person and its
Restricted Subsidiaries; plus (ii) (without duplication), (a) the
aggregate liquidation preference of Preferred Stock of such
Person and its Restricted Subsidiaries (other than Disqualified
Stock), and (b) any increase in depreciation and amortization
resulting from any purchase accounting treatment from an
acquisition or related financing; less (iii) any goodwill
incurred subsequent to the Issuance Date and less (iv) any write
up of assets (in excess of fair market value) after the Issuance
Date, in each case on a combined basis for such Person and its
Restricted Subsidiaries determined in accordance with GAAP;
PROVIDED, that in calculating Combined Net Worth, any gain or
loss from any Asset Sale shall be excluded.
"COMMENCEMENT DATE" shall have the meaning specified in
paragraph 1 of the First Mortgage Notes.
"COMPLETION GUARANTEE" means that certain Completion
Guarantee dated as of the Closing Date executed by Showboat in
favor of the Trustee.
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"COMPLETION GUARANTOR SUBORDINATION AGREEMENT" means that
certain Completion Guarantor Subordination Agreement dated the
Closing Date by and between Showboat and the Trustee.
"CONSENT AND SUBORDINATION AGREEMENT" means that certain
Manager's Consent and Subordination of Management Agreement dated
as of the Closing Date among Showboat Partnership, the Manager
and the Trustee.
"CONSTRUCTION BUDGET" means itemized schedules setting forth
on a line item basis all of the costs (including financing costs)
estimated to be incurred in connection with the financing,
design, development, construction, equipping and opening of the
East Chicago Showboat, as such schedules are delivered to the
Disbursement Agent on the Issuance Date and as amended from time
to time in accordance with the terms of the Escrow and
Disbursement Agreement.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the
address of the Trustee specified in Section 12.02 hereof or such
other address as to which the Trustee may give notice to the
Company.
"DEFAULT" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.
"DEFINITIVE NOTES" means First Mortgage Notes that are in the
form of the First Mortgage Notes attached hereto as Exhibit A,
that do not include the information called for by footnotes 1 and
2 thereof.
"DEPOSITORY" means, with respect to the First Mortgage Notes
issuable or issued in whole or in part in global form, the Person
specified in Section 2.03 hereof as the Depository with respect
to the First Mortgage Notes until a successor shall have been
appointed and become such pursuant to the applicable provision of
this Indenture, and, thereafter, "Depository" shall mean or
include such successor.
"DISQUALIFIED STOCK" means any Capital Stock which, by its
terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the
happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is
redeemable at the option of the holder thereof, in whole or in
part, on or prior to March 15, 2003.
"EAST CHICAGO SHOWBOAT" means the Casino, Pavilion, parking
garage, breakwater and other land-based and dockside facilities
proposed to be constructed in East Chicago, Indiana by the
Company, as the Plans may be amended pursuant to the Indenture
and the Collateral Documents, but excluding (i) any obsolete
personal property or real property improvement determined by the
Board of Directors to be no longer useful or necessary to the
operations or support of East Chicago Showboat and (ii) any
equipment leased from a third party in the ordinary course of
business.
"ECCF" means East Chicago Communication Foundation, Inc., an
Indiana non-profit corporation.
"ENVIRONMENTAL INDEMNITY AGREEMENT" means that certain
Environmental Indemnity Agreement dated as of the Closing Date
between Showboat Partnership and the Trustee.
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"EQUITY INTERESTS" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding
any debt security that is convertible into, or exchangeable for,
Capital Stock).
"ESCROW ACCOUNT" shall have the meaning specified in the
Escrow and Disbursement Agreement.
"ESCROW AND DISBURSEMENT AGREEMENT" means the Escrow and
Disbursement Agreement among the Company, the Trustee, the Escrow
Agent and the Disbursement Agent.
"EVENT OF LOSS" means, with respect to any property or asset
(tangible or intangible, real or personal), any of the following:
(A) any loss, destruction or damage of such property or asset;
(B) any institution of any proceedings for the condemnation or
seizure of such property or asset or for the exercise of any
right of eminent domain; (C) any actual condemnation, seizure or
taking by exercise of the power of eminent domain or otherwise of
such property or asset, or confiscation of such property or asset
or the requisition of the use of such property or asset; or (D)
any settlement in lieu of clause (B) or (C) above; PROVIDED that
any event under clauses (B), (C) or (D) for the benefit of the
Company shall not be an Event of Loss.
"EXCESS CASH FLOW" means, for any period, the Company's
Combined Cash Flow, less the sum of (i) combined cash interest
expense (including the interest portion of any payments
associated with Capital Lease Obligations and capitalized
interest) of the Company and its Restricted Subsidiaries that is
actually paid during such period, (ii) up to $12.0 million in
combined capital expenditures of the Company and its Restricted
Subsidiaries that are actually made during such period, (iii)
principal payments on the First Mortgage Notes or any other
Indebtedness (including the principal portion of any Capital
Lease Obligations) of the Company and its Restricted Subsidiaries
that are actually made or paid during such period, (iv) the
amount distributed in respect of the same period under clause (z)
of Section 4.07 of this Indenture in respect of income taxes, and
(v) $3.0 million, all determined on a combined basis in
accordance with GAAP.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCHANGE OFFER" means the offer that may be made by the
Company pursuant to the Registration Rights Agreement to exchange
Series A First Mortgage Notes for Series B First Mortgage Notes.
"EXISTING INDEBTEDNESS" means up to $1.0 million in aggregate
principal amount of Indebtedness (other than Capital Lease
Obligations) of the Company and its Restricted Subsidiaries in
existence on the Issuance Date, plus interest accruing thereon,
after application of the net proceeds of the sale of the Series A
First Mortgage Notes as described in the Offering Memorandum,
until such amounts are repaid.
"FINANCING STATEMENTS" means the UCCs executed by the Company
in favor of the Trustee.
"FIRST MORTGAGE NOTES" means the Company's 13 1/2% First
Mortgage Notes due March 15, 2003 to be issued pursuant to this
Indenture.
"FIRST PREFERRED SHIP MORTGAGE" means the First Preferred Ship
Mortgage in the form attached to this Indenture as Exhibit D.
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"FIXED CHARGE COVERAGE RATIO" means, with respect to any
Person as of any date, the ratio of the Combined Cash Flow of
such Person for the most recently ended four full fiscal quarters
for which internal financial statements are available to the
Fixed Charges of such Person for such period. In the event that
the Company or any of its Restricted Subsidiaries incurs,
assumes, guarantees or redeems any Indebtedness (other than
revolving credit borrowings) or issues Disqualified Stock
subsequent to the commencement of the period for which the Fixed
Charge Coverage Ratio is being calculated but prior to the event
for which the calculation of the Fixed Charge Coverage Ratio is
made (the "Calculation Date"), then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee or redemption of Indebtedness,
or such issuance or redemption of Disqualified Stock, as if the
same had occurred at the beginning of the applicable four-quarter
period. For purposes of making the computation referred to
above, acquisitions, dispositions and discontinued operations (as
determined in accordance with GAAP) that have been made by the
Company or any of its Restricted Subsidiaries, including all
mergers, consolidations and dispositions, during the four-quarter
reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be calculated on a pro forma
basis assuming that all such acquisitions, dispositions,
discontinued operations, mergers, consolidations (and the
reduction of any associated fixed charge obligations resulting
therefrom) had occurred on the first day of the applicable four-
quarter reference period.
"FIXED CHARGES" means, with respect to any Person for any
period, the sum of (i) Combined Interest Expense of such Person
for such period, (ii) any capitalized interest not deducted in
calculating Combined Net Income and (iii) to the extent not
included above, the maximum amount of interest which would have
to be paid by such Person or its Restricted Subsidiaries under a
Guarantee of Indebtedness of any other Person if such Guarantee
were called upon, in each case, on a combined basis and in
accordance with GAAP.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of
the accounting profession, which are in effect from time to time.
For the purposes of this Indenture, the term "combined" with
respect to any Person shall mean such Person combined with its
Restricted Subsidiaries, and shall not include any Unrestricted
Subsidiary.
"GAMING AUTHORITY" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature
whatsoever of the United States of America or foreign government,
any state, province or any city or other political subdivision,
whether now or hereafter existing, or any officer or official
thereof, including, without limitation, the Indiana Gaming
Commission and any other agency with authority to regulate any
gaming operation (or proposed gaming operation) owned, managed or
operated by the Company or any of its Subsidiaries.
"GAMING LICENSE" means every material license, franchise or
other authorization required to own, lease, operate or otherwise
conduct gaming activities of the Company or any of its
Subsidiaries, including, without limitation, all such licenses
granted under the Indiana Riverboat Gambling Act, and the
regulations promulgated thereunder, and other applicable federal,
state, foreign or local laws.
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"GLOBAL NOTE" means a First Mortgage Note that contains the
paragraph referred to in footnote 1 and the additional schedule
referred to in footnote 2 to the form of the First Mortgage Note
attached hereto as EXHIBIT A.
"GOVERNMENT SECURITIES" means securities that are (a) direct
obligations of the United States of America for the timely
payment of which its full faith and credit is pledged or (b)
obligations of a Person controlled or supervised by and acting as
an agency or instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America,
which, in either case, are not callable or redeemable at the
option of the issuer thereof, and shall also include a depository
receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act of 1933), as custodian with respect to any such
Government Security or a specific payment of principal of or
interest on any such Government Security held by such custodian
for the account of the holder of such depository receipt;
PROVIDED, that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the
custodian in respect of the Government Security or the specific
payment of principal of or interest on the Government Security
evidenced by such depository receipt.
"GUARANTEE" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of
business), direct or indirect, in any manner (including, without
limitation, letters of credit and reimbursement agreements in
respect thereof), of all or any part of any Indebtedness.
"GUARANTOR" means any Restricted Subsidiary that has or is
obligated to deliver a Note Guarantee in accordance with Section
11.02 hereof, and their successors and assigns.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under (i) currency exchange or
interest rate swap agreements, currency exchange or interest rate
cap agreements and currency exchange or interest rate collar
agreements and (ii) other agreements or arrangements designed to
protect such Person against fluctuations in currency exchange or
interest rates.
"HOLDER" means a Person in whose name a First Mortgage Note is
registered.
"INDEBTEDNESS" means, with respect to any Person, (a) any
indebtedness of such Person, whether or not contingent (i) in
respect of borrowed money, (ii) evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof), (iii) representing
the balance deferred and unpaid of the purchase price of any
property (including Capital Lease Obligations), except any such
balance that constitutes an accrued expense or trade payable, or
(iv) representing any Hedging Obligations, if and to the extent
any of the foregoing indebtedness (other than letters of credit
and Hedging Obligations) would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP,
(b) to the extent not otherwise included, any obligation by such
Person to be liable for, or to pay, as obligor, guarantor or
otherwise, on the Indebtedness of another Person (other than by
endorsement of negotiable instruments for collection in the
ordinary course of business) and (c) to the extent not otherwise
included, Indebtedness of another Person secured by a Lien on any
asset owned by such Person (whether or not such Indebtedness is
assumed by such Person). For purposes of this definition, the
term "Indebtedness" shall not include any amount of the liability
in respect of any operating lease that at such time would not be
required to be capitalized and reflected as a liability on a
balance sheet in accordance with GAAP.
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<PAGE>
"INDENTURE" means this Indenture, as amended, modified or
supplemented from time to time.
"INDEPENDENT FINANCIAL ADVISOR" means an accounting, appraisal
or investment banking firm of nationally recognized standing that
is, in the judgment of the Board of Directors, (i) qualified to
perform the task for which it has been engaged and (ii)
disinterested and independent with respect to the Company and all
of its Subsidiaries, each Affiliate of the Company, and the
Permitted Holder and its Related Parties.
"INDIANA ACT" means the Indiana Riverboat Gambling Act.
"INITIAL PERIOD" shall have the meaning specified in paragraph
1 of the First Mortgage Notes.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement, a
form of which is attached hereto as Exhibit C.
"INVESTMENTS" means, with respect to any Person, all
investments by such Person in other Persons (including
Affiliates) in the form of loans (including Guarantees and any
guarantee of performance for the benefit of a third Person or
commitment to invest in a third Person, in each case to the
extent of such guarantee or such commitment and measured at the
time such guarantee of performance or commitment to invest is
made), 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.
"ISSUANCE DATE" means the closing date for the sale and
original issuance of the First Mortgage Notes.
"LEASE AGREEMENT" means that certain Redevelopment Project
Lease Agreement dated as of October 19, 1995 between the City of
East Chicago, Department of Redevelopment and the Parent
Partnership, as amended, modified or supplemented from time to
time, as assigned to Showboat Partnership.
"LEASEHOLD MORTGAGE" means that certain Leasehold Mortgage and
Security Agreement, dated as of the Closing Date granted by
Showboat Partnership in favor of the Trustee encumbering Showboat
Partnership's right, title and interest in and to the Lease
Agreement and the leasehold estate created thereby.
"LICENSE AGREEMENT" means that certain License Agreement dated
as of the Closing Date between Showboat Partnership and Showboat.
"LIEN" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset, 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).
"MANAGEMENT AGREEMENT" means the Management Agreement dated as
of March 1, 1996 between the Manager and the Company, as in
effect on the Issuance Date.
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<PAGE>
"MANAGER" means Showboat Marina Partnership, an Indiana
general partnership.
"MINIMUM FACILITIES" means, with respect to East Chicago
Showboat, a passenger vessel fully documented and certified by
the Coast Guard licensed to accommodate at least 1,800 passengers
(in addition to master, crew and any other employees of the
Company) with all engines, propulsion, navigation, safety,
heating and air conditioning, and other marine equipment
necessary for the proper and safe operation of a cruising vessel
and with a casino of at least 1,800 gaming positions of operating
slot machines and operating table games (assuming 12 gaming
positions per craps table and 7 gaming positions per other
tables), 800 usable parking spaces in a parking garage, together
with all necessary dockside facilities for embarking and
disembarking passengers and all banking, coin, security and other
ancillary equipment and facilities necessary to operate East
Chicago Showboat on at least a 20 hour per day, seven day per
week, 365 day per year basis.
"NET INCOME" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and
calculated before deducting any amortization of pre-opening
expenses incurred prior to the date East Chicago Showboat is
Operating and before any reduction in respect of Preferred Stock
dividends, excluding, however, (i) any gain (but not loss)
realized in connection with (a) any Asset Sale (including,
without limitation, dispositions pursuant to sale and leaseback
transactions) or (b) the disposition of any securities or the
extinguishment of any Indebtedness of such Person or any of its
Restricted Subsidiaries, and (iii) excluding any extraordinary
gain (but not loss).
"NET LOSS PROCEEDS" means the aggregate cash proceeds received
by the Company or any of its Restricted Subsidiaries in respect
of any Event of Loss, including, without limitation, insurance
proceeds from condemnation awards or damages awarded by any
judgment, net of the direct costs in recovery of such Net Loss
Proceeds (including, without limitation, legal, accounting,
appraisal and insurance adjuster fees) and any taxes paid or
payable as a result thereof.
"NET PROCEEDS" means the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in respect of
any Asset Sale, net of the direct costs relating to such Asset
Sale (including, without limitation, legal, accounting and
investment banking fees, and sales commissions), and any
relocation expenses incurred as a result thereof, taxes paid or
payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of
Indebtedness secured by a Lien (other than the First Mortgage
Notes) on the asset or assets that are the subject of such Asset
Sale and any reserve for adjustment in respect of the sale price
of such asset or assets.
"NET REVENUES" means, with respect to any Person for any
period, the net revenues (after promotional allowances) of such
Person and its Restricted Subsidiaries calculated on a combined
basis in accordance with GAAP.
"NON-RECOURSE FINANCING" means Indebtedness incurred in
connection with the purchase or lease of personal or real
property useful in the Principal Business and as to which the
lender upon default (i) may seek recourse or payment only through
the return or sale of the property or equipment so purchased or
leased and (ii) may not otherwise assert a valid claim for
payment on such Indebtedness against the Company or any
Restricted Subsidiary or any other property of the Company or any
Restricted Subsidiary.
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"NON-RECOURSE INDEBTEDNESS" means Indebtedness or
Disqualified Stock, as the case may be, or that portion of
Indebtedness or Disqualified Stock, as the case may be, (a) as to
which neither the Company nor any of its Restricted Subsidiaries
(i) provides credit support pursuant to any undertaking,
agreement or instrument that would constitute Indebtedness or
Disqualified Stock, as the case may be, or (ii) is directly or
indirectly liable, and (b) no default with respect to which
(including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would
permit (upon notice, lapse of time or both) any holder of any
other Indebtedness or Disqualified Stock, as the case may be, of
the Company or any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or Disqualified Stock, as the
case may be, or cause the payment thereof to be accelerated or
payable prior to its stated maturity.
"NOTE CUSTODIAN" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
"NOTE GUARANTEE" means any Guarantee given by any Guarantor
pursuant to the terms of this Indenture.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"OFFERING" means the Offering of the Series A First Mortgage
Notes by the Company as contemplated by the Offering Memorandum.
"OFFERING MEMORANDUM" means the Offering Memorandum relating
to the Series A First Mortgage Notes dated March 21, 1996.
"OFFICER" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief
Operating Officer, the Chief Financial Officer, the Treasurer,
any Assistant Treasurer, the Controller, the Secretary, any
Assistant Secretary or any Vice President of such Person or, in
the case of the Company, for so long as it is a partnership, of
Showboat Indiana.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf
of the Company or a Guarantor, as the case may be, by two
Officers of the Company or a Guarantor, as the case may be, one
of whom must be the principal executive officer, the principal
financial officer, the treasurer or the principal accounting
officer of the Company or a Guarantor, as the case may be, that
meets the requirements set forth in Section 12.05 hereof.
"OPERATING" means, with respect to East Chicago Showboat, the
first time that (i) all Gaming Licenses have been granted, are in
full force and effect and have not been revoked or suspended,
(ii) all Liens (other than Liens created by the Collateral
Documents or Permitted Liens) related to the construction of East
Chicago Showboat have been discharged or, if payment is not yet
due or if such payment is contested in good faith by the Company,
sufficient funds remain in the Escrow Account to discharge such
Liens, (iii) East Chicago Showboat is in a condition (including
installation of furnishings, fixtures and equipment) to receive
guests in the ordinary course of business, (iv) gaming and other
operations in accordance with applicable law are open to the
general public and are being conducted at East Chicago Showboat
with respect to at least the Minimum Facilities, (v) the Casino
has been certified by the U.S. Coast Guard, and (vi) a notice of
completion of the East Chicago Showboat has been duly recorded in
Indiana.
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"OPERATING YEAR" means the four full consecutive fiscal
quarter period of the Company first beginning after the date that
East Chicago Showboat first becomes Operating, and each
succeeding four full consecutive fiscal quarter period thereafter
that begins immediately after each anniversary of the date the
East Chicago Showboat first becomes Operating.
"OPINION OF COUNSEL" means an opinion from legal counsel that
meets the requirements of Section 12.05 hereof. Such counsel may
be an employee of or counsel to the Company, any Subsidiary of
the Company, any Guarantor or the Trustee.
"PARENT PARTNERSHIP" means Showboat Marina Partnership, an
Indiana general partnership.
"PARTNERSHIP" means Showboat Marina Casino Partnership, an
Indiana general partnership.
"PAYMENT AND PERFORMANCE BOND" means that certain Payment and
Performance Bond relating to the Casino Vessel Construction
Contract.
"PERMITTED HOLDER" means Showboat.
"PERMITTED INVESTMENTS" means (a) any Investments in the
Company, any Guarantor or in any Restricted Subsidiary if the
Investments in such Restricted Subsidiary from the Company, any
Guarantor or any of the other Restricted Subsidiaries aggregate
less than $1.0 million; (b) any Investments in Cash Equivalents;
and (c) Investments by the Company or any Restricted Subsidiary
of the Company in a Person, if as a result of such Investment (i)
such Person becomes a Guarantor or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated, dissolved
or wound-up into, the Company or a Guarantor.
"PERMITTED LIENS" means (a) Liens in favor of the Company;
PROVIDED that if such Liens are on any Collateral, that such
Liens are either collaterally assigned to the Trustee or
subordinate to the Lien in favor of the Trustee securing the
First Mortgage Notes or any Note Guarantee; (b) Liens on property
of a Person existing at the time such Person is merged into or
consolidated with or into, or wound up into, the Company or any
Restricted Subsidiary; PROVIDED, that such Liens were in
existence prior to the contemplation of such merger or
consolidation or winding-up and do not extend to any other assets
other than those of the Person merged into or consolidated with
the Company or such Restricted Subsidiary and any replacement or
accession to such property; (c) Liens on property existing at the
time of acquisition thereof by the Company or any Restricted
Subsidiary of the Company; PROVIDED that such Liens were in
existence prior to the contemplation of 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 or in the
construction of East Chicago Showboat and which obligations are
not expressly prohibited by this Indenture; PROVIDED, HOWEVER,
that the Company has obtained a title insurance endorsement
insuring against losses arising therewith or if such Lien arises
after completion of East Chicago Showboat, the Company has bonded
within a reasonable time after becoming aware of the existence of
such Lien; (e) Liens securing obligations in respect of this
Indenture, First Mortgage Notes and any Note Guarantee; (f) any
existing Liens listed on the Project Title Insurance and leases,
to the extent permitted pursuant to Section 4.22 hereof; (g) (1)
Liens for taxes, assessments or governmental charges or claims or
(2) statutory Liens of landlords, and carriers', warehousemen's,
mechanics', suppliers', materialmen's, repairmen's, crew wages,
maritime or other similar Liens arising in the ordinary course of
business or in the construction of East Chicago Showboat, in the
case of each of (1) and (2), with respect to amounts that either
(A) are not yet delinquent or (B) are being contested
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in good faith by appropriate proceedings as to which appropriate
reserves or other provisions have been made in accordance with
GAAP; PROVIDED, HOWEVER, that the Company has obtained a title
insurance endorsement insuring against losses arising therewith
or if such Lien arises after completion of East Chicago Showboat,
the Company has bonded within a reasonable time after becoming
aware of the existence of such Lien; (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 Company and its Restricted
Subsidiaries; (i) Liens securing purchase money or lease
obligations otherwise permitted by this Indenture incurred or
assumed in connection with the acquisition, purchase or lease of
real or personal property to be used in the Principal Business of
the Company or any of its Restricted Subsidiaries; PROVIDED, that
such Lien does not extend to any Collateral or to any property or
assets of the Company or any Restricted Subsidiary other than the
property or assets so purchased or leased; (j) Liens on East
Chicago Showboat or any related facilities or real estate
securing any Indebtedness permitted to be incurred pursuant to
Section 4.09 hereof which is used to finance the Project
Expansion Costs of a Project Expansion; PROVIDED that (i) such
Lien is junior or PARI PASSU to the Lien securing the First
Mortgage Notes; (ii) the aggregate principal amount of such
Indebtedness does not exceed 70% of the aggregate Project
Expansion Costs of such Project Expansion; (iii) the First
Mortgage Notes are secured by such Project Expansion on a senior
or PARI PASSU basis with respect to such Lien; and (iv) with
respect to any Indebtedness secured by a Lien ranking PARI PASSU
with the Lien securing the First Mortgage Notes, (A) the holders
of such Indebtedness or any trustee or other representative
thereof becomes a party to an Intercreditor Agreement
substantially in the form attached to this Indenture as an
Exhibit and exercises rights and remedies in accordance with the
provisions thereof, and (B) the Trustee receives an endorsement
to its title insurance policy relating to the Lien of the
Leasehold Mortgage insuring the continuing priority of such Lien
as set forth in the title insurance policy; and (k) a leasehold
mortgage in favor of a party financing the lessee of space within
East Chicago Showboat; PROVIDED that (i) the lease affected by
such leasehold mortgage is permitted pursuant to Section 4.22
hereof, (ii) neither the Company nor any Restricted Subsidiary is
liable for the payment of any principal of, or interest or
premium on, such financing and (iii) the affected lease and
leasehold mortgage are expressly made subject and subordinate to
the Lien of the Leasehold Mortgage.
"PERMITTED PROCEED USES" means (i) funding interest payments
on the First Mortgage Notes, (ii) repurchasing First Mortgage
Notes pursuant to a Repurchase Offer, (iii) funding Project Costs
relating to East Chicago Showboat in accordance with the Escrow
and Disbursement Agreement and (iv) providing working capital, to
the extent of funds remaining after the payment of the items set
forth in clauses (i) through (iii) above.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision
thereof or any other entity.
"PLANS" means all drawings, plans and specifications prepared
by or on behalf of the Company and its Restricted Subsidiaries,
as the same may be amended, modified or supplemented from time to
time, and, if required, submitted to and approved by the
appropriate Gaming Authorities, which describe and show East
Chicago Showboat and the labor and materials necessary for
construction thereof.
"PLEDGE AGREEMENT" means that certain Pledge Agreement dated
as of the Closing Date, by and between Showboat Partnership and
the Trustee.
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"PREFERRED STOCK" means any Equity Interest with preferential
right of payment of dividends or upon liquidation, dissolution,
or winding up.
"PRINCIPAL BUSINESS" means the casino gaming and resort
business and any activity or business incidental, directly
related or similar thereto, or any business or activity that is a
reasonable extension, development or expansion thereof or
ancillary thereto, including any hotel, entertainment, recreation
or other activity or business designed to promote, market,
support, develop, construct or enhance the casino gaming and
resort business operated by the Company and its Restricted
Subsidiaries.
"PROJECT" means East Chicago Showboat.
"PROJECT ASSETS" means, with respect to East Chicago Showboat
at any time, all of the assets then in use related to East
Chicago Showboat including the Casino, pavilion, parking garage,
breakwater, any real estate assets, any buildings or improvements
thereon, and all equipment, furnishings and fixtures, but
excluding: (i) any obsolete personal property or real property
improvement determined by the Board of Directors to be no longer
useful or necessary to the operations or support of East Chicago
Showboat and (ii) any equipment leased from a third party in the
ordinary course of business.
"PROJECT COSTS" means, with respect to the construction or
development of East Chicago Showboat, the aggregate costs
required to complete the construction or development of East
Chicago Showboat, through the date on which East Chicago Showboat
is Operating in accordance with the Plans, the applicable legal
requirements and the Construction Budget.
"PROJECT EXPANSION" means any addition, improvement, extension
or capital repair to East Chicago Showboat or any contiguous or
adjacent property, including the purchases of real estate
improvements thereon, but excluding separable furniture.
"PROJECT EXPANSION COSTS" means, with respect to a Project
Expansion, the aggregate costs required to complete such Project
Expansion, including direct costs related thereto, including, but
not limited to, construction management, architectural,
engineering, interior design, legal and other professional fees,
site work, utility installation, permits, certificates and bonds,
but excluding principal or interest payments on any Indebtedness,
operating expenses (including, but not limited to, non-
construction supplies and pre-opening expenses) and any
allocation to corporate overhead or administrative expenses of
the Company, any Guarantor, or any Subsidiary.
"PROJECT TITLE INSURANCE" means any lender's policy of title
insurance issued to the Trustee for the benefit of the Holders.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement dated as of the Closing Date, by and among the Company
and the other parties named on the signature pages thereto, as
such agreement may be amended, modified or supplemented from time
to time.
"RELATED PARTIES" means any Wholly-Owned Subsidiary of the
Permitted Holder.
"REPURCHASE OFFER" means an offer made by the Company to
purchase all or any portion of a Holder's First Mortgage Notes
pursuant to Sections 4.10, 4.11, 4.16, 4.24 or 4.28 hereof.
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"RESPONSIBLE OFFICER" means with respect to the Trustee, any
officer within the corporate trust department of the Trustee
located at the Corporate Trust Office of the Trustee (or any
successor group of the Trustee) and also means, with respect to a
particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity
with the particular subject.
"RESTRICTED INVESTMENT" means (i) an Investment other than a
Permitted Investment or (ii) any sale, conveyance, lease,
transfer or other disposition of assets at less than fair market
value to an Unrestricted Subsidiary, PROVIDED THAT the amount of
such Restricted Investment under this clause (ii) shall be such
difference in value.
"RESTRICTED SUBSIDIARY" means, at any time, any direct or
indirect Subsidiary of the Company that is not then an
Unrestricted Subsidiary; PROVIDED, HOWEVER, that upon the
occurrence of any Unrestricted Subsidiary ceasing to be an
Unrestricted Subsidiary, such Subsidiary shall be included in the
definition of Restricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"SECOND CENTURY" means East Chicago Second Century, Inc. or
any successor corporation that is entitled to receive 0.75% of
Adjusted Gross Gaming Receipts (as defined in certain economic
development commitments of Showboat Partnership to the City of
East Chicago) of East Chicago Showboat under the Certificate of
Suitability.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY AGREEMENT" means that certain Security Agreement
dated as of the Closing Date, by and between Showboat Partnership
and the Trustee.
"SEMIANNUAL PERIOD" shall have the meaning specified in
paragraph 1 of the First Mortgage Notes.
"SHOWBOAT" means Showboat, Inc., a Nevada corporation.
"SHOWBOAT INDIANA" means Showboat Indiana, Inc., a Nevada
corporation.
"SMIP" means Showboat Marina Investment Partnership, an
Indiana general partnership.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary which would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated under the Act, as such Regulation is
in effect on the Issuance Date.
"STANDBY EQUITY COMMITMENT" means that certain Standby Equity
Commitment Agreement entered into as of the Closing Date by and
among Showboat and the Company.
"SUBORDINATED INDEBTEDNESS" means any Indebtedness of the
Company or any of its Restricted Subsidiaries which is expressly
by its terms subordinated in right of payment to the First
Mortgage Notes or any Note Guarantee.
"SUBSIDIARY" means, with respect to any Person, (i) any
corporation, association, or other business entity (other than a
partnership) 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
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in the election of directors, managers or trustees thereof is
at the time of determination owned or controlled, directly or
indirectly, by such Person or one or more of the other
Subsidiaries of that Person or a combination thereof and (ii) any
partnership of which more than 50% of the partnership's capital
accounts, distribution rights or general or limited partnership
interests are owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that
Person or a combination thereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb), as in effect on the date on which this
Indenture is qualified under the TIA.
"TCEF" means Twin City Education Foundation, Inc., an Indiana
non-profit corporation.
"TRANSFER RESTRICTED SECURITIES" means securities that bear or
are required to bear the legend set forth in Section 2.06 hereof.
"TRUSTEE" means the party named as such above until a
successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor
serving hereunder.
"UCCS" means those certain UCC-1 financing statements and UCC-
2 fixture filings filed by Showboat Partnership, Finance
Corporation or any Guarantor in connection with any of the
Collateral Documents.
"UNRESTRICTED SUBSIDIARY" means any entity that would have
been a Restricted Subsidiary of the Company but for its
designation as an "Unrestricted Subsidiary" in accordance with
the provisions of this Indenture so long as it remains an
Unrestricted Subsidiary in accordance with the terms of this
Indenture.
"VOTING STOCK" means, with respect to any Person, any class or
series of capital stock of such Person that is ordinarily
entitled to vote in the election of directors thereof at a
meeting of stockholders called for such purpose, without the
occurrence of any additional event or contingency.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness or Disqualified Stock, as the case may be, at any
date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (x) the amount of each then
remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final
maturity, in respect thereof, by (y) the number of years
(calculated to the nearest one-twelfth) that shall elapse between
such date and the making of such payment, by (b) the then
outstanding principal amount or liquidation preference, as
applicable, of such Indebtedness or Disqualified Stock, as the
case may be.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" is any Wholly Owned
Subsidiary that is a Restricted Subsidiary.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of
such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying
shares) shall at the time be owned by such Person or by one or
more Wholly Owned Subsidiaries of such Person and one or more
Wholly Owned Subsidiaries of such Person.
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SECTION 1.02. OTHER DEFINITIONS.
DEFINED IN
TERM SECTION
"Affiliate Transaction" 4.12
"Asset Sale Offer" 4.10
"Bankruptcy Law" 4.01
"Benefitted Party" 11.01
"Certificate of Suitability Transfer Offer" 4.28
"Certificate of Suitability Transfer Payment" 4.28
"Change of Control Offer" 4.16
"Change of Control Payment" 4.16
"Company" Introduction
"Covenant Defeasance" 8.03
"Event of Default" 6.01
"Event of Loss Offer" 4.11
"Excess Cash Offer Amount" 4.24
"Excess Cash Purchase Price" 4.24
"Excess Cash Flow Offer" 4.24
"Excess Loss Proceeds" 4.11
"Excess Proceeds" 4.10
"incur" 4.09
"Lease Transaction" 4.22
"Legal Defeasance" 8.02
"Offer Amount" 3.10
"Offer Period" 3.10
"Paying Agent" 2.03
"Payment Default" 6.01
"Purchase Date" 3.10
"Purchase Price" 3.10
"Refinancing Indebtedness" 4.09
"Registrar" 2.03
"Repurchase Offer" 3.10
"Restricted Payments" 4.07
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE
ACT.
Whenever this Indenture refers to a provision of the TIA,
the provision is incorporated by reference in and made a part of
this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"INDENTURE SECURITIES" means the First Mortgage Notes and
the Note Guarantees;
"INDENTURE SECURITY HOLDER" means a Holder of a First
Mortgage Note;
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"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the
Trustee;
"OBLIGOR" on the First Mortgage Notes means the Company,
the Guarantors, if any, and any successor obligor upon the First
Mortgage Notes or any Note Guarantee, as the case may be.
All other terms used in this Indenture regarding a
reference to the TIA and that are defined by the TIA, defined by
TIA reference to another statute or defined by SEC rule under the
TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and in the
plural include the singular;
(v) provisions apply to successive events and
transactions;
(vi) references to sections of or rules under the
Securities Act shall be deemed to include substitute,
replacement of successor sections or rules adopted by the SEC
from time to time;
(vii) the term "redeem" and the correlative terms
"redemption" and "redeemed" shall not include any Repurchase
Offer; and
(viii) the term "consolidated" when used in the context of
the Company and its Restricted Subsidiaries shall exclude all
assets, liabilities, revenue or expenses of Unrestricted
Subsidiaries.
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ARTICLE 2
THE FIRST MORTGAGE NOTES
SECTION 2.01. FORM AND DATING.
(a) The First Mortgage Notes and the Trustee's certificate
of authentication shall be substantially in the form of Exhibit A
hereto. Each First Mortgage Note shall be dated the date of its
authentication. The First Mortgage Notes shall be in
denominations of $1,000 and integral multiples thereof except
that First Mortgage Notes used to pay Liquidated Damages may be
in other denominations.
(b) The terms and provisions contained in the First
Mortgage Notes and the Note Guarantees shall constitute, and are
hereby expressly made, a part of this Indenture and the Company,
the Guarantors and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions
and to be bound thereby.
First Mortgage Notes issued in global form shall be
substantially in the form of Exhibit A attached hereto (including
the text referred to in footnotes 1 and 2 thereto). First
Mortgage Notes issued in definitive form shall be substantially
in the form of Exhibit A attached hereto (but without including
the text referred to in footnotes 1 and 2 thereto). Each Global
Note shall represent such of the outstanding First Mortgage Notes
as shall be specified therein and each shall provide that it
shall represent the aggregate amount of outstanding First
Mortgage Notes from time to time endorsed thereon and that the
aggregate amount of outstanding First Mortgage Notes represented
thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any
endorsement of a Global Note to reflect the amount of any
increase or decrease in the amount of outstanding First Mortgage
Notes represented thereby shall be made by the Trustee or the
Note Custodian, at the direction of the Trustee, in accordance
with instructions given by the Holder thereof as required by
Section 2.06 hereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
(a) The aggregate principal amount of First Mortgage Notes
that may be authenticated and delivered under this Indenture is
unlimited. The First Mortgage Notes and the Trustee's
certificate of authentication shall be substantially in the form
of Exhibit A hereto and shall have such appropriate insertions,
omissions, substitutions and other variations as permitted or
contemplated by Exhibit A hereto, as established by a resolution
of the Board of Directors delivered to the Trustee hereunder,
together with an Officers' Certificate setting forth the form of
such series, at or prior to the written order of the Company
contemplated by Section 2.02(d). The First Mortgage Notes may
have such letters, numbers or other marks of identification or
designation and such legends or endorsements placed thereon as
the Company may deem appropriate and as are not inconsistent with
the provisions of this Indenture, or as may be required to comply
with any law or with any rule or regulation made pursuant thereto
or with any rule or regulation of any securities exchange on
which any series of the First Mortgage Notes may be listed or to
conform to usage, all as determined by the officers executing
such First Mortgage Notes. Two Officers of the Company shall
sign each First Mortgage Note issued hereunder for the Company by
manual or facsimile signature.
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(b) If an Officer whose signature is on a First Mortgage
Note no longer holds that office at the time a First Mortgage
Note is authenticated, the First Mortgage Note shall nevertheless
be valid.
(c) A First Mortgage Note shall not be valid until
authenticated by the manual signature of the Trustee. The
signature shall be conclusive evidence that the First Mortgage
Note has been authenticated under this Indenture.
(d) The Trustee shall, upon a written order of the Company
signed by two Officers of the Company, authenticate First
Mortgage Notes of any series with the Note Guarantees for
original issue up to the aggregate principal amount stated in
paragraph 4 of the First Mortgage Notes plus First Mortgage Notes
issued to pay Liquidated Damages pursuant to paragraph 2 of the
First Mortgage Notes. The aggregate principal amount of First
Mortgage Notes outstanding at any time may not exceed such amount
except as provided in Section 2.07 hereof.
(e) The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate First Mortgage Notes.
Unless limited by the terms of such appointment, an
authenticating agent may authenticate First Mortgage Notes
whenever the Trustee may do so. Each reference in this Indenture
to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent
to deal with the Company or any Guarantor or an Affiliate of the
Company or any Guarantor.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
(a) The Company shall maintain an office or agency where
First Mortgage Notes may be presented for registration of
transfer or for exchange ("REGISTRAR") and an office or agency
where First Mortgage Notes may be presented for payment ("PAYING
AGENT"). The Registrar shall keep a register of the First
Mortgage Notes and of their transfer and exchange. The Company
may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar
and the term "Paying Agent" includes any additional paying agent.
The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall notify the Trustee in
writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as
such. The Company or any of its Subsidiaries may act as Paying
Agent or Registrar.
(b) The Company initially appoints The Depository Trust
Company ("DTC") to act as Depository with respect to the Global
Notes.
(c) The Company initially appoints the Trustee to act as
the Registrar and Paying Agent and for service of notices and
demands and to act as Note Custodian in connection with the First
Mortgage Notes.
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SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent shall hold in
trust for the benefit of Holders or the Trustee all money held by
the Paying Agent for the payment of principal, premium and
Liquidated Damages, if any, or interest on the First Mortgage
Notes, and shall notify the Trustee of any Default by the Company
or any Guarantor in making any such payment. While any such
Default continues, the Trustee may require a Paying Agent to pay
all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the
Trustee. Upon payment over to the Trustee, the Paying Agent (if
other than the Company or a Subsidiary) shall have no further
liability for the money. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings
relating to the Company or a Guarantor, the Trustee shall serve
as Paying Agent for the First Mortgage Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of
the names and addresses of all Holders and shall otherwise comply
with TIA Section 312(a). If the Trustee is not the Registrar,
the Company and/or the Guarantors shall furnish to the Trustee at
least seven Business Days before each interest payment date and
at such other times as the Trustee may request in writing, a list
in such form and as of such date as the Trustee may reasonably
require of the names and addresses of the Holders of First
Mortgage Notes and the Company and the Guarantors shall otherwise
comply with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES. When
Definitive Notes are presented by a Holder to the Registrar with
a request:
(x) to register the transfer of the Definitive Notes;
or
(y) to exchange such Definitive Notes for an equal
principal amount of Definitive Notes of other
authorized denominations,
the Registrar shall register the transfer or make the exchange as
requested if its requirements for such transactions are met;
PROVIDED, HOWEVER, that the Definitive Notes presented or
surrendered for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a
written instruction of transfer in form
satisfactory to the Registrar duly executed by
such Holder or by his attorney, duly
authorized in writing; and
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(ii) in the case of a Definitive Note that is a
Transfer Restricted Security, such request
shall be accompanied by the following
additional information and documents, as
applicable:
(A) if such Transfer Restricted Security is
being delivered to the Registrar by a
Holder for registration in the name of
such Holder, without transfer, a
certification to that effect from such
Holder (in substantially the form of
Exhibit B hereto); or
(B) if such Transfer Restricted Security is
being transferred to a "qualified
institutional buyer" (as defined in Rule
144A under the Securities Act) in
accordance with Rule 144A under the
Securities Act or pursuant to an exemption
from registration in accordance with Rule
144 or Rule 904 under the Securities Act
or pursuant to an effective registration
statement under the Securities Act, a
certification to that effect from such
Holder (in substantially the form of
Exhibit B hereto); or
(C) if such Transfer Restricted Security is
being transferred in reliance on another
exemption from the registration
requirements of the Securities Act, a
certification to that effect from such
Holder (in substantially the form of
Exhibit B hereto) and an Opinion of
Counsel from such Holder or the transferee
reasonably acceptable to the Company and
to the Registrar to the effect that such
transfer is in compliance with the
Securities Act.
(b) TRANSFER OF A DEFINITIVE NOTE FOR A BENEFICIAL INTEREST
IN A GLOBAL NOTE. A Definitive Note may not be exchanged for a
beneficial interest in a Global Note except upon satisfaction of
the requirements set forth below. Upon receipt by the Trustee of
a Definitive Note, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Trustee,
together with:
(i) if such Definitive Note is a Transfer Restricted
Security, a certification from the Holder thereof
(in substantially the form of Exhibit B hereto) to
the effect that such Definitive Note is being
transferred by such Holder to a "qualified
institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with Rule
144A under the Securities Act; and
(ii) whether or not such Definitive Note is a Transfer
Restricted Security, written instructions from the
Holder thereof directing the Trustee to make, or
to direct the Note Custodian to make, an
endorsement on the Global Note to reflect an
increase in the aggregate principal amount of the
First Mortgage Notes represented by the Global
Note,
in which case the Trustee shall cancel such Definitive Note in
accordance with Section 2.11 hereof and cause, or direct the Note
Custodian to cause, in accordance with the standing instructions
and procedures existing between the Depository and the Note
Custodian, the
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aggregate principal amount of First Mortgage Notes represented by
the Global Note to be increased accordingly. If no Global Notes
are then outstanding, the Company shall issue and, upon receipt
of an authentication order in accordance with Section 2.02
hereof, the Trustee shall authenticate a new Global Note in the
appropriate principal amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL NOTES. The transfer
and exchange of Global Notes or beneficial interests therein
shall be effected through the Depository, in accordance with this
Indenture and the procedures of the Depository therefor, which
shall include restrictions on transfer comparable to those set
forth herein to the extent required by the Securities Act.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL NOTE FOR
A DEFINITIVE NOTE.
(i) Any Person having a beneficial interest in a
Global Note may upon request exchange such
beneficial interest for a Definitive Note. Upon
receipt by the Trustee of written instructions or
such other form of instructions as is customary
for the Depository, from the Depository or its
nominee on behalf of any Person having a
beneficial interest in a Global Note, and, in the
case of a Transfer Restricted Security, the
following additional information and documents
(all of which may be submitted by facsimile):
(A) if such beneficial interest is being
transferred to the Person designated by
the Depository as being the beneficial
owner, a certification to that effect from
such Person (in substantially the form of
Exhibit B hereto); or
(B) if such beneficial interest is being
transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule
144A under the Securities Act or pursuant
to an exemption from registration in
accordance with Rule 144 or Rule 904 under
the Securities Act or pursuant to an
effective registration statement under the
Securities Act, a certification to that
effect from the transferor (in
substantially the form of Exhibit B
hereto); or
(C) if such beneficial interest is being
transferred in reliance on another
exemption from the registration
requirements of the Securities Act, a
certification to that effect from the
transferor (in substantially the form of
Exhibit B hereto) and an Opinion of
Counsel from the transferee or transferor
reasonably acceptable to the Company and
to the Registrar to the effect that such
transfer is in compliance with the
Securities Act,
in which case the Trustee or the Note Custodian,
at the direction of the Trustee, shall, in
accordance with the standing instructions and
procedures existing between the Depository and the
Note Custodian, cause the aggregate principal
amount of Global Notes to be reduced accordingly
and, following such reduction, the Company shall
execute and, upon receipt of an authentication
order in accordance with Section 2.02 hereof, the
Trustee shall authenticate and deliver to the
transferee a Definitive Note in the appropriate
principal amount.
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(ii) Definitive Notes issued in exchange for a
beneficial interest in a Global Note pursuant to
this Section 2.06(d) shall be registered in such
names and in such authorized denominations as the
Depository, pursuant to instructions from its
direct or indirect participants or otherwise,
shall instruct the Trustee. The Trustee shall
deliver such Definitive Notes to the Persons in
whose names such First Mortgage Notes are so
registered.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL NOTES.
Notwithstanding any other provision of this Indenture (other than
the provisions set forth in subsection (f) of this Section 2.06),
a Global Note may not be transferred as a whole except by the
Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository
or by the Depository or any such nominee to a successor
Depository or a nominee of such successor Depository.
(f) AUTHENTICATION OF DEFINITIVE NOTES IN ABSENCE OF
DEPOSITORY. If at any time:
(i) the Depository for the First Mortgage Notes
notifies the Company that the Depository is
unwilling or unable to continue as Depository for
the Global Notes and a successor Depository for
the Global Notes is not appointed by the Company
within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the
Trustee in writing that it elects to cause the
issuance of Definitive Notes under this Indenture,
then the Company shall execute, and the Trustee shall, upon
receipt of an authentication order in accordance with Section
2.02 hereof, authenticate and deliver, Definitive Notes in an
aggregate principal amount equal to the principal amount of the
Global Notes in exchange for such Global Notes.
(g) LEGENDS.
(i) Except as permitted by the following paragraphs
(ii) and (iii), each First Mortgage Note
certificate evidencing Global Notes and Definitive
Notes (and all First Mortgage Notes issued in
exchange therefor or substitution thereof) shall
bear legends in substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED
HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER
OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES
FOR THE BENEFIT OF SHOWBOAT MARINA CASINO
PARTNERSHIP, AN INDIANA GENERAL PARTNERSHIP, AND
SHOWBOAT MARINA FINANCE CORPORATION, A NEVADA
CORPORATION (COLLECTIVELY, THE
24
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"COMPANY") THAT (A) SUCH SECURITY MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A NON-U.S. PERSON IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE
COMPANY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER OF THE SECURITY EVIDENCED HEREBY OF
THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted
Security represented by a Global Note) pursuant to
Rule 144 under the Securities Act or pursuant to
an effective registration statement under the
Securities Act:
(A) in the case of any Transfer Restricted
Security that is a Definitive Note, the
Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for
a Definitive Note that does not bear the first
legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer
Restricted Security; and
(B) in the case of any Transfer Restricted
Security represented by a Global Note, such
Transfer Restricted Security shall not be
required to bear the first legend set forth in
(i) above, but shall continue to be subject to
the provisions of Section 2.06(c) hereof;
PROVIDED, HOWEVER, that with respect to any
request for an exchange of a Transfer
Restricted Security that is represented by a
Global Note for a Definitive Note that does
not bear the first legend set forth in (i)
above, which request is made in reliance upon
Rule 144, the Holder thereof shall certify in
writing to the Registrar that suchrequest is
being made pursuant to Rule 144 (such
certification to be substantially in the form
of Exhibit B hereto).
(iii) Notwithstanding the foregoing, upon consummation
of the Exchange Offer, the Company shall issue
and, upon receipt of an authentication order in
accordance with Section 2.02 hereof, the Trustee
shall authenticate Series B First Mortgage Notes
in exchange for Series A First Mortgage Notes
accepted for exchange in the Exchange Offer,
which Series B First Mortgage Notes shall not
bear the first legend set forth in (i) above, and
the Registrar shall rescind any restriction on
the transfer of such First Mortgage Notes, in
each case unless the Holder of such Series A
First Mortgage Notes is either (A) a broker-
dealer, (B) a Person participating in the
distribution of the Series A First Mortgage
Notes or (C) a Person who is an affiliate (as
defined in Rule 144A) of the Company.
(h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At
such time as all beneficial interests in Global Notes have been
exchanged for Definitive Notes, redeemed, repurchased or
cancelled, all Global Notes shall be returned to or retained and
cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial
interest in a Global Note is exchanged for Definitive Notes,
redeemed, repurchased or cancelled, the principal amount of First
Mortgage Notes
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represented by such Global Note shall be reduced accordingly and
an endorsement shall be made on such Global Note, by the Trustee
or the First Mortgage Notes Custodian, at the direction of the
Trustee, to reflect such reduction.
(i) GENERAL PROVISIONS RELATING TO TRANSFERS AND
EXCHANGES.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the
Trustee shall authenticate Definitive Notes
and Global Notes at the Registrar's request.
(ii) No service charge shall be made to a Holder
for any registration of transfer or
exchange, but the Company may require
payment of a sum sufficient to cover any
transfer tax or similar governmental charge
payable in connection therewith (other than
any such transfer taxes or similar
governmental charge payable upon exchange or
transfer pursuant to Sections 2.10, 3.06 or
9.05 hereto).
(iii) The Registrar shall not be required to
register the transfer of or exchange any
First Mortgage Note selected for redemption
in whole or in part, except the unredeemed
portion of any First Mortgage Note being
redeemed in part.
(iv) All Definitive Notes and Global Notes issued
upon any registration of transfer or
exchange of Definitive Notes or Global Notes
shall be the valid obligations of the
Company, evidencing the same debt, and
entitled to the same benefits under this
Indenture, as the Definitive Notes or Global
Notes surrendered upon such registration of
transfer or exchange.
(v) The Company shall not be required:
(A) to issue, to register the transfer of or
to exchange First Mortgage Notes during
a period beginning at the opening of
business on a Business Day 15 days
before the day of any selection of First
Mortgage Notes for purchase or
redemption under Section 3.02 or 3.10
hereof or register the transfer of or
exchange any First Mortgage Note so
selected for purchase or redemption in
whole or in part, except the unpurchased
or unredeemed portion of any First
Mortgage Note being purchased or
redeemed in part; or
(B) to register the transfer of or to
exchange any First Mortgage Note so
selected for redemption in whole or in
part, except the unredeemed portion of
any First Mortgage Note being redeemed
in part; or
(C) to register the transfer of or to
exchange a First Mortgage Note between a
record date and the next succeeding
interest payment date.
(vi) Prior to due presentment to the Trustee
registration of the transfer of any First
Mortgage Note, the Trustee, any Agent, the
Company and the Guarantors may deem and
treat the Person in whose name any First
Mortgage Note is registered as the absolute
owner of such First Mortgage Note for the
purpose of receiving payment of principal
of, premium and Liquidated Damages, if any,
and interest on such First Mortgage Notes
and for all other purposes whatsoever,
whether or not such First Mortgage Note is
overdue, and neither the Trustee, any Agent,
the Company nor the Guarantors shall be
affected by notice to the contrary.
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(vii) The Trustee shall authenticate Definitive
Notes and Global Notes in accordance with
the provisions of Section 2.02 hereof.
SECTION 2.07. REPLACEMENT FIRST MORTGAGE NOTES.
(a) If any mutilated First Mortgage Note is surrendered to
the Trustee, or the Company and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any First
Mortgage Note, the Company shall issue and the Trustee, upon the
written order of the Company signed by two Officers of the
Company, shall authenticate a replacement First Mortgage Note if
the Trustee's requirements are met. If required by the Trustee
or the Company or the Guarantors, an indemnity bond must be
supplied by the Holder that is sufficient in the judgment of the
Trustee, the Company and the Guarantors to protect the Company,
the Guarantors, the Trustee, any Agent and any authenticating
agent from any loss that any of them may suffer if a First
Mortgage Note is replaced. The Company and the Guarantors may
charge for its expenses in replacing a First Mortgage Note.
(b) Every replacement First Mortgage Note is an additional
obligation of the Company and the Guarantors and shall be
entitled to all of the benefits of this Indenture equally and
proportionately with all other First Mortgage Notes duly issued
hereunder.
SECTION 2.08. OUTSTANDING FIRST MORTGAGE NOTES.
(a) The First Mortgage Notes outstanding at any time are
all the First Mortgage Notes authenticated by the Trustee except
for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note
effected by the Trustee in accordance with the provisions hereof,
and those described in this Section 2.08 as not outstanding.
Except as set forth in Section 2.09 hereof, a First Mortgage Note
does not cease to be outstanding because the Company or an
Affiliate of the Company holds the First Mortgage Note.
(b) If a First Mortgage Note is replaced pursuant to
Section 2.07 hereof, it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note
is held by a bona fide purchaser.
(c) If the principal amount of any First Mortgage Note is
considered paid under Section 4.01 hereof, it ceases to be
outstanding and interest on it ceases to accrue.
(d) If the Paying Agent (other than the Company, a
Subsidiary or an Affiliate of any thereof) holds, on a redemption
date or maturity date, money sufficient to pay First Mortgage
Notes payable on that date, then on and after that date such
First Mortgage Notes shall be deemed to be no longer outstanding
and shall cease to accrue interest.
SECTION 2.09. TREASURY FIRST MORTGAGE NOTES.
In determining whether the Holders of the required
principal amount of First Mortgage Notes have concurred in any
direction, waiver or consent, First Mortgage Notes owned by the
Company, any Guarantor, or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common
control with the Company or a Guarantor, shall be considered as
though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only First Mortgage Notes
that a Trustee knows are so owned shall be so disregarded.
Notwithstanding the foregoing, First Mortgage Notes that are to
be acquired by the Company, any Guarantor, any Subsidiary of the
Company or any Guarantor or an Affiliate of the Company or any
Guarantor pursuant to an exchange offer, tender offer or other
agreement shall not be
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deemed to be owned by the Company, such Guarantor, a Subsidiary
of the Company or such Guarantor or an Affiliate of the Company
or such Guarantor until legal title to such First Mortgage Notes
passes to the Company, such Guarantor, Subsidiary of the Company
or such Guarantor or Affiliate of the Company or such Guarantor,
as the case may be.
SECTION 2.10. TEMPORARY FIRST MORTGAGE NOTES.
(a) Until Definitive First Mortgage Notes are ready for
delivery, the Company may prepare and the Trustee shall
authenticate temporary First Mortgage Notes upon a written order
of the Company signed by two Officers of the Company. Temporary
First Mortgage Notes shall be substantially in the form of
Definitive First Mortgage Notes but may have variations that the
Company considers appropriate for temporary First Mortgage Notes
and as shall be reasonably acceptable to the Trustee. Without
unreasonable delay, the Company shall prepare and the Trustee
shall authenticate Definitive First Mortgage Notes in exchange
for temporary First Mortgage Notes.
(b) Until such exchange, Holders of temporary First
Mortgage Notes shall be entitled to all of the benefits of this
Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver First Mortgage Notes to
the Trustee for cancellation. The Registrar and Paying Agent
shall forward to the Trustee any First Mortgage Notes surrendered
to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all First Mortgage Notes
surrendered for registration of transfer, exchange, payment,
replacement or cancellation and shall destroy cancelled First
Mortgage Notes (subject to the record retention requirement of
the Exchange Act), unless the Company directs cancelled First
Mortgage Notes to be returned to it. The Company may not issue
new First Mortgage Notes to replace First Mortgage Notes that it
has redeemed or paid or that have been delivered to the Trustee
for cancellation. All cancelled First Mortgage Notes held by the
Trustee shall be destroyed and certification of their destruction
delivered to the Company, unless by a written order, signed by
two Officers of the Company, the Company shall direct that
cancelled First Mortgage Notes be returned to it.
SECTION 2.12. DEFAULTED INTEREST.
If the Company or any Guarantor defaults in a payment of
interest on any series of First Mortgage Notes, the Company or
such Guarantor (to the extent of their obligations under the Note
Guarantees) shall pay the defaulted interest in any lawful manner
plus, to the extent lawful, interest payable on the defaulted
interest, to the Persons who are Holders of First Mortgage Notes
of such series on a subsequent special record date, in each case
at the rate provided in the First Mortgage Notes of such series
and in Section 4.01 hereof. The Company shall notify the Trustee
in writing of the amount of such defaulted interest proposed to
be paid on each First Mortgage Note and the date of the proposed
payment. The Company shall fix or cause to be fixed each such
special record date and payment date, PROVIDED that no such
special record date shall be less than 10 days prior to the
related payment date for such defaulted interest. At least 15
days before the special record date, the Company (or, upon the
written request of the Company, the Trustee in the name and at
the expense of the Company) shall mail or cause to be mailed to
Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.
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SECTION 2.13. RECORD DATE.
The record date for purposes of determining the identity of
Holders entitled to vote or consent to any action by vote or
consent authorized or permitted under this Indenture shall be
determined as the Company determines or, if not so determined, as
provided in TIA Section 316(c).
ARTICLE 3
OFFERS TO PURCHASE OR REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE.
(a) If the Company elects to redeem First Mortgage Notes
pursuant to the optional redemption provisions of Section 3.07
hereof, it shall furnish to the Trustee, at least 30 days but
not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the Section of this Indenture
pursuant to which the redemption shall occur, (ii) the redemption
date, (iii) the series of First Mortgage Notes to be redeemed,
(iv) the principal amount of First Mortgage Notes to be redeemed
and (v) the redemption price.
(b) If the Company is required to make an offer to purchase
First Mortgage Notes pursuant to the provisions of Section 4.10,
4.11, 4.16, 4.24 or 4.28 it shall furnish to the Trustee, at
least 30 days before the scheduled purchase date, an Officers'
Certificate setting forth (i) the Section of this Indenture
pursuant to which the offer to purchase shall occur, (ii) the
offer's terms, (iii) the purchase price, (iv) the principal
amount of the First Mortgage Notes to be purchased and (v)
further setting forth a statement (A) of the Company's Excess
Cash Flow for the fiscal year then ended, or to the effect that
(B) the Company or one of its Restricted Subsidiaries has made an
Asset Sale and there are Excess Proceeds aggregating more than
$7.5 million and the amount of such Excess Proceeds, (C) the
Company or one of its Restricted Subsidiaries has suffered an
Event of Loss and there are Excess Loss Proceeds aggregating more
than $7.5 million and the amount of such Excess Loss Proceeds,
(D) a Change of Control has occurred, or (E) the transfer of the
Certificate of Suitability from the Manager to the Company has
not occurred by July 1, 1996, as applicable.
SECTION 3.02. SELECTION OF FIRST MORTGAGE NOTES TO BE
PURCHASED OR REDEEMED.
(a) If less than all of the First Mortgage Notes are to be
purchased in an Asset Sale Offer, Event of Loss Offer, Excess
Cash Flow Offer, or Certificate of Suitability Transfer Offer or
redeemed at any time, selection of First Mortgage Notes for
purchase or redemption shall be made by the Trustee in compliance
with the requirements of the principal national securities
exchange, if any, on which the First Mortgage Notes are listed,
or, if the First Mortgage Notes are not so listed, on a pro rata
basis, by lot or by such other method as the Trustee shall deem
fair and appropriate (and in such manner as complies with
applicable legal requirements); PROVIDED that no First Mortgage
Notes of $1,000 or less shall be purchased or redeemed in part.
(b) Notices of purchase or redemption shall be mailed by
first class mail, postage prepaid, at least 30 but not more than
60 days before the purchase or redemption date to each Holder of
First Mortgage Notes to be purchased or redeemed at such Holder's
registered address. If any First Mortgage Note is to be
purchased or redeemed in part only, any notice of purchase or
redemption that relates to such First Mortgage Note shall state
the portion of the principal amount thereof that has been or is
to be purchased or redeemed.
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<PAGE>
(c) In the event of partial purchase or partial redemption
in the manner provided above, the particular First Mortgage Notes
to be purchased or redeemed shall be selected, unless otherwise
provided herein, not less than 30 nor more than 60 days prior to
the purchase or redemption date by the Trustee from the
outstanding First Mortgage Notes not previously purchased or
called for redemption. In the event that less than all of the
First Mortgage Notes properly tendered in an Asset Sale Offer,
Event of Loss Offer, Excess Cash Flow Offer or Certificate of
Suitability Transfer Offer are to be purchased, the particular
First Mortgage Notes to be purchased shall be selected promptly
upon the expiration of such Asset Sale Offer, Event of Loss
Offer, Excess Cash Flow Offer or Certificate of Suitability
Transfer Offer.
(d) The Trustee shall promptly notify the Company in
writing of the First Mortgage Notes selected for purchase or
redemption and, in the case of any First Mortgage Note selected
for partial purchase or redemption, the principal amount thereof
to be purchased or redeemed. First Mortgage Notes and portions
of First Mortgage Notes selected shall be in amounts of $1,000
or whole multiples of $1,000; except that if all of the First
Mortgage Notes of a Holder are to be purchased or redeemed, the
entire outstanding amount of First Mortgage Notes held by such
redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to First Mortgage Notes
purchased or called for redemption also apply to portions of
First Mortgage Notes purchased or called for redemption.
(e) A new First Mortgage Note in principal amount equal to
the unpurchased or unredeemed portion of any First Mortgage Note
purchased or redeemed in part shall be issued in the name of the
Holder thereof upon cancellation of the original First Mortgage
Note. On and after the purchase or redemption date, unless the
Company defaults in payment of the purchase or redemption price,
interest shall cease to accrue on First Mortgage Notes or
portions thereof purchased or called for redemption.
(f) In the event the Company is required to make an Asset
Sale Offer, an Event of Loss Offer or an Excess Cash Flow Offer
pursuant to Section 4.10, 4.11 or 4.24 hereof, and the amount of
money in the Escrow Account or the amount of Excess Proceeds,
Excess Loss Proceeds or Excess Cash Flow, as the case may be, to
be applied to such purchase would result in the purchase of a
principal amount of First Mortgage Notes that is not evenly
divisible by $1,000, the Trustee shall promptly refund to the
Company the amount of Excess Proceeds, Excess Loss Proceeds or
Excess Cash Flow that are not applied pursuant to the terms of
this Indenture, as the case may be, that is not necessary to
purchase the immediately lesser principal amount of First
Mortgage Notes that is so divisible.
SECTION 3.03. NOTICE OF REDEMPTION.
(a) At least 30 days but not more than 60 days before a
redemption date, the Company shall mail or cause to be mailed, by
first class mail, a notice of redemption to each Holder whose
First Mortgage Notes are to be redeemed at its registered
address.
(b) The notice shall identify the First Mortgage Notes to
be redeemed and shall state:
(i) the redemption date;
(ii) the redemption price;
(iii) if any First Mortgage Note is being redeemed in
part, the portion of the principal amount of such First
Mortgage Note to be redeemed and that, after the redemption
date upon surrender of such First Mortgage Note, a new
First Mortgage Note or First Mortgage Notes
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in principal amount equal to the unredeemed portion shall
be issued upon cancellation of the original First Mortgage
Note;
(iv) the name and address of the Paying Agent;
(v) that First Mortgage Notes called for redemption
must be surrendered to the Paying Agent to collect the
redemption price;
(vi) that, unless the Company defaults in making such
redemption payment, interest on First Mortgage Notes called
for redemption ceases to accrue on and after the redemption
date;
(vii) the paragraph of the First Mortgage Notes and/or
Section of this Indenture pursuant to which the First
Mortgage Notes called for redemption are being redeemed;
and
(viii)that no representation is made as to the
correctness or accuracy of the CUSIP number, if any, listed
in such notice or printed on the First Mortgage Notes.
(c) At the Company's request, the Trustee shall give the
notice of redemption in the Company's name and at its expense;
PROVIDED, HOWEVER, that the Company shall have delivered to the
Trustee, at least 35 days prior to the redemption date, an
Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such
notice as provided in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with
Section 3.03 hereof, First Mortgage Notes called for redemption
become irrevocably due and payable on the redemption date at the
redemption price. A notice of redemption may not be conditional.
SECTION 3.05. DEPOSIT OF PURCHASE OR REDEMPTION PRICE.
(a) On or prior to any purchase date with respect to an
offer to purchase the First Mortgage Notes required hereunder or
redemption date, the Company shall deposit with the Trustee or
with the Paying Agent money sufficient to pay the purchase or
redemption price of, and accrued and unpaid interest, if any, on
all First Mortgage Notes to be purchased or redeemed on that
date. The Trustee or the Paying Agent shall promptly return to
the Company any money deposited with the Trustee or the Paying
Agent by the Company in excess of the amounts necessary to pay
the purchase or redemption price of, and accrued and unpaid
interest, if any, on, all First Mortgage Notes to be purchased or
redeemed.
(b) If the Company complies with the provisions of the
preceding paragraph, on and after the purchase or redemption
date, interest shall cease to accrue on the First Mortgage Notes
or the portions of First Mortgage Notes purchased or called for
redemption. If a First Mortgage Note is purchased or redeemed on
or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest shall
be paid to the Person in whose name such First Mortgage Note was
registered at the close of business on such record date. If any
First Mortgage Note tendered for purchase or called for
redemption shall not be so paid upon surrender for such tender or
redemption because of the failure of the Company to comply with
the preceding paragraph, interest shall be paid on the unpaid
principal, from the purchase or redemption date until such
principal is paid, and to the extent lawful on
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any interest not paid on such unpaid principal, in each case at
the rate provided in the First Mortgage Notes and in Section 4.01
hereof.
SECTION 3.06. FIRST MORTGAGE NOTES PURCHASED OR REDEEMED IN
PART.
Upon surrender of a First Mortgage Note that is purchased
or redeemed in part, the Company shall issue and, upon the
Company's written request, the Trustee shall authenticate for the
Holder at the expense of the Company a new First Mortgage Note
equal in principal amount to the unpurchased or unredeemed
portion of the First Mortgage Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in Section 3.08 hereof, the First
Mortgage Notes of any series are not redeemable at the Company's
option prior to March 15, 2000. From and after March 15, 2000,
the First Mortgage Notes shall be subject to redemption at the
option of the Company, in whole or in part, upon not less than 30
nor more than 60 days' notice, at the redemption prices plus
accrued and unpaid interest and Liquidated Damages, if any,
thereon to the applicable redemption date as set forth in
paragraph 5 of the First Mortgage Notes.
(b) Any redemption pursuant to this Section 3.07 shall be
made pursuant to the provisions of Sections 3.01 through 3.06
hereof.
SECTION 3.08. REDEMPTION PURSUANT TO GAMING LAW.
(a) Notwithstanding any other provisions of this Article
3, if any Gaming Authority requires that a Holder or beneficial
owner of the First Mortgage Notes must be licensed, qualified or
found suitable under any applicable gaming laws in order to
maintain any Gaming License or franchise of the Company or any
Restricted Subsidiary under any applicable gaming laws, and such
Holder or beneficial owner fails to apply for a license,
qualification or finding of suitability within 30 days after
being requested to do so by such Gaming Authority (or such lesser
period that may be required by such Gaming Authority) or if such
Holder or beneficial owner is not so licensed, qualified or found
suitable by such Gaming Authority or the Company determines, upon
the written advice of counsel or any Gaming Authority, that the
ownership of the First Mortgage Notes would jeopardize or prevent
the issuance of any Gaming License to the Company, or the
reinstatement or renewal of any Gaming License held by the
Company, the Company shall have the right, at its option, (i) to
require such Holder or beneficial owner to dispose of such
Holder's or beneficial owner's First Mortgage Notes within 30
days of receipt of such finding by the applicable Gaming
Authority that such Holder or beneficial owner will not be
licensed, qualified or found suitable as directed by such Gaming
Authority or within 30 days of the Company's determination,
described herein, based upon written advice of counsel or any
Gaming Authority (or such earlier date as may be required by the
applicable Gaming Authority) or (ii) to call for redemption of
the First Mortgage Notes of such Holder or beneficial owner at a
redemption price equal to the lesser of the principal amount
thereof or the price at which such Holder or beneficial owner
acquired the First Mortgage Notes, together with, in either case,
accrued and unpaid interest and Liquidated Damages thereon, if
any, to the earlier of the date of redemption or the date of the
finding of unsuitability by such Gaming Authority, which may be
less than 30 days following the notice of redemption if so
ordered by such Gaming Authority. In connection with any such
redemption, and except as may be required by a Gaming Authority,
the Company shall comply with the procedures contained in this
Indenture and the First Mortgage Notes for redemption of the
First Mortgage Notes. Under this Indenture, the Company is not
required to pay or reimburse any Holder or beneficial owner of
the First Mortgage Notes who is required to apply for such
license, qualification or finding of suitability for the
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costs or fees of such application, licensure, qualification or
finding, including investigation costs for such qualification or
finding.
(b) In connection with any redemption pursuant to this
Section 3.08, and except as may be required by a Gaming
Authority, the Company shall be required to comply with Sections
3.01 through 3.06 hereof.
SECTION 3.09. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10, 4.11, 4.16, 4.24
and 4.28 hereof, the Company shall not be required to make
mandatory redemptions or sinking fund payments prior to maturity
with respect to the First Mortgage Notes.
SECTION 3.10. REPURCHASE OFFERS.
(a) In the event that, pursuant to Section 4.10, 4.11,
4.16, 4.24 or 4.28 hereof, the Company shall be required to
commence an offer to all Holders to purchase First Mortgage Notes
(a "REPURCHASE OFFER"), it shall follow the procedures specified
below.
(b) The Repurchase Offer shall remain open for a period of
20 Business Days following its commencement and no longer, except
to the extent that a longer period is required by applicable law
(the "OFFER PERIOD"). No later than five Business Days after the
termination of the Offer Period (the "PURCHASE DATE"), the
Company shall purchase at the purchase price as determined in
accordance with Section 4.10, 4.11, 4.16, 4.24 or 4.28 hereof, as
the case may be (the "PURCHASE PRICE"), the principal amount of
First Mortgage Notes required to be purchased pursuant to Section
4.10, 4.11, 4.16, 4.24 or 4.28 hereof, as the case may be (the
"OFFER AMOUNT"), or, if less than the Offer Amount has been
tendered, all First Mortgage Notes tendered in response to the
Repurchase Offer. Payment for any First Mortgage Notes so
purchased shall be made in the same manner as interest payments
are made.
(c) If the Purchase Date is on or after an interest record
date and on or before the related interest payment date, any
accrued and unpaid interest, if any, shall be paid to the Person
in whose name a First Mortgage Note is registered at the close of
business on such record date, and no additional interest shall be
payable to Holders who tender First Mortgage Notes pursuant to
the Repurchase Offer.
(d) Upon the commencement of a Repurchase Offer, the
Company shall send, by first class mail, a notice to each of the
Holders, with a copy to the Trustee. The notice shall contain
all instructions and materials necessary to enable such Holders
to tender First Mortgage Notes pursuant to the Repurchase Offer.
The Repurchase Offer shall be made to all Holders. The notice,
which shall govern the terms of the Repurchase Offer, shall
state:
(i) that the Repurchase Offer is being made pursuant
to this Section 3.10 and Section 4.10, 4.11, 4.16, 4.24 or
4.28 hereof, as the case may be, and that all First
Mortgage Notes properly tendered pursuant to such
Repurchase Offer shall be accepted for payment;
(ii) the Offer Amount, the Purchase Price and the
Purchase Date, which shall be no earlier than 30 days nor
later than 60 days from the date on which such notice is
mailed, except as may be otherwise required by applicable
law;
(iii) that any First Mortgage Note not properly
tendered shall remain outstanding and continue to accrue
interest;
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(iv) that, unless the Company defaults in making such
payment, all First Mortgage Notes accepted for payment
pursuant to the Repurchase Offer shall cease to accrue
interest after the Purchase Date;
(v) that Holders electing to have any First Mortgage
Notes purchased pursuant to a Repurchase Offer shall be
required to surrender the First Mortgage Notes, with the
form titled "Option of Holder to Elect Purchase" on the
reverse of the First Mortgage Notes completed, or transfer
by book entry transfer, to the Company, the Depository, if
appointed by the Company, or to the Paying Agent specified
in the notice at the address specified in the notice prior
to the close of business on the third Business Day
preceding the Purchase Date;
(vi) that Holders shall be entitled to withdraw their
tendered First Mortgage Notes and their election to
require the Company to purchase the First Mortgage Notes,
PROVIDED, that the Company, the depository or the Paying
Agent receives, not later than the close of business on the
last day of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the
Holder, the principal amount of First Mortgage Notes
tendered for purchase, and a statement that such Holder is
withdrawing his tendered First Mortgage Notes and his
election to have such First Mortgage Notes purchased; and
(vii) that Holders whose First Mortgage Notes are
being purchased only in part shall be issued new First
Mortgage Notes equal in principal amount to the unpurchased
portion of the First Mortgage Notes surrendered (or
transferred by book-entry transfer), which unpurchased
portion must be equal to $1,000 in principal amount or an
integral multiple thereof.
(e) The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws or regulations
are applicable in connection with the repurchase of the First
Mortgage Notes pursuant to a Repurchase Offer.
(f) On the Purchase Date, the Company shall, to the extent
permitted by law, (i) accept for payment, pursuant to the terms
of Section 3.02 hereof, the Offer Amount of First Mortgage Notes
or portions thereof properly tendered pursuant to the Repurchase
Offer, or if less than the Offer Amount has been tendered, all
First Mortgage Notes tendered, (ii) deposit with the Paying Agent
an amount equal to the aggregate Purchase Price in respect of all
First Mortgage Notes or portions thereof so tendered and
(iii) deliver, or cause to be delivered, to the Trustee for
cancellation the First Mortgage Notes so accepted together with
an Officers' Certificate stating that such First Mortgage Notes
or portions thereof have been tendered to and purchased by the
Company. The Paying Agent shall promptly (but in any case not
later than three days after the Purchase Date) mail or deliver to
each Holder an amount equal to the Purchase Price of the First
Mortgage Notes tendered by such Holder and accepted by the
Company for purchase and the Trustee shall promptly authenticate
and mail or deliver a new First Mortgage Note to such Holder
equal in principal amount to any unpurchased portion of the First
Mortgage Notes surrendered, if any, PROVIDED that each such new
First Mortgage Note shall be in a principal amount of $1,000 or
an integral multiple thereof. Any First Mortgage Note not so
accepted shall be promptly mailed or delivered by the Company to
the Holder thereof. The Company shall publicly announce the
results of the Repurchase Offer on or as soon as practicable
after the Purchase Date.
(g) Other than as specifically provided in this Sec
tion 3.10, any purchase pursuant to this Section 3.10 shall be
made pursuant to the provisions of Sections 3.01 through 3.06
hereof to the extent applicable.
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ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF FIRST MORTGAGE NOTES.
(a) The Company shall pay or cause to be paid the
principal of, premium, if any, and interest on the First Mortgage
Notes on the dates and in the manner provided in the First
Mortgage Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other
than the Company or a Subsidiary thereof, holds as of 10:00 a.m.
Eastern time on the due date money deposited by the Company in
immediately available funds and designated for and sufficient to
pay all principal, premium, if any, and interest then due. The
Company shall pay all Liquidated Damages, if any, in the same
manner on the dates and in the amounts set forth in the
Registration Rights Agreement.
(b) The Company shall pay interest (including post-
petition interest in any proceeding under any Bankruptcy Law) on
overdue principal at the rate equal to 1% per annum in excess of
the then applicable interest rate on the First Mortgage Notes to
the extent lawful; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard
to any applicable grace period) at the same rate to the extent
lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
(a) The Company shall maintain in the Borough of
Manhattan, the City of New York, an office or agency (which may
be an office of the Trustee or an affiliate of the Trustee,
Registrar or co-registrar) where First Mortgage Notes may be
surrendered for registration of transfer or for exchange and
where notices and demands to or upon the Company or the
Guarantors in respect of the First Mortgage Notes and this
Indenture may be served. The Company shall give prompt written
notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee.
(b) The Company may also from time to time designate one
or more other offices or agencies where the First Mortgage Notes
may be presented or surrendered for any or all such purposes and
may from time to time rescind such designations; PROVIDED,
HOWEVER, that no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain an
office or agency in the Borough of Manhattan, the City of New
York for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
(c) The Company hereby designates the Corporate Trust
Office of the Trustee as one such office or agency of the Company
in accordance with Section 2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations
of the Commission, and within the time periods that are (or
would be) prescribed thereby, so long as any First Mortgage Notes
are outstanding, the Company shall furnish to the Holders of
the First Mortgage Notes, (i) all quarterly and annual financial
information that would be required to be contained in a filing
with the Commission on
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Forms 10-Q and 10-K if the Company were required to file such
Forms, including a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and, with respect
to the annual information only, a report thereon by the Company's
independent certified public accountants and (ii) all current
reports that would be required to be filed with the Commission on
Form 8-K if the Company were required to file such reports. In
addition, whether or not required by the rules and regulations of
the Commission, the Company shall file a copy of all such
information and reports with the Commission for public
availability (unless the Commission shall not accept such a
filing) and make such information available to securities
analysts and prospective investors upon request.
(b) For so long as any First Mortgage Notes remain
outstanding, the Company shall furnish to the Holders and to
securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90
days after the end of each fiscal year, an Officers' Certificate
stating that a review of the activities of the Company and its
Subsidiaries during the preceding fiscal year has been made under
the supervision of the signing Officers of the Company with a
view to determining whether the Company and each obligor on the
First Mortgage Notes and this Indenture is in compliance with
this Indenture and each Collateral Document and further stating,
(i) as to each such Officer signing such certificate, that to the
best of his or her knowledge the Company and each such obligor is
in compliance with each and every covenant contained in this
Indenture and each Collateral Document and is not in default in
the performance or observance of any of the terms, provisions and
conditions of this Indenture or any Collateral Document (or, if a
Default or Event of Default shall exist, describing all such
Defaults or Events of Default of which he or she may have
knowledge and what action the Company or such obligor, as the
case may be, is taking or proposes to take with respect thereto)
and that to the best of his or her knowledge no event has
occurred that remains in existence by reason of which payments on
account of the principal of or interest, if any, on the First
Mortgage Notes is prohibited or if such event exists, a
description of the event and what action the Company or such
obligor, as the case may be, is taking or proposes to take with
respect thereto and (ii) the amount of Excess Cash Flow for such
fiscal year and whether the Company is required to make an Excess
Cash Flow Offer pursuant to Section 4.24 hereof.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public
Accountants, the year-end financial statements delivered pursuant
to Section 4.03(a) above shall be accompanied by a written
statement of the Company's independent public accountants (who
shall be a firm of established national reputation) that in
making the examination necessary for certification of such
financial statements, nothing has come to their attention that
would lead them to believe that the Company is in violation of
any provisions of Article 4 or Article 5 hereof or, if any such
violation exists, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be
liable directly or indirectly to any Person for any failure to
obtain knowledge of any such violation.
(c) The Company shall, so long as any of the First
Mortgage Notes are outstanding, deliver to the Trustee, within
five Business Days upon any Officer becoming aware of any Default
or Event of Default or any event of default under any document,
instrument or agreement representing Indebtedness of the Company,
an Officers' Certificate specifying such Default or Event of
Default and what action the Company is taking or proposes to take
with respect thereto.
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(d) Immediately upon East Chicago Showboat becoming
Operating, the Company shall deliver promptly to the Trustee an
Officers' Certificate that shall state that (i) East Chicago
Showboat is Operating and (ii) the date on which East Chicago
Showboat became Operating.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its
Restricted Subsidiaries to pay, prior to delinquency, all
material taxes, assessments, and governmental levies except such
as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any
material respect to the Holders of the First Mortgage Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
Each of the Company and the Guarantors covenants (to the
extent that it may lawfully do so) that it shall not at any time
insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and
each of the Company and the Guarantors (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage
of any such law, and covenants that it shall not, by resort to
any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been
enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly: (i) declare
or pay any dividend or make any distribution on account of the
Company's or any of its Restricted Subsidiaries' Equity Interests
(other than (1) dividends or distributions by the Company payable
in Equity Interests (other than Disqualified Stock) of the
Company or (2) dividends or distributions by a Restricted
Subsidiary of the Company payable to the Company); (ii) purchase,
redeem or otherwise acquire or retire for value any Equity
Interests of the Company or any of its Restricted Subsidiaries or
any other Affiliate of the Company (other than any such Equity
Interests owned by the Company or any Wholly Owned Restricted
Subsidiary); (iii) purchase, redeem or otherwise acquire or
retire for value any Subordinated Indebtedness of the Company or
any of its Restricted Subsidiaries; (iv) make any payment in
respect of repayment or reimbursement of amounts advanced under
any obligation under the Completion Guarantee or make any payment
of any fee for services to any Affiliate of any partner of the
Company (other than a reimbursement of actual out-of-pocket costs
not to exceed fair market value and other than any payment in the
form of Equity Interests that are not Disqualified Stock); or (v)
make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (v) above being
collectively referred to as "Restricted Payments"), unless, at
the time of such Restricted Payment:
(a) no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof;
(b) for any Restricted Payment, the Company would, at
the time of such Restricted Payment and after giving PRO FORMA
effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in
Section 4.09 hereof; and
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(c) such Restricted Payment, together with the aggregate
of all other Restricted Payments made by the Company and its
Restricted Subsidiaries after the Issuance Date (including
Restricted Payments permitted by clauses (u) and (x) in the
next succeeding paragraph of this Section 4.07 but excluding
Restricted Payments under clauses (v), (w), (y) and (z) in the
next succeeding paragraph of this Section 4.07), is less than
the sum of (i) 50% of the Combined Net Income After Tax
Distributions of the Company for the period (taken as one
accounting period) from the first day after East Chicago
Showboat is Operating to the end of the Company's most
recently ended fiscal quarter for which internal financial
statements are available (or, if such Combined Net Income
After Tax Distributions for such period is a deficit, MINUS
100% of such deficit), PLUS (ii) 100% of the aggregate net
cash proceeds received by the Company since the Issuance Date
from the issue or sale of Equity Interests or debt securities
of the Company that have been converted into such Equity
Interests of the Company (other than (1) Equity Interests or
convertible debt securities of the Company sold to a
Restricted Subsidiary of the Company, (2) Disqualified Stock
or debt securities that have been converted into Disqualified
Stock, (3) Equity Interests the proceeds of which were applied
under clauses (v) and (w) of the next succeeding paragraph of
this Section 4.07 and (4) Equity Interests issued or sold to
comply with the Standby Equity Commitment or the Completion
Guarantee), PLUS (iii) to the extent not otherwise included in
the Company's Combined Net Income After Tax Distributions,
100% of the cash dividends or distributions or the amount of
the cash principal and interest payments received since the
Issuance Date by the Company or any Restricted Subsidiary from
any Unrestricted Subsidiary or in respect of any Restricted
Investment (other than dividends or distributions to pay
obligations of such Unrestricted Subsidiary for income taxes),
until the entire amount of the Investment in such Unrestricted
Subsidiary has been received or the entire amount of such
Restricted Investment has been returned, as the case may be.
The foregoing provisions shall not prohibit:
(u) the payment of any dividend or the making of any
distribution within 60 days after the date of declaration
thereof, if, at the date of declaration, such payment or
distribution would have complied with the provisions of
this Indenture;
(v) the redemption, repurchase, retirement or other
acquisition of any Equity Interests of the Company or any
Restricted Subsidiary in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than
to a Restricted Subsidiary of the Company) of Equity
Interests of the Company (other than any Disqualified
Stock);
(w) the redemption, repurchase, retirement or other
acquisition of any Subordinated Indebtedness of the Company
or any Restricted Subsidiary in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than
to a Restricted Subsidiary of the Company) of Subordinated
Indebtedness of the Company or Equity Interests of the
Company (other than Disqualified Stock); PROVIDED, HOWEVER,
that (A) the principal amount of such Subordinated
Indebtedness shall not exceed the principal amount of the
Subordinated Indebtedness so redeemed, repurchased, retired
or otherwise acquired (plus the amount of reasonable
expenses incurred and any premium paid in connection
therewith), (B) the Subordinated Indebtedness shall have a
Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of the Subordinated
Indebtedness being redeemed, repurchased, retired or
otherwise acquired, and (C) such Subordinated Indebtedness
is subordinated in right of payment to the First Mortgage
Notes and any Note Guarantee on terms at least as favorable
to the Holders as those contained in the documentation
governing the Subordinated Indebtedness being redeemed,
repurchased, retired or otherwise acquired;
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(x) any redemption or purchase by the Company or any
Restricted Subsidiary of Equity Interests of the Company
required by a Gaming Authority in order to preserve a
Gaming License; (PROVIDED, that so long as such efforts do
not jeopardize any Gaming License, the Company or such
Restricted Subsidiary shall have diligently attempted to
find a third-party purchaser for such Equity Interests and
no third-party purchaser acceptable to the applicable
Gaming Authority was willing to purchase such Equity
Interests within a time period acceptable to such Gaming
Authority);
(y) the payment of fees to the Manager under the
Management Agreement; PROVIDED, HOWEVER, that: (A) no
Default or Event of Default shall have occurred and be
continuing by the Company; (B) at the time of payment of
such fees, the Company's Fixed Charge Coverage Ratio for
the Company's most recently ended four full fiscal quarters
for which internal financial statements are available
immediately preceding the date of such payment would have
been at least 1.5 to 1.0 (calculated on a pro forma cash
basis after only deducting such fees to the extent paid in
cash and not deferred for such period including any fees
deferred from a prior period to be paid in cash during such
period and not deducting any such fees to the extent
deferred and not paid in cash during such period); and (C)
any fees not paid pursuant to the previous provision shall
be deferred and may be paid only at such time that such fee
may be paid under this clause (y) or as a Restricted
Payment under paragraph (c) above; and
(z) quarterly distributions to the partners of the
Company in an amount not to exceed, with respect to any
fiscal year, an amount equal to the good faith estimate of
maximum federal and state income tax liability of the
Company in such period if it were a taxable Person at the
highest effective federal and state tax rate of any partner
of the Parent Partnership. Each such quarterly
distribution shall not exceed the estimated federal and
state tax liability calculated on such basis. In addition,
the Company may make one annual tax distribution in respect
of any difference between the annual tax liability so
calculated and the estimated quarterly distributions made.
Any distribution of estimated tax payments that exceed the
annual tax liability so calculated shall be applied to
reduce the distributions in the following year;
The amount of all Restricted Payments (other than cash)
shall be the fair market value (as determined in good faith by,
and evidenced by a resolution of, the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee) on
the date of such Restricted Payment of the asset(s) proposed to
be transferred by the Company or such Restricted Subsidiary, as
the case may be, pursuant to such Restricted Payment.
Not less than once each fiscal quarter, the Company shall
deliver to the Trustee an Officers' Certificate stating that each
Restricted Payment made during the prior fiscal quarter was
permitted and setting forth the basis upon which the calculations
required by this Section 4.07 were computed, which calculations
may be based upon the Company's latest available financial
statements.
For purposes of determining the amount of Restricted
Investments outstanding at any time, all Restricted Investments
shall be valued at their fair market value at the time made (as
determined in good faith by, and evidenced by a resolution of,
the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee), and no adjustments shall be made for
subsequent changes in fair market value.
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SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any
encumbrance or consensual restriction on the ability of any such
Restricted Subsidiary to:
(i) (A) pay dividends or make any other
distributions to the Company or any of its Restricted
Subsidiaries (1) on its Capital Stock or (2) with respect
to any other interest or participation in, or measured by,
its profits, or (B) pay any Indebtedness owed to the
Company or any of its Restricted Subsidiaries (other than
in respect of the subordination of such Indebtedness to
the First Mortgage Notes or the Note Guarantees, as the
case may be);
(ii) make loans or advances to the Company or any of
its Restricted Subsidiaries; or
(iii) sell, lease, or transfer any of its properties
or assets to the Company or any of its Restricted
Subsidiaries.
(b) Paragraph (a) of this Section 4.08 shall not apply (in
each case) for such encumbrances or restrictions existing under
or by reason of:
(i) contractual encumbrances or restrictions in
effect on the Issuance Date;
(ii) this Indenture, the First Mortgage Notes, any
Note Guarantees and the Collateral Documents;
(iii) any instrument governing Indebtedness or Capital
Stock of a Person acquired by the Company or any Restricted
Subsidiary as in effect at the time of such acquisition
(except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition),
which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other
than the Person, or the property or assets of the Person,
so acquired and replacements and accessions thereto;
(iv) customary non-assignment provisions in leases
entered into in the ordinary course of business and
consistent with past practices;
(v) purchase money obligations for property acquired
in the ordinary course of business that impose restrictions
of the nature discussed in clause (iii) of paragraph (a) of
this Section 4.08 on the property so acquired;
(vi) applicable law or any applicable rule or order
of any Gaming Authority; or
(vii) any encumbrances or restrictions imposed by any
amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or
refinancings of the contracts, instruments or obligations
referred to in clauses (i) through (vi) of this paragraph
(b); PROVIDED, that such amendments, modifications,
restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith
judgment of the Board of Directors (as evidenced by a
resolution thereof set forth in an Officers' Certificate
delivered to the Trustee), no more restrictive with respect
to such dividend and other payment restrictions than those
contained in the dividend or other payment restrictions
prior to such amendment,
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modification, restatement, renewal, increase, supplement,
refunding, replacement or refinancing.
SECTION 4.09. LIMITATIONS ON INCURRENCE OF INDEBTEDNESS AND
ISSUANCE OF DISQUALIFIED STOCK.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create,
incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to (collectively, "incur" and
correlatively, an "incurrence" of) any Indebtedness (including
Acquired Indebtedness) or issue any shares of Disqualified Stock;
PROVIDED, HOWEVER, that the Company and its Restricted
Subsidiaries may incur Indebtedness or issue shares of
Disqualified Stock if: (i) East Chicago Showboat is Operating,
and (ii) the Company's Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding
the date of such incurrence or issuance would have been at least
2.0 to 1.0, determined on a PRO FORMA basis (including a PRO
FORMA application of the net proceeds therefrom) as if the
additional Indebtedness had been incurred or the Disqualified
Stock had been issued, as the case may be, and the application of
such proceeds had occurred, at the beginning of such four-quarter
period:
The foregoing limitations shall not apply to:
(a) the incurrence by the Company or any of its
Restricted Subsidiaries of Indebtedness for working capital in
an aggregate principal amount not to exceed $3.0 million at
any time outstanding;
(b) the incurrence by the Company or any of its
Restricted Subsidiaries of the Existing Indebtedness;
(c) the incurrence by the Company or any of its
Restricted Subsidiaries of Indebtedness represented by the
First Mortgage Notes or a Note Guarantee or obligations
arising under the Collateral Documents, to the extent that
such obligations would constitute Indebtedness;
(d) the incurrence by the Company or any of its
Restricted Subsidiaries of Indebtedness (the "REFINANCING
INDEBTEDNESS") issued in exchange for, or the proceeds of
which are used to extend, refinance, renew, replace, or refund
Indebtedness referred to the first paragraph of this Section
4.09 or in clauses (b) or (c) or this clause (d); PROVIDED,
HOWEVER, that (1) the principal amount of such Refinancing
Indebtedness shall not exceed the principal amount of
Indebtedness so extended, refinanced, renewed, replaced,
substituted or refunded (plus the amount of reasonable
expenses incurred and any premium paid in connection
therewith), (2) the Refinancing Indebtedness shall, if
applicable, be subordinated in right and priority of payment
to the First Mortgage Notes and any Note Guarantee on terms at
least as favorable to the Holders of the First Mortgage Notes
as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced,
substituted or refunded, and (3) the Refinancing Indebtedness
shall have a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of the
Indebtedness being extended, refinanced, renewed, replaced,
substituted or refunded;
(e) intercompany Indebtedness between or among the
Company and any Wholly Owned Restricted Subsidiary; PROVIDED,
HOWEVER, the obligations to pay principal, interest or other
amounts under such intercompany Indebtedness is subordinated
to the prior payment in full in cash of the First Mortgage
Notes and any Note Guarantee;
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(f) Hedging Obligations that are incurred for the
purpose of fixing or hedging (1) interest rate risk with
respect to any floating rate Indebtedness that is permitted by
the terms of this Indenture to be outstanding or (2) foreign
currency exchange rate risk;
(g) the incurrence by the Company or any of its
Restricted Subsidiaries of Indebtedness represented by Capital
Lease Obligations or purchase money obligations, in each case
incurred for the purpose of financing all or any part of the
purchase or lease of personal property or equipment used in
the Principal Business of the Company or such Restricted
Subsidiary, in an aggregate principal amount pursuant to this
clause (g) not to exceed $16.0 million at any time
outstanding;
(h) the incurrence by the Company or any of its
Restricted Subsidiaries of Non-Recourse Financing used to
finance the purchase or lease of personal or real property
used in the business of the Company or any such Restricted
Subsidiary; PROVIDED, that (1) such Non-Recourse Financing
represents at least 80% of the purchase price of such personal
or real property, (2) the Indebtedness incurred pursuant to
this clause (h) shall not exceed $15.0 million at any time
outstanding, and (3) no such Indebtedness may be incurred
pursuant to this clause (h) unless East Chicago Showboat is
Operating and the Company shall have generated at least $10.0
million of Combined Cash Flow in any one fiscal quarter; and
(i) the incurrence by the Company or any of its
Restricted Subsidiaries of any other Indebtedness in an
aggregate principal amount pursuant to this clause (i) not to
exceed $4.0 million at any time outstanding.
(j) The Company shall not permit any of its Unrestricted
Subsidiaries to incur any Indebtedness (including Acquired
Indebtedness) or issue any shares of Disqualified Stock, other
than Non-Recourse Indebtedness; PROVIDED, HOWEVER, that if any
such Unrestricted Subsidiary ceases to remain an Unrestricted
Subsidiary, such event shall be deemed to constitute the
incurrence of the Indebtedness of such Subsidiary by a
Restricted Subsidiary.
SECTION 4.10. ASSET SALES.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, cause, make or suffer to exist any
Asset Sale, unless (i) no Default or Event of Default exists or
is continuing immediately prior to or after giving effect to such
Asset Sale, (ii) the Company or its Restricted Subsidiary, as the
case may be, receives consideration at the time of such Asset
Sale at least equal to the fair market value (as determined by
the Board of Directors and set forth in an Officers' Certificate
delivered to the Trustee) of the assets sold or otherwise
disposed of and (iii) at least 80% of the consideration therefor
received by the Company or such Restricted Subsidiary, as the
case may be, is in the form of cash or Cash Equivalents;
PROVIDED, HOWEVER, that the amount of (A) any liabilities (as
shown on the Company's or such Restricted Subsidiary's, as the
case may be, most recent balance sheet or in the notes thereto)
of the Company or any Restricted Subsidiary, as the case may be
(other than liabilities that are by their terms expressly
subordinated to the First Mortgage Notes or any Note Guarantee),
that are assumed or repaid by the transferee of any such assets
and (B) any notes or other obligations received by the Company or
any Restricted Subsidiary, as the case may be, from such
transferee that are converted by the Company or such Restricted
Subsidiary, as the case may be, into cash (to the extent of the
cash received) within 10 Business Days following the closing of
such Asset Sale, shall be deemed to be cash only for purposes of
satisfying clause (iii) of this paragraph and for no other
purpose under this Indenture.
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(b) Within 180 days after the Company's or any Restricted
Subsidiary's, as the case may be, receipt of the Net Proceeds of
any Asset Sale, the Company or such Restricted Subsidiary, as the
case may be, may apply the Net Proceeds from such Asset Sale to
an investment in any one or more businesses, capital expenditures
or other tangible assets of the Company or any Restricted
Subsidiary, in each case, engaged, used or useful in the
Principal Business, with no concurrent obligation to make an
offer to repurchase any First Mortgage Notes. Pending the final
application of any such Net Proceeds, the Company or such
Restricted Subsidiary, as the case may be, may temporarily reduce
Indebtedness under a revolving credit facility, if any, or
otherwise invest such Net Proceeds in Cash Equivalents, which
shall be pledged to the Trustee as security for the First
Mortgage Notes if such unapplied Net Proceeds aggregate more than
$2.0 million at any time. Any Net Proceeds from any Asset Sale
that are not invested as provided in the first sentence of this
paragraph shall be deemed to constitute "Excess Proceeds." When
the aggregate amount of Excess Proceeds exceeds $7.5 million, the
Company shall make an offer to all Holders (an "Asset Sale
Offer") to purchase the maximum principal amount of First
Mortgage Notes, that is an integral multiple of $1,000, that may
be purchased out of the Excess Proceeds at an offer price in cash
in an amount equal to 101% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages thereon, if
any, to the date fixed for the closing of such Asset Sale Offer,
in accordance with the procedures set forth in this Indenture.
The Company shall commence an Asset Sale Offer with respect to
Excess Proceeds within 10 Business Days after the date that the
Excess Proceeds exceed $7.5 million by mailing the notice
required pursuant to the terms of this Indenture. To the extent
that the aggregate amount of First Mortgage Notes tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds,
the Company may, subject to the other provisions of this
Indenture, use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of First
Mortgage Notes surrendered by Holders thereof exceeds the amount
of Excess Proceeds, the Trustee shall select the First Mortgage
Notes to be purchased in the manner described under Section 3.02
hereof. To the extent that the aggregate amount of First
Mortgage Notes tendered pursuant to an Asset Sale Offer is less
than the Excess Proceeds, the Company may, subject to the other
provisions of the Indenture, use any remaining Excess Proceeds
for general corporate purposes. Upon completion of any such
Asset Sale Offer, the amount of Excess Proceeds shall be reset at
zero. This Indenture shall also require the Company (or such
Restricted Subsidiary, as the case may be) to grant to the
Trustee, on behalf of the Holders, a first priority lien on any
properties or assets acquired with the Net Proceeds of any such
Asset Sale on the terms set forth in this Indenture and the
Collateral Documents.
SECTION 4.11. EVENT OF LOSS.
(a) Within 12 months after any Event of Loss with respect
to Collateral with a fair market value (or replacement cost, if
greater) in excess of $1.0 million, the Company or the affected
Restricted Subsidiary, as the case may be, shall apply the Net
Loss Proceeds from such Event of Loss to the rebuilding, repair,
replacement or construction of improvements to the East Chicago
Showboat, with no concurrent obligation to make any purchase of
any First Mortgage Notes; PROVIDED that (i) the Company delivers
to the Trustee within 90 days of such Event of Loss a written
opinion from a reputable architect that the East Chicago Showboat
with at least the Minimum Facilities can be rebuilt, repaired,
replaced, or constructed and Operating within one year of such
Event of Loss and that, with respect to any Event of Loss that
occurs on or prior to July 1, 1997, such rebuilding, repair,
replacement or construction of improvements can be rebuilt,
repaired, replaced or constructed and Operating on or prior to
December 31, 1997, (ii) an Officer's Certificate certifying that
the Company has available from Net Loss Proceeds or other sources
sufficient funds to complete such rebuilding, repair, replacement
or construction, and (iii) the Net Loss Proceeds are less than
$75.0 million. Any Net Loss Proceeds from an Event of Loss that
are not reinvested or are not permitted to be reinvested as
provided in the first sentence of this paragraph shall be deemed
"Excess Loss Proceeds." When the aggregate amount of Excess Loss
Proceeds
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exceeds $7.5 million, the Company shall make an offer to all
Holders (an "Event of Loss Offer") to purchase the maximum
principal amount of First Mortgage Notes, that is an integral
multiple of $1,000, that may be purchased out of the Excess Loss
Proceeds at a purchase price in cash in an amount equal to 101%
of the principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date fixed for the
closing of such Event of Loss Offer, in accordance with the
procedures set forth in this Indenture. If the aggregate
principal amount of First Mortgage Notes tendered pursuant to an
Event of Loss Offer exceeds the amount of Excess Loss Proceeds,
the Trustee shall select the First Mortgage Notes to be purchased
in the manner described under Section 3.02 hereof. To the extent
that the aggregate amount of First Mortgage Notes tendered
pursuant to an Event of Loss Offer is less than the Excess Loss
Proceeds, the Company may, subject to the other provisions of
this Indenture, use any remaining Excess Loss Proceeds for
general corporate purposes. Upon completion of any such Event of
Loss Offer, the amount of Excess Loss Proceeds shall be reset at
zero. Pending any permitted rebuilding, repair, replacement or
construction or the completion of any Event of Loss Offer, the
Company shall pledge to the Trustee as additional Collateral any
Net Loss Proceeds or other cash on hand required for such
permitted rebuilding, repair, replacement or construction
pursuant to the terms of the mortgages relating to the East
Chicago Showboat. Such pledged funds shall be released to the
Company to pay for or reimburse the Company for the actual cost
of such permitted rebuilding, repair or construction, or such
Event of Loss Offer, pursuant to the terms of the mortgages
relating to the East Chicago Showboat. Pending the final
application of the Net Loss proceeds, such proceeds shall be
invested in Cash Equivalents which shall be pledged to the
Trustee as security for the First Mortgage Notes. The Company or
such Restricted Subsidiary shall also grant to the Trustee, on
behalf of the Holders, a first priority lien on any properties or
assets rebuilt, repaired or constructed with such Net Loss
Proceeds on the terms set forth in this Indenture and the
Collateral Documents.
(b) With respect to any Event of Loss pursuant to clause
(D) of the definition of "Event of Loss" that has a fair market
value (or replacement cost, if greater) in excess of $15.0
million, the Company (or the affected Restricted Subsidiary, as
the case may be, shall be required to receive consideration at
least (i) equal to the fair market value (as determined by an
Independent Financial Advisor) of the assets subject to an Event
of Loss and (ii) 90% of which is in the form of cash or Cash
Equivalents; PROVIDED, HOWEVER, that the amount of (A) any
liabilities (as shown on the Company's or such Restricted
Subsidiary's, as the case may be) most recent balance sheet or in
the notes thereto) of the Company (or such Restricted Subsidiary,
as the case may be) (other than liabilities that are by their
terms expressly subordinated to the First Mortgage Notes or any
Note Guarantee) that are assumed or repaid by the transferee of
any such assets and (B) any notes or other obligations received
by the Company (or such Restricted Subsidiary, as the case may
be) from such transferee that are converted by the Company or
such Restricted Subsidiary, as the case may be, into cash (to the
extent of cash received) within 10 Business Days following the
closing of such sale of the assets subject to such Event of Loss,
shall be deemed to be cash only for purposes of satisfying clause
(ii) of this paragraph and for no other purpose.
SECTION 4.12. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into any contract, agreement,
understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless: (i) such Affiliate Transaction is on terms
that are no less favorable to the Company or the relevant
Restricted Subsidiary than those that would have been obtained in
a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person, and (ii) the Company
delivers to the Trustee with respect to any Affiliate Transaction
involving aggregate payments in excess of $1.0 million, a
resolution adopted by a majority of the disinterested non-
employee directors of the Board of Directors approving such
Affiliate
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Transaction and set forth in an Officers' Certificate certifying
that such Affiliate Transaction complies with clause (i) above
and with respect to any Affiliate Transaction involving aggregate
payments of, or loans in the principal amount of, $10.0 million
or more, an opinion as to the fairness to the Company or such
Restricted Subsidiary from a financial point of view issued by an
Independent Financial Advisor.
The restrictions contained in this Section 4.12 shall not
apply to the following: (1) transactions between or among the
Company and/or any of its Restricted Subsidiaries; (2) Restricted
Payments permitted by Section 4.07 hereof; (3) purchases of
Equity Interests (other than Disqualified Stock) by any holder of
Capital Stock of the Company (or an Affiliate of any holder of
Capital Stock of the Company); PROVIDED that such Equity
Interests do not bear cash dividends; (4) any payments due to the
Manager under the Management Agreement in the form executed prior
to the Issuance Date; (5) payments to Second Century, TCEF and
ECCF relating to the Company's economic development commitments
to the City of East Chicago under the Certificate of Suitability;
and (6) the transactions contemplated by the Completion Guarantee
and the Standby Equity Commitment.
SECTION 4.13. LIENS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create,
incur, assume or suffer to exist any Lien, except Permitted
Liens, on any asset owned as of the Issuance Date or thereafter
acquired by the Company or such Restricted Subsidiary (including,
without limitation, the Collateral), or any income or profits
therefrom, or assign or convey any right to receive income or
profits therefrom.
SECTION 4.14. LINE OF BUSINESS.
For so long as any First Mortgage Notes are outstanding,
the Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in any business or activity other than
the Principal Business.
Finance Corporation shall not own or acquire any assets or
properties, or conduct any business or activities other than in
connection with the issuance of the First Mortgage Notes and
observance of the provisions of this Indenture.
SECTION 4.15. CORPORATE OR PARTNERSHIP EXISTENCE.
Subject to Article 5 and Article 11 hereof, as the case may
be, the Company and each of the Guarantors shall do or cause to
be done all things necessary to preserve and keep in full force
and effect (i) its corporate or partnership existence, and the
corporate, partnership or other existence of each of its
Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the
Company, any such Guarantor or any such Subsidiary and (ii) the
rights (charter and statutory), licenses and franchises of the
Company, the Guarantor and their respective Subsidiaries;
PROVIDED, HOWEVER, that the Company and the Guarantors shall not
be required to preserve any such right, license or franchise, or
the corporate, partnership or other existence of any of their
respective Subsidiaries, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in
the conduct of the business of the Company, the Guarantors and
their Subsidiaries, taken as a whole, and that the loss thereof
is not adverse in any material respect to the Holders of the
First Mortgage Notes.
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SECTION 4.16. CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, the Company
shall make an offer to purchase all or any part (equal to $1,000
or an integral multiple thereof) of the First Mortgage Notes (the
"Change of Control Offer") at a purchase price in cash (the
"Change of Control Payment") equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase.
Such Change of Control Offer shall be made in accordance with the
procedures set forth in Article 3 hereof. Within 30 days
following any Change of Control, the Company shall commence such
Change of Control Offer by mailing the notice set forth in
Section 3.10 hereof to Holders of First Mortgage Notes.
SECTION 4.17. DESIGNATION OF UNRESTRICTED SUBSIDIARY
(a) The Board of Directors may designate any Restricted
Subsidiary (other than Finance Corporation) to be an Unrestricted
Subsidiary; PROVIDED, that:
(i) at the time of designation, the Investment by
the Company and any of its Restricted Subsidiaries in such
Subsidiary shall be deemed a Restricted Investment (to the
extent not previously included as a Restricted Investment)
made on the date of such designation in the amount of the
greater of (A) the net book value of such Investment or (B)
the fair market value of such Investment (as determined in
good faith by, and evidenced by a resolution of, the Board
of Directors set forth in an Officers' Certificate
delivered to the Trustee);
(ii) since the Issuance Date, such Unrestricted
Subsidiary has not acquired any assets from the Company or
any Restricted Subsidiary, other than as permitted by the
provisions of this Indenture, including the provisions
described under Sections 4.07 and 4.10 hereof;
(iii) at the time of designation, no Default or Event
of Default has occurred and is continuing or will result
immediately after such designation or as a result of any
Restricted Investment in such Subsidiary;
(iv) at the time of designation, such Subsidiary has
no Indebtedness other than Non-Recourse Indebtedness of
such Subsidiary or a Note Guarantee;
(v) such Subsidiary does not own any Equity
Interests in a Restricted Subsidiary;
(vi) such Subsidiary does not own or operate or
possess any material license, franchise or right used in
connection with the ownership or operation of any part of
the Project Assets of East Chicago Showboat; and
(vii) such Subsidiary does not operate any gaming
operations in East Chicago, Indiana or within a 50 mile
radius of Chicago, Illinois, or permit any gaming
operations to be conducted on any property owned by such
Subsidiary in East Chicago, Indiana or within a 50 mile
radius of Chicago, Illinois, other than operations that are
conducted by the Company or a Restricted Subsidiary
pursuant to a lease that extends beyond March 15, 2003.
(b) An Unrestricted Subsidiary shall cease to be an
Unrestricted Subsidiary and shall become a Restricted Subsidiary
if either (i) at any time while it is a Subsidiary of the
Company, (A) such Subsidiary acquires any assets from the Company
or any Restricted Subsidiary other than as permitted by the
provisions of this Indenture, including the provisions described
under Sections 4.07 and 4.10; (B)
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such Subsidiary has any Indebtedness other than Non-Recourse
Indebtedness of such Subsidiary; (C) such Subsidiary owns any
Equity Interests in a Restricted Subsidiary of the Company; and
(D) such Subsidiary owns or operates or possesses any material
license, franchise or right used in connection with the ownership
or operation of any part of the Project Assets of the East
Chicago Showboat or (ii) the Company designates such Unrestricted
Subsidiary to be a Restricted Subsidiary and no Default or Event
of Default occurs or will be continuing immediately after such
designation.
(c) Any such designation by the Board of Directors shall be
evidenced to the Trustee by filing with the Trustee a certified
copy of the resolution of the Board of Directors giving effect to
such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions. As of
the Issuance Date, the Company shall not have any Unrestricted
Subsidiaries. Unrestricted Subsidiaries shall not be subject to
any of the restrictive covenants set forth in this Indenture and
will not be Guarantors.
SECTION 4.18. MAINTENANCE OF INSURANCE.
Until the First Mortgage Notes have been paid in full, the
Company shall, and shall cause its Restricted Subsidiaries to,
maintain insurance with responsible carriers against such risks
and in such amounts as is customarily carried by similar
businesses with such deductibles, retentions, self insured
amounts and coinsurance provisions as are customarily carried by
similar businesses of similar size, including, without
limitation, property and casualty, and shall have provided
insurance certificates evidencing such insurance to the Trustee
prior to the Issuance Date, excluding, however, insurance
coverages for which insurance certificates cannot be issued until
after the commencement of construction on the Casino or the
Project, in which event the Company shall provide such insurance
certificates evidencing its compliance with the insurance
requirements of this Section 4.18 promptly after such
construction has commenced but in no event later than 30 days
after such commencement. The Company shall promptly provide such
certificates or other evidence of insurance prior to the
anniversary or renewal date of each such policy, which
certificate shall expressly state the expiration date for each
policy listed. The Company shall furnish or cause to be
furnished copies of the policies to the Trustee. Customary
insurance coverage shall be deemed to include the following: (i)
workers' compensation insurance, to the extent required to comply
with all applicable state laws, including a specific endorsement
or separate policy covering liability for Federal Longshoremen's
and Harbor Workers' Compensation Act (if any employees are so
covered by such Act), territorial, or United States laws and
regulations or the laws and regulations of any other applicable
jurisdiction, (ii) Protection and Indemnity Insurance Collision,
including hull liability, liability insurance with minimum limits
of $1.0 million, (iii) umbrella or excess liability insurance
providing liability limits over and above the foregoing insurance
up to a minimum limit of $25.0 million, and (iv) property
insurance protecting the property against such risks and hazards
as are from time to time covered by an "all-risk" policy or a
property policy covering "special" causes of loss (such insurance
shall provide coverage in not less than the lesser of 120% of the
outstanding principal amount of First Mortgage Notes plus accrued
and unpaid interest or 100% of actual replacement value (as
determined at each policy renewal based on the F.W. Dodge
Building Index or some other recognized means) of any
improvements and with a deductible for physical damage to the
Casino of not more than 2% of the insured value of the Casino and
a deductible for the land based facilities of not more than
$500,000 (other than earthquake and flood insurance, for which
the deductible may be up to 10% of such replacement value or such
greater amount as is available on reasonably commercial terms).
Subject to the terms of the Lease Agreement, all insurance
required under this Indenture (except worker's compensation)
shall name the Company and the Trustee as additional insureds or
loss payees, as the case may be, with losses in excess of $1.0
million payable jointly to the Company and the Trustee (unless a
Default or Event of Default has occurred and is then continuing,
in which case all losses are payable solely to the Trustee), with
no recourse against the Trustee for the payment of premiums,
deductibles,
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commissions or club calls, and for at least 30 days notice of
cancellation. In the event that an Event of Loss exceeds $7.5
million, all Excess Loss Proceeds shall be deposited in the
Escrow Account to be applied in accordance with Section 4.11
hereof. All such insurance policies shall be issued by carriers
having an A.M. Best & Company, Inc. rating of A- or higher and a
financial size category of not less than X, or if such carrier is
not rated by A.M. Best & Company, Inc., having the financial
stability and size deemed appropriate by an opinion from a
reputable insurance broker. The Company shall deliver to the
Trustee on the Issuance Date and each anniversary thereafter a
certificate of an insurance agent stating that the insurance
policies obtained by the Company and its Restricted Subsidiaries
comply with this provision and the related applicable provisions
of the Collateral Documents.
SECTION 4.19. LIMITATION ON STATUS AS INVESTMENT COMPANY.
None of the Company and its Restricted Subsidiaries shall
take any action that would result in a requirement to register as
an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended), or otherwise
becoming subject to regulation under the Investment Company Act
of 1940, as amended.
SECTION 4.20. COLLATERAL DOCUMENTS.
Neither the Company nor any of its Restricted Subsidiaries
shall amend, waive or modify, or take or refrain from taking any
action that has the effect of amending, waiving or modifying any
provision of the Collateral Documents, to the extent that such
amendment, waiver, modification or action could have an adverse
effect on the rights of the Trustee or the Holders of First
Mortgage Notes; PROVIDED, that: (i) the Collateral may be
released or modified as expressly provided in this Indenture and
in the Collateral Documents; (ii) any Note Guarantee and pledges
may be released as expressly provided in this Indenture and in
the Collateral Documents; (iii) the Construction Budget may be
amended as expressly provided in the Escrow and Disbursement
Agreement; and (iv) this Indenture and any of the Collateral
Documents may be otherwise amended, waived or modified as set
forth in Article 9 hereof.
SECTION 4.21. FURTHER ASSURANCES.
The Company shall (and shall cause each of its Restricted
Subsidiaries to) do, execute, acknowledge, deliver, record, re-
record, file, re-file, register and re-register, as applicable,
any and all such further acts, deeds, conveyances, security
agreements, mortgages, assignments, estoppel certificates,
financing statements and continuations thereof, termination
statements, notices of assignment, transfers, certificates,
assurances and other instruments as may be required from time to
time in order (i) to carry out more effectively the purposes of
the Collateral Documents, (ii) to subject to the Liens created by
any of the Collateral Documents any of the properties, rights or
interests required to be encumbered thereby, (iii) to perfect and
maintain the validity, effectiveness and priority of any of the
Collateral Documents and the Liens intended to be created
thereby, and (iv) to better assure, convey, grant, assign,
transfer, preserve, protect and confirm to the Trustee any of the
rights granted or now or hereafter intended by the parties
thereto to be granted to the Trustee or under any other
instrument executed in connection therewith or granted to the
Company under the Collateral Documents or under any other
instrument executed in connection therewith.
SECTION 4.22. RESTRICTIONS ON LEASING AND DEDICATION OF
PROPERTY.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, lease, sublease, or grant a license,
concession or other agreement to occupy, manage or use any real
or personal
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Project Assets owned or leased by the Company or any Restricted
Subsidiary (each, a "Lease Transaction"), other than the
following Lease Transactions:
(i) the Company or any Restricted Subsidiary may enter
into a Lease Transaction with respect to any space on or
within East Chicago Showboat with any Person (other than an
Unrestricted Subsidiary with respect to any space on or within
East Chicago Showboat); PROVIDED that such Lease Transaction
shall not interfere with, impair or detract from the
operations of any of the Project Assets and shall, in the
opinion of the Company, enhance the value and operations of
East Chicago Showboat and such Lease Transaction is at a fair
market rent (in light of other similar or comparable
prevailing commercial transactions) and contains such other
terms such that the Lease Transaction, taken as a whole, is
commercially reasonable and fair to the Company or such
Restricted Subsidiary in light of prevailing or comparable
transactions in other casinos, hotels, attractions or shopping
venues;
(ii) the Company or any Restricted Subsidiary may enter
into a management or operating agreement with respect to any
Project Asset (other than any Project Asset or space used for
any casino or gaming operations) with any Person (other than
an Unrestricted Subsidiary); PROVIDED that the manager or
operator has experience in managing or operating similar
operations, such management or operating agreement is on
commercially reasonable and fair terms to the Company or such
Restricted Subsidiary and such management or operating
agreement is terminable without penalty to the Company or such
Restricted Subsidiary upon no more than 90 days written
notice; and
(iii) the Company may dedicate land, easements or space to
any Governmental Authority, provided that such dedication does
not materially economically impair the use or operations of
the East Chicago Showboat.
(b) Notwithstanding the foregoing, the Company shall not
be permitted to enter into any Lease Transaction: (x) if at the
time of such proposed Lease Transaction, a Default or Event of
Default has occurred and is continuing or would occur immediately
after entering into such Lease Transaction (or immediately after
any extension or renewal of such Lease Transaction made at the
option of the Company or any Restricted Subsidiary); (y) that
permits gaming or casino operations to be conducted with respect
to any space on or within East Chicago Showboat by a Person other
than the Company or a Restricted Subsidiary; or (z) if such
Lease Transaction provides that the Company or any Restricted
Subsidiary may subordinate its interest with respect to any space
on or within East Chicago Showboat to any lessee or any party
providing financing to any lessee.
(c) The Trustee shall enter into a commercially customary
leasehold non-disturbance and attornment agreement with the
lessee under any Lease Transaction permitted under this Section
4.22. Such agreement, among other things, shall provide that if
the interests of the Company (or in the case of a Lease
Transaction being entered into by a Restricted Subsidiary, the
interests of the Restricted Subsidiary) in the Project Assets
subject to the Lease Transaction are acquired by the Trustee (on
behalf of the Holders of the First Mortgage Notes), whether by
purchase and sale, foreclosure, or deed in lieu of foreclosure or
in any other way, or by a successor to the Trustee, including,
without limitation, a purchaser at a foreclosure sale, then (1)
the interests of the lessee in the Project Assets subject to the
Lease Transaction shall continue in full force and effect and
shall not be terminated or disturbed, except in accordance with
the lease documentation applicable to the Lease Transaction, and
(2) the lessee in the Lease Transaction shall attorn to and be
bound to the Trustee (on behalf of the Holders of First Mortgage
Notes), its successors and assigns under all terms, covenants and
conditions of the lease documentation applicable to the Lease
Transaction. Such agreement shall also contain such other
provisions that are
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commercially customary and that shall not materially and
adversely affect the Lien granted by the Leasehold Mortgage, as
certified by the Board of Directors in an Officers' Certificate
delivered to the Trustee.
SECTION 4.23. NOTE GUARANTEES.
The Company shall, and shall cause each of its Restricted
Subsidiaries to, comply with Section 11.02 hereof.
SECTION 4.24. EXCESS CASH FLOW OFFER.
(a) Within 90 days after each Operating Year, the Company
shall make an offer to all Holders (an "EXCESS CASH FLOW OFFER")
to purchase the maximum principal amount of First Mortgage Notes,
that is an integral multiple of $1,000, that may be purchased
with 50% of the Company's Excess Cash Flow (the "EXCESS CASH FLOW
OFFER AMOUNT") in respect of the Operating Year then ended, at a
purchase price in cash equal to 101% of the principal amount of
First Mortgage Notes to be purchased, plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date
fixed for the closing of such Excess Cash Flow Offer (the "EXCESS
CASH FLOW PURCHASE PRICE"), in accordance with the procedures set
forth in this Indenture. The Excess Cash Flow Offer shall remain
open for 20 Business Days following its commencement and no
longer, except to the extent that a longer period is required by
applicable law. Upon the expirations of such period, the Company
will apply the Excess Cash Flow Offer Amount to the purchase of
all First Mortgage Notes tendered at the Excess Cash Flow
Purchase Price. If the aggregate principal amount of First
Mortgage Notes tendered pursuant to any such offer exceeds the
amount of funds available to repurchase such First Mortgage
Notes, the Trustee will select the First Mortgage Notes to be
repurchased in the manner set forth under Section 3.02 hereof.
To the extent that the aggregate amount of First Mortgage Notes
tendered pursuant to any Excess Cash Flow Offer is less than the
Excess Cash Flow Offer Amount with respect thereto, the Company
may, subject to the other provisions of this Indenture, use any
remaining Excess Cash Flow for general corporate purposes.
(b) Any offer to repurchase First Mortgage Notes pursuant
to this section shall be made in accordance with the procedures
set forth in Section 3.10 hereof.
SECTION 4.25. USE OF PROCEEDS.
The Company shall use the net proceeds from the sale of the
Series A First Mortgage Notes and the proceeds from the Capital
Contribution, to the extent of cash remaining, and any Additional
Project Financing, to the extent received in cash, if any, only
for Permitted Proceed Uses. The Company shall cause all of such
proceeds to be deposited into the Escrow Account and disbursed
only in accordance with the terms of the Escrow and Disbursement
Agreement.
SECTION 4.26. GAMING LICENSES.
The Company shall use its best efforts to obtain and retain
in full force and effect at all times all Gaming Licenses
necessary for the operation of East Chicago Showboat.
SECTION 4.27. CONSTRUCTION.
The Company shall cause construction of the East Chicago
Showboat, including the furnishing, fixturing and equipping
thereof, to be prosecuted with diligence and continuity in a good
and workerlike manner substantially in accordance with the Plans
and within the Construction Budget.
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SECTION 4.28. TRANSFER OF CERTIFICATE OF SUITABILITY.
If the Certificate of Suitability has not been transferred
from the Manager to the Company by July 1, 1996, the Company
shall make an offer to all Holders (a "Certificate of Suitability
Transfer Offer") to purchase all or any part (equal to $1,000 or
an integral multiple thereof) of the First Mortgage Notes equal
to 101% of the aggregate principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages thereon, if any, to
the date of purchase. Such Certificate of Suitability Transfer
Offer shall be made in accordance with the procedures set forth
in Article 3 hereof. Within 30 days following July 1, 1996, the
Company shall commence such Certificate of Suitability Transfer
Offer by mailing the notice set forth in Section 3.10 hereof to
Holders of First Mortgage Notes.
Until the earlier to occur of (i) the completion of such
Certificate of Suitability Transfer Offer or (ii) transfer of the
Certificate of Suitability from the Manager to the Company, the
Company will cause the amount of funds remaining in the Escrow
Account to be no less than $147.0 million.
SECTION 4.29. FILING OF FIRST PREFERRED SHIP MORTGAGE.
The Company shall cause, as soon as practicable after
construction has been sufficiently completed to permit such
actions (but in no event later than five (5) business days after
title to the Casino vessel has been conveyed to Showboat
Partnership pursuant to the terms of the Casino Vessel
Construction Contract), the Casino vessel to be a newly
documented United States vessel with the United States Coast
Guard, and to file and perfect a First Preferred Ship Mortgage
with respect to such Casino vessel in favor of the Trustee for
the ratable benefit of the Holders of the First Mortgage Notes.
The Company shall also cause, as soon as practicable after filing
of the First Preferred Ship Mortgage with the United States Coast
Guard, Financing Statements to be filed with respect to the
Casino with the Secretary of State of Indiana and the Office of
the Lake County Recorder. In no event shall the Casino vessel be
titled under the laws of any state, including the State of
Indiana.
SECTION 4.30. PAYMENT AND PERFORMANCE BOND.
Until such time as the Casino is secured by the First
Preferred Ship Mortgage as provided in Section 4.29, the Company
shall have in effect the Payment and Performance Bond naming the
Trustee, for the benefit of the Holders of the First Mortgage
Notes, as an obligee on such bond, guaranteeing the completion of
the Casino vessel by Atlantic Marine, Inc.
SECTION 4.31. TRANSFER OF CERTIFICATE OF SUITABILITY.
The Company shall use its best efforts to diligently pursue
the transfer of the Certificate of Suitability from the Manager
to the Company.
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ARTICLE 5
SUCCESSORS
SECTION 5.01 MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company may not consolidate or merge with or into or
wind-up into (whether or not the Company is the surviving
Person), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets
in one or more related transactions to, any Person unless:
(i) the Company is the surviving Person or the Person
formed by or surviving any such consolidation or merger (if
other than the Company) or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have
been made is a corporation or partnership organized or
existing under the laws of the United States, any state
thereof, the District of Columbia, or any territory
thereof;
(ii) the Person formed by or surviving any such
consolidation or merger (if other than the Company) or the
Person to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made
assumes all of the obligations of the Company under this
Indenture and the Collateral Documents pursuant to a
supplemental indenture or other documents or instruments in
form reasonably satisfactory to the Trustee under the First
Mortgage Notes and this Indenture;
(iii) immediately after such transaction, no Default or
Event of Default exists;
(iv) such transaction shall not result in the loss or
suspension or material impairment of any Gaming License;
(v) the Company or any Person formed by or surviving
any such consolidation or merger, or to which such sale,
assignment, transfer, lease, conveyance or other
disposition shall have been made (A) shall have Combined
Net Worth (immediately after the transaction but prior to
any purchase accounting adjustments resulting from the
transaction) equal to or greater than the Combined Net
Worth of the Company immediately preceding the transaction
and (B) shall, at the time of such transaction and after
giving PRO FORMA effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter
period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Cover Ratio test
set forth in Section 4.09 hereof; and
(vi) such transaction would not require any Holder or
beneficial owner of First Mortgage Notes to obtain a Gaming
License or be qualified or found suitable under the law of
any applicable gaming jurisdiction; PROVIDED that such
Holder or beneficial owner would not have been required to
obtain a Gaming License or be qualified or found suitable
under the laws of any applicable gaming jurisdiction in the
absence of such transaction.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or
substantially all of the assets of the Company in accordance with
Section 5.01 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so
that from and after the date of such consolidation, merger, sale,
lease,
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conveyance or other disposition, the provisions of this Indenture
referring to the "COMPANY" shall refer instead to the successor
corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same
effect as if such successor Person had been named as the Company
herein; PROVIDED, HOWEVER, that (i) the Company has delivered to
the Trustee an Officers' Certificate and Opinion of Counsel,
subject to customary assumptions and exclusions, stating that the
proposed transaction complies with this Indenture and (ii) the
surviving entity or acquiring corporation shall (A) assume all of
the obligations of the acquired Person under this Indenture, the
First Mortgage Notes, and, if applicable, the Collateral
Documents, (B) acquire and own and operate, directly or through
Wholly Owned Subsidiaries, all or substantially all of the
properties and assets then constituting the assets of the Company
or any of its Subsidiaries, as the case may be, (C) have been
issued, or have a consolidated Subsidiary that has been issued,
Gaming Licenses to operate the acquired casino operations and
entities substantially in the manner and scope operated prior to
such transaction, which Gaming Licenses are in full force and
effect and (D) comply fully with Section 5.01 hereof; PROVIDED
FURTHER, HOWEVER, that the predecessor Company shall not be
relieved from the obligation to pay the principal of and interest
on the First Mortgage Notes except in the case of a sale of all
of the Company's assets that meets the requirements of Section
5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT AND REMEDIES.
(a) Each of the following constitutes an Event of Default:
(i) default in payment when due and payable, upon
redemption or otherwise, of principal of or premium, if
any, on the First Mortgage Notes or under any Note
Guarantee;
(ii) default for 30 days or more in the payment when
due of interest or Liquidated Damages on the First Mortgage
Notes or under any Note Guarantee;
(iii) East Chicago Showboat is not Operating by October
1, 1997 and continues to be not Operating;
(iv) failure by the Company or any Guarantor to comply
with Section 4.07, 4.09, 4.10, 4.11, 4.16, 4.24, 4.25 or
4.28 hereof;
(v) failure by the Company or any Guarantor for 30
days after receipt of written notice until December 31,
1997, and thereafter for 60 days after receipt of written
notice, to comply with any of its other agreements in this
Indenture, the Collateral Documents, or the First Mortgage
Notes;
(vi) default under any mortgage, indenture or
instrument under which there is issued or by which there is
secured or evidenced any Indebtedness for money borrowed by
the Company or any of its Restricted Subsidiaries or the
payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries, whether such Indebtedness or
Guarantee now exists or is created after the Issuance Date,
which default (A) is caused by a failure to pay when due
principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period
provided in such Indebtedness (a "PAYMENT DEFAULT") or (B)
results in the acceleration of such Indebtedness prior to
its express maturity or would constitute a default in the
payment of such issue of Indebtedness at final maturity of
such issue and, in each case, the principal amount of
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any such Indebtedness, together with the principal amount
of any other such Indebtedness under which a Payment
Default then exists or with respect to which the maturity
thereof has been so accelerated or which has not been paid
at maturity, aggregates $5.0 million or more;
(vii) failure by the Company or any of its Restricted
Subsidiaries to pay final judgments aggregating in excess
of $5.0 million, which final judgments remain unpaid,
undischarged and unstayed for a period of more than 60
days;
(viii) breach by the Company, any Guarantor or any of
their Subsidiaries of any representation or warranty set
forth in any Note Guarantee or any of the Collateral
Documents, or default by the Company or any Guarantor in
the performance of any covenant set forth in any Note
Guarantee or any of the Collateral Documents or the
repudiation by the Company, any Guarantor or any of their
Subsidiaries of its obligations under, or any judgment or
decree by a court or governmental agency of competent
jurisdiction declaring the unenforceability of, any Note
Guarantee or any of the Collateral Documents for any reason
that would materially impair the benefits to the Trustee or
the Holders of the First Mortgage Notes thereunder;
(ix) the Company or any Guarantor that is a
Significant Subsidiary of the Company or any group of
Guarantors that together would constitute a Significant
Subsidiary of the Company (A) commences a voluntary case,
(B) consents to the entry of an order for relief against it
in an involuntary case, (C) consents to the appointment of
a Custodian of it or for all or substantially all of its
property, (D) makes a general assignment for the benefit of
its creditors, (E) generally is not paying its debts as
they become due, or (F) a court of competent jurisdiction
enters an order or decree under any Bankruptcy Law that
(1) is for relief against the Company or any of Guarantor
that is a Significant Subsidiary of the Company or any
group of Guarantors that together would constitute a
Significant Subsidiary of the Company in an involuntary
case or (2) appoints a Custodian of Company or any of
Guarantor that is a Significant Subsidiary of the Company
or any group of Guarantors that together would constitute a
Significant Subsidiary of the Company;
(x) revocation, termination, suspension or other
cessation of effectiveness of any Gaming License which
results in the cessation or suspension of gaming operations
for a period of more than 90 days at East Chicago Showboat
and such cessation or suspension of gaming operations is
continuing; or
(xi) any failure by Showboat to comply with the terms
of the Completion Guarantee, the Standby Equity Commitment
or the Escrow and Disbursement Agreement for 30 days after
the receipt of written notice.
SECTION 6.02. ACCELERATION.
(a) If any Event of Default (other than an Event of Default
specified in clause (viii) or (ix) set forth in paragraph (a) of
Section 6.01 hereof with respect to the Company or any Guarantor
that is a Significant Subsidiary or any group of Guarantors that
would together constitute a Significant Subsidiary), occurs and
is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding First Mortgage Notes
(treating all First Mortgage Notes of every series as a single
class) may declare the principal, premium, if any, interest and
any other monetary obligations on all of the First Mortgage Notes
to be due and payable immediately. Notwithstanding the
foregoing, if an Event of Default specified in clause (ix) set
forth in paragraph (a) of Section 6.01 hereof occurs with respect
to the Company or any Guarantor that is a Significant Subsidiary
or any group of Guarantors that would
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together constitute a Significant Subsidiary of the Company, the
principal, premium, if any, interest any other monetary
obligations on all of the outstanding First Mortgage Notes shall
be due and payable immediately without further action or notice.
The Holders of a majority in aggregate principal amount of the
then outstanding First Mortgage Notes by written notice to the
Trustee may on behalf of all of the Holders rescind an
acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events
of Default (except nonpayment of principal, interest or premium
that has become due solely because of the acceleration) have been
cured or waived.
(b) Notwithstanding paragraph (a) of this Section 6.02, the
Trustee shall have no obligation to accelerate the First Mortgage
Notes if in the best judgment of the Trustee acceleration is not
in the best interest of the Holders of the First Mortgage Notes.
(c) If an Event of Default occurs on or after March 15,
2000 for First Mortgage Notes of any series by reason of any
willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding payment of the
premium that the Company would have had to pay if the Company
then had elected to redeem the First Mortgage Notes pursuant to
Section 3.07 hereof, then, upon acceleration of the First
Mortgage Notes, an equivalent premium shall also become and be
immediately due and payable on First Mortgage Notes of such
series, to the extent permitted by law, anything in this
Indenture or in the First Mortgage Notes to the contrary
notwithstanding. If an Event of Default occurs prior to March 15,
2000, for First Mortgage Notes of any series by reason of any
willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding the prohibition on
redemption of the First Mortgage Notes prior to such date, then,
upon acceleration of the First Mortgage Notes, an additional
premium shall also become and be immediately due and payable on
First Mortgage Notes of such series in an amount equal to (i) the
highest premium then payable on the First Mortgage Notes of any
other series or (ii) if no such premium is then payable, for each
of the years beginning on March 15 of the years set forth below,
as set forth below (expressed as a percentage of the principal
amount that would otherwise be due but for the provisions of this
sentence):
YEAR PERCENTAGE
1996 120.250%
1997 116.875%
1998 113.500%
1999 110.125%
2000 106.750%
SECTION 6.03. OTHER REMEDIES.
(a) If an Event of Default occurs and is continuing, the
Trustee, may pursue any available remedy to collect the payment
of principal, premium, if any, and interest on the First Mortgage
Notes or to enforce the performance of any provision of the First
Mortgage Notes or this Indenture.
(b) The Trustee may maintain a proceeding even if it does
not possess any of the First Mortgage Notes or does not produce
any of them in the proceeding. A delay or omission by the
Trustee or any Holder of a First Mortgage Note in exercising any
right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquies
cence in the Event of Default. All remedies are cumulative to
the extent permitted by law.
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SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal
amount of the then outstanding First Mortgage Notes by notice to
the Trustee may on behalf of the Holders of all of the First
Mortgage Notes waive an existing Default or Event of Default and
its consequences hereunder, except a continuing Default or Event
of Default in the payment of the principal of, premium and
Liquidated Damages, if any, or interest on, the First Mortgage
Notes (including in connection with an offer to purchase)
(provided, however, that the Holders of a majority in aggregate
principal amount of the then outstanding First Mortgage Notes may
rescind an acceleration and its consequences, including any
related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been
cured for every purpose of this Indenture; but no such waiver
shall extend to any subsequent or other Default or impair any
right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then
outstanding First Mortgage Notes (treating all First Mortgage
Notes of every series as a single class) may direct the time,
method and place of conducting any proceeding for exercising any
remedy available to the Trustee or exercising any trust or power
conferred on it, including the exercise of any remedy under the
Collateral Documents. However, the Trustee may refuse to follow
any direction that conflicts with law or this Indenture that the
Trustee determines may be unduly prejudicial to the rights of
other Holders of First Mortgage Notes or that may involve the
Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
(a) A Holder of a First Mortgage Note may pursue a remedy
with respect to this Indenture or the First Mortgage Notes only
if:
(i) the Holder of a First Mortgage Note gives to the
Trustee written notice of a continuing Event of Default or
the Trustee receives such notice from the Company;
(ii) the Holders of at least 25% in principal amount of
the then outstanding First Mortgage Notes (treating all
First Mortgage Notes of every series as a single class) make
a written request to the Trustee to pursue the remedy;
(iii) such Holder of a First Mortgage Note or Holders
of First Mortgage Notes offer and, if requested, provide to
the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(iv) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer
and, if requested, the provision of indemnity; and
(v) during such 60-day period the Holders of a
majority in principal amount of the then outstanding First
Mortgage Notes do not give the Trustee a direction
inconsistent with the request; provided, however, that such
provision does not effect the right of a Holder to sue for
enforcement of any overdue payment thereon.
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(b) A Holder of a First Mortgage Note may not use this
Indenture to prejudice the rights of another Holder of a First
Mortgage Note or to obtain a preference or priority over another
Holder of a First Mortgage Note.
SECTION 6.07. RIGHTS OF HOLDERS OF FIRST MORTGAGE NOTES TO
RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a First Mortgage Note to receive payment
of principal, premium and Liquidated Damages, if any, and
interest on the First Mortgage Note, on or after the respective
due dates expressed in the First Mortgage Note (including in
connection with an offer to purchase), or to bring suit for the
enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of
such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in clause (i) or (ii) set
forth in paragraph (a) of Section 6.01 hereof occurs and is
continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company
or any Guarantor for the whole amount of principal of, premium
and Liquidated Damages, if any, and interest remaining unpaid on
the First Mortgage Notes and interest on overdue principal and,
to the extent lawful, interest and such further amount as shall
be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and the Holders of the
First Mortgage Notes allowed in any judicial proceedings relative
to the Company (or any other obligor upon the First Mortgage
Notes, including the Guarantors), its creditors or its property
and shall be entitled and empowered to collect, receive and
distribute any money or other property payable or deliverable on
any such claims and any custodian in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the
Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section
7.07 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof out of the estate in any such
proceeding, shall be denied for any reason, payment of the same
shall be secured by a Lien on, and shall be paid out of, any and
all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such
proceeding whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition
affecting the First Mortgage Notes or the rights of any Holder,
or to authorize the Trustee to vote in respect of the claim of
any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
(a) If the Trustee collects any money pursuant to this
Article, it shall pay out the money in the following order:
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First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all
compensation, expense and liabilities incurred, and all advances
made, by the Trustee and the costs and expenses of collection;
Second: to Holders of First Mortgage Notes for amounts due
and unpaid on the First Mortgage Notes for principal, premium and
Liquidated Damages, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due
and payable on the First Mortgage Notes for principal, premium
and Liquidated Damages, if any, and interest, respectively; and
Third: to the Company or to such party as a court of
competent jurisdiction shall direct.
(b) The Trustee may fix a record date and payment date for
any payment to Holders of First Mortgage Notes pursuant to this
Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action
taken or omitted by it as a Trustee, a court in its discretion
may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having
due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 does not apply to
a suit by the Trustee, a suit by a Holder of a First Mortgage
Note pursuant to Section 6.07 hereof, or a suit by Holders of
more than 10% in principal amount of the then outstanding First
Mortgage Notes.
SECTION 6.12. MANAGEMENT OF CASINOS.
Notwithstanding any provision of this Article 6 to the
contrary, following an Event of Default that permits the taking
of possession of the East Chicago Showboat by the Trustee or the
appointment of a receiver of either the Collateral or any part
thereof pursuant to the Leasehold Mortgage (as such term is
defined in the Collateral Documents), or after such taking of
possession of such appointment, the Trustee or any such receiver
shall be authorized, subject to the restrictions imposed by the
Indiana Act, to the extent applicable, in addition to the rights
and powers of the Trustee and such receiver set forth elsewhere
in this Indenture and the Collateral Documents, to retain one or
more experienced operators of casinos to manage the East Chicago
Showboat on behalf of the Holders of First Mortgage Notes;
provided, however, that any such operator shall have all
necessary legal qualifications, including all Gaming Licenses to
manage the East Chicago Showboat.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested
in it by this Indenture and the Collateral Documents, and use the
same degree of care and skill in its exercise, as a prudent
person would exercise or use under the circumstances in the
conduct of his or her own affairs.
(b) Except during the continuance of an Event of Default:
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(i) the duties of the Trustee shall be determined
solely by the express provisions of this Indenture and the
Collateral Documents and the Trustee need perform only those
duties that are specifically set forth in this Indenture and
the Collateral Documents and no others, and no implied
covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming in all material respects to the
requirements of this Indenture and the Collateral Documents.
However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform in all
material respects to the requirements of this Indenture and
the Collateral Documents.
(c) The Trustee may not be relieved from liabilities for
its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:
(i) this paragraph (c) does not limit the effect of
paragraph (b) of this Section 7.01;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless
it is proved that the Trustee was negligent in ascertaining
the pertinent facts; and
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section
7.01.
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur any liability.
The Trustee shall be under no obligation to exercise any of its
rights and powers under this Indenture before or following the
occurrence of any Event of Default at the request of any Holders,
unless such Holder shall have offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing
with the Company or the Guarantors. Money held in trust by the
Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented
by the proper Person. The Trustee need not investigate any fact
or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or
both. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection
from liability in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.
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(c) The Trustee may act through its attorneys and agents
and shall not be responsible for the misconduct or negligence of
any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith that it believes to be authorized
or within the rights or powers conferred upon it by this
Indenture.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the
Company or any Guarantor shall be sufficient if signed by an
Officer of the Company or such Guarantor.
(f) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders unless such Holders
shall have requested such action in accordance with this
Indenture and have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities that might
be incurred by it in compliance with such request or direction.
(g) Except with respect to Section 4.01 hereof, the Trustee
shall have no duty to inquire as to the performance of the
Company's covenants in Article 4 hereof. In addition, the
Trustee shall not be deemed to have knowledge of any Default or
Event of Default except (i) any Event of Default occurring
pursuant to clause (i) or (ii) set forth in paragraph (a) of
Section 6.01 hereof or (ii) any Default or Event of Default of
which the Trustee shall have received written notification or
obtained actual knowledge.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may
become the owner or pledgee of First Mortgage Notes and may
otherwise deal with the Company and the Guarantors with the same
rights it would have if it were not Trustee. However, in the
event that the Trustee acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do
the same with like rights and duties. The Trustee is also
subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture,
the Collateral Documents, the First Mortgage Notes or any Note
Guarantee, it shall not be accountable for the Company's use of
the proceeds from the First Mortgage Notes or any money paid to
the Company or upon the Company's direction under any provision
of this Indenture or the Collateral Documents, it shall not be
responsible for the use or application of any money received by
any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement
in the First Mortgage Notes or any other document in connection
with the sale of the First Mortgage Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall mail to
Holders of First Mortgage Notes a notice of the Default or Event
of Default within 90 days after it occurs. Except in the case of
a Default or Event of Default in payment of principal of,
premium, if any, or interest on any First Mortgage Note, the
Trustee may withhold the notice if and so long as the Trustee in
good faith determines that withholding the notice is in the
interests of the Holders of the First Mortgage Notes.
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SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE FIRST
MORTGAGE NOTES.
(a) On each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as First Mortgage Notes
remain outstanding, the Trustee shall mail to the Holders of the
First Mortgage Notes a brief report dated as of such reporting
date that complies with TIA Sec. 313(a) (but if no event described
in TIA Sec. 313(a) has occurred within the twelve months preceding
the reporting date, no report need be transmitted). The Trustee
also shall comply with TIA Sec. 313(b)(2). The Trustee shall also
transmit by mail all reports as required by TIA Sec. 313(c).
(b) A copy of each report at the time of its mailing to the
Holders of First Mortgage Notes shall be mailed to the Company
and filed with the SEC and each stock exchange on which the First
Mortgage Notes are listed in accordance with TIA Sec. 313(d). The
Company shall promptly notify the Trustee when the First Mortgage
Notes are listed on any stock exchange.
(c) At the expense of the Company, the Trustee or, if the
Trustee is not the Registrar, the Registrar, shall report the
names of record Holders of the First Mortgage Notes to any Gaming
Authority when requested to do so by the Company.
(d) At the express direction of the Company and at the
Company's expense, the Trustee shall provide any Gaming Authority
with:
(i) copies of all notices, reports and other written
communications which the Trustee gives to Holders;
(ii) a list of all of the Holders promptly after the
original issuance of the First Mortgage Notes and
periodically thereafter if the Company so directs;
(iii) notice of any Default under this Indenture, any
acceleration of the Indebtedness evidenced hereby, the
institution of any legal actions or proceedings before any
court or governmental authority in respect of a Default or
Event of Default hereunder;
(iv) notice of the removal or resignation of the
Trustee within five Business Days of the effectiveness
thereof;
(v) notice of any transfer or assignment of rights
under this Indenture or the Note Guarantees known to the
Trustee within five Business Days thereof; and
(vi) a copy of any amendment to the First Mortgage
Notes or this Indenture within five Business Days of the
effectiveness thereof.
(e) To the extent requested by the Company and at the
Company's expense, the Trustee shall cooperate with any Gaming
Authority in order to provide such Gaming Authority with the
information and documentation requested and as otherwise required
by applicable law.
SECTION 7.07. COMPENSATION AND INDEMNITY.
(a) The Company and the Guarantors shall pay to the Trustee
from time to time reasonable compensation for its acceptance of
this Indenture and services hereunder in accordance with a
written schedule provided by the Trustee to the Company. The
Trustee's compensation shall not be limited by
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any law on compensation of a trustee of an express trust. The
Company and the Guarantors shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation
for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents
and counsel.
(b) The Company and the Guarantors shall indemnify the
Trustee against any and all losses, liabilities or expenses
incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture,
including the costs and expenses of enforcing this Indenture
against the Company (including this Section 7.07) and defending
itself against any claim (whether asserted by the Company or any
Holder or any other person) or liability in connection with the
exercise or performance of any of its powers or duties hereunder,
except to the extent any such loss, liability or expense may be
attributable to its negligence or bad faith. The Trustee shall
notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall
not relieve the Company or any Guarantor of its obligations
hereunder, except to the extent such failure to notify results in
a loss, liability or expense. The Company shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee may
have separate counsel and the Company and the Guarantors shall
pay the reasonable fees and expenses of such counsel. Neither
the Company nor any Guarantor need pay for any settlement made
without its consent, which consent shall not be unreasonably
withheld.
(c) The obligations of the Company and the Guarantors under
this Section 7.07 shall survive the satisfaction and discharge of
this Indenture.
(d) To secure the Company's and the Guarantors' payment
obligations in this Section 7.07, the Trustee shall have a Lien
prior to the First Mortgage Notes or any Note Guarantee on all
money or property held or collected by the Trustee, except that
held in trust to pay principal and interest on particular First
Mortgage Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
(e) When the Trustee incurs expenses or renders services
after an Event of Default specified in clause (viii) or (ix) set
forth in paragraph (a) of Section 6.01 hereof occurs, the
expenses and the compensation for the services (including the
fees and expenses of its agents and counsel) are intended to
constitute expenses of administration under any Bankruptcy Law.
(f) The Trustee shall comply with the provisions of TIA Sec.
313(b)(2) to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
(a) A resignation or removal of the Trustee and appointment
of a successor Trustee shall become effective only upon the
successor Trustee's acceptance of appointment and taking of
office as provided in this Section 7.08.
(b) The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the
Company. The Holders of First Mortgage Notes of a majority in
principal amount of the then outstanding First Mortgage Notes may
remove the Trustee by so notifying the Trustee and the Company in
writing. The Company may remove the Trustee if:
(i) the Trustee fails to comply with Section 7.10
hereof;
(ii) the Trustee is adjudged a bankrupt or an insolvent
or an order for relief is entered with respect to the
Trustee under any Bankruptcy Law;
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(iii) a Custodian or public officer takes charge of the
Trustee or its property; or
(iv) the Trustee becomes incapable of acting.
(c) If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company shall
promptly appoint a successor Trustee. For up to one year after
the successor Trustee takes office, the Holders of a majority in
principal amount of the then outstanding First Mortgage Notes may
by written action appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
(d) If any Gaming Authority requires a Trustee to be
approved, licensed or qualified and the Trustee fails or declines
to do so, such approval, license or qualification shall be
obtained upon the request of, and at the expense of, the Company
unless the Trustee declines to do so, or, if the Trustee's
relationship with either the Company or the Guarantors may, in
the Company's discretion, jeopardize any material gaming license
or franchise or right or approval granted thereto, the Trustee
shall resign, and, in addition, the Trustee may at its option
resign if the Trustee in its sole discretion determines not to be
so approved, licensed or qualified.
(e) If a successor Trustee does not take office within 60
days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company, any Guarantor or the Holders of
First Mortgage Notes of at least 10% in principal amount of the
then outstanding First Mortgage Notes may petition any court of
competent jurisdiction for the appointment of a successor
Trustee.
(f) If the Trustee, after written request by any Holder of
a First Mortgage Note who has been a Holder of a First Mortgage
Note for at least six months, fails to comply with Section 7.10
hereof, such Holder of a First Mortgage Note may petition any
court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee. (g) A successor
Trustee shall deliver a written acceptance of its appointment to
the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to
Holders of the First Mortgage Notes. The retiring Trustee shall
promptly transfer all property held by it as Trustee to the
successor Trustee, provided all sums owing to the Trustee
hereunder have been paid and subject to the Lien provided for in
Section 7.07 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's and the Guarantors'
obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation
without any further act shall be the successor Trustee; provided
such corporation shall be otherwise eligible and qualified under
this Article.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
(a) There shall at all times be a Trustee hereunder that is
a corporation organized and doing business under the laws of the
United States of America or of any state thereof that is
authorized under such laws to exercise corporate trustee power,
that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at
least $50 million as set forth in its most recent published
annual report of condition.
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(b) This Indenture shall always have a Trustee who
satisfies the requirements of TIA Sec. 310(a)(1), (2) and (5). The
Trustee is subject to TIA Sec. 310(b).Section 7.11. Preferential
Collection of ClaimS AGAINST COMPANY.
The Trustee is subject to TIA Sec. 311(a), excluding any
creditor relationship listed in TIA Sec. 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Sec. 311(a) to
the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate
delivered to the Trustee, at any time, elect to have either
Section 8.02 or 8.03 hereof be applied to all outstanding First
Mortgage Notes upon compliance with the conditions set forth
below in this Article Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company and the
Guarantors shall, subject to the satisfaction of the conditions
set forth in Section 8.04 hereof, be deemed to have been
discharged from their respective obligations with respect to all
outstanding First Mortgage Notes and any Note Guarantees on the
date the conditions set forth below are satisfied (hereinafter,
"Legal Defeasance"). For this purpose, Legal Defeasance means
that the Company shall be deemed to have paid and discharged the
entire Indebtedness represented by the outstanding First Mortgage
Notes and cured all existing Events of Default, which shall
thereafter be deemed to be "outstanding" only for the purposes of
Section 8.05 hereof and the other Sections of this Indenture
referred to in clauses (i) and (ii) below, and to have satisfied
all its other obligations under such First Mortgage Notes and
this Indenture (and the Trustee, on demand of and at the expense
of the Company, shall execute proper instruments acknowledging
the same), except for the following provisions, which shall
survive until otherwise terminated or discharged hereunder: (i)
the rights of Holders of outstanding First Mortgage Notes to
receive payments in respect of the principal of, premium, if any,
and interest and Liquidated Damages, if any, such First Mortgage
Notes when such payments are due solely out of the trust created
pursuant to this Indenture, (ii) the Company's and any
Guarantor's obligations with respect to the First Mortgage Notes
concerning issuing temporary First Mortgage Notes, registration
of First Mortgage Notes, mutilated, destroyed, lost or stolen
First Mortgage Notes and the maintenance of an office or agency
for payment and money for security payments held in trust, (iii)
the rights, powers, trusts, duties and immunities of the Trustee,
and the Company's and any Guarantor's obligations in connection
therewith and (iv) this Article Eight. Subject to compliance
with this Article Eight, the Company may exercise its option
under this Section 8.02 notwithstanding the prior exercise of its
option under Section 8.03 hereof.
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SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company and the
Guarantors shall, subject to the satisfaction of the conditions
set forth in Section 8.04 hereof, be released from their
obligations under the covenants contained in Sections 4.05, 4.07,
4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18,
4.19, 4.20, 4.21, 4.22, 4.23, 4.24, 4.25, 4.28, 4.29 and 4.30 and
Articles 5, 10 and 11 hereof with respect to the outstanding
First Mortgage Notes and Note Guarantees on and after the date
the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the First Mortgage Notes shall
thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders of
the First Mortgage Notes (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being
understood that such First Mortgage Notes shall not be deemed
outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding First
Mortgage Notes, the Company and the Guarantors may omit to comply
with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any
such covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a
Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this Indenture and
such First Mortgage Notes and Note Guarantees shall be unaffected
thereby. In addition, upon the Company's exercise under Section
8.01 hereof of the option applicable to this Section 8.03,
subject to the satisfaction of the conditions set forth in
Section 8.04 hereof or clauses (iv) through (viii) set forth in
paragraph (a) of Section 6.01 hereof shall not constitute Events
of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
(a) The following shall be the conditions to the
application of either Section 8.02 or 8.03 hereof to the
outstanding First Mortgage Notes:
(i) the Company must irrevocably deposit with the
Trustee, in trust, for the benefit of the Holders of the
First Mortgage Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such
amounts as shall be sufficient, in the opinion of a
nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and
interest due on the outstanding First Mortgage Notes on the
stated maturity date or on the applicable redemption date,
as the case may be, and the Company must specify whether the
First Mortgage Notes are being defeased to maturity or to a
particular redemption date;
(ii) in the case of an election under Section 8.02
hereof, the Company shall have delivered to the Trustee an
opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that, subject to
customary assumptions and exclusions, (A) the Company has
received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the Issuance Date,
there has been a change in the applicable U.S. federal
income tax laws, in either case to the effect that, and
based thereon such opinion of counsel in the United States
shall confirm that, subject to customary assumptions and
exclusions, the Holders of the outstanding First Mortgage
Notes shall not recognize income, gain or loss for U.S.
federal income tax purposes as a result of such Legal
Defeasance and shall be subject to U.S. federal income tax
on the same amounts, in the same manner and at the same
times as would have been the case if such Legal Defeasance
had not occurred;
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(iii) in the case of an election under Section 8.03
hereof, the Company shall have delivered to the Trustee an
opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that, subject to
customary assumptions and exclusions, the Holders of the
outstanding First Mortgage Notes shall not recognize income,
gain or loss for U.S. federal income tax purposes as a
result of such Covenant Defeasance and shall be subject to
U.S. federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred
and be continuing with respect to certain Events of Default
on the date of such deposit;
(v) such Legal Defeasance or Covenant Defeasance shall
not result in a breach or violation of, or constitute a
default under any material agreement or instrument (other
than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound;
(vi) the Company shall have delivered to the Trustee an
opinion of counsel to the effect that, as of the date of
such opinion and subject to customary assumptions and
exclusions following the deposit, the trust funds shall not
be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting
creditors' rights generally under any applicable United
States or state law and that the Trustee has a perfected
security interest in such trust funds for the ratable
benefit of the Holders of the outstanding First Mortgage
Notes;
(vii) the Company shall have delivered to the Trustee
an Officers' Certificate stating that the deposit was not
made by the Company with the intent of preferring the
Holders of the First Mortgage Notes over the other creditors
of the Company with the intent of defeating, hindering,
delaying or defrauding any creditors of the Company or
others; and
(viii) the Company shall have delivered to the Trustee
an Officers' Certificate and an opinion of counsel in the
United States (which opinion of counsel may be subject to
customary assumptions and exclusions), each stating that all
conditions precedent provided for or relating to the Legal
Defeasance or the Covenant Defeasance have been complied
with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
(a) Subject to Section 8.06 hereof, all money and non-
callable Government Securities (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee,
collectively for purposes of this Section 8.05, the "Trustee")
pursuant to Section 8.04 hereof in respect of the outstanding
First Mortgage Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such First Mortgage
Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying
Agent) as the Trustee may determine, to the Holders of such First
Mortgage Notes of all sums due and to become due thereon in
respect of principal, premium, if any, and interest, but such
money need not be segregated from other funds except to the
extent required by law.
(b) The Company and the Guarantors shall pay and indemnify
the Trustee against any tax, fee or other charge imposed on or
assessed against the cash or non-callable Government Securities
deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any
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such tax, fee or other charge which by law is for the account of
the Holders of the outstanding First Mortgage Notes.
(c) Anything in this Article Eight to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company
from time to time upon the request of the Company any money or
non-callable Government Securities held by it as provided in
Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee (which may
be the opinion delivered under Section 8.04(a) hereof), are in
excess of the amount thereof that would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the
principal of, premium, if any, or interest on any First Mortgage
Note and remaining unclaimed for two years after such principal,
premium, if any, or interest, has become due and payable shall be
paid to the Company on its request or (if then held by the
Company) shall be discharged from such trust; and the Holder of
such First Mortgage Note shall thereafter, as a secured creditor,
look only to the Company for payment thereof, and all liability
of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in
The New York Times and the Wall Street Journal (national
edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30
days from the date of such notification or publication, any
unclaimed balance of such money then remaining shall be repaid to
the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United
States dollars or non-callable Government Securities in
accordance with Section 8.02 or 8.03 hereof, as the case may be,
by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such
application, then the Company's and the Guarantors' obligations
under this Indenture and the First Mortgage Notes and Note
Guarantees shall be revived and reinstated as though no deposit
had occurred pursuant to Section 8.02 or 8.03 hereof until such
time as the Trustee or Paying Agent is permitted to apply all
such money in accordance with Section 8.02 or 8.03 hereof, as the
case may be; provided, however, that, if the Company and the
Guarantors make any payment of principal of, premium, if any, or
interest on any First Mortgage Note following the reinstatement
of its obligations, the Company and the Guarantors shall be
subrogated to the rights of the Holders of such First Mortgage
Notes to receive such payment from the money held by the Trustee
or Paying Agent.
SECTION 8.08. FIRST MORTGAGE NOTE COLLATERAL.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to either Section 8.02 or 8.03, Collateral,
except the funds in the trust fund described in Section 8.04
hereof, shall be released pursuant to Section 10.03 hereof.
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ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF FIRST MORTGAGE
NOTES.
(a) Notwithstanding Section 9.02 hereof, without the
consent of any Holder of First Mortgage Notes, the Company and
the Trustee together may amend or supplement this Indenture, the
First Mortgage Notes, the Note Guarantees or the Collateral
Documents:
(i) to cure any ambiguity, defect or inconsistency;
(ii) to comply with Article 5 or Article 11 hereof;
(iii) to provide for uncertificated First Mortgage
Notes in addition to or in place of certificated First
Mortgage Notes;
(iv) to provide for the assumption of the Company's or
any Guarantor's obligations to the Holders of the First
Mortgage Notes in the case of a merger or consolidation
pursuant to Article 5 or Article 11 hereof, as the case may
be;
(v) to make any change that would provide any
additional rights or benefits to the Holders of the First
Mortgage Notes (including providing for additional Note
Guarantees pursuant to this Indenture) or that does not
adversely affect the legal rights hereunder of any such
Holder of First Mortgage Notes;
(vi) to comply with requirements of the SEC in order to
effect or maintain the qualification of this Indenture under
the TIA; or
(vii) to enter into additional or supplemental Collateral
Documents.
(b) Upon the request of the Company accompanied by a
resolution of the Board of Directors of the Company and the
Guarantors authorizing the execution of any such amended or
supplemental Indenture, First Mortgage Notes, Note Guarantees or
Collateral Documents, and upon receipt by the Trustee of the
documents described in Section 7.02 hereof, the Trustee shall
join with the Company and the Guarantors in the execution of any
amended or supplemental Indenture, First Mortgage Notes, Note
Guarantees or Collateral Documents authorized or permitted by the
terms of this Indenture and to make any further appropriate
agreements and stipulations that may be therein contained, but
the Trustee shall not be obligated to enter into such amended or
supplemental Indenture, First Mortgage Notes, Note Guarantees or
Collateral Documents that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF FIRST MORTGAGE NOTES.
(a) Except as provided below in this Section 9.02 or
elsewhere in this Indenture, the Company and the Trustee may
amend or supplement this Indenture, the First Mortgage Notes, the
Note Guarantees or the Collateral Documents with the consent of
the Holders of at least a majority in principal amount of all of
the First Mortgage Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for
First Mortgage Notes), and, subject to Sections 6.04 and 6.07
hereof, any existing Default or Event of Default (other than a
Default or Event of Default in the payment of the principal of,
premium, if any, or interest on the First Mortgage Notes, except
a payment default resulting
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from an acceleration that has been rescinded) or compliance with
any provision of this Indenture or the First Mortgage Notes may
be waived with the consent of the Holders of a majority in
principal amount of all of the then outstanding First Mortgage
Notes (including consents obtained in connection with a tender
offer or exchange offer for First Mortgage Notes). Without the
consent of at least 662/3% in principal amount of all of the
First Mortgage Notes, the Company may not amend, alter or waive
the provisions with respect to Section 4.16 hereof.
(b) Upon the request of the Company accompanied by a
resolution of the Board of Directors of the Company and the
Guarantors authorizing the execution of any such amended or
supplemental Indenture, First Mortgage Notes, Note Guarantees or
Collateral Documents, and upon the filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the
Holders of First Mortgage Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof,
the Trustee shall join with the Company and the Guarantors in the
execution of such amended or supplemental Indenture, First
Mortgage Notes, Note Guarantees or Collateral Documents, unless
such amended or supplemental Indenture, First Mortgage Notes,
Note Guarantees or Collateral Documents affects the Trustee's own
rights, duties or immunities under this Indenture, the First
Mortgage Notes, the Note Guarantees, the Collateral Documents or
otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or
supplemental Indenture, First Mortgage Notes, Note Guarantees or
Collateral Documents.
(c) It shall not be necessary for the consent of the
Holders of First Mortgage Notes under this Section 9.02 to
approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance
thereof.
(d) After an amendment, supplement or waiver under this
Section 9.02 becomes effective, the Company shall mail to the
Holders of First Mortgage Notes affected thereby a notice briefly
describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any
such amended or supplemental Indenture, First Mortgage Notes,
Note Guarantees or Collateral Documents or waiver. Subject to
Sections 6.04 and 6.07 hereof, the Holders of a majority in
aggregate principal amount of the First Mortgage Notes then
outstanding may waive compliance in a particular instance with
any provision of this Indenture, the First Mortgage Notes, the
Note Guarantees or the Collateral Documents. However, without
the consent of each Holder affected, an amendment or waiver may
not (with respect to any First Mortgage Notes held by a non-
consenting Holder of First Mortgage Notes):
(i) reduce the principal amount of First Mortgage Notes
whose Holders must consent to an amendment, supplement or
waiver;
(ii) reduce the principal or change the fixed maturity
of any First Mortgage Note or alter or waive the provisions
with respect to the redemption of the First Mortgage Notes
(provided, however, that the term "redemption" does not
apply to any provision with respect to any Repurchase
Offer);
(iii) reduce the rate or change the time for payment of
interest on any First Mortgage Note;
(iv) waive a Default or Event of Default in the payment
of principal of, premium, if any, or interest on the First
Mortgage Notes (except a rescission of acceleration of the
First Mortgage Notes by the Holders of at least a majority
in aggregate principal amount of the First Mortgage Notes
and a waiver of the payment default that resulted from such
acceleration);
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(v) make any First Mortgage Note payable in money other
than that stated in the First Mortgage Notes;
(vi) make any change in the provisions of this
Indenture relating to waivers of past Defaults or the rights
of Holders of First Mortgage Notes to receive payments of
principal of or premium, if any, or interest on the First
Mortgage Notes;
(vii) release all or substantially all of the
Collateral from the Lien of this Indenture or the Collateral
Documents; or
(viii) make any change in the foregoing amendment and
waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture, the First
Mortgage Notes, the Note Guarantees and the Collateral Documents
shall be set forth in a amended or supplemental Indenture or
Collateral Document that complies with the TIA as then in effect,
if applicable. This Indenture shall be construed to comply in
every respect with the TIA.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective,
a consent to it by a Holder of a First Mortgage Note is a
continuing consent by the Holder of a First Mortgage Note and
every subsequent Holder of a First Mortgage Note or portion of a
First Mortgage Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not
made on any First Mortgage Note. However, any such Holder of a
First Mortgage Note or subsequent Holder of a First Mortgage Note
may revoke the consent as to its Note if the Trustee receives
written notice of revocation before the date the waiver,
supplement or amendment becomes effective. An amendment,
supplement or waiver becomes effective in accordance with its
terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF FIRST MORTGAGE NOTES.
(a) The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any First Mortgage Note
thereafter authenticated. The Company in exchange for all First
Mortgage Notes may issue and the Trustee shall authenticate new
First Mortgage Notes (accompanied by a notation of the Note
Guarantees duly endorsed by the Guarantors) that reflect the
amendment, supplement or waiver.
(b) Failure to make the appropriate notation or issue a new
First Mortgage Note shall not affect the validity and effect of
such amendment, supplement or waiver.SECTION 9.06. TRUSTEE TO
SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental
indenture, Note, Note Guarantee or Collateral Document, if
necessary, authorized pursuant to this Article Nine if the
amendment or supplement does not adversely affect the rights,
duties, liabilities or immunities of the Trustee. The Company or
any Guarantor may not sign an amendment or supplemental
Indenture, Note, Note Guarantee or Collateral Document until the
Board of Directors approves it. In executing any amended or
supplemental indenture, Note, Note Guarantee or Collateral
Document, if necessary, the Trustee shall be entitled to receive
and (subject to Section 7.01) shall be fully protected in relying
upon, an Officer's
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Certificate and an Opinion of Counsel, which Opinion of Counsel
may be subject to customary assumptions and exclusions, stating
that the execution of such amended or supplemental indenture,
Note, Note Guarantee or Collateral Document is authorized or
permitted by this Indenture.
ARTICLE 10
COLLATERAL AND SECURITY
SECTION 10.01. SECURITY.
(a) The due and punctual payment of the principal of,
premium and Liquidated Damages, if any, and interest on all of
the First Mortgage Notes of every series issued hereunder when
and as the same shall be due and payable, whether on an interest
payment date, at maturity, by acceleration, repurchase,
redemption or otherwise, and interest on the overdue principal
of, premium and Liquidated Damages, if any, and interest on the
First Mortgage Notes and performance of all other obligations of
the Company to the Holders of First Mortgage Notes or the Trustee
under this Indenture, the First Mortgage Notes and the Note
Guarantees, according to the terms hereunder or thereunder, shall
be ratably secured by a lien on the Collateral owned by the
Company and each Note Guarantee similarly shall be ratably
secured by the Collateral owned by such Guarantor, as provided in
the Collateral Documents that the Company and the Guarantors have
entered into simultaneously with the execution of this Indenture
for the benefit of the Holders of First Mortgage Notes.
(b) Each Holder of First Mortgage Notes, by its acceptance
thereof, consents and agrees to the terms of the Collateral
Documents (including, without limitation, the provisions
providing for foreclosure and release of Collateral) as the same
may be in effect or may be amended from time to time in
accordance with its terms and authorizes and directs the Trustee
to enter into the Collateral Documents and to perform its
obligations and exercise its rights thereunder in accordance
therewith. The Company and the Guarantors shall deliver to the
Trustee copies of all documents executed pursuant to this
Indenture and the Collateral Documents and shall do or cause to
be done all such acts and things as may be necessary or proper,
or as may be required by the provisions of the Collateral
Documents to assure and confirm to the Trustee the security
interest in the Collateral contemplated hereby, by the Collateral
Documents or any part thereof, as from time to time constituted,
so as to render the same available for the security and benefit
of this Indenture and of the First Mortgage Notes and the Note
Guarantees secured hereby, according to the intent and purposes
herein expressed.
(c) The Company shall take, or shall cause its Restricted
Subsidiaries to take, upon request of the Trustee, any and all
actions reasonably required to cause the Collateral Documents to
create and maintain, as security for the obligations of the
Company or the respective Guarantors hereunder, valid and
enforceable perfected first priority Liens in and on all the
Collateral, in favor of the Trustee for the ratable benefit of
the Holders, superior to and prior to the right of payment to all
Subordinated Indebtedness of the Company or the respective
Guarantor and subject to no other Liens than Permitted Liens.
(d) The Net Proceeds of all Asset Sales (if unapplied Net
Proceeds of Asset Sales exceed $2.0 million at any time) and the
Net Loss Proceeds of all Events of Loss of assets constituting
Collateral (other than Permitted Investments), as well as Excess
Proceeds, shall be promptly and without any commingling deposited
with the Trustee subject to a lien in favor of the Trustee for
the benefit of the Holders of the First Mortgage Notes unless and
until applied as permitted under Section 4.10 or Section 4.11
hereof, as the case may be. The Trustee shall release to the
Company any Excess Proceeds or Excess Loss Proceeds, as the case
may be, that remain after making an offer to purchase the
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First Mortgage Notes in compliance with Section 4.10 or Section
4.11 hereof, as the case may be. Amounts so paid to the Trustee
shall be invested or released in accordance with the provisions
of this Indenture.
(e) The Trustee may appoint one or more collateral agents,
who may be delegated any one or more of the duties or rights of
the Trustee under the Collateral Documents or that are specified
in any of the Collateral Documents.
SECTION 10.02. RECORDING AND OPINIONS.
(a) The Company and the Guarantors shall cause the
applicable Collateral Documents including the Leasehold Mortgage,
the First Preferred Ship Mortgage and any Financing Statements,
all amendments or supplements to each of the foregoing and any
other similar security documents as necessary, to be registered,
recorded and filed and/or re-recorded, re-filed and renewed in
such manner and in such place or places, if any, as may be
required by law or reasonably requested by the Trustee in order
fully to preserve and protect (i) the Lien securing the
obligations under the First Mortgage Notes and the Note
Guarantees pursuant to the Collateral Documents and (ii) the Lien
of the Guarantors securing (for the ratable benefit of the
Holders of the First Mortgage Notes) the First Mortgage Notes and
the Note Guarantees and to effectuate and preserve the security
of the Holders of First Mortgage Notes and all rights of the
Trustee.
(b) The Company, the Guarantors and any other obligor shall
furnish to the Trustee:
(i) promptly after the execution and delivery of this
Indenture, and promptly after the execution and delivery of
any other instrument of further assurance or amendment, an
Opinion of Counsel in the United States either (i) stating
that, subject to customary assumptions and exclusions, in
the opinion of such counsel, this Indenture, the Leasehold
Mortgage, the First Preferred Ship Mortgage, the Financing
Statements and other applicable Collateral Documents and all
other instruments of further assurance or amendment have
been properly recorded, registered and filed to the extent
necessary to make effective the Lien intended to be created
by such Collateral Documents and reciting the details of
such action or referring to prior Opinions of Counsel in
which such details are given, and stating that, subject to
customary assumptions and exclusions, as to such Collateral
Documents and such other instruments such recording,
registering and filing are the only recordings, registerings
and filings necessary to give notice thereof and that no re-
recordings, re-registerings or re-filings are necessary to
maintain such notice, and further stating that all financing
statements and continuation statements have been executed
and filed that are necessary fully to preserve and protect
the rights of the Holders of First Mortgage Notes and the
Trustee hereunder and under the Collateral Documents or (ii)
stating that, subject to customary assumptions and
exclusions, in the opinion of such counsel, no such action
is necessary to make any other Lien created under any of the
Collateral Documents effective as intended by such
Collateral Documents; and
(ii) within 30 days after January 1, in each year
beginning with the year 1997, an Opinion of Counsel, dated
as of such date, either (A) stating that, subject to
customary assumptions and exclusions, in the opinion of such
counsel, such action has been taken with respect to the
recording, registering, filing, re-recording, re-registering
and re-filing of this Indenture and all supplemental
indentures, financing statements, continuation statements or
other instruments of further assurance as is necessary to
maintain the Lien of this Indenture and the Collateral
Documents until the next Opinion of Counsel is required to
be rendered pursuant to this paragraph and reciting the
details of such action or referring to prior Opinions of
Counsel in which such details are given, and stating that
all financing statements and continuation
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statements have been executed and filed that are necessary
fully to preserve and protect the rights of the Holders and
the Trustee hereunder and under the Collateral Documents or
(B) stating that, subject to customary assumptions and
exclusions, in the opinion of such counsel, no such action
is necessary to maintain such Lien, until the next Opinion
of Counsel is required to be rendered pursuant to this
paragraph.
(c) The Company shall furnish to the Trustee the
certificates or opinions, as the case may be, required by TIA
Section 314(d). Such certificates or opinions shall be subject
to the terms of TIA Section 314(e).
SECTION 10.03. RELEASE OF COLLATERAL.
(a) Subject to paragraphs (b), (c) and (d) of this Section
10.03, Collateral may be released from the Lien and security
interest created by this Indenture and the Collateral Documents
at any time or from time to time upon the request of the Company
pursuant to an Officers' Certificate certifying that all terms
for release and conditions precedent hereunder and under any
applicable Collateral Document have been met and specifying (i)
the identity of the Collateral to be released and (ii) the
provision of this Indenture that authorizes such release. The
Trustee shall release (at the sole cost and expense of the
Company) (i) all Collateral that is contributed, sold, leased,
conveyed, transferred or otherwise disposed of (including,
without limitation, any Collateral that does not constitute
Project Assets, and that is contributed, sold, leased, conveyed,
transferred or otherwise disposed of to an Unrestricted
Subsidiary, but excluding any such contribution, sale, lease,
conveyance, transfer or other distribution to the Company or a
Restricted Subsidiary); provided that such contribution, sale,
lease, conveyance, transfer or other distribution is or shall be
in accordance with the provisions of this Indenture, including,
without limitation, the requirement that the net proceeds from
such contribution, sale, lease, conveyance, transfer or other
distribution are or shall be applied in accordance with this
Indenture and that no Default or Event of Default has occurred
and is continuing or would occur immediately following such
release; (ii) Collateral that is condemned, seized or taken by
the power of eminent domain or otherwise confiscated pursuant to
an Event of Loss; provided that the Net Loss Proceeds, if any,
from such Event of Loss are or shall be applied in accordance
with Section 4.11 hereof and that no Default or Event of Default
has occurred and is continuing or would occur immediately
following such release; (iii) Collateral that may be released
with the consent of Holders pursuant to Article 9 hereof; (iv)
all Collateral (except as provided in Article 8 hereof and, in
particular, the funds in the trust fund described in Section 8.04
hereof) upon discharge or defeasance of this Indenture in
accordance with Article 8 hereof; (v) all Collateral upon the
payment in full of all obligations of the Company with respect to
the First Mortgage Notes; and (vi) Collateral of a Guarantor
whose Note Guarantee is released pursuant to Section 11.06
hereof. Upon receipt of such Officers' Certificate the Trustee
shall execute, deliver or acknowledge any necessary or proper
instruments of termination, satisfaction or release to evidence
the release of any Collateral permitted to be released pursuant
to this Indenture or the Collateral Documents.
(b) No Collateral shall be released from the Lien and
security interest created by the Collateral Documents pursuant to
the provisions of the Collateral Documents unless there shall
have been delivered to the Trustee the certificate required by
this Section 10.03.
(c) The Trustee may release Collateral from the Lien and
security interest created by this Indenture and the Collateral
Documents upon the sale or disposition of Collateral pursuant to
the Trustee's powers, rights and duties with respect to remedies
provided under any of the Collateral Documents.
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(d) The release of any Collateral from the terms of this
Indenture and the Collateral Documents shall not be deemed to
impair the security under this Indenture in contravention of the
provisions hereof if and to the extent the Collateral is released
pursuant to the terms hereof. To the extent applicable, the
Company shall cause TIA Sec. 313(b), relating to reports, and TIA
Sec. 314(d), relating to the release of property or securities from
the Lien and security interest of the Collateral Documents and
relating to the substitution therefor of any property or
securities to be subjected to the Lien and security interest of
the Collateral Documents to be complied with. Any certificate or
opinion required by TIA Sec. 314(d) may be made by an Officer of
the Company except in cases where TIA Sec. 314(d) requires that
such certificate or opinion be made by an independent Person,
which Person shall be an independent engineer, appraiser or other
expert selected or approved by the Trustee in the exercise of
reasonable care.
SECTION 10.04. PROTECTION OF THE TRUST ESTATE.
Upon prior written notice to the Company and the
Guarantors, the Trustee shall have the power (i) to institute and
maintain such suits and proceedings as it may deem expedient, to
prevent any impairment of the Collateral under any of the
Collateral Documents; and (ii) to enforce the obligations of the
Company, the Guarantors or any Restricted Subsidiary under this
Indenture or the Collateral Documents, to institute and maintain
such suits and proceedings as may be expedient to prevent any
impairment of the Collateral under the Collateral Documents and
in the profits, rents, revenues and other income arising
therefrom; including the power to institute and maintain suits or
proceedings to restrain the enforcement of or compliance with any
legislative or other governmental enactment, rule or order that
may be unconstitutional or otherwise invalid if the enforcement
of, or compliance with, such enactment, rule or order would
impair any Collateral or be prejudicial to the interests of the
Holders of First Mortgage Notes or the Trustee, to the extent
permitted thereunder. Upon receipt of notice that a Restricted
Subsidiary or a Guarantor is not in compliance with any of the
requirements of the Leasehold Mortgage or the First Preferred
Ship Mortgage, the Trustee may, but shall have no obligation to
purchase, at the Company's expense, such insurance coverage
necessary to comply with the appropriate section of such
mortgage.
SECTION 10.05. CERTIFICATES OF THE COMPANY.
The Company shall furnish to the Trustee, prior to each
proposed release of Collateral pursuant to the Collateral
Documents (i) all documents required by TIA Sec. 314(d) and (ii)
an Opinion of Counsel in the United States, which may be rendered
by internal counsel to the Company, to the effect that, subject to
customary assumptions and exclusions, such accompanying documents
constitute all documents required by TIA Sec. 314(d). The Trustee
may, to the extent permitted by Sections 7.01 and 7.02 hereof,
accept as conclusive evidence of compliance with the foregoing
provisions the appropriate statements contained in such documents
and such Opinion of Counsel.
SECTION 10.06. CERTIFICATES OF THE TRUSTEE.
In the event that the Company wishes to release Collateral
in accordance with the Collateral Documents and has delivered the
certificates and documents required by the Collateral Documents
and Sections 10.03 and 10.04 hereof, the Trustee shall determine
whether it has received all documentation required by TIA Sec.
314(d) in connection with such release and, based on such
determination and the Opinion of Counsel delivered pursuant to
clause (ii) of Section 10.05 hereof, shall deliver a certificate
to the Collateral Agent setting forth such determination.
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SECTION 10.07. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE
TRUSTEE UNDER THE COLLATERAL DOCUMENTS.
(a) Subject to the provisions of Sections 7.01 and 7.02
hereof, the Trustee may, in its sole discretion and without the
consent of the Holders of First Mortgage Notes, direct, on behalf
of the Holders of First Mortgage Notes, the Collateral Agent to,
take all actions it deems necessary or appropriate in order to
(i) enforce any of the terms of the Collateral Documents and (ii)
collect and receive any and all amounts payable in respect of the
Obligations of the Company hereunder. The Trustee shall have
power to institute and maintain such suits and proceedings as it
may deem expedient to prevent any impairment of the Collateral by
any acts that may be unlawful or in violation of the Collateral
Documents or this Indenture, and such suits and proceedings as
the Trustee may deem expedient to preserve or protect its
interests and the interests of the Holders of First Mortgage
Notes in the Collateral (including power to institute and
maintain suits or proceedings to restrain the enforcement of or
compliance with any legislative or other governmental enactment,
rule or order that may be unconstitutional or otherwise invalid
if the enforcement of, or compliance with, such enactment, rule
or order would impair the security interest hereunder or be
prejudicial to the interests of the Holders of First Mortgage
Notes or of the Trustee).
(b) Upon an Event of Default and so long as such Event of
Default continues, subject to the restrictions imposed by the
Indiana Act, to the extent applicable, the Trustee may exercise
in respect of the Collateral, in addition to the other rights and
remedies provided for herein, in the Collateral Documents or
otherwise available to it, all of the rights and remedies of a
secured party under the Uniform Commercial Code or other
applicable law, and the Trustee may also upon obtaining
possession of the Collateral as set forth herein, without notice
to the Company, except as specified below, sell the Collateral or
any part thereof in one or more parcels at public or private
sale, at any exchange, broker's board or at any of the Trustee's
offices or elsewhere, for cash, on credit or for future delivery,
and upon such other terms as the Trustee may deem commercially
reasonable. The Company acknowledges and agrees that any such
private sale may result in prices and other terms less favorable
to the seller than if such a sale were a public sale. The
Company agrees that, to the extent notice of sale shall be
required by law, at least 10 days' notice to the Company of the
time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable
notification. The Trustee shall not be obligated to make any
sale regardless of notice of sale having been given. The Trustee
may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to
which it was so adjourned.
SECTION 10.08 PRIORITY OF APPLICATION OF CASH PROCEEDS BY
TRUSTEE.
Any cash that is Collateral held by the Trustee and all cash
proceeds received by the Trustee in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral shall be applied (unless otherwise provided for in the
Collateral Documents and after payment of any and all amounts
payable to the Trustee pursuant to this Indenture), as the
Trustee shall determine or as the Holders of the First Mortgage
Notes shall direct pursuant to Section 6.05 hereof, (i) against
the obligations for the ratable benefit of the Holders of the
First Mortgage Notes, (ii) to maintain, repair or otherwise
protect the Collateral or (iii) to take such other action to
protect the other rights of the Holders of the First Mortgage
Notes or to take any other appropriate action or remedy for the
benefit of the Holders of the First Mortgage Notes. Any surplus
of such cash or cash proceeds held by the Trustee and remaining
after payment in full of all the obligations shall be paid over
to the Company or to whomsoever may be lawfully entitled to
receive such surplus or as a court of competent jurisdiction may
direct.
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SECTION 10.09. TERMINATION OF SECURITY INTEREST.
Upon the payment in full of all Obligations of the Company
under this Indenture and the First Mortgage Notes, or upon Legal
Defeasance or Covenant Defeasance, the Trustee shall, at the
request of the Company, deliver a certificate to the Trustee
stating that such Obligations have been paid in full, and
instruct the Trustee to release the Liens pursuant to this
Indenture and the Collateral Documents.
SECTION 10.10. COOPERATION OF TRUSTEE.
In the event the Company or any Guarantor pledges or grants
a security interest in additional Collateral, the Trustee shall
cooperate with the Company or such Guarantor in reasonably and
promptly agreeing to the form of, and executing as required, any
instruments or documents necessary to make effective the security
interest in the Collateral to be so substituted or pledged. To
the extent practicable, the terms of any security agreement or
other instrument or document necessitated by any such
substitution or pledge shall be comparable to the provisions of
the existing Collateral Documents. Subject to, and in accordance
with the requirements of this Article 10 and the terms of the
Collateral Documents, in the event that the Company or any
Guarantor engages in any transaction pursuant to Section 10.03
hereof, the Trustee shall cooperate with the Company or such
Guarantor in order to facilitate such transaction in accordance
with any reasonable time schedule proposed by the Company,
including by delivering and releasing the Collateral in a prompt
and reasonable manner.
SECTION 10.11. COLLATERAL AGENT.
The Trustee may, from time to time, appoint one or more
Collateral Agents hereunder. Each of such Collateral Agents may
be delegated any one or more of the duties or rights of the
Trustee hereunder or under the Collateral Documents or that are
specified in any Collateral Documents, including without
limitation, the right to hold any Collateral in the name of,
registered to, or in the physical possession of, such Collateral
Agent, for the rateable benefit of the Holders of the First
Mortgage Notes. Each such Collateral Agent shall have such
rights and duties as may be specified in an agreement between the
Trustee and such Collateral Agent. The Trustee and any
Collateral Agent shall be authorized hereunder to give any
acknowledgment reasonably requested by any party under the
Intercreditor Agreement to confirm the rights and obligations of
the parties under the Intercreditor Agreement.
ARTICLE 11
NOTE GUARANTEES
SECTION 11.01. NOTE GUARANTEE.
(a) Each Subsidiary of the Company hereafter formed or
acquired (other than Unrestricted Subsidiaries) that in
accordance with Section 11.02 hereof is required to guarantee the
obligations of the Company under the First Mortgage Notes upon
execution of a counterpart of this Indenture, hereby jointly and
severally and unconditionally guarantees, on an unsubordinated
secured basis (each such guarantee being a "Note Guarantee"), to
each Holder of a First Mortgage Note authenticated and delivered
by the Trustee irrespective of the validity or enforceability of
this Indenture, the First Mortgage Notes or the obligations of
the Company under this Indenture or the First Mortgage Notes,
that: (i) the principal of, premium, if any, and interest on the
First Mortgage Notes of every series issued hereunder shall be
paid in full when due, whether at the maturity or interest
payment or mandatory redemption date, by acceleration, call for
redemption or otherwise, and interest on the overdue principal
and interest, if any, of the First Mortgage Notes and all other
obligations of the Company to the Holders or the Trustee under
this Indenture or the First Mortgage Notes shall be promptly paid
in full or performed, all in
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accordance with the terms of this Indenture and the First
Mortgage Notes; and (ii) in case of any extension of time of
payment or renewal of any First Mortgage Notes or any of such
other obligations, they shall be paid in full when due or
performed in accordance with the terms of the extension or
renewal, whether at maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed for whatever
reason, each Guarantor shall be obligated to pay the same whether
or not such failure to pay has become an Event of Default that
could cause acceleration pursuant to Section 6.02 hereof. Each
Guarantor agrees that this is a guarantee of payment not a
guarantee of collection.
(b) Each Guarantor hereby agrees that its obligations with
regard to each Note Guarantee shall be joint and several,
unconditional, irrespective of the validity or enforceability of
the First Mortgage Notes or the obligations of the Company under
this Indenture, the absence of any action to enforce the same,
the recovery of any judgment against the Company or any other
obligor with respect to this Indenture, the First Mortgage Notes
or the Obligations of the Company under this Indenture or the
First Mortgage Notes, any action to enforce the same or any other
circumstances (other than complete performance) that might
otherwise constitute a legal or equitable discharge or defense of
a Guarantor. Each Guarantor further, to the extent permitted by
law, waives and relinquishes all claims, rights and remedies
accorded by applicable law to guarantors and agrees not to assert
or take advantage of any such claims, rights or remedies,
including but not limited to: (i) any right to require the
Trustee, the Holders or the Company (each, a "Benefitted Party")
to proceed against the Company or any other Person or to proceed
against or exhaust any security held by a Benefitted Party at any
time or to pursue any other remedy in any Benefitted Party's
power before proceeding against such Guarantor; (ii) the defense
of the statute of limitations in any action hereunder or in any
action for the collection of any Indebtedness or the performance
of any obligation hereby guaranteed; (iii) any defense that may
arise by reason of the incapacity, lack of authority, death or
disability of any other Person or the failure of a Benefitted
Party to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of any other
Person; (iv) demand, protest and notice of any kind including but
not limited to notice of the existence, creation or incurring of
any new or additional Indebtedness or obligation or of any action
or non-action on the part of such Guarantor, the Company, any
Benefitted Party, any creditor of such Guarantor, the Company or
on the part of any other Person whomsoever in connection with any
Indebtedness or Obligations hereby guaranteed; (v) any defense
based upon an election of remedies by a Benefitted Party,
including but not limited to an election to proceed against such
Guarantor for reimbursement; (vi) any defense based upon any
statute or rule of law that provides that the obligation of a
surety must be neither larger in amount nor in other respects
more burdensome than that of the principal; (vii) any defense
arising because of a Benefitted Party's election, in any
proceeding instituted under the Federal Bankruptcy Code, of the
application of Section 1111(b)(2) of the Federal Bankruptcy Code;
or (viii) any defense based on any borrowing or grant of a
security interest under Section 364 of the Federal Bankruptcy
Code. Each Guarantor hereby covenants that its Note Guarantee
shall not be discharged except by complete performance of the
obligations contained in its Note Guarantee and this Indenture.
(c) If any Holder or the Trustee is required by any court
or otherwise to return to either the Company or any Guarantor, or
any custodian, trustee, or similar official acting in relation to
either the Company or such Guarantor, any amount paid by the
Company or such Guarantor to the Trustee or such Holder, the
applicable Note Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Guarantor
agrees that it shall not be entitled to any right of subrogation
in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations
guaranteed hereby.
(d) Each Guarantor further agrees that, as between such
Guarantor, on the one hand, and the Holders and the Trustee, on
the other hand, (i) the maturity of the obligations guaranteed
hereby may be
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accelerated as provided in Section 6.02 hereof for the purposes
of this Note Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration as to the Company
or any other obligor on the First Mortgage Notes of the
obligations guaranteed hereby and (ii) in the event of any
declaration of acceleration of those obligations as provided in
Section 6.02 hereof, those obligations (whether or not due and
payable) shall forthwith become due and payable by such Guarantor
for the purpose of this Note Guarantee.
SECTION 11.02. ADDITIONAL NOTE GUARANTEES.
The Company shall cause each Restricted Subsidiary other
than Finance Corporation to (i) execute and deliver to the
Trustee a supplemental indenture and supplemental Collateral
Documents in form reasonably satisfactory to the Trustee pursuant
to which such Restricted Subsidiary shall unconditionally
guarantee all of the Company's obligations under the First
Mortgage Notes, this Indenture and the Collateral Documents on
the terms set forth in this Indenture and (ii) deliver to the
Trustee an opinion of counsel that, subject to customary
assumptions and exclusions, such supplemental indenture and
supplemental Collateral Documents, if any, have been duly
executed and delivered by such Restricted Subsidiary. The Note
Guarantee shall be secured by a lien or charge on all Collateral,
if any, owned by such Restricted Subsidiary. The Note Guarantee
shall be released if the Company or its Restricted Subsidiaries
cease to own any Equity Interests in such Restricted Subsidiary
or if such Restricted Subsidiary becomes an Unrestricted
Subsidiary in accordance with the terms of this Indenture.
SECTION 11.03. LIMITATION OF GUARANTORS' LIABILITY.
Each Guarantor and by its acceptance hereof, each
beneficiary hereof, hereby confirms that it is its intention that
the Note Guarantee by such Guarantor not constitute a fraudulent
transfer or conveyance for purposes of the Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent
applicable to any of the Note Guarantees. To effectuate the
foregoing intention, each such person hereby irrevocably agrees
that the obligation of such Guarantor under its Note Guarantee
under this Article 11 shall be limited to the maximum amount as
shall, after giving effect to such maximum amount and all other
liabilities of such Guarantor that are relevant under such laws,
and after giving effect to any collections from, rights to
receive contribution from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other
Guarantor under this Article 11, result in the obligations of
such Guarantor in respect of such maximum amount not constituting
a fraudulent conveyance. Each beneficiary under the Note
Guarantees, by accepting the benefits hereof, confirms its
intention that, in the event of a bankruptcy, reorganization or
other similar proceeding of the Company or any Guarantor in which
concurrent claims are made upon such Guarantor hereunder, to the
extent such claims shall not be fully satisfied, each such
claimant with a valid claim against the Company shall be entitled
to a ratable share of all payments by such Guarantor in respect
of such concurrent claims.
SECTION 11.04. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN
TERMS.
(a) No Guarantor shall consolidate with or merge with or
into (whether or not such Guarantor is the surviving Person),
another Person, whether or not it is affiliated with such
Guarantor, unless (i) subject to the provisions of Section 11.05
and certain other provisions of this Indenture, the Person formed
by or surviving any such consolidation or merger (if other than
such Guarantor) assumes all the obligations of such Guarantor
pursuant to a supplemental indenture and supplemental Collateral
Documents in form reasonably satisfactory to the Trustee pursuant
to which such Person shall unconditionally guarantee, on a senior
secured basis, all of such Guarantor's obligations under such
Guarantor's Note Guarantee, this Indenture and the Collateral
Documents on the terms set forth in this
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Indenture; (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists; (iii) such
transaction shall not result in the loss or suspension or
material impairment of any Gaming License; (iv) such Guarantor,
or any Person formed by or surviving any such consolidation or
merger, shall have Combined Net Worth (immediately after giving
effect to such transaction), equal to or greater than the
Combined Net Worth of such Guarantor immediately preceding the
transaction; and (v) such transactions would not require any
Holder of First Mortgage Notes to obtain a Gaming License or be
qualified under the laws of any applicable gaming jurisdiction;
provided that such Holder would not have been required to obtain
a Gaming License or be qualified under the laws of any applicable
gaming jurisdiction in the absence of such transactions.
In case of any such consolidation, merger, sale or
conveyance and upon the assumption by the successor corporation,
by supplemental indenture, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of the Note Guarantee in
this Indenture and the due and punctual performance and
observance of all of the covenants and conditions of this
Indenture to be performed by the Guarantor, such successor
corporation shall succeed to and be substituted for the Guarantor
with the same effect as if it had been named herein as a
Guarantor.
(b) Notwithstanding the foregoing, (i) a Guarantor may
consolidate with or merge with or into the Company, provided that
the surviving corporation (if other than the Company) shall
expressly assume by supplemental indenture complying with the
requirements of this Indenture, the due and punctual payment of
the principal of, premium, if any, and interest on all of the
First Mortgage Notes, and the due and punctual performance and
observance of all the covenants and conditions of this Indenture
to be performed by the Company; and (ii) a Guarantor may
consolidate with or merge with or into any other Guarantor.
SECTION 11.05. RELEASES OF NOTE GUARANTEES.
In the event of (i) a sale or disposition of all or
substantially all of the assets of any Guarantor by way of
merger, consolidation or otherwise, (ii) a Restricted Subsidiary
becoming an Unrestricted Subsidiary pursuant to the terms of this
Indenture or (iii) a sale or other disposition of all of the
Capital Stock of any Guarantor, then such Guarantor (in the event
of a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the Capital Stock of such
Guarantor or the Restricted Subsidiary becomes an Unrestricted
Subsidiary pursuant to the terms of this Indenture) or the
corporation acquiring the property (in the event of a sale or
other disposition of all or substantially all of the assets of
such Guarantor) shall be released and relieved of its obligations
under its Note Guarantee; provided that (A) immediately after
giving effect to such transaction, no Default or Event of Default
shall have occurred and be continuing or would occur as a
consequence thereof and (B) the Net Proceeds of such sale or
other disposition are applied in accordance with the applicable
provisions of this Indenture.
SECTION 11.06. "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting
hereunder, the term "Trustee" as used in this Article 11 shall in
such case (unless the context shall otherwise require) be
construed as extending to and including such Paying Agent within
its meaning as fully and for all intents and purposes as if such
Paying Agent were named in this Article 11 in place of the
Trustee.
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ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA Sec. 318(c), the imposed
duties shall control.
SECTION 12.02. NOTICES.
(a) Any notice or communication by the Company, any
Guarantor or the Trustee to the others is duly given if in
writing and delivered in Person or mailed by first class mail
(registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day
delivery, to the others' address:
If to the Company or the Guarantors:
Showboat Marina Casino Partnership
Showboat Marina Finance Corporation
2001 East Columbus Drive
East Chicago, Indiana 46312
Telecopier No.: (219) 398-0144
Attention: Vice President - Finance and Administration
With a copy to:
Kummer Kaempfer Bonner & Renshaw
3800 Howard Hughes Parkway
Seventh Floor
Las Vegas, Nevada 89109
Attention: John N. Brewer, Esq.
Telephone No.: (702) 792-7000
Telecopier No.: (702) 796-7181
and to:
Ice Miller Donadio & Ryan
One American Square
31st Floor
Indianapolis, Indiana 46204
Attention: Stephen J. Hackman, Esq.
Telephone: (317) 236-2100
Telecopier: (317) 235-2219
If to the Trustee:
American Bank National Association
101 East 5th St.
St. Paul, MN 55101
Telecopier No.: (612) 229-6415
Attention: Corporate Trust Department
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(b) The Company, the Guarantors or the Trustee, by notice
to the others may designate additional or different addresses for
subsequent notices or communications.
(c) All notices and communications (other than those sent
to Holders) shall be deemed to have been duly given: at the time
delivered by hand, if personally delivered; five Business Days
after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if
telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next-
day delivery.
(d) Any notice or communication to a Holder shall be mailed
by first class mail, certified or registered, return receipt
requested, or by overnight air courier guaranteeing next day
delivery to its address shown on the register kept by the
Registrar. Any notice or communication shall also be so mailed
to any Person described in TIA Sec. 313(c), to the extent required
by the TIA. Failure to mail a notice or communication to a
Holder or any defect in it shall not affect its sufficiency with
respect to other Holders.
(e) If a notice or communication is mailed in the manner
provided above within the time prescribed, it is duly given,
whether or not the addressee receives it. (f) If the Company
or a Guarantor mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same
time.SECTION 12.03. COMMUNICATION BY HOLDERS OF FIRST MORTGAGE
NOTES WITH OTHER HOLDERS OF FIRST MORTGAGE NOTES.
Holders may communicate pursuant to TIA Sec. 312(b) with other
Holders with respect to their rights under this Indenture or the
First Mortgage Notes. The Company, the Guarantors, the Trustee,
the Registrar and anyone else shall have the protection of TIA Sec.
312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT.
Upon any request or application by the Company or the
Guarantors to the Trustee to take any action under this
Indenture, the Company or the Guarantors shall furnish to the
Trustee:
(i) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee (which shall include
the statements set forth in Section 12.05 hereof) stating
that, in the opinion of the signers, all conditions
precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been
satisfied; and
(ii) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall include
the statements set forth in Section 12.05 hereof) stating
that, subject to customary assumptions and exclusions, in
the opinion of such counsel, all such conditions precedent
and covenants have been satisfied.Section 12.05. Statements
Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture (other
than a certificate provided pursuant to TIA Sec. 314(a)(4)) shall
comply with the provisions of TIA Sec. 314(e) and shall include:
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(i) a statement that the Person making such
certificate or opinion has read such covenant or condition;
(ii) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
(iii) a statement that, in the opinion of such Person,
he or she has made such examination or investigation as is
necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been
satisfied; and
(iv) a statement as to whether or not, in the opinion
of such Person, such condition or covenant has been
satisfied.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make
reasonable rules and set reasonable requirements for its
functions.
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES, STOCKHOLDERS AND PARTNERS.
No director, officer, employee, incorporator, stockholder or
partner of the Company or the Guarantors, as such, shall have any
liability for any obligations of the Company or the Guarantors
under the First Mortgage Notes, any Note Guarantee, this
Indenture, the Collateral Documents, as applicable, or for any
claim based on, in respect of, or by reason of such obligations
or their creation. Each Holder of the First Mortgage Notes by
accepting a First Mortgage Note waives and releases all such
liability. The waiver and release are part of the consideration
for issuance of the First Mortgage Notes and the Note Guarantees.
Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Commission that
such a waiver is against public policy.
SECTION 12.08. GOVERNING LAW.
THIS INDENTURE AND THE FIRST MORTGAGE NOTES SHALL BE,
SUBJECT TO CERTAIN EXCEPTIONS, GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE CHOICE OF LAW RULES THEREOF. THE
COLLATERAL DOCUMENTS SHALL BE GOVERNED, SUBJECT TO CERTAIN
EXCEPTIONS, BY THE LAWS OF THE STATE OF INDIANA OR THE LAWS OF
THE STATE OF NEVADA, AS SPECIFIED THEREIN.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its
Subsidiaries or of any other Person. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 12.10. SUCCESSORS.
All agreements of the Company and the Guarantors in this
Indenture, the First Mortgage Notes and the Note Guarantees, as
applicable, shall bind their respective successors. All
agreements of the Trustee in this Indenture shall bind its
successors.
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SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture, in the First
Mortgage Notes or in the Note Guarantees shall be invalid,
illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together
represent the same agreement.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted
for convenience of reference only, are not to be considered a
part of this Indenture and shall in no way modify or restrict any
of the terms or provisions hereof.
[Signature pages follow]
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the day first above written.
COMPANY: SHOWBOAT MARINA CASINO PARTNERSHIP,
an Indiana general partnership
By: SHOWBOAT MARINA PARTNERSHIP, an Indiana
general partnership, its general partner
By: SHOWBOAT INDIANA INVESTMENT LIMITED
PARTNERSHIP, a Nevada limited partnership,
its general partner
By: SHOWBOAT INDIANA, INC., a Nevada
corporation, its general partner
By: s/J. Keith Wallace
Name: J. Keith Wallace
Title: President and Chief Executive
Officer
By: s/John N. Brewer
Name: John N. Brewer
Title: Assistant Secretary
SHOWBOAT MARINA FINANCE CORPORATION,
a Nevada corporation
By: s/Mark J. Miller
Name: Mark J. Miller
Title: Treasurer
By: s/John N. Brewer
Name: John N. Brewer
Title: Assistant Secretary
AMERICAN BANK NATIONAL ASSOCIATION
By:
Name:
Title:
By: s/Thomas M. Rorsman
Name: Thomas M. Rorsman
Title: Vice Presisdent
<PAGE>
EXHIBIT A 13 1/2% [SERIES A] [SERIES B] FIRST MORTGAGE NOTES DUE 2003
No.
SHOWBOAT MARINA CASINO PARTNERSHIPSHOWBOAT MARINA FINANCE
CORPORATION
Jointly and severally promise to pay to _____________, or
registered assigns, the principal sum of ___________________
Dollars on March 15, 2003.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Dated:
SHOWBOAT MARINA CASINO PARTNERSHIP,an
Indiana general partnership
By: SHOWBOAT MARINA PARTNERSHIP, an
Indiana general partnership, its
general partner
By: SHOWBOAT INDIANA INVESTMENT LIMITED
PARTNERSHIP, a Nevada limited partnership,
its general partner
By: SHOWBOAT INDIANA, INC.,
a Nevada corporation, its general partner
By:
Name:
Title:
By:
Name:
Title:
<PAGE>
SHOWBOAT MARINA FINANCE CORPORATION,
a Nevada corporation
By:
Name:
Title:
By:
Name:
Title:
This is one of the Global
First Mortgage Notes referred to in the
within-mentioned Indenture:
American Bank National Association,
a national banking association,
as Trustee
By: __________________________________
Name:
Title:
<PAGE>
EXHIBIT A
13 1/2% Series A First Mortgage Note due 2003
Unless and until it is exchanged in whole or in part for
First Mortgage Notes in definitive form, this First Mortgage Note
may not be transferred except as a whole by the Depository to a
nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository or a
nominee of such successor Depository. Unless this certificate is
presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York, New York) ("DTC"), to the
issuer or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as may be requested by an
authorized representative of DTC (and any payment is made to Cede
& Co. or such other entity as may be requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest
herein.1
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF SHOWBOAT MARINA CASINO
PARTNERSHIP, AN INDIANA GENERAL PARTNERSHIP, AND SHOWBOAT
MARINA FINANCE CORPORATION, A NEVADA CORPORATION
(COLLECTIVELY, THE "COMPANY"), THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A NON U.S. PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE
COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.
Capitalized terms used herein shall have the meanings
assigned to them in the Indenture referred to below unless
otherwise indicated.
1. This Paragraph should be included only if the First Mortgage
is issued in global form.
<PAGE>
1. INTEREST. Showboat Marina Casino Partnership, an
Indiana general partnership ("Showboat Partnership"), and
Showboat Marina Finance Corporation, a Nevada corporation
("Finance Corporation" and, together with Showboat Partnership,
the "Company") (or any successor thereto as provided in the
Indenture), jointly and severally promise to pay interest at the
rate of 13 1/2% per annum of the principal amount of this First
Mortgage Note (the "Interest") and shall pay the Liquidated
Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below from the Issuance Date to the date of
payment of such principal amount of this First Mortgage Note.
Installments of Interest and Liquidated Damages shall become due
and payable semi-annually in arrears on each March 15 and
September 15 (each, an "Interest Payment Date") to the holder of
record at the close of business on the immediately preceding
March 1 or September 1. Additionally, installments of accrued
and unpaid Interest and Liquidated Damages shall become due and
payable with respect to any principal amount of this First
Mortgage Note that matures (whether at stated maturity, upon
acceleration, upon maturity of repurchase obligation or
otherwise) upon such maturity of such principal amount of this
First Mortgage Note. Interest and Liquidated Damages on this
First Mortgage Note shall be computed on the basis of a 360-day
year, consisting of twelve 30-day months. Each installment of
Interest shall be calculated to accrue from and including the
most recent date to which Interest has been paid or provided for
(or from and including the Issuance Date if no installment of
Interest has been paid) to, but not including, the date of
payment.
2. METHOD OF PAYMENT. The Company shall pay interest
(except defaulted interest) and Liquidated Damages, if any, to
the Persons who are registered Holders of First Mortgage Notes at
the close of business on March 1 or September 1 next preceding
the Interest Payment Date, even if such First Mortgage Notes are
cancelled after such record date and on or before such Interest
Payment Date (the "Record Date"), except as provided in Section
2.12 of the Indenture with respect to defaulted interest. The
Holder hereof must surrender this First Mortgage Note to a Paying
Agent to collect principal payments. The First Mortgage Notes
shall be payable both as to principal, interest and premium and
Liquidated Damages, if any, at the office or agency of the
Company maintained for such purpose within the City and State of
New York, or, at the option of the Company, payment of interest,
if any, may be made by check mailed to the Holders of First
Mortgage Notes at their respective addresses set forth in the
register of Holders of First Mortgage Notes; provided that all
payments with respect to Global Notes and $5.0 million or more in
principal amount of First Mortgage Notes the Holders of which
have given wire transfer instructions to the Company shall be
required to be made by wire transfer of immediately available
funds to the accounts specified by the Holders thereof. Such
payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of
public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, American Bank
National Association (including any successor appointed under the
Indenture, the "Trustee"), the Trustee under the Indenture, shall
act as Paying Agent and Registrar. The Company may change any
Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE AND COLLATERAL DOCUMENTS. The Company issued
the First Mortgage Notes under an Indenture dated as of March 28,
1996 (as it may be amended, modified or supplemented from time to
time, the "Indenture") among the Company and the Trustee. The
terms of the First Mortgage Notes include those stated in the
Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939, as amended (15 U.S. Code Secs.
77aaa-77bbbb), as in effect on the Issuance Date. The First
Mortgage Notes are subject to all such terms, and Holders are
referred to the Indenture and such Act for a statement of such
terms. The First Mortgage Notes are obligations of the Company
that may be issued from time to time in one or more series. The
First Mortgage Notes of this series are limited in principal
amount to $140,000,000, plus amounts, if any, issued to pay
Liquidated Damages on outstanding First Mortgage Notes as set
forth in Paragraph 2 hereof. The First Mortgage Notes are
secured by a pledge of the Capital Stock of each Subsidiary now
or hereafter owned by the Company, including by a pledge of the
Capital Stock of Finance Corporation, and of any intercompany
notes held by the Company pursuant to the Pledge Agreement
referred to in the Indenture, unless such pledge would in any way
jeopardize obtaining or maintaining a Gaming License or would
require the Trustee or a Holder or beneficial owner of First
Mortgage Notes to be licensed, qualified or found suitable by any
applicable Gaming Authority. The terms of the Indenture shall
govern any inconsistencies between the Indenture and the First
Mortgage Notes or the Note Guarantee. The First Mortgage Notes
are secured by certain collateral pursuant to the Collateral
Documents referred to in the Indenture that may be released
pursuant to the terms thereof.
<PAGE>
5. OPTIONAL REDEMPTION. Except as set forth in Section
3.07 of the Indenture, the First Mortgage Notes shall not be
redeemable at the Company's option prior to March 15, 2000
(except as otherwise required by a Gaming Authority). From and
after March 15, 2000 (except as otherwise required by a Gaming
Authority), the First Mortgage Notes shall be subject to
redemption at the option of the Company, in whole or in part,
upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount)
set forth below, plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the applicable redemption date, if
redeemed during the twelve-month period beginning on March 15 of
the years indicated below.
Percentage
of Principal
Year Amount
2000 106.750%
2001 103.375%
2002 and thereafter 100.000%
Notwithstanding the foregoing or any other provisions of
Article 3 of the Indenture, if any Gaming Authority requires that
a Holder or beneficial owner of the First Mortgage Notes must be
licensed, qualified or found suitable under any applicable gaming
laws in order to maintain any or obtain any applied for Gaming
License or franchise of the Company or any Restricted Subsidiary
under any applicable gaming laws, and such Holder or beneficial
owner fails to apply for a license, qualification or finding of
suitability within 30 days after being requested to do so by such
Gaming Authority (or such lesser period that may be required by
such Gaming Authority) or if such Holder or beneficial owner is
not so licensed, qualified or found suitable or the Company
determines, upon the written advice of counsel or any Gaming
Authority, that the ownership of the First Mortgage Notes would
jeopardize or prevent the issuance, reinstatement or renewal of
any Gaming License held by the Company, the Company shall have
the right, at its option, (i) to require such Holder or
beneficial owner to dispose of such Holder's or beneficial
owner's First Mortgage Notes within 30 days of notice of such
finding by the applicable Gaming Authority that such Holder or
beneficial owner will not be licensed, qualified or found
suitable as directed by such Gaming Authority or within 30 days
of the Company's determination, described herein, based upon
written advice of counsel or any Gaming Authority (or such
earlier date as may be required by the applicable Gaming
Authority) or (ii) to call for redemption of the First Mortgage
Notes of such Holder or beneficial owner at a redemption price
equal to the lesser of the principal amount thereof or the price
at which such Holder or beneficial owner acquired the First
Mortgage Notes, together with, in either case, accrued and unpaid
interest and Liquidated Damages thereon, if any, to the earlier
of the date of redemption or the date of the finding of
unsuitability by such Gaming Authority, which may be less than 30
days following the notice of redemption if so ordered by such
Gaming Authority. In connection with any such redemption, and
except as may be required by a Gaming Authority, the Company
shall comply with the procedures contained in the Indenture for
redemption of the First Mortgage Notes. The Company shall not be
required to pay or reimburse any Holder or beneficial owner of
First Mortgage Notes who is required to apply for such license,
qualification or finding of suitability for the costs of such
licensure or investigation for such qualification or finding of
suitability. Such expenses shall, therefore, be the obligation
of such Holder or beneficial owner.
Any redemption pursuant to Section 3.07 of the Indenture
shall be made pursuant to the provisions of Sections 3.01 through
3.06 of the Indenture.
6. MANDATORY REDEMPTION. Except as set forth in paragraph
five above, the Company shall not be required to make mandatory
redemption or sinking fund payments prior to maturity with
respect to the First Mortgage Notes.
7. REPURCHASE AT OPTION OF HOLDER. Under certain
circumstances, as provided in the Indenture, the Company may be
required to purchase all or a portion of the First Mortgage
Notes. Holders of First Mortgage Notes that are subject to an
offer to purchase shall receive an offer to purchase from the
Company prior to any related purchase date, and may elect to have
such First Mortgage Notes purchased by completing the form titled
"Option of Holders to Elect Purchase" appearing below.
<PAGE>
8. NOTICE OF REDEMPTION. Notice of redemption shall be
mailed at least 30 days but not more than 60 days before the
redemption date to each Holder whose First Mortgage Notes are to
be redeemed at its registered address. First Mortgage Notes in
denominations larger than $1,000 may be redeemed in part but only
in whole multiples of $1,000, unless all of the First Mortgage
Notes held by a Holder are to be redeemed. On and after the
redemption date interest ceases to accrue on First Mortgage Notes
or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The First Mortgage
Notes are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. A Holder may register,
transfer or exchange First Mortgage Notes in accordance with the
terms of the Indenture. The Registrar and the Trustee may
require a Holder of First Mortgage Notes, among other things, to
furnish appropriate endorsements and transfer documents and the
Company may require a Holder of First Mortgage Notes to pay any
taxes and fees required by law or permitted by the Indenture.
The Company is not required to transfer or exchange any First
Mortgage Note selected for redemption. Also, the Company is not
required to transfer or exchange any First Mortgage Note for a
period of 15 days before a selection of First Mortgage Notes to
be redeemed.
10. PERSONS DEEMED OWNERS. Prior to due presentment to the
Trustee for registration of the transfer of this First Mortgage
Note, the Trustee, any Agent, the Company and the Guarantors may
deem and treat the Person in whose name this First Mortgage Note
is registered as its absolute owner for the purpose of receiving
payment of principal of, premium, if any, and interest and
Liquidated Damages, if any, on this First Mortgage Note and for
all other purposes whatsoever, whether or not this First Mortgage
Note is overdue, and neither the Trustee, any Agent, the Company
nor any Guarantor shall be affected by notice to the contrary.
The registered Holder of a First Mortgage Note shall be treated
as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture, the First Mortgage Notes, the Note
Guarantees and the Collateral Documents may be amended or
supplemented with the consent of the Holders of at least a
majority in principal amount of the First Mortgage Notes then
outstanding (including consents obtained in connection with a
tender offer or exchange offer for First Mortgage Notes), and any
existing default or compliance with any provision of the
Indenture, the First Mortgage Notes, the Note Guarantees and the
Collateral Documents may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding
First Mortgage Notes (including consents obtained in connection
with a tender offer or exchange offer for First Mortgage Notes).
Without the consent of any Holder of First Mortgage Notes, the
Company and the Trustee together may amend or supplement the
Indenture, the First Mortgage Notes, the Note Guarantees and the
Collateral Documents to cure any ambiguity, defect or
inconsistency, to comply with Section 5.01 of the Indenture, to
provide for uncertificated First Mortgage Notes in addition to or
in place of certificated First Mortgage Notes, to provide for the
assumption of the Company's obligations to Holders of the First
Mortgage Notes in the case of a merger or consolidation, to make
any change that would provide any additional rights or benefits
to the Holders of the First Mortgage Notes (including providing
for additional Note Guarantees pursuant to the Indenture), or
that does not adversely affect the legal rights under the
Indenture of any such Holder, to comply with requirements of the
Commission in order to effect or maintain the qualification of
the Indenture under the Trust Indenture Act or to enter into
additional or supplemental Collateral Documents.
12. DEFAULTS AND REMEDIES. Events of Default include (as
more fully described, and subject to, the terms and conditions of
the Indenture as it may be amended, modified or supplemented from
time to time): (i) default in payment when due and payable, upon
redemption or otherwise, of principal of or premium, if any, on
the First Mortgage Notes or under any Note Guarantee; (ii)
default for 30 days or more in the payment when due of interest
or Liquidated Damages, if any, on the First Mortgage Notes or
under any Note Guarantee; (iii) East Chicago Showboat is not
Operating by October 1, 1997 and continues to be not Operating;
(iv) failure by the Company or any Guarantor to comply with
Section 4.07, 4.09, 4.10, 4.11, 4.16, 4.24, 4.25 or 4.28 hereof;
(v) failure by the Company or any Guarantor for 30 days after
receipt of written notice until December 31, 1997, and thereafter
for 60 days after receipt of written notice, to comply with any
of its other agreements in the Indenture, the Collateral
Documents or the First Mortgage Notes; (vi) default under any
mortgage, indenture or instrument under which there is issued or
by which there is secured or evidenced any Indebtedness for money
borrowed by the Company or any of its Restricted Subsidiaries or
the payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries, whether such Indebtedness or Guarantee
now exists or is created after the Issuance Date, which default
(a) is caused by a failure to pay when due principal of or
premium, if any, or interest on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness
<PAGE>
(a "Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its express maturity or would constitute a
default in the payment of such issue of Indebtedness at final
maturity of such issue and, in each case, the principal amount of
any such Indebtedness, together with the principal amount of any
other such Indebtedness under which a Payment Default then exists
or with respect to which the maturity thereof has been so
accelerated or which has not been paid at maturity, aggregates
$5.0 million or more; (vii) failure by the Company or any of its
Restricted Subsidiaries to pay final judgments aggregating in
excess of $5.0 million, which final judgments remain unpaid,
undischarged and unstayed for a period of more than 60 days;
(viii) breach by the Company, any Guarantor or any of their
Subsidiaries of any representation or warranty set forth in any
Note Guarantee or any of the Collateral Documents, or default by
the Company or any Guarantor in the performance of any covenant
set forth in any Note Guarantee or any of the Collateral
Documents or the repudiation by either of the Company, any
Guarantor or any of their Subsidiaries of their obligations
under, or any judgment or decree by a court or governmental
agency of competent jurisdiction declaring the unenforceability
of, any Note Guarantee or any of the Collateral Documents for any
reason that would materially impair the benefits to the Trustee
or the Holders of the First Mortgage Notes thereunder; (ix)
certain events of bankruptcy or insolvency with respect to the
Company or any Guarantor that is a Significant Subsidiary of the
Company or any group of Guarantors that together would constitute
a Significant Subsidiary of the Company; (x) revocation,
termination, suspension or other cessation of effectiveness of
any Gaming License which results in the cessation or suspension
of gaming operations for a period of more than 90 days at East
Chicago Showboat and such cessation or suspension of gaming
operations is continuing; or (xi) any failure by Showboat to
comply with the terms of the Completion Guarantee, the Standby
Equity Commitment or the Escrow and Disbursement Agreement for 30
days after the receipt of written notice. If any Event of
Default (other than by reason of bankruptcy or insolvency) occurs
and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding First Mortgage Notes may
declare the principal, premium, if any, interest and any other
monetary obligations on all of the First Mortgage Notes to be due
and payable immediately. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to the Company or any
Guarantor, all outstanding First Mortgage Notes shall become due
and payable without further action or notice. Holders of the
First Mortgage Notes may not enforce the Indenture or the First
Mortgage Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of
the then outstanding First Mortgage Notes may direct the Trustee
in its exercise of any trust or power, including the exercise of
any remedy under the Collateral Documents. The Trustee may
withhold from Holders of the First Mortgage Notes notice of any
continuing Default or Event of Default (except a Default or Event
of Default relating to the payment of principal or interest) if
it determines that withholding notice is in their interest. In
addition, the Trustee shall have no obligation to accelerate the
First Mortgage Notes if in the best judgment of the Trustee
acceleration is not in the best interest of the Holders of the
First Mortgage Notes. The Holders of a majority in aggregate
principal amount of the First Mortgage Notes then outstanding by
notice to the Trustee may on behalf of the Holders of all of the
First Mortgage Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a
continuing Default or Event of Default in the payment of interest
on, premium, if any, or the principal of, any First Mortgage Note
held by a non-consenting Holder. The Company is required to
deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Company is required, within five
Business Days upon becoming aware of any Default or Event of
Default, to deliver to the Trustee a statement specifying such
Default or Event of Default.
13. GUARANTEE. Payment of principal of, premium, if any,
and interest on overdue principal and overdue interest on the
First Mortgage Notes and all other obligations of the Company to
the Holders shall be unconditionally guaranteed by the Guarantors
pursuant to, and subject to the terms of, Article 11 of the
Indenture.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its
individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its
Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. No director, officer,
employee, incorporator, stockholder or partner of the Company or
the Guarantors, as such, shall have any liability for any
obligations of the Company or the Guarantors under the First
Mortgage Notes, any Note Guarantee, the Indenture, the Collateral
Documents, as applicable, or for any claim based on, in respect
of, or by reason of such obligations or their creation. Each
holder of the First Mortgage Notes by accepting a First Mortgage
Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the First
Mortgage Notes and the Note Guarantees.
<PAGE>
16. AUTHENTICATION. This First Mortgage Note shall not be
valid until authenticated by the manual signature of the Trustee
or an authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants
in common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED
SECURITIES. In addition to the rights provided to Holders of
First Mortgage Notes under the Indenture, Holders of Transferred
Restricted Securities shall have all of the rights set forth in
the A/B Exchange Registration Rights Agreement dated as of March
28, 1996, between the Company and the parties named on the
signature pages thereof (the "Registration Rights Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on
the First Mortgage Notes and the Trustee may use CUSIP numbers in
notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either
as printed on the First Mortgage Notes or as contained in any
notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
20. ADDITIONAL INFORMATION. Any Holder of the First
Mortgage Notes or prospective investor may obtain a copy of the
Indenture, the Registration Rights Agreement and the other
Collateral Documents without charge by writing to the Company at
the following address:
Showboat Marina Casino Partnership
Showboat Marina Finance Corporation
2001 East Columbus Drive
East Chicago, Indiana 46312
Attention: Vice President - Finance and Chief Financial Officer
<PAGE>
ASSIGNMENT FORM
To assign this First Mortgage Note, fill in the form below:
(I) or (we) assign and transfer this First Mortgage Note to:
_________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
_________________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint__________________________________________
to transfer this First Mortgage Note on the books of the Company.
The agent may substitute another to act for him.
Date:_________
Your
Signature:___________________________________
(Sign exactly as your name appears
on the face of this First Mortgage Note)
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this First Mortgage Note
purchased by the Company pursuant to Section 4.10, 4.11, 4.16,
4.24 or 4.28 of the Indenture, check the box below:
[] Section 4.10
[] Section 4.11
[] Section 4.16
[] Section 4.24
[] Section 4.28
Date: __________
Signature:_____________________________________________
(Sign exactly as your name appears on the First
Mortgage Note)
Tax Identification No.:
Signature Guarantee.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTE2
The following exchanges of a part of this Global Note for Definitive Notes have been made:
<S> <C> <C> <C> <C>
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Note authorized officer of
Principal Amount of Principal Amount of following such decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
</TABLE>
2. This schedule should only be included if the First Mortgage Note
is issued in global form.
<PAGE>
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER OF FIRST MORTGAGE NOTES
Re: 13 1/2% First Mortgage Notes due 2003 of Showboat Marina
Casino Partnership and Showboat Marina Finance Corporation.
This Certificate relates to $_____ principal amount of First
Mortgage Notes held in * ________ book-entry or *_______
definitive form by ________________ (the "Transferor").
The Transferor*:
[] has requested the Trustee by written order to deliver in
exchange for its beneficial interest in the Global Note held by
the Depository a First Mortgage Note or First Mortgage Notes in
definitive, registered form of authorized denominations in an
aggregate principal amount equal to its beneficial interest in
such Global Note (or the portion thereof indicated above); or
[] has requested the Trustee by written order to exchange or
register the transfer of a First Mortgage Note or First Mortgage
Notes.
In connection with such request and in respect of each such
First Mortgage Note, the Transferor does hereby certify that
Transferor is familiar with the Indenture relating to the above
captioned First Mortgage Notes and as provided in Section 2.06 of
such Indenture, the transfer of this First Mortgage Note does not
require registration under the Securities Act (as defined below)
because:*
[] Such First Mortgage Note is being acquired for the
Transferor's own account, without transfer (in satisfaction of
Section 2.06(a)(ii)(A) or Section 2.06(d)(i)(A) of the
Indenture).
[] Such First Mortgage Note is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under
the Securities Act of 1933, as amended (the "Securities Act")) in
reliance on Rule 144A (in satisfaction of Section 2.06(a)(ii)(B),
Section 2.06(b)(A) or Section 2.06(d)(i) (B) of the Indenture) or
pursuant to an exemption from registration in accordance with
Rule 904 under the Securities Act (in satisfaction of Section
2.06(a)(ii)(B) or Section 2.06(d)(i)(B) of the Indenture.)
_______________
*Check applicable box.
<PAGE>
[] Such First Mortgage Note is being transferred in accordance
with Rule 144 under the Securities Act, or pursuant to an
effective registration statement under the Securities Act (in
satisfaction of Section 2.06(a)(ii)(B) or Section 2.06(d)(i)(B)
of the Indenture).
[] Such First Mortgage Note is being transferred in reliance
on and in compliance with an exemption from the registration
requirements of the Securities Act, other than Rule 144A, 144 or
Rule 904 under the Securities Act. An Opinion of Counsel to the
effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of
Section 2.06(a)(ii)(C) or Section 2.06(d)(i)(C) of the
Indenture).
__________________________________
[INSERT NAME OF TRANSFEROR]
By:_______________________________
Date:_____________________________________
_______________
*Check applicable box.
<PAGE>
EXHIBIT 10.01
<PAGE>
EXECUTION COPY
ESCROW AND DISBURSEMENT AGREEMENT
By and Among
SHOWBOAT MARINA CASINO PARTNERSHIP
SHOWBOAT MARINA FINANCE CORPORATION
and
SHOWBOAT, INC.
(as Escrow Agent and Disbursement Agent)
and
AMERICAN BANK NATIONAL ASSOCIATION
(as Trustee)
dated as of
March 28, 1996
<PAGE>
ESCROW AND DISBURSEMENT AGREEMENT
THIS ESCROW AND DISBURSEMENT AGREEMENT (this "AGREEMENT") is
dated as of March 28, 1996 by and among Showboat Marina Casino
Partnership, an Indiana general partnership ("SHOWBOAT
PARTNERSHIP"), Showboat Marina Finance Corporation, a Nevada
corporation ("FINANCE CORPORATION" and, together with Showboat
Partnership, the "COMPANY"), and Showboat, Inc., a Nevada
corporation ("SHOWBOAT"), as escrow agent and disbursement agent
(as applicable, the "ESCROW AGENT" and the "DISBURSEMENT AGENT").
RECITALS
A. FIRST MORTGAGE NOTES. The Company has issued
$140,000,000 aggregate principal amount of 13 1/2% First Mortgage
Notes due 2003 (the "FIRST MORTGAGE NOTES"). The First Mortgage
Notes are to be issued pursuant to the provisions of an Indenture
(the "INDENTURE") dated as of March 28, 1996 among the Company
and the Trustee. The proceeds from the issuance of the First
Mortgage Notes (net of any discounts and commissions, certain
expense reimbursements and certain reductions for the receipt of
immediately available funds) in the amount of $135.1 million (the
"NOTE PROCEEDS") will be deposited contemporaneously with the
execution of this Agreement into a segregated cash collateral
trust account to be maintained at National Westminster Bank, at
Freehold, New Jersey, Custody Account No. 35400008, in the name
of American Bank National Association, as Trustee, "Collateral
Account for Showboat Marina Casino Partnership and Showboat
Marina Finance Corporation" (the "ESCROW ACCOUNT"). The Escrow
Account and all balances and investments from time to time
therein shall be under the sole control and dominion of the
Trustee. In addition, the Indenture provides that (i) the
proceeds from the Capital Contribution, to the extent of cash
remaining, (ii) the Additional Project Financing, to the extent
of cash received, if any, (iii) any Insurance Proceeds received
on or prior to the date on which East Chicago Showboat first
becomes Operating, and (iv) any awards, payments or other
compensation or settlement in lieu thereof made in connection
with any taking of property or condemnation or eminent domain
proceeding whether actual or threatened ("CONDEMNATION
PROCEEDS"), will be deposited in the Escrow Account upon receipt
thereof by the Company. As used herein, the term "PROCEEDS"
shall refer to the Note Proceeds and the proceeds of any Capital
Contribution, Additional Project Financing and Insurance
Proceeds.
B. COLLATERAL AND COLLATERAL ASSIGNMENT. As security for
its obligations under the First Mortgage Notes and the Indenture,
the Company has granted security interests to the Trustee, for
the benefit of the holders from time to time of the First
Mortgage Notes (the "Holders"), in certain assets and has
collaterally assigned certain contracts to the Trustee. As
further security for its obligations under the First Mortgage
Notes and the Indenture, the Company has also granted a security
interest to the Trustee, for the benefit of the Holders of the
First Mortgage Notes, in all of its right, title and interest in
and to the Escrow Account, and any Proceeds or other amounts held
therein.
C. PURPOSE. The parties hereto have entered into this
Agreement in order to set forth the conditions upon which, and
the manner in which, funds will be disbursed from the Escrow
Account in order to permit the Company to design, develop,
construct, equip and open East Chicago Showboat.
D. COMPLETION GUARANTEE. Showboat, pursuant to the
Completion Guarantee, has guaranteed the completion of East
Chicago Showboat, up to a maximum of $30.0 million.
<PAGE>
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree that (i) the recitals above are true and
correct and are by this reference incorporated herein as if fully
set forth herein and (ii) as follows:
1. DEFINITIONS.
1.1 DEFINED TERMS. In this Agreement, unless a
different meaning clearly appears from the context, the terms
defined in this Section 1 shall have the meanings herein
specified, such definitions to be equally applicable to both the
singular and plural forms of any of the terms defined:
"ADDITIONAL PROJECT FINANCING" means any funds, not
initially subject to this Agreement, which the Company
obtains prior to the date on which East Chicago Showboat
becomes Operating in accordance with the terms of the
Indenture through the incurrence of additional debt
(including, without limitation, loans or advances made to
the Company by Showboat, or capital contributions caused to
be made to the Company by Showboat, in each case under the
Completion Guarantee), but only to the extent that such
funds (a) are on deposit in the Escrow Account and (b) are
held by the Company free and clear of any claims of any
other parties whatsoever (other than Permitted Liens).
"ADDITIONAL REVENUE" means revenue (including, without
limitation, investment income accruing on funds in the
Escrow Account and the Segregated Account) generated by the
Company other than from the disposition of its assets or the
receipt of the proceeds of any Additional Project Financing,
but only to the extent that such revenue (a) is on deposit
in the Escrow Account and (b) is held by the Company free
and clear of any claims of any other parties whatsoever
(other than Permitted Liens); PROVIDED, HOWEVER, that as of
any date of measurement, Additional Revenue shall also
include investment income which the Company reasonably
determines will accrue on funds in the Escrow Account
through the date on which the Company reasonably anticipates
that East Chicago Showboat first will be Operating.
"AVAILABLE FUNDS" with respect to the Company means, at
any given time, the sum of (a) the Original Allocation less
disbursements theretofore made from the Escrow Account, (b)
Additional Revenue theretofore received, (c) Realized
Savings theretofore achieved, (d) Additional Project
Financing theretofore received, (e) Capital Lease Savings
theretofore achieved and (f) any undisbursed funds in the
Segregated Account.
"CAPITAL LEASE SAVINGS" means, with respect to any
personal property that the Company determines, subsequent to
the date hereof, to fund pursuant to Capital Lease
Obligations, the excess of the amount budgeted in the
Construction Budget for the purchase of such personal
property over the total amount of capital lease payments
required to be paid over the term of the capital lease
pursuant to the instrument or agreement governing such
capital lease; PROVIDED, HOWEVER, that Capital Lease Savings
for any line item shall be zero if (a) the total amount of
liabilities with respect to Capital Lease Obligations
incurred by the Company or any of its subsidiaries exceeds
$16,000,000 at any one time; (b) the Company fails to
allocate a sufficient amount in the Construction Budget to
make the capital lease payments, if any, required to be paid
pursuant to the terms of the instrument or agreement
governing such capital lease prior to the date
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on which East Chicago Showboat becomes Operating; or (c) the
Company fails to promptly deliver to the Disbursement Agent
a copy of the instrument or agreement governing the capital
lease.
"CLOSING FEES AND EXPENSES" means fees and expenses (a)
incurred by the Company in connection with the raising of
debt or equity to finance East Chicago Showboat and (b) paid
on or before the Closing Date. The Closing Fees and
Expenses are identified on EXHIBIT 1 to the Company's
Closing Certification as "Fees and Expenses."
"COMPANY'S CLOSING CERTIFICATION" means an Officers'
Certificate in the form attached hereto as EXHIBIT B-1.
"COMPLETION DATE" means October 1, 1997.
"CONSTRUCTION BUDGET" means an itemized schedule
setting forth on a line item basis all of the costs
(including anticipated Debt Financing Costs through the date
that the Company reasonably anticipates that East Chicago
Showboat first will be Operating) which the Company
anticipates to expend in connection with the financing,
design, development, construction, equipping and opening of
East Chicago Showboat, as such Construction Budget may be
amended from time to time pursuant to this Agreement;
PROVIDED, HOWEVER, that the Construction Budget does not and
shall not include (a) any expenses paid by the Company in
connection with East Chicago Showboat prior to the Closing
Date, or (b) to the extent not included within clause (a),
any expenses paid pursuant to paragraphs (a) through (h) of
the Initial Disbursements Certificate attached hereto as
EXHIBIT A. The Construction Budget as of the date hereof is
attached as EXHIBIT 1 to the Company's Closing
Certification. As more fully set forth in Section 6.2 of
this Agreement, at or before the first requested
disbursement from the Escrow Account following the Initial
Disbursements, the Company shall prepare a revised
Construction Budget utilizing the Project Cost Schedule in
the form attached hereto as EXHIBIT D, and the "Construction
Budget" thereafter shall consist of the line item
allocations set forth in column (iv) thereof under the
heading "Construction Budget."
"CONSTRUCTION EXPENSES" means expenses incurred in
connection with the construction of East Chicago Showboat in
accordance with the Construction Budget, excluding, however,
(a) any such Construction Expenses paid prior to the Closing
Date, (b) any Pre-Opening Expenses, (c) any Debt Financing
Costs and (d) any Closing Fees and Expenses.
"CONSTRUCTION SCHEDULE" means a schedule describing the
sequencing of the components of work to be undertaken in
connection with the construction of East Chicago Showboat,
which schedule (as the same may be amended) demonstrates
that East Chicago Showboat will be Operating on or before
the Completion Date.
"CONTRACTOR" means a contractor, subcontractor or
supplier of materials or services in connection with the
construction and design of East Chicago Showboat.
"CONTRACTS" means the contracts pertaining to the
construction of East Chicago Showboat, including, without
limitation, any contracts, subcontracts, licenses and
performance and payment bonds or guarantees.
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"DEBT FINANCING COSTS" means all premium, principal,
repayments, interest, Liquidated Damages and other amounts
payable or accrued from time to time under the First
Mortgage Notes or any Additional Project Financing.
"DISBURSEMENT AGENT" means Showboat, or such substitute
Disbursement Agent as may be designated in accordance with
Section 10 hereof.
"ESCROW AGENT" means Showboat, or such substitute
Escrow Agent as may be designated in accordance with Section
10 hereof.
"ESCROW AGENT STATEMENT" shall mean a statement in form
and substance satisfactory to the Disbursement Agent
prepared by the Escrow Agent setting forth in reasonable
particularity the balance of funds in the Escrow Account and
the manner in which such funds are invested.
"FINAL PLANS" with respect to any particular work or
improvement means Plans which (a) have received final
approval from all governmental authorities required to
approve such Plans prior to completion of the work or
improvements; and (b) contain sufficient specificity to
permit the completion of the work or improvement.
"INITIAL DISBURSEMENTS CERTIFICATE" means an Officer's
Certificate from the Company in the form attached hereto as
EXHIBIT A.
"INITIAL CONSTRUCTION BUDGET" means the line items
identified on the budget attached as EXHIBIT 1 to the
Company's Closing Certification and the corresponding
entries listed thereon under the heading "Available Amount"
(except that the Initial Construction Budget shall not
include the "Fees and Expenses" line item listed thereon and
the corresponding amount listed in the Available Amount
column. The Initial Construction Budget also specifies
(under the entry for "Additional Revenue" within the Debt
Financing Costs category) the Additional Revenue which the
Company reasonably anticipates it will earn as investment
income on funds in the Escrow Account through the date that
the Company reasonably anticipates that East Chicago
Showboat first will be Operating.
"INITIAL PROPERTY" means the real property located in
East Chicago, Indiana, leased by the City of East Chicago,
Indiana Department of Redevelopment to Showboat Partnership,
under the Redevelopment Project Lease, on which the Company
will construct at least part of the Minimum Facilities.
"INSURANCE PROCEEDS" means the proceeds from any
insurance covering an Event of Loss received by or on behalf
of the Company prior to the date on which East Chicago
Showboat becomes Operating or any such proceeds required to
be deposited into the Escrow Account pursuant to the terms
of the Indenture and/or the Mortgages.
"MORTGAGES" means (i) that certain Leasehold Mortgage,
Assignment of Rents and Security Agreement executed by
Showboat Partnership encumbering Showboat Partnership's
interest in the Redevelopment Project Lease and the
leasehold estate created thereby, in favor of the Trustee,
on behalf of the Holders of the First Mortgage Notes, (ii)
that certain First Preferred Ship Mortgage in the form
attached as an Exhibit to the Indenture to be executed by
the Company
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to encumber the Casino vessel in favor of the Trustee, on
behalf of the Holders of the First Mortgage Notes, and (iii)
all liens and security interests granted by the Company in
accordance with the terms of the Indenture, by executing and
filing security agreements and financing statements in the
applicable state, under the Uniform Commercial Code adopted
by such state, to encumber property utilized in the
construction of East Chicago Showboat.
"OFFICERS' CERTIFICATE" means a certificate signed by
two officers, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or
the principal accounting officer.
"ORIGINAL ALLOCATION" means the Note Proceeds less the
Initial Disbursements listed in paragraphs (a) through (h)
of the Initial Disbursements Certificate.
"PERMITTED DISBURSEMENTS" shall mean the disbursements
from the Escrow Account pursuant to Sections 3.2, 3.3 or 3.4
hereof.
"PLANS" means the plans, specifications, working
drawings, change orders, correspondence and related items
that collectively: (a) provide for and detail the manner of
construction of improvements which contain at least the
Minimum Facilities; (b) call for construction that will
permit East Chicago Showboat to be Operating on or prior to
the Completion Date; (c) call for construction which will
cause East Chicago Showboat to be completed for a total cost
consistent with the Construction Budget and the line items
set forth therein; and (d) to the extent such Plans are
amended, such Plans that continue to represent a logical
evolution consistent with previous Plans, as the same may be
amended, modified or supplemented from time to time, and, if
required, submitted to and approved by the appropriate
gaming or regulatory authorities.
"PRE-OPENING EXPENSES" means expenses of the type
described on EXHIBIT K attached hereto.
"PROJECT ARCHITECT" means, (i) Showboat, for so long as
Showboat continues serving as Disbursement Agent under this
Agreement, and, in the event that Showboat ceases to serve
as Disbursement Agent hereunder, (ii) as applicable, (a) The
Hillier Group and (b) Rodney Lay & Associates, Inc., and, in
each case, their respective successors identified by notice
to the Disbursement Agent.
"PROJECT COST SCHEDULE" means an itemized schedule in
the form of EXHIBIT D hereto.
"PROJECT MANAGER" means, (i) Showboat, for so long as
Showboat continues serving as Disbursement Agent under this
Agreement, and, in the event that Showboat ceases to serve
as Disbursement Agent hereunder, (ii) as applicable, (a)
Tonn & Blank, Incorporated, (b) KLM and (c) Atlantic Marine,
Inc., and, in each case, their respective successors
identified by notice to the Disbursement Agent.
"PROPERTY" means the Initial Property.
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"REALIZED SAVINGS" means the excess of the amount
budgeted in the Construction Budget for a line item over the
amount of funds expended or owed by the Company to complete
the tasks set forth in such line item and for the materials
and services used to complete such tasks; PROVIDED, HOWEVER,
that: (a) Realized Savings for any line item shall be
deemed to be zero if such savings are obtained in a manner
that materially detracts from the overall quality and
amenities of East Chicago Showboat being constructed by the
Company as reasonably determined by the Project Architect,
and (b) Realized Savings for each line item shall in all
cases be deemed to be zero until (i) the Company completes
all work and improvements covered by the line item, or (ii)
the Company satisfies or reasonably provides for in all
material respects the obligations arising out of the
completion of that line item. For purposes of clause (ii)
of the immediately preceding sentence, the Company shall be
deemed to have satisfied or reasonably provided for in all
material respects the obligations arising out of the
completion of a particular line item if (A) the Company
entered into Contracts providing for the completion of all
tasks set forth in such line item and for all materials and
services required for such tasks for a guaranteed fixed or
maximum price, with payment and performance bonds (or other
assurances) satisfactory to the Disbursement Agent for each
such Contract, (B) copies of such Contracts and related
bonds (or other assurances) have been delivered to the
Disbursement Agent, and (C) the Disbursement Agent has
concluded that such Contracts and bonds (or other
assurances) provide reasonable assurance that the work
involved in the line item will be completed by a specified
date consistent with the timely construction of East Chicago
Showboat and for a cost less than or equal to the aggregate
guaranteed fixed or maximum prices in such Contracts. In
determining whether the Contracts and bonds (or other
assurances) meet the foregoing test, the Disbursement Agent
may rely upon such factual certificates of the Company, the
Project Architect and the Project Manager as the
Disbursement Agent deems reasonably appropriate.
"REMAINING COSTS" means, at any given time, the amount
necessary to pay, through completion, all theretofore unpaid
costs (including Retainage Amounts and Debt Financing Costs)
to be incurred or payable in connection with the
construction of East Chicago Showboat through the date that
the Company reasonably anticipates that East Chicago
Showboat first will be Operating.
"RETAINAGE AMOUNTS" means, at any given time, amounts
which have accrued and are owing under the terms of a
Contract for work or services already provided but which at
such time (and in accordance with the terms of the Contract)
are being withheld from payment to the Contractor until
certain subsequent events (e.g., completion benchmarks) have
been achieved under the Contract.
"REVIEWING AGENT" means Showboat, any successor
thereto, and any replacement thereof.
"SEGREGATED ACCOUNT" means a segregated cash collateral
trust account the balance of which shall not exceed $5.0
million at any one time to be maintained at National City
Bank, in East Chicago, Indiana, Custody Account No.
501755883, in the name of Showboat, as Escrow Agent, as
agent/bailee for American Bank National Association, as
Trustee.
"TITLE INSURER" means, collectively, Chicago Title
Insurance Company and Stewart Title Guaranty Company.
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"TITLE POLICY" means the lender's policy or policies of
title insurance to be provided by the Title Insurer to the
Trustee with respect to the Initial Property, together with
all endorsements thereto.
1.2 INDENTURE DEFINED TERMS. In addition, the
following terms shall have the respective meanings assigned to
such terms in the Indenture:
CASH EQUIVALENTS
CASINO
CASINO VESSEL CONSTRUCTION CONTRACT
CLOSING DATE
COLLATERAL DOCUMENTS
COMBINED CASH FLOW
COMPLETION GUARANTEE
EAST CHICAGO SHOWBOAT
EVENT OF LOSS
FIRST PREFERRED SHIP MORTGAGE
LIEN
MINIMUM FACILITIES
OFFICER
OPERATING
PURCHASE DATE
PROJECT
REDEVELOPMENT PROJECT LEASE
REPURCHASE OFFER
1.3 INDEX OF ADDITIONAL DEFINED TERMS. In addition,
the terms listed in the left column below shall have the
respective meanings assigned to such terms in the Section of this
Agreement listed opposite such terms in the right column below:
Section of
DEFINED TERM DEFINITION
ACCOUNT 16.2
AGENT 16.2
AGREEMENT Introduction
COLLATERAL 16.2
COMPANY Introduction
CONDEMNATION PROCEEDS Introduction
DISBURSEMENT AGENT Introduction
DISBURSEMENT AUTHORIZATION 3.1
DISBURSEMENT REQUEST 5.2
DISPUTED AMOUNTS 6.2(h)
ESCROW ACCOUNT A of Recitals
ESCROW ACCOUNT COLLATERAL 16.1
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ESCROW AGENT Introduction
EVENT OF DEFAULT 6.3
FINANCE CORPORATION Introduction
FIRST MORTGAGE NOTES A of Recitals
INDENTURE A of Recitals
INITIAL DISBURSEMENTS 6.1
NOTE PROCEEDS A of Recitals
PAYING AGENT 3.3
PAYMENT DATE 3.3
PAYMENT REQUEST 3.3
PRE-CLOSING DISBURSEMENTS 6.4
PROCEEDS A of Recitals
SHOWBOAT Introduction
SHOWBOAT PARTNERSHIP Introduction
TRUSTEE Introduction
2. ESTABLISHMENT OF ESCROW ACCOUNT.
2.1 APPOINTMENT OF ESCROW AGENT. The Trustee hereby
appoints the Escrow Agent, and the Escrow Agent hereby accepts
appointment, to act as the Trustee's agent, on behalf of the
Holders of the First Mortgage Notes, for purposes of perfecting
the pledge, assignment and security interest in the Collateral as
set forth in Section 16.1 of this Agreement, and the Escrow Agent
hereby accepts such appointment. By executing and delivering
this Agreement, the Escrow Agent hereby acknowledges its receipt
of the Note Proceeds and the proceeds of the remaining Capital
Contribution.
2.2 ESTABLISHMENT OF ESCROW ACCOUNT. Concurrently
with the execution and delivery hereof and for so long as this
Agreement is in full force and effect, the Company shall
establish and maintain the Escrow Account and the Segregated
Account. The Escrow Account and the Segregated Account shall,
and the Company hereby acknowledges and agrees that the Escrow
Account and the Segregated Account shall, at all times remain
under the exclusive dominion and control of the Trustee. Funds
in the Escrow Account shall be held in trust and not commingled
with any ordinary deposit or commercial bank account. The Escrow
Agent shall note in its records that all funds and other assets
in the Escrow Account have been pledged to the Trustee and that
the Escrow Agent is holding such items as agent for the Trustee.
Accordingly, all such funds and assets shall not be within the
bankruptcy "estate" (as such term is used in 11 U.S.C. Sec. 541)
of the Escrow Agent. All such funds and all earnings accruing from
time to time thereon shall be held in the Escrow Account until
disbursed in accordance with the terms hereof or until
transferred to such other Escrow Account as the Trustee and the
Company may direct the Escrow Agent to establish. All funds
contained in the Escrow Account shall be invested in cash and
Cash Equivalents (as defined in the Indenture) as are specified,
from time to time, by the Company in writing pending disbursement
of such funds pursuant to this Agreement; PROVIDED, HOWEVER, that
the Escrow Agent shall not invest any such funds in any
investment unless such investment is described in Section 16.3 of
this Agreement and the Escrow Agent has taken the actions
described in Section 16.3 of this Agreement with respect to such
investment. If no such instructions are received by the Escrow
Agent after request, such funds shall be invested in Cash
Equivalents (provided that the requirements set forth in Section
16.3 of this Agreement with respect to such investment have been
satisfied). Concurrently with the execution and delivery hereof,
the Company shall deliver all of the
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Proceeds to the Escrow Agent for deposit into the Escrow Account,
subject to the security interest granted to the Trustee pursuant
to Section 16.1 hereof.
3. DISBURSEMENTS FROM ESCROW.
3.1 CONDITION TO DISBURSEMENT. Except as provided in
Section 3.3, 3.4, 6.1, 10.2.1 or 16.3(g) hereof, the Escrow Agent
shall disburse funds from the Escrow Account only to the extent
and in the manner directed by the Disbursement Agent in a written
authorization (each, a "DISBURSEMENT AUTHORIZATION") delivered by
the Disbursement Agent to the Escrow Agent in the form of EXHIBIT
H attached hereto, which shall be accompanied by the Disbursement
Request in the form of EXHIBIT C attached hereto delivered by the
Company pursuant to this Agreement.
3.2 METHOD OF DISBURSEMENT. Upon receipt of a
Disbursement Authorization as set forth in Section 3.1 above, the
Escrow Agent shall disburse funds from the Escrow Account as
specified in the Disbursement Authorization. Such disbursement
shall be effected within five (5) business days of receipt
thereof.
3.3 PAYMENTS ON FIRST MORTGAGE NOTES. Ten (10) days
prior to the date that (i) any payment is due on the First
Mortgage Notes, or (ii) in connection with any Repurchase Offer,
the Purchase Date, the Company shall deliver to the Escrow Agent
and the Trustee a Payment Request in the form of EXHIBIT I
attached hereto (each, a "PAYMENT REQUEST") describing the amount
required to be paid, the paying agent appointed pursuant to the
Indenture (the "PAYING AGENT") to which the Escrow Agent should
transfer funds in order to effect the payment, and the day (the
"PAYMENT DATE") upon which such payment is due and payable. If
the Company fails to deliver timely such Payment Request, then
the Trustee may deliver such Payment Request to the Escrow Agent.
On the Payment Date, the Escrow Agent shall disburse to the
Paying Agent the amounts described in the Payment Request as due
and payable on that date. The Company acknowledges that the
failure of either notice referenced in this Section 3.3 to be
delivered to the Escrow Agent shall not in any way exonerate or
diminish the Company's obligation to make all payments under the
Indenture and the First Mortgage Notes as and when due.
3.4 TRANSFER OF FUNDS TO THE TRUSTEE. Upon the
receipt of written notice executed by the Trustee, which
certifies that an Event of Default has occurred and is continuing
and that the Trustee is entitled to the funds in the Escrow
Account and the Segregated Account, the Escrow Agent shall
deliver to the Trustee all funds in the Escrow Account and the
Segregated Account, other than amounts then permitted to be
disbursed under clauses (i), (ii) and (iii) of Section 6.2.1
hereof. Notwithstanding anything to the contrary in this
Agreement, in the event that the Company fails to make any
payment of any amount when due or fails to timely perform any of
its obligations under the Casino Vessel Construction Contract,
then the Escrow Agent shall, upon receipt of a written request
executed by the Trustee, disburse from the Escrow Account any
amounts necessary in the reasonable judgment of the Trustee to
cure such payment or performance default.
4. AMENDMENTS TO CONSTRUCTION BUDGET; REVIEWING AGENT.
4.1 CONSTRUCTION BUDGET AMENDMENT PROCESS.
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(a) The Construction Budget for East Chicago
Showboat may be amended from time to time in the manner set forth
herein. The Company shall have the right from time to time to
amend the Construction Budget to amend the amounts allocated for
specific line item components of the work required to complete
East Chicago Showboat. Any such amendment shall be in writing
and shall identify with particularity the line item to be
increased, the amount of the increase, and the Realized Savings,
Additional Revenue, Capital Lease Savings, previously unallocated
reserves in the Construction Budget, previously allocated
reserves which are permitted to be reduced pursuant to this
Section 4.1 and/or any Additional Project Financing, which funds
represent Available Funds (but excluding Retainage Amounts),
which the Company proposes will be utilized to pay for such
increase. Construction line items may be reduced only upon
obtaining Realized Savings or Capital Lease Savings. Unallocated
reserves may be reduced by allocation to other line items. Any
amounts of Available Funds so identified for use in connection
with a particular line item thenceforth shall be deemed dedicated
to the particular line item, unless and until the Construction
Budget is amended to reduce the amounts budgeted for such line
item.
(b) The Company shall submit the Construction
Budget amendment to the Disbursement Agent by an Officers'
Certificate in the form of EXHIBIT E hereto, together with the
Project Manager's and Project Architect's certification as
provided in EXHIBITS 1 and 2, respectively, to the Construction
Budget Amendment Certificate. Upon submission of such Officers'
Certificate to the Disbursement Agent, together with the Project
Manager's and Project Architect's certificate (and if the line
item "unallocated reserve" on such Construction Budget is zero,
together with a copy of a review letter from the Reviewing Agent
in the form of SCHEDULE 4 to EXHIBIT E hereto with respect to
such amendment), such amendment shall become effective hereunder,
and the Construction Budget for East Chicago Showboat shall
thereafter be as so amended.
4.2 CONTRACT AMENDMENT PROCESS. The Company shall
have the right from time to time to amend any Contract to change
the scope of the work and the Company's payment obligations
thereunder. Any such amendment shall be in writing and shall
identify with particularity all changes being made. Each such
amendment shall be effective when and only when: (a) the Company
and the Contractor have executed and delivered the Contract
Amendment (with the effectiveness thereof subject only to
satisfaction of the conditions in clauses (b) and (c) below);
(b) the Company has submitted the Contract amendment to the
Disbursement Agent and the Trustee by an Officers' Certificate in
the form attached hereto as EXHIBIT F, together with the Project
Manager's and Project Architect's certification as provided in
EXHIBITS 1 and 2, respectively, to the Contract Amendment
Certificate; and (c) the Disbursement Agent has acknowledged its
receipt of the materials referenced in clause (b) above, as
contemplated in the form of Contract Amendment Certificate.
4.3 REVIEW BY REVIEWING AGENT; PROJECT COST SCHEDULE.
(a) The Company shall engage the Reviewing Agent, at
the Company's expense, to review all Disbursement Requests and
all disbursements from the Segregated Account (and, to the extent
required by Section 4.1 above, all Construction Budget Amendment
Certificates). In order to facilitate such review, the Company
shall provide to the Reviewing Agent (i) concurrently with the
submission to the Disbursement Agent of any Disbursement Request,
a copy of the same and all materials provided in connection
therewith, and (ii) within 15 days after submission to the
Disbursement Agent of any Disbursement Request, a Project Cost
Schedule updated to include payments made with the disbursements
pursuant to the Disbursement Request. Concurrently with the
delivery of each such Project Cost Schedule to the Reviewing
Agent, the Company also shall provide a copy to the Disbursement
Agent.
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(b) The Company shall cause the Reviewing Agent,
within 60 days after the submission of each Disbursement Request
to the Disbursement Agent, to provide the Disbursement Agent with
a certificate relating to said Disbursement Request in the form
of EXHIBIT G attached hereto.
(c) The Company covenants to promptly cure any cost
overrun for any line item (taking into account any applicable
reserves) by (i) providing sufficient funds to cover in full such
cost overrun from any of the following (but in each case only to
the extent that the same have not previously been expended or
dedicated (including Retainage Amounts) to the payment of items
contained in the Construction Budget): (A) the amount equal to
the Original Allocation, (B) the unspent Additional Revenue,
(C) the Realized Savings, (D) any Additional Project Financing or
(E) Capital Lease Savings; and (ii) effecting a Construction
Budget Amendment to dedicate such funds to the line item in
question.
(d) From and after the date, if any, upon which the
unallocated reserves have been reduced to zero, the Company shall
cause the Reviewing Agent, within 45 days after the submission of
each Construction Budget Amendment Certificate, to review the
Construction Budget Amendment Certificate and all supporting
documentation for the purpose of obtaining from the Reviewing
Agent a review letter in the form of SCHEDULE 4 to EXHIBIT E
attached hereto.
(e) The Project Cost Schedule further shall set forth
(i) the actual investment income earned on the funds held in the
Escrow Account and the Segregated Account through the date of
such Project Cost Schedule, and (ii) the additional amount of
investment income which the Company reasonably anticipates will
accrue on the funds held in the Escrow Account and the Segregated
Account from the date of the Project Cost Schedule through the
date that the Company reasonably anticipates that East Chicago
Showboat first will be Operating. If at any time the Company
submits a Project Cost Schedule pursuant to this paragraph and
the Company can no longer reasonably anticipate that the
Additional Revenue earned (and anticipated to be earned through
the date that the Company reasonably anticipates that East
Chicago Showboat first will be Operating) from investments of
funds in the Escrow Account and the Segregated Account will equal
the amount of such Additional Revenue anticipated as of the date
the Initial Disbursements are made (as set forth in the Initial
Construction Budget), then
(i) if the total amount of such Additional
Revenue at such date earned or anticipated to be earned is less
than the total amount of such Additional Revenue anticipated as
of the date the Initial Disbursements are made, then the
Available Funds shall be deemed reduced by the amount of such
deficiency and the Company, as a condition to the next
Disbursement Request, shall reallocate unallocated reserves,
provide additional Available Funds or otherwise amend the
Construction Budget so that the total Project Costs do not exceed
total Available Funds; or
(ii) if the total amount of such Additional
Revenue at such date earned or anticipated to be earned is
greater than the total amount of such Additional Revenue
anticipated as of the date the Initial Disbursements are made,
then the Available Funds shall be deemed increased by the amount
of such excess, but only as and when such excess is actually
earned and deposited into the Escrow Account.
5. DUTIES OF DISBURSEMENT AGENT. The Disbursement Agent
agrees, for the benefit of the Trustee and the Holders of the
First Mortgage Notes, that the Disbursement Agent shall perform
the following duties pursuant to this Agreement:
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5.1 FINAL DISBURSEMENT OF FUNDS TO THE COMPANY
FOLLOWING OPERATING DATE. If the Company provides written
certification to the Disbursement Agent that (a) East Chicago
Showboat commenced Operating on or before the Completion Date,
and East Chicago Showboat continues to be Operating as of the
date of the certification, (b) funds remain in the Escrow Account
and/or the Segregated Account as of the date of the
certification, and (c) as of the date of the certification, East
Chicago Showboat shall have generated at least $5.0 million of
Combined Cash Flow in one fiscal quarter as certified by the
Company, then the Disbursement Agent shall, upon the direction of
the Company, pursuant to a Disbursement Authorization in the form
of EXHIBIT H attached hereto, direct the Escrow Agent to disburse
all remaining funds in the Escrow Account and the Segregated
Account, if any, to the Company; PROVIDED, HOWEVER, that the
Disbursement Agent shall direct the Escrow Agent to retain funds
in the Escrow Account in an amount sufficient to pay any then
unpaid Retainage Amounts as provided in Section 6.2.1(iii)
herein.
5.2 DISBURSEMENT REQUESTS AND DISBURSEMENTS.
(a) The Company shall have the right from time to
time during the term of this Agreement to submit to the
Disbursement Agent a request for the disbursement of funds from
the Escrow Account in the form of EXHIBIT C hereto (a
"DISBURSEMENT REQUEST"), together with the schedules and exhibits
attached thereto. The Disbursement Agent shall approve each
Disbursement Request subject to its satisfaction of the
conditions set forth in Section 6 hereof. Such approval shall be
evidenced by the Disbursement Agent's delivery to the Escrow
Agent of the Disbursement Authorization. The Disbursement Agent
shall notify the Company and the Reviewing Agent as soon as
reasonably possible (and in any event within two (2) business
days after the Disbursement Agent reaches its conclusion) if any
Disbursement Request is disapproved and the reason(s) therefor.
(b) Provided that a Disbursement Request is not
disapproved by the Disbursement Agent, within three (3) business
days following submission of a Disbursement Request, the
Disbursement Agent (by delivery of the Disbursement Authorization
to the Escrow Agent) shall authorize the Escrow Agent to disburse
the funds requested in such Disbursement Request.
5.3 PERIODIC INSPECTION AND REVIEW OF PROJECT. The
Disbursement Agent shall exercise commercially reasonable efforts
and utilize commercially prudent practices in the performance of
its duties hereunder consistent with those of similar
institutions disbursing disbursement control funds. Commencing
upon execution and delivery hereof, the Disbursement Agent shall
have the right to meet periodically at reasonable times, however
no less frequently than quarterly, upon no less than three (3)
business days' notice, with representatives of the Company, the
Project Architect, the Project Manager and such other employees,
consultants or agents as the Disbursement Agent shall reasonably
request to be present for such meetings. The Disbursement Agent
may perform, and the Company agrees to provide the Disbursement
Agent reasonable access to the Property to enable the
Disbursement Agent to perform, such inspections and tests of East
Chicago Showboat as it deems reasonably appropriate in the
performance of its duties hereunder. In addition, the
Disbursement Agent shall have the right at reasonable times upon
prior notice to review all information (including Contracts)
supporting the amendments to the Construction Budget, amendments
to any Contracts, the Company's Disbursement Requests and any
certificates in support of any of the foregoing, to inspect
materials stored at East Chicago Showboat, to review the
insurance required pursuant to the terms of the Indenture, to
confirm receipt of endorsements from the Title Insurer insuring
the continuing priority of the lien of the Mortgages as security
for each advance of funds from the Escrow Account hereunder, and
to examine
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the Plans and all shop drawings relating to East Chicago
Showboat. The Disbursement Agent is authorized to contact any
Contractor for purposes of confirming receipt of progress
payments. The Disbursement Agent shall be entitled to examine,
copy and make extracts of the books, records, accounting data and
other documents of the Company, including, without limitation,
bills of sale, statements, receipts, conditional and
unconditional lien releases, contracts or agreements, which
relate to any materials, fixtures or articles incorporated into
East Chicago Showboat. From time to time, at the request of the
Disbursement Agent, the Company shall make available to the
Disbursement Agent a Project Cost Schedule and/or a Construction
Schedule for East Chicago Showboat. Upon the completion of the
foundation for any building within East Chicago Showboat, the
Disbursement Agent shall obtain and provide to the Trustee, on a
building-by-building basis, a commitment from the Title Insurer
evidencing the Title Insurer's unconditional commitment to issue
a CLTA 102.5 or similar endorsement to the Title Policy insuring
that said building is located entirely within the Property then
leased by the Company and does not encroach upon any easement or
other restrictions, encumbrances or rights of ways affecting said
property, and shall deliver such commitment and other
endorsements and assurances to the Trustee. The Company agrees
to cooperate with the Disbursement Agent in assisting the
Disbursement Agent to perform its duties hereunder and to take
such further steps as the Disbursement Agent reasonably may
request in order to facilitate the Disbursement Agent's
performance of its obligations hereunder.
5.4 DISBURSEMENT AGENT'S DUTY TO REPORT EVENT OF
DEFAULT. The Disbursement Agent shall, within five Business
Days, upon becoming aware of any Default or Event of Default,
deliver to the Trustee a statement specifying such Default or
Event of Default.
6. CONDITIONS PRECEDENT TO DISBURSEMENT.
6.1 INITIAL DISBURSEMENTS. Upon satisfaction of the
conditions described below in this Section 6.1, the Escrow Agent
shall make the disbursements described in the Initial
Disbursements Certificate (the "INITIAL DISBURSEMENTS") in the
form of EXHIBIT A attached hereto. The conditions to the Initial
Disbursement shall consist of the following:
(a) The Escrow Agent shall have received the Note
Proceeds and the proceeds of the remaining Capital Contribution;
(b) The Escrow Agent shall have received the
Initial Disbursements Certificate, and the Escrow Agent shall
have received confirmation from the Trustee and the Disbursement
Agent that they each have received the Initial Disbursements
Certificate;
(c) The Escrow Agent shall have received the
Closing Certifications from the Disbursement Agent and the
Trustee, in the form of EXHIBITS B-2 and B-3 attached hereto,
respectively; and
(d) The Escrow Agent shall have received the
Company's Closing Certification from the Company in the form of
EXHIBIT B-1 attached hereto.
6.2 CONDITIONS TO OTHER DISBURSEMENTS. The
Disbursement Agent's approval of any disbursements from the
Escrow Account other than the Initial Disbursements and the Pre-
Closing Disbursements (described in Section 6.4) shall be subject
to the following conditions:
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(a) The Company shall have submitted to the
Disbursement Agent a Disbursement Request as provided for herein
pertaining to the amounts requested for disbursement, together
with a completed SCHEDULE 1 in the form contemplated thereby and
the certifications of the Project Manager and the Project
Architect in the form of EXHIBITS 1 and 2 to the Disbursement
Request.
(b) The Disbursement Agent shall have received
copies of all Contracts identified by the Company to be material
to East Chicago Showboat (which the Company agrees shall include
all Contracts with a total contract amount in excess of $75,000)
and, with respect to each such Contract: (i) if such Contract
contemplates any payments thereunder in excess of $75,000, a
consent substantially in the form attached hereto as EXHIBIT J
signed by the third-party contractor under each such Contract;
and (ii) copies of such performance and payment bonds as the
Company may require to be provided to the Company pursuant to any
Contract. Such bonds shall name the Company and the Trustee as
additional insureds or obligees and shall be in full force and
effect.
(c) The Disbursement Agent shall have received
copies of all Plans which, as of the date of the Disbursement
Request, constitute Final Plans. The Disbursement Agent may rely
upon the certification of the Company set forth in the
Disbursement Request in order to establish satisfaction of this
condition.
(d) The total payments by the Company with
respect to each line item component described on the Construction
Budget (plus any Retainage Amounts held for such line item) after
giving effect to the requested disbursements shall not exceed the
amount budgeted on the Construction Budget for such line item.
Further, to the extent the work or payment required in connection
with any line item has not yet been completed, there shall be no
reason to believe that the estimated cost to complete such work
or payment will exceed the difference between: (i) the amount
budgeted for such line item on the Construction Budget; and (ii)
the sum of (A) the total payments theretofore disbursed with
respect to such line item and (B) any Retainage Amounts then held
with respect to such line item.
(e) The Disbursement Request on its face has been
completed as to the information required therein and the required
attachments, if any, are attached and the Disbursement Agent
shall not have become aware of any material error, inaccuracy,
misstatement or omission of fact in a Disbursement Request or an
exhibit or attachment thereto or information provided by the
Company upon the request of the Disbursement Agent.
(f) The Disbursement Agent shall have received a
copy of the Reviewing Agent's certificate in the form of
EXHIBIT G hereto with respect to all prior Disbursement Requests
more than 60 days old, and no such certificate shall have
reported any exceptions to the procedures set forth therein.
(g) (i) For so long as Showboat or any
wholly owned subsidiary thereof shall serve as the Disbursement
Agent under this Agreement, the Disbursement Agent is not aware
that an Event of Default exists and is continuing.
(i) For so long as any entity other than
Showboat or any wholly owned subsidiary thereof shall serve as
the Disbursement Agent under this Agreement, the Disbursement
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Agent is not aware (from the facts set forth in any Disbursement
Request or any certificate from the Project Manager or the
Project Architect or the Reviewing Agent or any notice from the
Trustee or the Company) that an Event of Default exists and is
continuing.
(h) The Disbursement Agent shall have received a
commitment from the Title Insurer, attached to the Disbursement
Request, evidencing the Title Insurer's unconditional commitment
to issue an endorsement to the Title Policy in the form of a CLTA
122 Endorsement or other similar endorsement insuring the
continuing priority of the Mortgages as security for each advance
of funds from the Escrow Account that (i) since the previous
disbursement from the Escrow Account, there has been no change in
the condition of title unless permitted by the Indenture, and
(ii) there are no intervening liens or encumbrances which may
then or thereafter take priority over the Mortgages (other than
(i) such intervening liens or encumbrances securing amounts
("DISPUTED AMOUNTS") the payment of which is being disputed in
good faith by the Company and to which the Company has provided,
upon the request of the Trustee, reasonable security to prevent
the forfeiture or loss of all or any portion of the Property, or
any impairment in the priority of the lien of the Mortgages, as a
result of an adverse decision in such contest, and (ii) preferred
maritime liens, so long as the Disbursement Agent has received
confirmation from the Trustee that (A) the Title Insurer has
delivered to the Trustee an endorsement to the Title Policy
insuring against loss to the holders of the First Mortgage Notes
due to the priority of such lien or encumbrance, and (B) if
covered by the Completion Guarantee, Showboat has delivered to
the Trustee written confirmation that if the Company is
determined by a court of appropriate jurisdiction to be obligated
to pay any of the Disputed Amounts, and the Company fails to pay
or otherwise provide for the payment of such Disputed Amounts
within 30 days after entry of the court's decision establishing
the obligation of the Company, then Showboat shall pay or
otherwise provide for payment of such Disputed Amount to the
party entitled thereto within the ensuing 30-day period). Upon
completion of any foundation for any building within East Chicago
Showboat, the Title Insurer shall have issued, on a building-by-
building basis, its foundation endorsement insuring that such
foundation is constructed wholly within the boundaries of the
Property then leased by the Company.
(i) The respective amounts deposited into the
Segregated Account pursuant to all previous Disbursement Requests
shall have been paid to the respective parties identified on
SCHEDULE 1 of each such previous Disbursement Request.
(j) Each Disbursement Request shall designate the
portion thereof that is being requested to pay (i) Construction
Expenses and (ii) Pre-Opening Expenses.
(k) With respect to that portion of a
Disbursement Request that is identified as being made to pay
Construction Expenses, SCHEDULE 1 to the Disbursement Request
also shall itemize for each line item and for each party to whom
payment is requested with respect to such line item, the
following: (i) the name of the payee to be paid, (ii) the
current payment requested, (iii) the increase or decrease in
accrued but unpaid Retainage Amount for such payee since the last
Disbursement Request (after giving effect to the payment
contemplated by the Disbursement Request); (iv) the total amount
contemplated to be payable to such payee under the terms of its
applicable Contract through completion of all work and delivery
of all materials contemplated by the Contract (I.E., the total
contract amount); (v) the total payments made to such payee under
its applicable Contract as of the Closing Date; (vi) the total
payments made to such payee since the Closing Date (after giving
effect to the payment contemplated by the Disbursement Request);
(vii) the sum of all payments made to such payee (after giving
effect to the payment contemplated by the Disbursement Request)
(I.E., the sum of (v) and (vi)
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above); (viii) the aggregate accrued Retainage Amounts which
shall continue to be owed with respect to such Contract (after
giving effect to the payment contemplated by the Disbursement
Request); and (ix) the percentage of the work actually completed,
or the materials actually delivered, under the Contract through
the date for which payment is made hereunder (expressed as a
percentage of the total work and materials contemplated by the
Contract through completion). To the extent that the
Disbursement Request includes a request for funds to pay
Construction Expenses, the Disbursement Request also shall be
accompanied by duly executed conditional lien releases, in form
and substance satisfactory to the Disbursement Agent, from all
Contractors identified as having provided the work, materials
and/or services giving rise to such Construction Expenses, and
covering in full such work, materials and/or services.
(l) With respect to each Construction Expense
identified for payment on a previous Disbursement Request, the
Disbursement Agent shall have received duly executed
acknowledgements of payment and unconditional (except as to
Retainage Amounts) lien releases, in form and substance
satisfactory to the Disbursement Agent, from all Contractors
identified on the previous Disbursement Request for payment of
Construction Expenses, and acknowledging the receipt by such
Contractor of the respective "Current Payment Amounts" listed on
the previous Disbursement Requests as payable to such Contractor.
6.2.1 In the event that the Disbursement Agent
determines that condition (g) described above is not satisfied in
respect of any Disbursement Request for any month and so long as
such condition is not satisfied, the Disbursement Agent shall not
authorize any disbursement of funds from the Escrow Account
pursuant to a Disbursement Request or from the Segregated Account
other than the following:
(i) if all other conditions in Section 6
hereof (including those stated in Section 6.1
hereof) are met, payments in respect of work
completed or materials purchased on or prior to
the date that the Disbursement Agent determined
that condition (g) was not satisfied and has so
notified the Issuer and the Project Manager in
writing. Each such disbursement shall be
accompanied by a certificate from the Project
Manager that such work was completed prior to such
date, or an invoice dated prior to such date for
any materials purchased prior to such date;
(ii) payments not to exceed $5,000,000 in the
aggregate to prevent the condition of East Chicago
Showboat from deteriorating or to preserve any
work completed on East Chicago Showboat as
certified to be reasonably necessary by the
Project Manager; PROVIDED, HOWEVER, that the
limitations set forth in this subparagraph (ii)
may be increased or decreased by the Trustee, in
the exercise of its reasonable discretion, by
written notice to the Disbursement Agent; and
(iii) if such condition continues for a
period of three (3) consecutive months or more, at
the request of the Company, Retainage Amounts for
work completed, provided that the Company and the
Project Manager certify that the conditions for
paying such amounts (other than completion of East
Chicago Showboat) are met.
6.3 EVENTS OF DEFAULT. The occurrence of any of the
following specified events shall be an Event of Default ("EVENT
OF DEFAULT") hereunder.
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6.3.1 The occurrence and continuance of an
"Event of Default," as defined in the Indenture, under the
Indenture.
6.3.2 The inability of the Project Manager or
the Project Architect to deliver their respective certificate (in
the form of EXHIBIT 1 and EXHIBIT 2 to EXHIBIT C attached hereto,
respectively) with any Disbursement Request, or their respective
certificates (in the form of EXHIBIT 1 and EXHIBIT 2 to EXHIBIT E
attached hereto, respectively) with any Construction Budget
Amendment Certificate, and any such failure continues for 30 days
without being cured.
6.3.3 The delivery by the Reviewing Agent
pursuant to Section 4.3 hereof of a certificate reporting an
exception with respect to any prior Disbursement Request, and
such exception shall continue for a period of 30 days without
being cured, or the failure of the Reviewing Agent to deliver (a)
with respect to any Disbursement Request, the letter required
pursuant to Section 4.3(b) of this Agreement, and such failure
shall continue for a period of 30 days without being cured, or
(b) with respect to any Construction Budget Amendment
Certificate, the letter required pursuant to Section 4.3(d) of
this Agreement, and such failure shall continue for a period of
30 days without being cured.
6.3.4 Any representation, warranty,
certification or statement by the Company, the Project Architect,
the Project Manager or the Disbursement Agent in this Agreement,
or any certificate, request, budget or statement delivered
pursuant to this Agreement, shall be untrue in any material
respect on the date given or made, and such untruthfulness
continues for a period of 30 days without being cured.
6.3.5 Any time that the Available Funds are
less than the amount required in the Construction Budget to cause
East Chicago Showboat to become Operating on or before the
Completion Date and such deficiency continues for a period of 30
days without being cured.
6.3.6 The failure to deliver any documents
required by Section 3 and any such failure continues for 30 days
without being cured.
6.3.7 The occurrence of an event of default
under the Casino Vessel Construction Contract.
6.4 PRE-CLOSING DISBURSEMENT. Upon satisfaction of
the conditions described below in this Section 6.4, the Escrow
Agent shall make the disbursements described in the Pre-Closing
Disbursement Certificate (the "PRE-CLOSING DISBURSEMENT") in the
form of EXHIBIT N attached hereto. The conditions to the Pre-
Closing Disbursement shall consist of the following:
(a) The Escrow Agent shall have received the
proceeds of the remaining Capital Contribution; and
(b) The Escrow Agent shall have received the Pre-
Closing Disbursements Certificate.
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7. LIMITATION OF LIABILITY.
7.1 LIMITATION OF DISBURSEMENT AGENT'S LIABILITY. The
Disbursement Agent's responsibility and liability under this
Agreement shall be limited as follows: (a) the Disbursement
Agent does not represent, warrant or guarantee to the Trustee or
the holders of the First Mortgage Notes the performance of the
Company, the Project Architect, the Project Manager, any
contractor, subcontractor or provider of materials or services in
connection with the construction of East Chicago Showboat
(PROVIDED, HOWEVER, that the foregoing shall not in any way limit
or impair Showboat's obligations under the Completion Guarantee);
(b) the Disbursement Agent shall have no responsibility to the
Company, the Trustee or the Holders of the First Mortgage Notes
as a consequence of performance by the Disbursement Agent
hereunder except for any gross negligence or willful misconduct
of the Disbursement Agent; (c) the Company shall remain solely
responsible for all aspects of its business and conduct in
connection with East Chicago Showboat, including but not limited
to the quality and suitability of the Plans, the supervision of
the work of construction, the qualifications, financial condition
and performance of all architects, engineers, contractors, subcon
tractors, suppliers, consultants and property managers, the
accuracy of all applications for payment, and the proper
application of all disbursements; (d) the Disbursement Agent is
not obligated to supervise, inspect or inform the Company, the
Trustee or any third party of any aspect of the construction of
East Chicago Showboat or any other matter referred to above; and
(e) the Disbursement Agent owes no duty of care to the Company to
protect against, or to inform the Company of, any negligent,
faulty, inadequate or defective design or construction of East
Chicago Showboat. The Disbursement Agent shall have no duties or
obligations hereunder except as expressly set forth herein, shall
be responsible only for the performance of such duties and
obligations, shall not be required to take any action otherwise
than in accordance with the terms hereof and shall not be in any
manner liable or responsible for any loss or damage arising by
reason of any act or omission to act by it hereunder or in
connection with any of the transactions contemplated hereby,
including, but not limited to, any loss that may occur by reason
of forgery, false representations, the exercise of its
discretion, or any other reason, except for its gross negligence
or willful misconduct.
7.2 LIMITATION OF ESCROW AGENT'S LIABILITY. The
Escrow Agent's responsibility and liability under this Agreement
shall be limited as follows: (a) the Escrow Agent does not
represent, warrant or guarantee to the Trustee or the holders of
the First Mortgage Notes the performance of the Company, the
Project Architect, the Project Manager, any contractor,
subcontractor or provider of materials or services in connection
with construction of East Chicago Showboat; (b) the Escrow Agent
shall have no responsibility to the Company, the Trustee or the
holders of the First Mortgage Notes as a consequence of
performance by the Escrow Agent hereunder except for any gross
negligence or willful misconduct of the Escrow Agent or failure
to account for funds held on deposit; (c) the Company shall
remain solely responsible for all aspects of its business and
conduct in connection with East Chicago Showboat, including, but
not limited to, the quality and suitability of the Plans, the
supervision of the work of construction, the qualifications,
financial condition and performance of all architects, engineers,
contractors, subcontractors, suppliers, consultants and property
managers, the accuracy of all applications for payment, and the
proper application of all disbursements; (d) the Escrow Agent is
not obligated to supervise, inspect or inform the Company, the
Trustee or any third party of any aspect of the construction of
East Chicago Showboat or any other matter referred to above; and
(e) the Escrow Agent owes no duty of care to the Company to
protect against, or to inform the Company of, any negligent,
faulty, inadequate or defective design or construction of East
Chicago Showboat. The Escrow Agent shall have no duties or
obligations hereunder except as expressly set forth herein, shall
be responsible only for the performance of such duties and
obligations, shall not be required to take any action otherwise
than in
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accordance with the terms hereof and shall not be in any manner
liable or responsible for any loss or damage arising by reason of
any act or omission to act by it hereunder or in connection with
any of the transactions contemplated hereby, including, but not
limited to, any loss that may occur by reason of forgery, false
representations, the exercise of its discretion, or any other
reason, except for its gross negligence or willful misconduct or
failure to account for funds on deposit.
8. INDEMNITY AND INSURANCE.
8.1 INDEMNITY OF DISBURSEMENT AGENT. The Company,
jointly and severally, indemnifies, holds harmless and will
defend the Disbursement Agent and its officers, directors, agents
and employees, from and against any and all claims, actions,
obligations, liabilities and expenses, including defense costs,
investigative fees and costs, legal fees, and claims for damages,
arising from the Disbursement Agent's performance of its
obligations under this Agreement, except to the extent that such
liability, expense or claim is attributable to the gross
negligence or willful misconduct of the Disbursement Agent.
8.2 INDEMNITY OF ESCROW AGENT. The Company, jointly
and severally, indemnifies, holds harmless and will defend the
Escrow Agent and its officers, directors, agents and employees,
from and against any and all claims, actions, obligations,
liabilities and expenses, including defense costs, investigative
fees and costs, legal fees, and claims for damages, arising from
the Escrow Agent's performance of its obligations under this
Agreement, except to the extent that such liability, expense or
claim is attributable to the gross negligence or willful
misconduct of the Escrow Agent or the Escrow Agent's failure to
account for funds on deposit.
8.3 INSURANCE. The Disbursement Agent, at its sole
cost and expense, shall purchase and maintain throughout the term
of this Agreement, comprehensive general liability insurance,
with minimum limits of $2,000,000 combined single limit per
occurrence, covering all bodily injury and property damage
arising out of the performance of its obligations under this
Agreement. The policy required by this Section shall provide for
thirty (30) days' prior written notice to the Trustee and the
Company of cancellation or a material change. If any of such
insurance is written on a claims made form, following termination
of this Agreement, coverage shall survive for the maximum
reporting period available at each anniversary date of such
insurance, or not less than five (5) years, whichever is greater.
The limits of coverage required above shall not in any way limit
the liability of the Company under Sections 8.1 or 8.2 hereof.
Notwithstanding the foregoing, Showboat shall not be obligated to
purchase a separate insurance policy in order to fulfill its
obligations as Disbursement Agent under this Section 8.3, but
rather shall be entitled to utilize its existing insurance policy
or policies, with any necessary amendments, in order to fulfill
such obligations.
9. TERMINATION. This Agreement shall terminate
automatically thirty (30) days following disbursement of all
funds remaining in the Escrow Account and the Segregated Account,
unless sooner terminated pursuant to Section 10 hereof; PROVIDED,
HOWEVER, that (a) the obligations of the Company under Section 8
of this Agreement shall survive termination of this Agreement;
and (b) if, following an Event of Loss, there exist Net Loss
Proceeds that (in accordance with Section 4.11 of the Indenture)
are deliverable to the Trustee and are eligible for distribution
to the Company for rebuilding, repair or construction, then, at
the option of the Trustee, the Company and the Disbursement Agent
shall execute and deliver to the Trustee such documentation as
the Trustee reasonably deems appropriate in order to cause (i)
the Trustee to possess a first priority perfected security
interest in said funds, and (ii) the
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Disbursement Agent to administer the disbursement of said funds
for such rebuilding, repair or construction pursuant to
disbursement control procedures substantially akin to those set
forth herein.
10. SUBSTITUTION OR RESIGNATION.
10.1 SUBSTITUTION OF THE DISBURSEMENT AGENT OR
RESIGNATION.
10.1.1 In the event that the Disbursement Agent
shall fail to fulfill its obligations under this Agreement, or
shall, through gross negligence or willful misconduct, take any
action that adversely affects the rights of the Trustee, the
Holders of the First Mortgage Notes, or the Company, the Trustee,
on behalf of the Holders of the First Mortgage Notes, or the
Company shall each, in addition to any rights each might have at
law or equity, have the right, upon the expiration of thirty (30)
days following delivery of written notice of substitution to the
Disbursement Agent and the Company, to cause the Disbursement
Agent to be relieved of its duties hereunder and to select a
substitute disbursement agent to serve hereunder. The
Disbursement Agent may resign at any time upon thirty (30) days'
written notice to all parties hereto. Such resignation shall
take effect upon receipt by the Disbursement Agent of an
instrument of acceptance executed by a successor disbursement
agent and consented to by the other parties hereto. Upon
selection of such substitute disbursement agent, the Trustee, the
Company, the Escrow Agent and the substitute disbursement agent
shall enter into an agreement substantially identical to this
Agreement and, thereafter, the Disbursement Agent shall be
relieved of its duties and obligations to perform hereunder,
except that the Disbursement Agent shall transfer to the
substitute disbursement agent upon request therefor originals of
all books, records, and other documents in the Disbursement
Agent's possession relating to this Agreement. In the event that
the agency relationship between the Disbursement Agent and the
Title Insurer is terminated, then Title Insurer shall have the
right to become the Disbursement Agent hereunder upon notice to
the parties hereto and execution and delivery to the parties of a
written assumption of all of the Disbursement Agent's obligations
hereunder.
10.1.2 The Escrow Agent acknowledges and agrees
that the Trustee and the Company shall have the right to change
the party acting as the "Disbursement Agent" pursuant to this
Agreement, and the Trustee and the Company agree to provide
written notice to the Escrow Agent of any such change. From and
after the Escrow Agent's receipt of such notice, the Escrow Agent
shall treat the new party identified by the Trustee and the
Company to serve as the Disbursement Agent as the Disbursement
Agent hereunder.
10.2 SUBSTITUTION OF ESCROW AGENT OR RESIGNATION.
10.2.1 The Trustee and the Company shall each
have the right, upon the expiration of thirty (30) days following
delivery of written notice of substitution to the Escrow Agent
and the Company, to cause the Escrow Agent to be relieved of its
duties hereunder and to select a substitute escrow agent to serve
hereunder. The Escrow Agent may resign at any time upon thirty
(30) days' written notice to all parties hereto. Such
resignation shall take effect upon receipt by the Escrow Agent of
an instrument of acceptance executed by a successor escrow agent
and consented to by the other parties hereto. Upon selection of
such substitute escrow agent, the Company, the Trustee, the
Disbursement Agent and the substitute escrow agent shall enter
into an agreement substantially identical to this Agreement and,
thereafter, the Escrow Agent shall be relieved of its duties and
obligations to perform hereunder, except that the Escrow Agent
shall transfer to the substitute escrow agent upon request
therefor all funds and Cash Equivalents maintained by the Escrow
Agent hereunder and originals of all
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books, records, plans and other documents in the Escrow Agent's
possession relating to such funds or Cash Equivalents or this
Agreement.
10.2.2 The Disbursement Agent acknowledges and
agrees that the Trustee and the Company shall each have the right
to change the party acting as "Escrow Agent" pursuant to this
Agreement, and the Trustee and the Company agree to provide
written notice to the Disbursement Agent of any such change.
From and after Disbursement Agent's receipt of such notice,
Disbursement Agent shall treat the new party identified by
Trustee and the Company to serve as the Escrow Agent as the
Escrow Agent hereunder.
10.3 SUBSTITUTION OF REVIEWING AGENT. The Disbursement
Agent, the Escrow Agent and the Trustee acknowledge and agree
that the Company shall have the right to change the party acting
as the Reviewing Agent by written notice to the Reviewing Agent
and the Company and the other parties hereto; PROVIDED, HOWEVER,
that any substitute Reviewing Agent selected by the Company shall
be an independent certified public accounting firm of national
standing. From and after the Disbursement Agent's, the Escrow
Agent's and the Trustee's receipt of such notice, the
Disbursement Agent, the Escrow Agent and the Trustee shall treat
the new party identified by the Company to serve as the Reviewing
Agent as the Reviewing Agent hereunder.
11. NOTICE TO DISBURSEMENT AGENT AND ESCROW AGENT. The
Company shall deliver to the Disbursement Agent and Escrow Agent,
within five (5) business of the date on which any Officer (as
defined in the Indenture) becomes aware of any Default or Event
of Default, an Officers' Certificate specifying such Default or
Event of Default and what action the Company is taking or
proposes to take with respect thereto.
12. ESCROW ACCOUNT STATEMENT. Upon the request of the
Company or the Disbursement Agent from time to time, the Escrow
Agent shall deliver to the Company and the Disbursement Agent a
statement prepared by the Escrow Agent in a form satisfactory to
the Disbursement Agent and the Company setting forth with
reasonable particularity the balance of funds then in the Escrow
Account and the manner in which such funds are invested;
PROVIDED, HOWEVER, that the Escrow Agent shall not be required to
provide such statements more often than weekly.
13. NOTICE. The parties hereto irrevocably instruct the
Escrow Agent that on the first date upon which the balance in the
Escrow Account is reduced to zero, the Escrow Agent shall deliver
to the Trustee and the Disbursement Agent a notice that the
balance in the Escrow Account has been reduced to zero.
14. MISCELLANEOUS.
14.1 WAIVER. Any party hereto may specifically waive
any breach of this Agreement by any other party, but no such
waiver shall be deemed to have been given unless such waiver is
in writing, signed by the waiving party and specifically
designates the breach waived, nor shall any such waiver
constitute a continuing waiver of similar or other breaches.
14.2 INVALIDITY. If for any reason whatsoever, any one
or more of the provisions of this Agreement shall be held or
deemed to be inoperative, unenforceable or invalid in a
particular case or in all cases, such circumstances shall not
have the effect of rendering any of the other provisions of
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this Agreement inoperative, unenforceable or invalid, and the
inoperative, unenforceable or invalid provision shall be
construed as if it were written so as to effectuate, to the
maximum extent possible, the parties' intent.
14.3 NO AUTHORITY. Neither the Disbursement Agent nor
the Escrow Agent shall have any authority to, and neither the
Disbursement Agent nor the Escrow Agent shall, make any warranty
or representation or incur any obligation on behalf of, or in the
name of, the Trustee.
14.4 ASSIGNMENT. This Agreement is personal to the
parties hereto, and the rights and duties of any party hereunder
shall not be assignable except with the prior written consent of
the other parties hereto. In any event, this Agreement shall
inure to and be binding upon the parties and their successors and
permitted assigns.
14.5 BENEFIT. The parties hereto, the holders from
time to time of the First Mortgage Notes, and their respective
successors and assigns, but no others, shall be bound hereby and
entitled to the benefits hereof.
14.6 TIME. Time is of the essence for each provision
of this Agreement.
14.7 CHOICE OF LAW. The existence, validity,
construction, operation and effect of any and all terms and
provisions of this Agreement shall be determined in accordance
with and governed by the substantive laws of the State of New
York, without giving effect to its conflicts of law principles.
14.8 ENTIRE AGREEMENT; AMENDMENTS. This Agreement
contains the entire agreement among the parties with respect to
the subject matter hereof and supersedes any and all prior
agreements, understandings and commitments, whether oral or
written. This Agreement may be amended only by a writing signed
by duly authorized representatives of all parties.
14.9 NOTICES. All notices, requests, approvals,
consents and other communications required or permitted to be
made hereunder shall, except as otherwise provided herein, be in
writing and may be delivered personally or sent by telegram,
telecopy, facsimile, telex, first class mail or overnight
courier, postage prepaid, to the parties hereto addressed as
follows:
To the Escrow Agent:
Showboat, Inc.
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Attention: R. Craig Bird
Telephone: (609) 487-2000
Facsimile: (609) 823-7811
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To the Disbursement Agent:
Showboat, Inc.
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Attention: R. Craig Bird
Telephone: (609) 487-2000
Facsimile: (609) 823-7811
With a copy to:
Kummer Kaempfer Bonner & Renshaw
3800 Howard Hughes Parkway
Las Vegas, Nevada 89104
Attention: John N. Brewer, Esq.
Telephone: (702) 792-7000
Facsimile: (702) 796-7181
Showboat, Inc.
3720 Howard Hughes Parkway
Suite 200
Las Vegas, Nevada 89104
Attention: Mark A. Clayton, Esq.
Telephone: (702) 650-1200
Facsimile: (702) 791-3410
To the Trustee:
American Bank National Association
101 East 5th Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department
Telephone: (612) 229-2600
Facsimile: (612) 229-6415
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To the Company:
Showboat Marina Casino Partnership
Showboat Marina Finance Corporation
2001 East Columbus Drive
East Chicago, Indiana 46312
Attention: Vice President - Finance
and Administration
Telephone: (219) 392-1111
Facsimile: (219) 736-2334
With copies to:
Kummer Kaempfer Bonner & Renshaw
3800 Howard Hughes Parkway
Las Vegas, Nevada 89104
Attention: John N. Brewer, Esq.
Telephone: (702) 792-7000
Facsimile: (702) 796-7181
Ice Miller Donadio & Ryan
One American Square, 31st Floor
Indianapolis, Indiana 46204
Attention: Stephen J. Hackman, Esq.
Telephone: (317) 236-2100
Facsimile: (317) 236-2219
To the Reviewing Agent:
Showboat, Inc.
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey
R. Craig Bird
Telephone: (609) 487-2000
Facsimile: (609) 823-7811
With a copy to:
Kummer Kaempfer Bonner & Renshaw
3800 Howard Hughes Parkway
Las Vegas, Nevada 89104
Attention: John N. Brewer, Esq.
Telephone: (702) 792-7000
Facsimile: (702) 796-7181
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Such notices, requests and other communications sent as provided
above shall be effective when received by the addressee thereof,
unless sent by registered or certified mail, postage prepaid, in
which case they shall be effective exactly five (5) business days
after being deposited in the United States mail. The parties
hereto may change their addresses by giving notice thereof to the
other parties hereto in conformity with this section.
14.10 COUNTERPARTS. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the
same instrument.
14.11 CAPTIONS. Captions in this Agreement are for
convenience only and shall not be considered or referred to in
resolving questions of interpretation of this Agreement.
14.12 RIGHT TO CONSULT COUNSEL. Each of the
Disbursement Agent, the Escrow Agent, the Reviewing Agent and the
Trustee may, if any of them deems it necessary or appropriate,
consult with and be advised by counsel in respect of their duties
hereunder. Each of the Disbursement Agent, the Escrow Agent, the
Reviewing Agent and the Trustee shall be entitled to rely upon
the advice of its counsel in any action taken in its respective
capacity hereunder and shall be protected from any liability of
any kind for actions taken in reasonable reliance upon such
counsel's opinion. The Company, jointly and severally, agrees to
pay all such reasonable counsel fees.
15. ARBITRATION. Any controversy between the parties
hereto involving the construction or application of any of the
terms, covenants, or conditions of this Agreement shall be
submitted to arbitration on the request of any party to this
Agreement, and such arbitration shall comply with and be governed
by the provisions of the United States Arbitration Act (Title 9,
U.S.Code) and the Commercial Rules of the American Arbitration
Association. The arbitrator(s) in any such arbitration shall
have the power to order and grant all remedies permitted at law
or in equity, including, without limitation, provisional and
equitable remedies. The exercise by a party of non-judicial or
self-help remedies permitted by law or equity shall not
constitute a waiver by that party of its right to compel
arbitration of controversies hereunder.
16. GRANT OF SECURITY INTEREST.
The Company hereby irrevocably pledges, assigns and
sets over to the Trustee, and grants to the Trustee, for the
benefit of the Holders of the First Mortgage Notes, a first
priority continuing security interest in all of the Company's
right, title and interest in and to all of the following, whether
now owned or existing or hereinafter acquired or created
(collectively, the "ESCROW ACCOUNT COLLATERAL");
(a) the Escrow Account and the Segregated
Account;
(b) all funds from time to time held in the
Escrow Account and the Segregated Account, including, without
limitation, the Proceeds and all certificates and instruments, if
any, from time to time, representing or evidencing the Escrow
Account, the Segregated Account, or the Proceeds;
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(c) all Cash Equivalents, whether the same shall
constitute certificated securities, uncertificated securities,
investment property, instruments, general intangibles or
otherwise, held by or registered in the name of the Escrow Agent
or the Trustee or any of their respective nominees and all
certificates and instruments, if any, from time to time
representing or evidencing Cash Equivalents;
(d) all notes, certificates of deposit, deposit
accounts, checks and other instruments from time to time
hereafter delivered to or otherwise possessed by the Trustee or
the Escrow Agent for or on behalf of the Company in substitution
for or in addition to any or all of the then existing Escrow
Account Collateral;
(e) all interest, dividends, cash, instruments
and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all
of the then existing Escrow Account Collateral; and
(f) all proceeds of the foregoing including,
without limitation, cash proceeds.
16.2 DEFINITIONS. For purposes of this Section 16, the
following terms shall have the following meanings:
"AGENT" means the Escrow Agent with respect to the
Escrow Account, the Segregated Account and the Escrow Account
Collateral.
"ACCOUNT" means the Escrow Account and the
Segregated Account with respect to the Escrow Agent.
"COLLATERAL" means the Escrow Account Collateral
with respect to the Escrow Agent.
16.3 SAFEKEEPING OF COLLATERAL. The Company and the
Trustee hereby irrevocably instruct the Agent, with respect to
its respective Account and Collateral, as follows:
(a) To the extent it is within its power, the
Agent at all times shall maintain all of the Collateral free and
clear of all liens, encumbrances, security interests, safekeeping
or other charges, demands and claims of any nature whatsoever now
or hereafter existing, in favor of anyone other than the Trustee
(or the Agent, as agent for the Trustee);
(b) With respect to any cash in the Account, the
Agent shall at all times, as agent/bailee for the Trustee,
maintain dominion and control over, and possession of, such cash
until such time as such cash is disbursed from the Account in
accordance with the terms of this Agreement;
(c) With respect to any certificated securities,
as a condition to acquiring any such securities: (i) the Agent
shall confirm that the Agent does not have any knowledge of any
other claims of any other person or entity in or to the
securities; (ii) the Agent shall cause any such securities to be
issued in the name of, or endorsed to, the Company, and the Agent
shall receive from the Company an endorsement in blank pertaining
to the securities; (iii) the Agent at all times shall maintain
dominion and control over, and possession of, said securities
until such time as the securities are sold for cash, at
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which time all proceeds shall be held in accordance with clause
(b) of this Section 16.3; and (iv) the Agent at all times shall
designate in its records that it is holding said securities as
agent for the Trustee, as trustee under the Indenture;
(d) With respect to any uncertificated securities
(other than uncertificated securities issued by the federal
government or an agency or instrumentality thereof), as a
condition to acquiring any such securities: (i) the Agent shall
confirm that the Agent does not have any knowledge of any other
claims of any other person or entity in or to the securities;
(ii) the Agent (A) shall cause the Company to execute a letter
substantially in the form of EXHIBIT L attached hereto addressed
to the issuer (or the transfer agent for the issuer, if
applicable) pertaining to the securities, shall deliver said
letter to the issuer of the securities (or the transfer agent for
the issuer, if applicable), and shall have received back from the
issuer (or the transfer agent for the issuer, if applicable) a
copy of said letter signed by the issuer of the securities (or
the transfer agent for the issuer, if applicable), or (B) shall
have taken such alternative steps as are necessary or appropriate
in order to cause the Trustee to enjoy a continuous first
priority perfected security interest in the securities; and (iii)
the Agent shall at all times designate in its records that it is
holding said securities as agent for the Trustee, as trustee
under the Indenture. For purposes of determining the steps to be
taken under clause (ii)(B) of this Section 16.3(d), the Agent may
rely upon an opinion of counsel to the Company or the Agent (the
expense of which shall be paid by the Company) specifying (A)
that such counsel is familiar with the laws applicable to the
perfection of security interests in said securities and (B) the
steps required to perfect and maintain a first priority security
interest in favor of the Trustee in said securities;
(e) With respect to any uncertificated securities
issued by the federal government or an agency or instrumentality
thereof, as a condition to acquiring any such securities: (i)
the Agent shall confirm that the Agent does not have any
knowledge of any claims of any other person or entity in or to
the securities; (ii) the Agent shall have taken such steps as are
necessary and appropriate in order to cause the Trustee to enjoy
a continuous perfected first priority security interest in said
securities. For purposes of determining the foregoing steps, the
Agent may rely upon an opinion of counsel to the Company or the
Agent (the expense of which shall be paid by the Company)
specifying (A) that such counsel is familiar with the laws
applicable to the perfection of security interests in said
securities and (B) the steps required to perfect and maintain a
first priority security interest in favor of the Trustee in said
securities;
(f) The Agent shall take any other steps from
time to time requested by Trustee to confirm and maintain the
priority of the security interests in the Collateral; and
(g) The Agent shall immediately disburse all
funds held in the Account to the Trustee and transfer title to
all other Collateral held by the Agent hereunder to the Trustee
upon written notice by the Trustee to the Agent that an Event of
Default has occurred and is continuing under the Indenture.
16.4 REMEDIES. In addition to any rights and remedies
provided in the Indenture, the First Mortgage Notes and the other
Collateral Documents, upon an Event of Default as defined in the
Indenture and for so long as such Event of Default is continuing
the Trustee may exercise any or all of the following remedies,
successively or concurrently and in such order as the Trustee
elects:
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(a) The Trustee may deliver some or all of the
notices contemplated by Section 16.3(g) above.
(b) The Trustee may exercise in respect of the
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it and subject to the
restrictions imposed by the Indiana Riverboat Gambling Act, to
the extent applicable, all the rights and remedies of a secured
party under the UCC or other applicable law, and the Trustee may
also upon obtaining possession of the Collateral as set forth
herein, without notice to the Company except as specified below,
sell the Collateral or any part thereof in one or more parcels at
one or more public or private sales, at any exchange, broker's
board or at any of the Trustee's offices or elsewhere, for cash,
on credit or for future delivery, and upon such other terms as
the Trustee may deem commercially reasonable. The Company
acknowledges and agrees that any such private sale may result in
prices and other terms less favorable to the seller than if such
sale were a public sale. The Company agrees that, to the extent
notice of sale shall be required by law, at least ten (10) days'
notice to the Company of the time and place of any public sale or
the time after which any private sale is to be made shall
constitute reasonable notification. The Trustee shall not be
obligated to make any sale regardless of notice of sale having
been given. The Trustee may adjourn any public or private sale
from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Each purchaser
at any such sale shall acquire the property sold free and clear
of any claim or right of the Company, the Escrow Agent or the
Disbursement Agent.
(c) Any cash that is Collateral held by the
Trustee and all cash proceeds received by the Trustee in respect
of any sale of, collection from, or other realization upon all or
any part of the Collateral shall be applied (after payment of any
and all amounts payable to the Trustee under the Indenture)
against the obligations for the ratable benefit of the Holders of
the First Mortgage Notes. Any surplus of such cash or cash
proceeds held by the Trustee and remaining after payment in full
of all the obligations shall be paid over to the Company or to
whomsoever may be lawfully entitled to receive such surplus or as
a court of competent jurisdiction may direct.
(d) The Company hereby irrevocably appoints the
Trustee as its attorney-in-fact effective upon and during the
continuance of an Event of Default with full power of
substitution to do any act which the Company is obligated hereby
to do, to exercise such rights as the Company might exercise with
respect to the Collateral and to execute and file in the
Company's name any financing statements and amendments thereto
required or advisable to protect the Trustee's rights or security
interest hereunder. Such appointment and power of attorney shall
be irrevocable and coupled with an interest.
16.5 It shall be a term and condition of the Escrow
Account, notwithstanding any term or condition to the contrary in
any other agreement relating to the Escrow Account and except as
otherwise provided by the provisions of this Agreement, that no
amount (including, without limitation, interest on or other
proceeds of the Escrow Account or on any Cash Equivalents) shall
be paid or released to or for the account of, or withdrawn from
the Escrow Account by or for the account of, the Company or any
other person or entity other than the Trustee or its designated
agent.
16.6 TRANSFERS AND OTHER LIENS. The Company agrees
that it will not (i) sell, assign (by operation of law or
otherwise) or otherwise dispose of, or grant any option with
respect to, any of the Escrow Account Collateral or (ii) create
or permit to exist any lien upon or with respect to any of the
Escrow Account Collateral, except for the security interest under
this Agreement.
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16.7 AGENCY. Each Agent shall act solely as the
Trustee's agent in connection with its duties under this Section
16, notwithstanding any other provision contained in this
Agreement, without any right to receive compensation from the
Trustee and without any authority to obligate the Trustee or to
compromise or pledge its security interest hereunder. The
Company acknowledges and agrees that in no event shall the
Trustee or the Holders of the First Mortgage Notes be liable for,
nor shall the obligations of the Company under the Indenture and
the First Mortgage Notes be affected or diminished as a
consequence of, any action or inaction of an Agent with respect
to the Escrow Account or the Escrow Account Collateral.
16.8 WAIVER OF SETOFF RIGHTS. The Escrow Agent and the
Disbursement Agent hereby acknowledge the Trustee's security
interest as set forth above and waive any security interest or
other lien in the Escrow Account Collateral and further waive any
right to set off the Escrow Account Collateral now or in the
future against any indebtedness of the Company to the Escrow
Agent or the Disbursement Agent. The waivers set forth in this
Section 16.8 are of rights which may exist now or arise hereafter
in favor of the Escrow Agent or the Disbursement Agent in their
individual capacities, and not of any such rights which may exist
now or arise hereafter in favor of the Escrow Agent or the
Disbursement Agent in their capacities as agents for the Trustee.
Nothing in this Section 16.8 shall be construed as waiving,
limiting or diminishing any rights of the Trustee vis-a-vis the
Company.
16.9 COOPERATION. Each Agent is hereby directed to
cooperate with the Trustee in the exercise of its rights in the
Collateral provided for herein. The Trustee will take all
necessary action to preserve and protect the security interest
created hereby as a lien and encumbrance upon the Collateral and,
upon demand, the Company and each Agent will execute and deliver
to the Trustee such instruments and documents as the Trustee may
deem reasonably necessary or advisable to confirm or perfect the
rights of the Trustee under this Agreement and the Trustee's
interest in the Collateral.
16.10 SECURED OBLIGATIONS. This Agreement secures
the due and punctual payment and performance of all obligations
and indebtedness of the Company, whether now or hereafter
existing, under the First Mortgage Notes and the Indenture
including, without limitation, interest accrued thereon after the
commencement of a bankruptcy, reorganization, dissolution,
winding-up or similar proceeding involving the Company, to the
extent permitted by applicable law.
17. CONSOLIDATION OF SHOWBOAT'S CAPACITIES UNDER THIS
AGREEMENT.
17.1 SATISFACTION OF OBLIGATIONS. For so long as
Showboat or any wholly owned subsidiary thereof as provided in
Section 17.3 below continues to serve as the Disbursement Agent
under this Agreement:
(a) all certificates, letters and other documents that
would otherwise be required to be executed and delivered to
the Disbursement Agent by the Company (except in connection
with disbursements to be made pursuant to Section 3.3 of
this Agreement), the Project Architect, the Project Manager,
the Reviewing Agent or any other party required to deliver a
certificate to the Disbursement Agent under this Agreement
before any disbursement, Construction Amendment, or Contract
Amendment would be authorized under this Agreement, shall be
deemed to have been executed and delivered to the
Disbursement Agent upon execution and delivery by the
Disbursement Agent to the Escrow Agent (with a copy
delivered to the Trustee) of the Showboat Disbursement
Certificate attached hereto as EXHIBIT M.
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17.2 COMBINED REPRESENTATIONS AND WARRANTIES BY
SHOWBOAT. Showboat
hereby represents and warrants that, by executing and delivering
each Showboat Disbursement Certificate to the Escrow Agent:
(a) all representations and warranties that, in the absence
of Section 17.1 would otherwise have been required to have
been made by the Company, the Project Architect, the Project
Manager, the Reviewing Agent, or any other party that would
otherwise be required to deliver a certificate or other
document to the Disbursement Agent before a Disbursement
Authorization could be made, are true and correct;
(b) it has undertaken all of the duties, including the duty
of inquiry, assigned to the applicable party that would
otherwise be required to deliver a certificate or other
document to the Disbursement Agent in the absence of Section
17.1; and
(c) it has in its possession the documentation that would
otherwise, in the absence of Section 17.1, have been
maintained by the Company, the Project Architect, the
Project Manager, the Reviewing Agent or any other party
required to deliver a certificate or other document to the
Disbursement Agent under this Agreement, and such
documentation may be inspected upon reasonable notice by the
Trustee.
17.3 DELEGATION OF DUTIES OF ESCROW AGENT AND
DISBURSEMENT AGENT. For so long as Showboat continues to serve
as the Escrow Agent and the Disbursement Agent under this
Agreement, Showboat may delegate its duties as such to any wholly
owned subsidiary of Showboat; PROVIDED that Showboat shall remain
liable for all duties of the Escrow Agent and Disbursement Agent
hereunder.
18. SEGREGATED ACCOUNT.
18.1 RIGHTS OF THE COMPANY AND DISBURSEMENT AGENT TO
SEGREGATED ACCOUNT. The Segregated Account shall be a segregated
cash collateral trust account, the balance of which shall not
exceed $5.0 million at any time, to be maintained at National
City Bank, in East Chicago, Indiana, Custody Account No.
501755883, in the name of Showboat, as Escrow Agent, as
agent/bailee for American Bank National Association, as Trustee.
Notwithstanding the foregoing and subject to Section 3.4 hereof,
all funds deposited and held in the Segregated Account shall
belong to the Company and, pending disbursement in accordance
with this Agreement, shall be invested in cash or Cash
Equivalents; provided, however, that the Disbursement Agent shall
not invest any such funds in any investment unless such
investment is described in Section 16.1 of this Agreement and the
Disbursement Agent has taken the actions described in Section
16.3 with respect to such investment. Pursuant to Section 16.1
of this Agreement, the Company has granted to the Trustee (for
the benefit of the Holders of the First Mortgage Notes) a
perfected first priority security interest in the Segregated
Account, and the Disbursement Agent shall hold the Segregated
Account and the funds therein, under the sole dominion and
control of such Disbursement Agent, as agent/bailee for the
Trustee (for the benefit of Holders of the First Mortgage Notes).
Funds in the Segregated Account shall be disbursed solely in
accordance with the terms and conditions of this Agreement.
Further, the Disbursement Agent shall note in its records that
all funds and other assets in the Segregated Account have been
pledged to the Trustee, and that the Disbursement Agent is
holding such items as agent for the Trustee. Accordingly, such
funds shall not be within the bankruptcy "estate" (as such term
is used in 11 U.S.C. 541) of the Disbursement Agent. The
Company
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hereby authorizes the Disbursement Agent to make disbursements on
its behalf in accordance with this Agreement.
18.2 DISBURSEMENTS FROM SEGREGATED ACCOUNT. Promptly
following the deposit of funds into the Segregated Account
pursuant to paragraph (i) of the Initial Disbursements
Certificate or in connection with a Disbursement Authorization,
the Disbursement Agent shall pay the respective "Current Payment
Amounts" to the payees identified on SCHEDULE 1 to the
Disbursement Request giving rise to the Disbursement
Authorization or replenish the Segregated Account; PROVIDED that
no disbursements shall be made to the Segregated Account that
would cause the balance therein to exceed $5.0 million at any one
time. In addition, the Disbursement Agent will promptly pay any
payee requested by the Project Manager pursuant to a payment
request in the form of EXHIBIT I, provided that such funds are
then available in the Segregated Account.
18.3 RIGHT TO SUBSTITUTE SEGREGATED ACCOUNT. The
Company and the Disbursement Agent from time to time shall have
the right to designate a substitute account to serve as the
Segregated Account, PROVIDED that no such substitute account
shall become the "Segregated Account" until (a) the Company shall
have taken all steps deemed necessary or appropriate by the
Trustee in order to cause the Trustee to enjoy a first priority
perfected security interest in such substituted Segregated
Account, (b) the depositary financial institution at which the
substitute account is located shall have acknowledged in a manner
satisfactory to the Trustee that the rights of the Trustee in
such account are senior to those of the financial institution,
and (c) the Escrow Agent and the Trustee shall have received
notice of the location and account number of such new substitute
account.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the day first above written.
THE ESCROW AGENT: SHOWBOAT, INC.,
A Nevada corporation
By: /s/ R. Craig Bird
Name: R. Craig Bird
Title: Executive Vice President -
Finance and Administration
By:
Name:
Title:
THE DISBURSEMENT AGENT: SHOWBOAT, INC.,
a Nevada corporation
By: /s/ R. Craig Bird
Name: R. Craig Bird
Title: Executive Vice President -
Finance and Administration
THE TRUSTEE: AMERICAN BANK NATIONAL ASSOCIATION,
a national banking association
By: /s/ Frank P. Leslie, III
Name: Frank P. Leslie, III
Title: Vice President
By: /s/ Thomas M. Korsman
Name: Thomas M. Korsman
Title: Vice President
<PAGE>
THE COMPANY: SHOWBOAT MARINA CASINO PARTNERSHIP,
an Indiana general partnership
By: SHOWBOAT MARINA PARTNERSHIP, an
Indiana general partnership,
its general partner
By: SHOWBOAT INDIANA INVESTMENT
LIMITED PARTNERSHIP, a Nevada
limited partnership, its
general partner
By: SHOWBOAT INDIANA, INC., a
Nevada corporation, its general
partner
By: /s/ J. Keith Wallace
Name: J. Keith Wallace
Title: President and Chief
Executive Officer
SHOWBOAT MARINA FINANCE
CORPORATION, a Nevada corporation
By: /s/ Mark J. Miller
Name: Mark J. Miller
Title: Treasurer
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
Before me, a Notary Public in and for said County and
State, personally appeared R. Craig Bird, the authorized signatory
of Showboat, Inc., a corporate organized and existing under the
laws of the State of Nevada, and acknowledged the execution of the
foregoing instrument as such authorized signatory acting for and
on behalf of said partnership.
Witness my hand and Notarial Seal this 28th day of
March, 1996.
Elizabeth T. McNamee /s/ Elizabeth T. McNamee
Notary of Public, State of New York Signature
No. 01MC5047948
Qualified in Suffolk County Elizabeth T. McNamee
Commission Expires August 14, 1997 Printed Notary Public
My Commission Expires: County of Residence:
______________________ New York
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<PAGE>
STATE OF MINNESOTA )
) SS:
COUNTY OF RAMSEY )
Before me, a Notary Public in and for said County and
State, personally appeared Frank P. Leslie III and Thomas M.
Korsman, the authorized signatories of American Bank National
Association, a national banking association, and acknowledged the
execution of the foregoing instrument as such authorized
signatories acting for and on behalf of American Bank National
Association.
Witness my hand and Notarial Seal this 28th day of
March, 1996.
Colleen D. Schwab /s/ Colleen D. Schwab
Notary Public - Minnesota Signature
My Comm. Expires Jan. 31, 2000
Colleen D. Schwab
Printed Notary Public
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF LAKE )
Before me, a Notary Public in and for said County and
State, personally appeared J. Keith Wallace the authorized
signatory of Showboat Marina Casino Partnership, a general
partnership organized and existing under the laws of the State of
Nevada and acknowledged the execution of the foregoing instrument
as such authorized signatory acting for and on behalf of said
partnership.
Witness my hand and Notarial Seal this 28th day of
March, 1996.
/s/ Richard J. Lesniak
Signature
Richard J. Lesniak
Notary Public State of Indiana
Lake County
My Commission Exp. Apr. 13, 1998
Printed Notary Public
My Commission Expires: County of Residence:
______________________ ____________________
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
Before me, a Notary Public in and for said County and
State, personally appeared Mark J. Miller, the authorized
signatory of Showboat Marina Finance Corporation, a corporation
organized and existing under the laws of the State of Nevada, and
acknowledged the execution of the foregoing instrument as such
authorized signatory acting for and on behalf of said partnership.
Witness my hand and Notarial Seal this 28th day of
March, 1996.
Elizabeth T. McNamee /s/ Elizabeth T. McNamee
Notary of Public, State of New York Signature
No. 01MC5047948
Qualified in Suffolk County Elizabeth T. McNamee
Commission Expires August 14, 1997 Printed Notary Public
My Commission Expires: County of Residence:
______________________ New York
<PAGE>
TABLE OF EXHIBITS
EXHIBIT
A. Form of Initial Disbursements Certificate
B-1. Form of Company's Closing Certification
B-2. Form of Disbursement Agent's Closing Certification
B-3. Form of Trustee's Closing Certification
C. Form of Disbursement Request
D. Project Cost Schedule
E. Form of Construction Budget Amendment Certificate
F. Form of Contract Amendment Certificate
G. Form of Reviewing Agent Letter
H. Form of Disbursement Authorization
I. Form of Payment Request
J. Form of Consent to Collateral Assignment of Contract
K. Pre-Opening Expenses
L. Form of Letter to Issuer (or Transfer Agent) of
Uncertificated Securities
M. Form of Showboat Disbursement Certificate
N. Form of Pre-Closing Disbursement Certificate
37
<PAGE>
EXHIBIT A TO ESCROW AND DISBURSEMENT AGREEMENT
FORM OF INITIAL DISBURSEMENTS CERTIFICATE
Showboat Marina Casino Partnership
Showboat Marina Finance Corporation
2001 East Columbus Drive
East Chicago, Indiana 46312
Showboat, Inc., as Escrow Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Attention: R. Craig Bird
Showboat, Inc., as Disbursement Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Attention: R. Craig Bird
American Bank National Association, as Trustee
101 East 5th Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department
Re: Initial Disbursements Certificate
Ladies and Gentlemen:
This Initial Disbursements Certificate is delivered to
you pursuant to that certain Escrow and Disbursement
Agreement (the "ESCROW AND DISBURSEMENT AGREEMENT") dated
March 28, 1996 by and among Showboat Marina Casino
Partnership, an Indiana general partnership ("SHOWBOAT
PARTNERSHIP"), Showboat Marina Finance Corporation, a Nevada
corporation ("FINANCE CORPORATION" and, together with
Showboat Partnership, the "COMPANY"), American Bank National
Association, a national banking association, as trustee (the
"TRUSTEE") under the Indenture (as defined in the Escrow and
Disbursement Agreement) and Showboat, Inc. ("SHOWBOAT"), a
Nevada corporation, as disbursement agent (the "DISBURSEMENT
AGENT"), and as escrow agent (the "ESCROW AGENT").
Capitalized terms used herein shall have the meanings
assigned to such terms in the Escrow and Disbursement
Agreement.
The Company hereby irrevocably instructs the Escrow
Agent to disburse the following sums to the following
parties:
(a) $___________ to Showboat, pursuant to instructions
provided to the Escrow Agent by Showboat, as reimbursement
of certain amounts advanced to the Company prior to the date
hereof.
(b) $ __________ to Kummer Kaempfer Bonner & Renshaw,
counsel to the Company, as payment of certain legal fees
incurred in connection with the issuance of the First
Mortgage Notes;
(c) $___________ to Ice Miller Donadio & Ryan, special
Indiana counsel to the Company, as payment of certain legal
fees incurred in connection with the issuance of the First
Mortgage Notes;
38
<PAGE>
(d) $___________ to Winston & Strawn, special
Admiralty counsel to the Company, as payment of certain
legal fees incurred in connection with the issuance of the
First Mortgage Notes;
(e) $ __________ to R.R. Donnelley, as payment for
certain printing and engraving fees incurred in connection
with the issuance of the First Mortgage Notes;
(f) $___________ to _____________, as payment of
certain fees and expenses incurred in connection with
serving as surety for the Payment and Performance Bond.
(g) $5,000,000 to the Segregated Account.
[SIGNATURE PAGE FOLLOWS]
39
<PAGE>
THE COMPANY: SHOWBOAT MARINA CASINO PARTNERSHIP, an
Indiana general partnership
By: SHOWBOAT MARINA PARTNERSHIP, an
Indiana general partnership, its
general partner
By: SHOWBOAT INDIANA INVESTMENT LIMITED
PARTNERSHIP, a Nevada limited
partnership, its general partner
By: SHOWBOAT INDIANA, INC., a Nevada
corporation, its general partner
By:
Name: J. Keith Wallace
Title: President and Chief
Executive Officer
SHOWBOAT MARINA FINANCE CORPORATION, a
Nevada corporation
By:
Name: Mark J. Miller
Title: Treasurer
40
<PAGE>
EXHIBIT B-1 TO ESCROW AND DISBURSEMENT AGREEMENT
FORM OF COMPANY'S CLOSING CERTIFICATION
Showboat Marina Casino Partnership
Showboat Marina Finance Corporation
2001 East Columbus Drive
East Chicago, Indiana 46312
_____ __, 1996
Showboat, Inc., as Escrow Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Showboat, Inc., as Disbursement Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
American Bank National Association, as Trustee
101 East 5th Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department
Re: Company's Closing Certification
Ladies and Gentlemen:
This Closing Certification is delivered to you pursuant to
that certain Escrow and Disbursement Agreement (the "ESCROW AND
DISBURSEMENT AGREEMENT") dated March 28, 1996 by and among
Showboat Marina Casino Partnership, an Indiana general
partnership ( "SHOWBOAT PARTNERSHIP"), Showboat Marina Finance
Corporation, a Nevada corporation ("FINANCE CORPORATION" and,
together with Showboat Partnership, the "COMPANY"), American Bank
National Association, a national banking association, as trustee
(the "TRUSTEE") under the Indenture (as defined in the Escrow and
Disbursement Agreement) and Showboat, Inc. as disbursement agent
(the "DISBURSEMENT AGENT"), and as escrow agent (the "ESCROW
AGENT"). Capitalized terms used herein shall have the meanings
assigned to such terms in the Escrow and Disbursement Agreement.
The Company hereby certifies to each of you as follows:
1. As of the date hereof, there is no reason to believe
that the date on which East Chicago Showboat will become
Operating will not occur on or prior to the Completion Date.
2. The "Available Amount" column of the Initial
Construction Budget attached hereto as EXHIBIT 1 constitutes the
Construction Budget presently in effect for the Construction;
PROVIDED, HOWEVER, that the Initial Construction Budget shall not
include the "Fees and Expenses" line item or the corresponding
amounts listed under the "Available Amount" column with respect
thereto.
1
<PAGE>
3. Said Initial Construction Budget accurately sets forth
the anticipated Construction Expenses through completion of the
construction of East Chicago Showboat and the various components
of East Chicago Showboat identified thereon as line items, all
within the respective line item amounts listed.
4. Said Initial Construction Budget also accurately sets
forth (a) all anticipated Pre-Opening Expenses which the Company
is expected to incur in order for East Chicago Showboat to begin
Operating on or before the Completion Date, and (b) all
anticipated Debt Financing Costs payable through the date that
the Company reasonably anticipates that East Chicago Showboat
first will be Operating and to provide a reserve to cover any
additional Debt Financing Costs that will accrue but will not yet
be payable as of such date, all within the line item allocations
established for those components set forth in the Initial
Construction Budget.
5. As of the date hereof, there are sufficient Available
Funds to pay for the anticipated costs described in paragraphs 2,
3 and 4 above, and, after giving effect to the Initial
Disbursements, the Company does not believe that any other
expenses will need to be incurred by the Company in order to
cause East Chicago Showboat to be Operating on or before the
Completion Date.
6. There is no Default or Event of Default existing under
the Indenture.
The foregoing representations, warranties and certifications
are true and correct and the Disbursement Agent is entitled to
rely on the foregoing in authorizing and making the Initial
Disbursements.
THE COMPANY: SHOWBOAT MARINA CASINO PARTNERSHIP,
an Indiana general partnership
By: SHOWBOAT MARINA PARTNERSHIP, an
Indiana general partnership,
its general partner
By: SHOWBOAT INDIANA INVESTMENT
LIMITED PARTNERSHIP, a Nevada
limited partnership, its
general partner
By: SHOWBOAT INDIANA, INC., a
Nevada corporation, its
general partner
By:
Name: J. Keith Wallace
Title: President and Chief
Executive Officer
SHOWBOAT MARINA FINANCE
CORPORATION, a Nevada corporation
By:
Name: Mark J. Miller
Title: Treasurer
2
<PAGE>
EXHIBIT 1 TO EXHIBIT B-1
INITIAL CONSTRUCTION BUDGET
The following table sets forth the initial construction budget
for the construction of East Chicago Showboat through its
expected opening date of July 1, 1997 (in millions):
<TABLE>
<CAPTION>
AVAILABLE AMOUNT:
<S> <C>
Casino vessel $ 46.0
Gaming and other equipment 17.2
Preopening expenses 11.0
Interest<F1> 16.6
Breakwater 16.4
Garage 15.8
Furniture, fixtures & equipment 11.9
Contingency 11.5
Pavilion 10.5
Design and development fees 16.0
Economic development incentives 5.9
Site improvements and infrastructure 5.6
Offering discounts and expenses 5.6
Bankroll and working capital 5.0
Total Available Amount $195.0
<FN>
<F1> Interest is net of interest income anticipated to be
earned on the funds in the Escrow Account. Assumes
interest income of 4.0% on the cash balance in the
Escrow Account.
</FN>
</TABLE>
1
<PAGE>
EXHIBIT 2 TO EXHIBIT B-1
FORM OF PROJECT MANAGER'S CLOSING CERTIFICATION
_____ __, 1996
Showboat, Inc., as Escrow Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Showboat, Inc., as Disbursement Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
American Bank National Association, as Trustee
101 East 5th Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department
Re: Company's Closing Certification
Project Manager's Closing Certification
Ladies and Gentlemen:
Showboat, Inc., a Nevada Corporation (the "PROJECT MANAGER")
hereby certifies to each of you as follows:
1. We have reviewed the above referenced Company Closing
Certification from the Company and that certain Escrow and
Disbursement Agreement (the "ESCROW AND DISBURSEMENT AGREEMENT")
dated March 28, 1996 by and among Showboat Marina Casino
Partnership, an Indiana general partnership ("SHOWBOAT
PARTNERSHIP"), Showboat Marina Finance Corporation, a Nevada
corporation ("FINANCE CORPORATION" and, together with Showboat
Partnership, the "COMPANY"), Showboat, Inc., a Nevada corporation
("SHOWBOAT") and as escrow agent (the "ESCROW AGENT"), as
disbursement agent (the "DISBURSEMENT AGENT"), and American Bank
National Association, as trustee (the "TRUSTEE") under the
Indenture, to the extent necessary to understand the defined
terms contained herein and in the Company's Closing Certification
that is incorporated by reference from the Escrow and
Disbursement Agreement, and to provide the certification
contained herein.
2. The Project Manager hereby certifies and confirms the
accuracy of the certifications in paragraphs 1 and 3 of the above-
referenced Company's Closing Certification.
2
<PAGE>
3. The Project Manager hereby certifies that to the best
of its knowledge, East Chicago Showboat with the Minimum
Facilities may be constructed in accordance within the Initial
Construction Budget identified in the Company's Closing
Certification.
The foregoing representations, warranties and certifications
are true and correct and you each are entitled to rely on the
foregoing in connection with the Initial Disbursements.
Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Escrow and Disbursement
Agreement.
Showboat, Inc.,
a Nevada corporation
By:
Name: R. Craig Bird
Title: Executive Vice President - Finance and Administration
3
<PAGE>
EXHIBIT 3 TO EXHIBIT B-1
FORM OF PROJECT ARCHITECT'S CLOSING CERTIFICATION
March 28, 1996
Showboat, Inc., as Escrow Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Showboat, Inc., as Disbursement Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
American Bank National Association, as Trustee
101 East 5th Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department
Re: Company's Closing Certification
Project Architect's Closing Certification
Ladies and Gentlemen:
Showboat, Inc., a Nevada Corporation (the "PROJECT
ARCHITECT") hereby certifies to each of you as follows:
1. The Project Architect has reviewed the above referenced
Company's Closing Certification from the Company and that certain
Escrow and Disbursement Agreement (the "ESCROW AND DISBURSEMENT
AGREEMENT") dated March 28, 1996 by and among Showboat Inc., a
Nevada corporation ("SHOWBOAT"), as escrow agent (the "Escrow
Agent"), and as disbursement agent (the "DISBURSEMENT AGENT"),
American Bank National Association, as trustee (the "TRUSTEE")
under the Indenture, Showboat Marina Casino Partnership, an
Indiana general partnership (the "PARTNERSHIP"), and Showboat
Marina Finance Corporation, ("FINANCE CORPORATION" and, together
with the Partnership, the "COMPANY"), to the extent necessary to
understand the defined terms contained herein and in the
Company's Closing Certification that are incorporated by
reference from the Escrow and Disbursement Agreement, and to
provide the certification contained herein.
2. The Project Architect hereby certifies and confirms the
accuracy of the certifications in paragraphs 1 and 3 of the above-
referenced Company's Closing Certification.
3. The Project Architect hereby certifies that to the best
of its knowledge, East Chicago Showboat with the Minimum
Facilities may be constructed in accordance within the Initial
Construction Budget identified in the Company's Closing
Certification.
4
<PAGE>
The foregoing representations, warranties and certifications
are true and correct and you each are entitled to rely on the
foregoing in connection with the Initial Disbursements.
Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Escrow and Disbursement
Agreement.
Showboat, Inc.,
a Nevada corporation
By:
Name: R. Craig Bird
Title: Executive Vice President - Finance and Administration
5
<PAGE>
EXHIBIT B-2 TO ESCROW AND DISBURSEMENT AGREEMENT
FORM OF DISBURSEMENT AGENT'S CLOSING CERTIFICATION
Showboat, Inc., Disbursement Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
_________ __, 1996
Showboat, Inc., Escrow Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Re: Disbursement Agent's Closing Certification
Ladies and Gentlemen:
This Closing Certification is delivered to you pursuant to
that certain Escrow and Disbursement Agreement (the "ESCROW AND
DISBURSEMENT AGREEMENT") dated March 28, 1996 by and among
AGENT"), Showboat, Inc., a Nevada corporation ("SHOWBOAT"), as
escrow agent (the "ESCROW AGENT"), and disbursement agent (the
"DISBURSEMENT AGENT"), American Bank National Association, as
trustee (the "TRUSTEE") under the Indenture (as defined therein),
Showboat Marina Casino Partnership, an Indiana general
partnership (the "PARTNERSHIP"), and Showboat Marina Finance
Corporation, a Nevada corporation ("FINANCE CORPORATION" and,
together with the Partnership, the "COMPANY"). Capitalized terms
used herein shall have the meanings assigned to such terms in the
Escrow and Disbursement Agreement.
The Disbursement Agent hereby certifies to each of you as
follows as contemplated by Section 6.1 (c) of the above-
referenced Escrow and Disbursement Agreement:
1. The Escrow Account has been established as contemplated
by the Escrow and Disbursement Agreement.
2. The Disbursement Agent has obtained and has in effect
insurance of the type required by Section 8.3 of the Escrow and
Disbursement Agreement.
3. The Disbursement Agent has received from the Company
(a) an executed Initial Disbursements Certificate, and (b) an
executed Closing Certification in the form attached to the Escrow
and Disbursement Agreement as Exhibit B-1, together with closing
certifications from the Project Manager and the Project Architect
in the form called for thereby.
The foregoing representations, warranties and certifications
are true and correct and you each are entitled to rely on the
foregoing in connection with the Initial Disbursements.
6
<PAGE>
Showboat Inc.,
a Nevada Corporation
By:
Name: R. Craig Bird
Title: Executive Vice President - Finance and Administration
7
<PAGE>
EXHIBIT B-3 TO ESCROW AND DISBURSEMENT AGREEMENT
FORM OF TRUSTEE'S CLOSING CERTIFICATION
American Bank National Association, as Trustee
101 East 5th Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department
_____ __, 1996
Showboat, Inc., Escrow Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Re: Trustee's Closing Certification
Ladies and Gentlemen:
This Closing Certification is delivered to you pursuant to
that certain Escrow and Disbursement Agreement (the "ESCROW AND
DISBURSEMENT AGREEMENT") dated March 28, 1996 by and among
Showboat Marina Casino Partnership, an Indiana general
partnership ( "SHOWBOAT PARTNERSHIP"), Showboat Marina Finance
Corporation, a Nevada corporation ("FINANCE CORPORATION" and,
together with Showboat Partnership, the "COMPANY"), American Bank
National Association, a national banking association, as trustee
(the "TRUSTEE") under the Indenture (as defined in the Escrow and
Disbursement Agreement) and Showboat, Inc., as escrow agent (the
"ESCROW AGENT"), and as disbursement agent (the "DISBURSEMENT
AGENT"). Capitalized terms used herein shall have the meanings
assigned to such terms in the Escrow and Disbursement Agreement.
The Trustee hereby certifies to each of you as follows as
contemplated by Section 6.1 (c) of the above-referenced Escrow
and Disbursement Agreement:
1. The Trustee has received from the Company an executed
Initial Disbursements Certificate and an executed Closing
Certification in the form attached to the Escrow and Disbursement
Agreement as Exhibit B-1, together with closing certifications
from the Project Manager and the Project Architect in the form
called for thereby.
2. The Trustee has received from the Title Insurer the
Title Policy required to be in effect under the terms of the
Escrow and Disbursement Agreement as of the date of the Initial
Disbursements.
The foregoing representations, warranties and certifications
are true and correct and you each are entitled to rely on the
foregoing in connection with the Initial Disbursements.
AMERICAN BANK NATIONAL ASSOCIATION,
a national banking association, as
Trustee
By:
Name:
Title:
8
<PAGE>
EXHIBIT C TO ESCROW AND DISBURSEMENT AGREEMENT
DISBURSEMENT REQUEST AND CERTIFICATE
[Letterhead of the Company]
__________, 199__
Showboat, Inc., Disbursement Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Re: Disbursement Request No. ____________ under Escrow and
Disbursement Agreement
Amount Requested: $_____________
Ladies and Gentlemen:
This Disbursement Request and certificate is delivered to
you pursuant to that certain Escrow and Disbursement Agreement
(the "ESCROW AND DISBURSEMENT AGREEMENT") dated March 28, 1996 by
and among Showboat, Inc., a Nevada corporation, as escrow agent
(the "ESCROW AGENT"), and as disbursement agent (the
"DISBURSEMENT AGENT"), American Bank National Association, as
trustee (the "TRUSTEE") under the Indenture (as defined therein),
Showboat Marina Casino Partnership, an Indiana general
partnership (the "PARTNERSHIP"), and Showboat Marina Finance
Corporation, a Nevada corporation ("FINANCE CORPORATION" and,
together with the Partnership, the "COMPANY"). Capitalized terms
used herein shall have the meanings assigned to such terms in the
Escrow and Disbursement Agreement.
The Company hereby requests that you, in your capacity as
Disbursement Agent under the Escrow and Disbursement Agreement,
authorize the Escrow Agent to make a disbursement of
$______________ (the "DISBURSEMENT") to the parties identified on
SCHEDULE 1 attached hereto and in the respective amounts listed
for such parties on SCHEDULE 1 under the column "CURRENT PAYMENT
AMOUNT."
In connection with the requested Disbursement, the Company
signing below hereby represent, and certify as follows:
1. With respect to amounts requested on SCHEDULE 1 for
Construction Expenses, SCHEDULE 1 accurately lists, for each line
item and for each party to whom payment is requested with respect
to such line item, the following: (i) the name of the payee to
be paid, (ii) the current payment requested, (iii) the increase
or decrease in accrued but unpaid Retainage Amount for such payee
since the last Disbursement Request (after giving effect to the
payment contemplated by the Disbursement Request); (iv) the total
amount contemplated to be payable to such payee under the terms
of its applicable Contract through completion of all work and
delivery of all materials contemplated by the Contract (i.e., the
total contract amount); (v) the total payments made to such payee
under its applicable Contract as of the Issue Date; (vi) the
total payments made to such payee since the Issue Date (after
giving effect to the payment contemplated by this Disbursement
Request); (vii) the sum of all payments made to such payee (after
giving effect to the payment contemplated by this Disbursement
Request) (i.e., the sum of (v) and (vi) above); (viii) the
aggregate accrued Retainage Amounts which shall continue to be
owed with respect to such Contract (after giving effect to the
payment contemplated by the Disbursement Request); and (ix) the
percentage of the work actually completed, or the materials
actually delivered, under the Contract through the date for which
1
<PAGE>
payment is made hereunder (expressed as a percentage of the total
work and materials contemplated by the Contract through
completion).
2. The construction performed as of the date hereof is in
accordance with the Plans for East Chicago Showboat and the
disbursement is appropriate in light of the percentage of
construction completed and the amount of stored materials. As of
the date hereof, there is no reason to believe that the date on
which East Chicago Showboat will become Operating will not occur
on or prior to the Completion Date.
3. With respect to amounts requested on SCHEDULE 1 for Pre-
Opening Expenses, all such Pre-Opening Expenses have been
incurred and are payable in accordance with the Indenture, and
all of the conditions set forth in EXHIBIT K to the Escrow and
Disbursement Agreement to the disbursement and payment of said
amounts have been satisfied.
4. Appropriate evidence of lien releases, if required by
Section 6.2(k) or 6.2(l) of the Escrow and Disbursement
Agreement, and title insurance endorsements, if required by
Section 6.2(h) of the Escrow and Disbursement Agreement, have
been received for all work, materials and/or services performed
and/or delivered in connection with East Chicago Showboat. In
addition all Title Policies required pursuant to the Escrow and
Disbursement Agreement have been received. The lien releases and
the title endorsements, to the extent applicable, are attached
hereto.
5. The Construction Budget presently in effect is dated
_________________ and includes all amendments through
Construction Budget Amendment No. ___. Said Construction Budget
accurately sets forth the anticipated Construction Expenses
through completion of construction of East Chicago Showboat and
the various components of East Chicago Showboat identified
thereon as line items, all within the respective line item
amounts listed.
6. The Construction Budget continues to accurately set
forth (a) all anticipated Pre-Opening Expenses which the Company
will need to incur in order the commence Operating East Chicago
Showboat on or before the Completion Date, and (b) all
anticipated Debt Financing Costs payable through the date that
the Company reasonably anticipates that East Chicago Showboat
first will be Operating and to provide a reserve to cover any
additional Debt Financing Costs that will accrue but will not yet
be payable as of such date, all within the line item allocations
established for those components set forth in the Construction
Budget.
7. After giving effect to the requested disbursement from
the Escrow Account, there are sufficient Available Funds to pay
for the anticipated costs described in paragraphs 6 and 7 above,
and the Company does not believe that any other expenses will
need to be incurred by the Company in order to cause East Chicago
Showboat to be Operating on or before the Completion Date.
8. There is no Event of Default under the Indenture or any
event, omission or failure of a condition which would constitute
an Event of Default under the Indenture after notice or lapse of
time or both.
9. As of the date hereof, the Company submitted to the
Disbursement Agent all Plans which, as of the date hereof,
constitute Final Plans. Further, all disbursements requested
under this Disbursement Request are for the Payment of
Construction Expenses incurred for work consistent with Plans
which the Company reasonably believes ultimately will become
Final Plans and which will permit the Company to complete
construction of East Chicago Showboat on or before the Completion
Date.
10. [ ] Check this box if this Disbursement is for the
purchase of real estate. (If so checked, the undersigned will
deliver a copy of the amended Collateral Documents evidencing
that the Lien (as defined in the Indenture) of the Trustee has
been amended to include such real estate).
2
<PAGE>
The foregoing representations, warranties and certifications
are true and correct and Disbursement Agent is entitled to rely
on the foregoing in authorizing and making the Disbursement.
Attached to this Disbursement Request are certificates from
the Project Manager and Project Architect.
THE COMPANY: SHOWBOAT MARINA CASINO PARTNERSHIP,
an Indiana general partnership
By: SHOWBOAT MARINA PARTNERSHIP,
an Indiana general partnership,
its general partner
By: SHOWBOAT INDIANA INVESTMENT
LIMITED PARTNERSHIP, a Nevada
limited partnership, its
general partner
By: SHOWBOAT INDIANA, INC., a
Nevada corporation, its
general partner
By:
Name: J. Keith Wallace
Title: President and Chief
Executive Officer
SHOWBOAT MARINA FINANCE
CORPORATION, a Nevada corporation
By:
Name: Mark J. Miller
Title: Treasurer
3
<PAGE>
<TABLE>
<CAPTION>
Schedule 1 to Disbursement Request and Certificate
Date:________________
CONSTRUCTION EXPENSES
Line Item:
(i) Payee (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) % of
Current Increase/ Total Payments Payments Total Aggregate Contract
Payment Decrease in Amount Under Under Payments Accured and Work
Amount Retainage Payable Contract Contract to Date Unpaid Completed
Amount Since Under Prior to From and [(iv)+(v)] Retainage
Last Contract Issue After Issue Amounts for
Disbursement Terms Date Date Contract
Request
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total for
Line Item
Line Item:
Total for
Line Item
Line Item:
Total for
Line Item
PRE-OPENING EXPENSES
Line Item:
(i) Payee (ii) Current Payment Amount
1
<PAGE>
Total for
Line Item
Line Item:
Total for
Line Item
</TABLE>
2
<PAGE>
EXHIBIT 1 TO EXHIBIT C
CERTIFICATE OF PROJECT MANAGER
(DISBURSEMENT REQUEST)
___________, 199__
Showboat, Inc., Disbursement Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Re: Disbursement Request No. __________
Under Escrow and Disbursement Agreement
Certificate of Project Manager
Ladies and Gentlemen:
The Project Manager hereby certifies as follows:
1. The Project Manager has reviewed the above referenced
Disbursement Request and that certain Escrow and Disbursement
Agreement (the "ESCROW AND DISBURSEMENT AGREEMENT") dated March
28, 1996 by and among Showboat Marina Casino Partnership, an
Indiana general partnership ("SHOWBOAT PARTNERSHIP"), Showboat
Marina Finance Corporation, a Nevada corporation ("FINANCE
CORPORATION" and, together with Showboat Partnership, the
"COMPANY"), American Bank National Association, a national
banking association, as trustee (the "TRUSTEE") under the
Indenture (as defined in the Escrow and Disbursement Agreement)
and Showboat, Inc., a Nevada Corporation ("SHOWBOAT"), as escrow
agent (the "ESCROW AGENT"), and as disbursement agent (the
"DISBURSEMENT AGENT") to the extent necessary to understand the
defined terms contained herein and in the Disbursement Request
that are incorporated by reference from the Escrow and
Disbursement Agreement, and to provide the certification
contained herein. Capitalized terms used herein shall have the
meanings assigned to such terms in the Escrow and Disbursement
Agreement.
2. The Project Manager hereby certifies and confirms the
accuracy of the certifications in paragraphs 1, 2, 5, 6 and 9 of
the above-referenced Disbursement Request.
3. The Project Manager hereby certifies that to the best
of its knowledge, East Chicago Showboat with the Minimum
Facilities may be constructed in accordance with the Construction
Budget presently in effect.
The foregoing representations, warranties and
certifications are true and correct and the Disbursement Agent is
entitled to rely on the foregoing in authorizing and making the
Disbursement.
Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Escrow and
Disbursement Agreement.
3
<PAGE>
Showboat, Inc.,
a Nevada corporation
By:
Name:
Title:
4
<PAGE>
EXHIBIT 2 TO EXHIBIT C TO ESCROW AND DISBURSEMENT AGREEMENT
CERTIFICATE OF PROJECT ARCHITECT
(DISBURSEMENT REQUEST)
_______, 199__
Showboat, Inc., Disbursement Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Attention: R. Craig Bird
Re: Disbursement Request No. __________
Under Escrow and Disbursement Agreement
Certificate of Project Architect
Ladies and Gentlemen:
The Undersigned, (the "Project Architect) hereby certifies
as follows:
1. We have reviewed the above referenced Disbursement
Request and that certain Escrow and Disbursement Agreement
(the "ESCROW AND DISBURSEMENT AGREEMENT") dated March 28, 1996 by
and among Showboat Marina Casino Partnership, an Indiana general
partnership ( "SHOWBOAT PARTNERSHIP"), Showboat Marina Finance
Corporation, a Nevada corporation ("FINANCE CORPORATION" and,
together with Showboat Partnership, the "COMPANY"), to the extent
necessary to understand the defined terms contained herein and in
the Disbursement Request that are incorporated by reference from
the Escrow and Disbursement Agreement, and to provide the
certification contained herein, American Bank National
Association, a national banking association, as trustee (the
"TRUSTEE") under the Indenture (as defined in the Escrow and
Disbursement Agreement) and Showboat, Inc., a Nevada Corporation
("SHOWBOAT"), as escrow agent (the "ESCROW AGENT"), and as
disbursement agent (the "DISBURSEMENT AGENT"). Capitalized terms
used herein shall have the meanings assigned to such terms in the
Escrow and Disbursement Agreement.
2. We hereby certify and confirm the accuracy of the
certifications contained in paragraphs 2 and 9 of the above-
referenced Disbursement Request.
3. We hereby certify that, to the best of our knowledge,
East Chicago Showboat with the Minimum Facilities may be
constructed in accordance with the Construction Budget presently
in effect.
The foregoing representations, warranties and
certifications are true and correct and the Disbursement Agent is
entitled to rely on the foregoing in authorizing and making the
Disbursement.
Capitalized terms used herein and not otherwise defined
shall have the meaning ascribed to them in the Escrow and
Disbursement Agreement.
5
<PAGE>
a Project Architect
By:
Name:
Title:
By:
Name:
Title:
6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT D TO ESCROW AND DISBURSEMENT AGREEMENT
PROJECT COST SCHEDULE
Prepared as of : _____________, 199__
CONSTRUCTION EXPENSES
(i) (ii) (iii) (iv) (v) (vi) (vii)
Line Item Total Excluded Construction Costs Paid Accrued and Available
Estimated Costs <F2> Budget<F3> to Date Unpaid Amount<F6>
Costs<F1> Since Issue Retainage
Date<F4> Amounts to
Date<F5>
<S> <C> <C> <C> <C> <C> <C>
PRE-OPENING EXPENSES
(i) Line Item (ii) Total (iii) (iv) (v) Costs (vi) (vii)
Estimated Excluded Construction Paid to Accrued and Available
Costs<F1> Costs <F2> Budget<F3> Date Since Unpaid Amount<F6>
Issue Retainage
Date<F4> Amounts to
Date<F5>
1
<PAGE>
DEBT FINANCING COSTS
UNALLOCATED RESERVES
TOTAL
<FN>
<F1> Includes "Excluded Costs" (column iii) under line item.
<F2> Represents (a) expenses paid by the Colmpany in connection
with East Chicago Showboat prior to the Issue Date, and (b)
to the extent not covered by clause (a), any expenses paid
pursuant to Initial Disbursemnts.
<F3> Excludes "Excluded Costs" (column(iii), but includes
Retainage Amounts accrued but unpaid as of Issue Date).
<F4> Include Retainage Amounts, as and when paid.
<F5> Include Retainage Amounts accrued as of Issue Date, to the
extent still unpaid.
<F6> Represents amounts presently allocated to Line Item that
have not yet been disbursed or retained to cover Retainage
Amounts.
</FN>
</TABLE>
2
<PAGE>
Additional Revenue Anticipated (as of Issue
Date, as noted on Intial Constructin Budget)
to be earned From Investments in Escrow Account $
Additional Revenue Earned From Investments in
Escrow Account as of the Date of this Project
Cost Schedule $
Additional Revenue Anticipated to be Earned,
From investments in Escrow Account, from the
Date of this Project Cost Schedule Through the
Date East Chicago Showboat Anticipated to be
Operating $
The undersigned hereby confirms the accuracy of the above Project
Cost Schedule as of the date for which it has been prepared.
Date:_____________, 199__
THE COMPANY: SHOWBOAT MARINA CASINO PARTNERSHIP,
an Indiana general partnership
By: SHOWBOAT INDIANA INVESTMENT LIMITED
PARTNERSHIP, a Nevada limited partnership
By: SHOWBOAT INDIANA, INC., a Nevada
corporation, its general partner
By:
Name:
Title:
SHOWBOAT MARINA FINANCE CORPORATION
By:
Name:
Title:
3
<PAGE>
EXHIBIT E TO ESCROW AND DISBURSEMENT AGREEMENT
CONSTRUCTION BUDGET AMENDMENT CERTIFICATE
[Letterhead of the Company]
Date: _______, 1996
Showboat, Inc., Disbursement Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Re: Amendment No. ___________ to Construction Budget
Under Escrow and Disbursement Agreement
Construction Budget Amendment Certificate
Ladies and Gentlemen:
The Company requests that the Construction Budget for East
Chicago Showboat be amended as set forth on SCHEDULE 1 to this
certificate. This certificate is delivered pursuant to that
certain Escrow and Disbursement Agreement (the "ESCROW AND
DISBURSEMENT AGREEMENT") dated March 28, 1996 by and among
Showboat, Inc., a Nevada corporation ("SHOWBOAT"), as escrow
agent (the "ESCROW AGENT"), and as disbursement agent (the
"DISBURSEMENT AGENT"), American Bank National Association, as
trustee (the "TRUSTEE") under the Indenture (as defined therein),
Showboat Marina Casino Partnership, an Indiana general
partnership (the "PARTNERSHIP"), and Showboat Marina Finance
Corporation, a Nevada corporation ("FINANCE CORPORATION" and,
together with the Partnership, the "COMPANY"). Capitalized terms
used in this certificate that are otherwise not defined shall
have the meaning assigned in the Escrow and Disbursement
Agreement.
In connection with the requested Construction Budget
amendment, the Company hereby represents, warrants and certifies
as follows:
1. The proposed amendment is reasonably necessary in
order to complete the work represented by such line
item in the Construction Budget that is amended.
2. Funding to pay the costs represented by any line
item increase is available from Realized Savings,
Additional Revenue, Capital Lease Savings and/or
Additional Project Financing to the extent not
previously expended or dedicated (including Retainage
Amounts) to the payment of items contained in the
Construction Budget, from the allocation of otherwise
unallocated reserves in the Construction Budget or from
the reduction of allocated reserves pursuant to the
terms and conditions of the Escrow and Disbursement
Agreement and, in each case, as set forth on SCHEDULE 1
hereto.
3. The Construction Budget in effect immediately
prior to the proposed amendment is attached to this
Construction Budget Amendment Certificate as SCHEDULE
2, and the Construction Budget which will be in effect
upon effectiveness of the proposed amendment is
attached to this Construction Budget Amendment as
SCHEDULE 3.
1
<PAGE>
4. Immediately following the proposed amendment: (i)
the Construction Budget will continue to provide for
construction of improvements which are substantially
consistent with the Minimum Facilities; (ii) the
Construction Budget will continue to call for
construction which will permit the date on which East
Chicago Showboat becomes Operating to occur on or prior
to the Completion Date; (iii) the Construction Budget
will continue to reasonably establish the line item
components of the work required to be undertaken in
order to complete construction of East Chicago
Showboat, and will continue to reasonably establish the
cost of completing each line item component of such
work; and (iv) the Remaining Costs will not exceed the
Available Funds.
5. The construction performed as of the date hereof
is in accordance with the Plans and the disbursement is
appropriate in light of the percentage of construction
completed and the amount of stored materials. The
undersigned have no reason to believe that the date on
which East Chicago Showboat will become Operating will
not occur on or prior to the Completion Date.
6. After giving effect to the proposed amendment, the
Construction Budget accurately sets forth the
anticipated Construction Expenses through completion of
the construction of East Chicago Showboat and the
various lien item components thereof identified on the
Construction Budget, all within the line item
allocations established for those components set forth
in the Construction Budget.
7. After giving effect to the proposed amendment, the
Construction Budget accurately sets forth all
anticipated Pre-Opening Expenses which the Company will
need to incur in order to commence Operating East
Chicago Showboat on or before the Completion Date, and
all anticipated Debt Financing Costs which will be
payable or which will accrue through the date that the
Company reasonably anticipates that East Chicago
Showboat first will be Operating and to provide a
reserve to cover any additional Debt Financing Costs
that will accrue but will not yet be payable as of such
date, all within the respective line items established
for those items in the Construction Budget.
8. After giving effect to the proposed amendment,
there are sufficient Available Funds to pay for the
anticipated costs described in paragraphs 6 and 7 above
and the Company does not believe that any other
expenses will need to be incurred by the Company in
order to cause East Chicago Showboat to be Operating on
or before the Completion Date.
9. There is no Event of Default under the Indenture
or any event, omission or failure of a condition which
could constitute an Event of Default under the
Indenture after notice or lapse of time or both.
10. If the line item "UNALLOCATED RESERVES" is zero in
the Construction Budget for East Chicago Showboat,
SCHEDULE 1 to this Construction Budget amendment has
been reviewed by the Reviewing Agent in accordance with
the Escrow and Disbursement Agreement and attached as
SCHEDULE 4 hereto is a copy of the Reviewing Agent's
review letter.
The undersigned certifies that the Construction Budget
amendment contemplated hereby is permitted pursuant to the Escrow
and Disbursement Agreement and the Indenture, and all conditions
precedent thereto have been met.
2
<PAGE>
Attached to this Construction Budget Amendment Certificate
are certificates from the Project Manager and the Project
Architect.
THE COMPANY: SHOWBOAT MARINA CASINO PARTNERSHIP,
an Indiana general partnership
By: SHOWBOAT MARINE PARTNERSHIP, an
Indiana general partnership, its
general partner
By: SHOWBOAT INDIANA INVESTMENT LIMITED
PARTNERSHIP, a Nevada limited
partnership
By: SHOWBOAT INDIANA, INC., a Nevada
corporation, its general partner
By:
Name:
Title:
SHOWBOAT MARINA FINANCE CORPORATION
By:
Name:
Title:
3
<PAGE>
SCHEDULE 1 TO CONSTRUCTION BUDGET AMENDMENT
Amendment No. __ to Construction Budget.
I. Increases to Line Items:
The following line item is increased: ________________________
Old Amount of Line Item: ________________________
Amount of Increase: ________________________
New Total For Line Item: ________________________
Source of Funds For Increase:
Source Amount
Realized Savings _______________1
Additional Revenue _______________2
Previously Unallocated Reserve _______________
Additional Project
Financing _______________2
Capital Lease Savings _______________3
Total _______________
II. Decreases to Line Items:
The following line item is
decreased: ________________________________
Old Amount of Line Item: ________________________________
Amount of Decrease: ________________________________
New Amount of Line Item: ________________________________
Reason For Decrease of Line Item:
___ Realized Savings1
___ Decrease of Unallocated Reserves
___ Decrease of Allocated Reserves
___ Capital Lease Savings3
_______________________________
1. Source and documentation (receipts for purchased goods or
contracts for fixed price) for Realized Savings are
attached.
2. Attached deposit slip into the Escrow Account to evidence
additional funds.
3. Documentation (leases for goods leased pursuant to
capital leases) for Capital Lease Savings are attached.
1
<PAGE>
III. New Construction Budget Totals
a. The total Construction Budget for the
Project is now: $_____________
b. The amount disbursed to date for the
Project is now: $_____________
c. Remaining amounts to be spent: $_____________
d. Available Funds for Project: $_____________
Item d should be greater than or equal to item c.
2
<PAGE>
SCHEDULE 2 TO CONSTRUCTION BUDGET AMENDMENT CERTIFICATE
EXISTING CONSTRUCTION BUDGET
The following table sets forth the existing construction budget
for East Chicago Showboat (in millions):
<TABLE>
<CAPTION>
CONSTRUCTION BUDGET:
<S> <C>
Casino vessel $ 46.0
Gaming and other equipment 17.2
Preopening expenses 11.0
Interest<F1> 16.6
Breakwater 16.4
Garage 15.8
Furniture, fixtures & equipment 11.9
Contingency 11.5
Pavilion 10.5
Design and development fees 16.0
Economic development incentives 5.9
Site improvements and infrastructure 5.6
Offering discounts and expenses 5.6
Bankroll and working capital 5.0
Total $195.0
<FN>
<F1> Interest is net of interest income anticipated to be
earned on the funds in the Escrow Account. Assumes
interest income of 4.0% on the cash balance in the
Escrow Account.
</FN>
</TABLE>
1
<PAGE>
SCHEDULE 3 TO CONSTRUCTION BUDGET AMENDMENT CERTIFICATE
REVISED CONSTRUCTION BUDGET
2
<PAGE>
SCHEDULE 4 TO CONSTRUCTION BUDGET AMENDMENT CERTIFICATE
FORM OF REVIEWING AGENT'S LETTER
_________, 199_
_______________________
_______________________
_______________________
_______________________
Dear ____________:
At your request, we are submitting this proposal to perform
certain agreed upon procedures relating to the Budget Amendment
Certificate to be submitted as part of an Officer's Certificate
pursuant to Section 4.1 of that certain Escrow and Disbursement
Agreement (the "ESCROW AND DISBURSEMENT AGREEMENT") dated March
28, 1996 by and among Showboat, Inc., a Nevada corporation
("SHOWBOAT"), as escrow agent (the "ESCROW AGENT") and as
disbursement agent (the "DISBURSEMENT AGENT"), American Bank
National Association, as trustee (the "TRUSTEE") under the
Indenture (as defined therein), Showboat Marina Casino
Partnership, an Indiana general partnership (the "PARTNERSHIP"),
and Showboat Marina Finance Corporation, a Nevada corporation
("FINANCE CORPORATION" and, together with the Partnership, the
"COMPANY"). Capitalized terms used in this certificate that are
otherwise not defined shall have the meaning assigned in the
Escrow and Disbursement Agreement.
It is our understanding that the purpose of these special
procedures is to verify the information listed on Schedule 1 to
Budget Amendment (an example of such schedule is shown as
Schedule 1 to Exhibit E of the aforementioned Escrow and
Disbursement Agreement), trace such information to the
Construction Budget and recalculate the schedule for mathematical
accuracy, and report any exceptions noted to the Company and the
Disbursement Agent responsible for disbursing the funds pursuant
to the Escrow and Disbursement Agreement. It is our further
understanding that these special procedures are to be performed
and our report thereon rendered timely such that it can be
attached to the Officer's Certificate to the Disbursement Agent.
We expect our report will read generally as follows:
We have performed the procedures enumerated below as
requested by the management of Showboat Marina Casino
Partnership relating to amendments to the Construction
Budget and in particular to the schedule attached to the
Budget Amendment Certificate prepared for such purpose.
These procedures were performed solely to assist the Company
in complying with the terms of the Escrow and Disbursement
Agreement, and to provide independent verification of
accounting information included as part of Schedule 1 to the
Budget Amendment. This report is intended solely for your
information and that of the Escrow Agent.
Our procedures were as follows:
(a) We compared the accounting information included in
Schedule 1 to the Budget Amendment to the accounting records
of the Company and to the Construction Budget and found it
to be in agreement except . . .
1
<PAGE>
(b) We recalculated the information submitted for
mathematical accuracy and are in agreement except . . .
These agreed-upon procedures are substantially less in scope
than an audit, the objective of which is the expression of
an opinion on the selected financial information.
Accordingly, we do not express such an opinion.
Based on the application of the procedures referred to
above, nothing came to our attention that caused us to
believe that the accounting information included in the
aforementioned Schedule 1 to the Budget Amendment, prepare
by the Company, was unsupported by the accounting records of
the Company or the Construction Budget, except as noted.
Had we performed additional procedures, or had we made an
audit of the selected financial information, other matters
might have come to our attention that would have been
reported to you.
The aforementioned work and related report is anticipated to be
performed and rendered for each Amendment to the Construction
Budget made within the construction periods of East Chicago
Showboat.
Our fees for the special procedures work will be billed at our
standard rate, plus reimbursable expenses, and submitted for
payment upon completion of each such amendment.
If the aforementioned is in accordance with our understanding,
please sign and return the enclosed copy of this engagement
letter in the attached return envelope.
We look forward to working with you on this important engagement.
Very truly yours,
Accepted By:
_____________________________________
Authorized Signature
2
<PAGE>
EXHIBIT 1 TO EXHIBIT E
CERTIFICATE OF PROJECT MANAGER
CONSTRUCTION BUDGET AMENDMENT
________, 199__
Showboat, Inc., Disbursement Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Re: Amendment No. ____ to Construction Budget
Construction Budget Amendment Certificate, dated _____,
199__
Under Escrow and Disbursement Agreement
Certificate of Project Manager
Ladies and Gentlemen:
Showboat, Inc., a Nevada corporation (the "PROJECT MANAGER")
hereby certifies as follows:
1. The Project Manager has reviewed the above referenced
Construction Budget Amendment Certificate and that certain Escrow
and Disbursement Agreement (the "ESCROW AND DISBURSEMENT
AGREEMENT") dated March 28, 1996 by and among Showboat Marina
Casino Partnership, an Indiana general partnership (the "SHOWBOAT
PARTNERSHIP"), Showboat Marina Finance Corporation, a Nevada
corporation ("FINANCE CORPORATION" and, together with Showboat
Partnership, the "COMPANY"), American Bank National Association,
a national banking association, as trustee (the "TRUSTEE") under
the Indenture (as defined in the Escrow and Disbursement
Agreement) and Showboat, Inc. ("SHOWBOAT"), as escrow agent (the
"ESCROW AGENT") and as disbursement agent (the "DISBURSEMENT
AGENT") to the extent necessary to understand the defined terms
contained herein and in the Construction Budget Amendment
Certificate that are incorporated by reference from the Escrow
and Disbursement Agreement, and to provide the certification
contained herein, Capitalized terms used herein shall have the
meanings assigned to such terms in the Escrow and Disbursement
Agreement.
2. The Project Manager hereby certifies and confirms the
accuracy of the certifications in paragraphs 1, 3, 5 and 6 of the
above-referenced Construction Budget Amendment Certificate.
The foregoing representations, warranties and
certifications are true and correct and the Disbursement Agent
and the Reviewing Agent are entitled to rely on the foregoing in
authorizing and making the amendment to the Construction Budget.
________________,
as Project Manager
By:
Name:
Title:
3
<PAGE>
EXHIBIT 2 TO EXHIBIT E
CERTIFICATE OF PROJECT ARCHITECT
CONSTRUCTION BUDGET AMENDMENT
Showboat, Inc., Disbursement Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Re: Amendment No. ___ to Construction Budget
Construction Budget Amendment Certificate, dated _____,
199__
Under Escrow and Disbursement Agreement
Certificate of Project Architect
Ladies and Gentlemen:
The undersigned, as project architect (the "PROJECT
ARCHITECT"), hereby certifies as follows:
1. The Project Manager has reviewed the above referenced
Construction Budget Amendment Certificate and that certain Escrow
and Disbursement Agreement (the "ESCROW AND DISBURSEMENT
AGREEMENT") dated March 28, 1996 by and among American Bank
National Association, a national banking association, as trustee
(the "TRUSTEE") under the Indenture (as defined in the Escrow and
Disbursement Agreement), Showboat, Inc. ("SHOWBOAT") as escrow
agent (the "ESCROW AGENT") and disbursement agreement
("DISBURSEMENT AGENT"), Showboat Marina Casino Partnership, an
Indiana general partnership (the "SHOWBOAT PARTNERSHIP"),
Showboat Marina Finance Corporation, a Nevada corporation
("FINANCE CORPORATION" and, together with Showboat Partnership,
the "COMPANY"), to the extent necessary to understand the defined
terms contained herein and in the Construction Budget Amendment
Certificate that are incorporated by reference from the Escrow
and Disbursement Agreement, and to provide the certification
contained herein, . Capitalized terms used herein shall have the
meanings assigned to such terms in the Escrow and Disbursement
Agreement.
2. We hereby certify and confirm the accuracy of the
certifications contained in paragraphs 1, 3, 5 and 6 of the above-
referenced Construction Budget Amendment Certificate.
The foregoing representations, warranties and
certifications are true and correct and the Disbursement Agent
and the Reviewing Agent are entitled to rely on the foregoing in
authorizing and making the amendment to the Construction Budget.
Showboat, Inc.,
as Project Manager
By:
Name:
Title:
4
<PAGE>
EXHIBIT F TO ESCROW AND DISBURSEMENT AGREEMENT
CONTRACT AMENDMENT CERTIFICATE
[Letterhead of Company]
_______, 199__
Showboat Inc., Disbursement Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Attention: R. Craig Bird
American Bank National Association, Trustee
101 East 5th Street
St. Paul, Minnesota 55101
Re: Amendment No. ___ to Contract dated __________
(the "CONTRACT") between Showboat Marina Casino
Partnership and ________________ ("CONTRACTOR")
Contract Amendment Certificate
Ladies and Gentlemen:
The Company requests that the above-referenced Contract be
amended as set forth on SCHEDULE 1 to this certificate. This
certificate is delivered pursuant to that certain Escrow and
Disbursement Agreement (the "ESCROW AND DISBURSEMENT AGREEMENT")
dated March 28, 1996 by and among Showboat Marina Casino
Partnership, an Indiana general partnership ( "SHOWBOAT
PARTNERSHIP"), Showboat Marina Finance Corporation, a Nevada
corporation ("FINANCE CORPORATION" and, together with Showboat
Partnership, the "COMPANY"), American Bank National Association,
a national banking association, as trustee (the "TRUSTEE") under
the Indenture (as defined in the Escrow and Disbursement
Agreement) and Showboat, Inc., a Nevada Corporation ("SHOWBOAT"),
as escrow agent (the "ESCROW AGENT") and as disbursement agent
(the "DISBURSEMENT AGENT"). Capitalized terms used in this
certificate that are not otherwise defined shall have the meaning
assigned in the meaning assigned in the Escrow and Disbursement
Agreement.
In connection with the requested Contract amendment, the
Company hereby represents, warrants and certifies as follows:
1. After giving effect to such amendment (and any
related amendment to the Construction Budget):
(a) The Construction Budget will continue to
call for construction of improvements constituting
the at least the Minimum Facilities;
(b) If the amendment will effect a reduction
in the scope of the work to be performed by
Contractor, then the work eliminated from the
scope of work either (i) is not necessary for the
completion of the Minimum Facilities, or (ii) to
the extent necessary for the completion of the
Minimum Facilities, will be completed by the
contractors set forth below under the new or
amended contracts described below. Each such
contractor is competent to perform the
1
<PAGE>
work called for by the new or amended contract in
exchange for the payments contemplated thereby.
WORK CONTRACTOR CONTRACT
__________ __________ __________
(c) The Company will continue to be able to
complete the work within the line items pertaining to
the Contract: (i) in a timely manner so as to permit
the date on which East Chicago Showboat becomes
Operating to occur on or prior to the Completion Date;
and (ii) within the aggregate amounts specified for the
line item on the Construction Budget.
2. After giving effect to the proposed amendment (and
any related amendment to the Construction Budget), the
Construction Budget accurately sets forth the
anticipated Construction Expenses through completion of
the construction of East Chicago Showboat and the
various components of East Chicago Showboat, all within
the line item allocations established for those
components set forth in the Construction Budget.
3. After giving effect to the proposed amendment (and
any related amendment to the Construction Budget), the
Construction Budget accurately sets forth all
anticipated Pre-Opening Expenses which the Company will
need to incur in order to commence Operating East
Chicago Showboat on or before the Completion Date, and
all anticipated Debt Financing Costs which will be
payable or which will accrue through the date that the
Company reasonably anticipates that East Chicago
Showboat first will be Operating and to provide a
reserve to cover any additional Debt Financing Costs
that will accrue but will not yet be payable as of such
date, all within the respective line items established
for those items in the Construction Budget.
4. There is no Event of Default or any event,
omission or failure of a condition which could
constitute an Event of Default after notice or lapse of
time or both.
The undersigned certifies that this Contract Amendment
Certificate is authorized hereby is permitted pursuant to the
Escrow and Disbursement Agreement and the Indenture, and all
conditions precedent thereto have been met.
Attached to this Contract Amendment Certificate are
certificates from the Project Manager and the Project Architect.
2
<PAGE>
THE COMPANY: SHOWBOAT MARINA CASINO PARTNERSHIP,
an Indiana general partnership
By: SHOWBOAT MARINA PARTNERSHIP,
an Indiana general
partnership, its general
partner
By: SHOWBOAT INDIANA INVESTMENT
LIMITED PARTNERSHIP, a Nevada
limited partnership, its
general partner
By: SHOWBOAT INDIANA, INC., a
Nevada corporation, its
general partner
By:
Name: J. Keith Wallace
Title: President and Chief
Executive Officer
SHOWBOAT MARINA FINANCE
CORPORATION, a Nevada corporation
By:
Name: Mark J. Miller
Title: Treasurer
______________________________ hereby certifies that it has
received the above Contract Amendment Certificate and the
certifications of the Project Manager and the Project Architect
attached thereto.
DATE:_____________________ ______________________________
By:
Name:
Title:
1
<PAGE>
SCHEDULE 1 TO CONTRACT AMENDMENT CERTIFICATE
COPY OF EXECUTED CONTRACT AMENDMENT)
2
<PAGE>
EXHIBIT 1 TO EXHIBIT F
CERTIFICATE OF PROJECT MANAGER
CONTRACT AMENDMENT
______, 199__
Showboat, Inc., Disbursement Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Re: Amendment No. ___ to Contract dated __________
(the "CONTRACT") between Showboat Marina Casino
Partnership, and ________________ ("CONTRACTOR")
Contract Amendment Certificate dated _____, _____
Certificate of Project Manager
Ladies and Gentlemen:
The undersigned, as project manager (the "PROJECT MANAGER"),
hereby certifies as follows:
1. The Project Manager has reviewed the above referenced
Contract Amendment Certificate and that certain Escrow and
Disbursement Agreement (the "ESCROW AND DISBURSEMENT AGREEMENT")
dated March 28, 1996 by and among Showboat Marina Casino
Partnership, an Indiana general partnership ( "SHOWBOAT
PARTNERSHIP"), Showboat Marina Finance Corporation, a Nevada
corporation ("FINANCE CORPORATION" and, together with Showboat
Partnership, the "COMPANY"), American Bank National Association,
a national banking association, as trustee (the "TRUSTEE") under
the Indenture (as defined in the Escrow and Disbursement
Agreement) and Showboat, Inc., a Nevada Corporation ("SHOWBOAT"),
as escrow agent (the "ESCROW AGENT") and as disbursement agent
(the "DISBURSEMENT AGENT"), to the extent necessary to understand
the defined terms contained herein and in the Contract Amendment
Certificate that are incorporated by reference from the Escrow
and Disbursement Agreement, and to provide the certification
contained herein.
2. We hereby certify and confirm the accuracy of the
certifications in paragraphs 1 and 2 of the above-referenced
Contract Amendment Certificate.
The foregoing representations, warranties and
certifications are true and correct and the Disbursement Agent is
entitled to rely on the foregoing in authorizing and making the
amendment to the Contract.
Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Escrow and
Disbursement Agreement.
Showboat, Inc.,
as Project Manager
By:
Name:
Title:
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EXHIBIT 2 TO EXHIBIT F
CERTIFICATE OF PROJECT ARCHITECT
CONTRACT AMENDMENT
_________, 1996
Showboat, Inc., Disbursement Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Re: Amendment No. ___ to Contract dated __________
(the "CONTRACT") between Showboat Marina Casino
Partnership, and ________________ ("CONTRACTOR")
Contract Amendment Certificate dated _____, 199_
Certificate of Project Architect
Ladies and Gentlemen:
The undersigned, as project architect (the "PROJECT
ARCHITECT"), hereby certifies as follows:
1. The Project Architect has reviewed the above referenced
Contract Amendment Certificate and that certain Escrow and
Disbursement Agreement (the "ESCROW AND DISBURSEMENT AGREEMENT")
dated March 28, 1996 by and among Showboat Marina Casino
Partnership, an Indiana general partnership ( "SHOWBOAT
PARTNERSHIP"), Showboat Marina Finance Corporation, a Nevada
corporation ("FINANCE CORPORATION" and, together with Showboat
Partnership, the "COMPANY"), American Bank National Association,
a national banking association, as trustee (the "TRUSTEE") under
the Indenture (as defined in the Escrow and Disbursement
Agreement) and Showboat, Inc., a Nevada Corporation ("SHOWBOAT"),
as escrow agent (the "ESCROW AGENT") and as disbursement agent
(the "DISBURSEMENT AGENT"), to the extent necessary to understand
the defined terms contained herein and in the Contract Amendment
Certificate that are incorporated by reference from the Escrow
and Disbursement Agreement, and to provide the certification
contained herein.
2. We hereby certify and confirm the accuracy of the
certifications contained in paragraphs 1 and 2 of the above-
referenced Contract Amendment Certificate.
The foregoing representations, warranties and
certifications are true and correct and the Disbursement Agent
and the Reviewing Agent are entitled to rely on the foregoing in
authorizing and making the amendment to the Contract.
Capitalized terms used herein and not otherwise defined
shall have the meaning ascribed to them in the Escrow and
Disbursement Agreement.
Showboat, Inc.,
as project architect
By:
Name:
Title:
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EXHIBIT G TO ESCROW AND DISBURSEMENT AGREEMENT
FORM OF REVIEWING AGENT LETTER CONFIRMING
PROCEDURES ON DISBURSEMENT REQUEST
Showboat, Inc., Disbursement Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Re: Disbursement No. ___, dated __________, 199_,
Under Escrow and Disbursement Agreement
Ladies and Gentlemen:
We have performed the procedures enumerated below as
requested by the Company in connection with the above-referenced
Disbursement, pursuant to section 4.3 of that certain Escrow and
Disbursement Agreement (the "ESCROW AND DISBURSEMENT AGREEMENT")
dated March 28, 1996 by and among Showboat Marina Casino
Partnership, an Indiana general partnership ( "SHOWBOAT
PARTNERSHIP"), Showboat Marina Finance Corporation, a Nevada
corporation ("FINANCE CORPORATION" and, together with Showboat
Partnership, the "COMPANY"), American Bank National Association,
a national banking association, as trustee (the "TRUSTEE") under
the Indenture (as defined in the Escrow and Disbursement
Agreement) and Showboat, Inc., a Nevada Corporation ("SHOWBOAT"),
as escrow agent (the "ESCROW AGENT") and as disbursement agent
(the "DISBURSEMENT AGENT"). Capitalized terms used herein and
not otherwise defined shall have the meaning ascribed to them in
the Escrow and Disbursement Agreement.
These procedures were performed solely to assist the Company
in complying with the terms of the Escrow and Disbursement
Agreement and to provide independent verification of the nature
of the construction disbursements made for East Chicago Showboat
for which the Company has requested disbursements relating to the
period noted. This report is intended solely for your
information and that of the Escrow Agent.
Our procedures were as follows:
(a) We selected all disbursements made at the request of
the Company individually in excess of $5,000, relating
to disbursement No. __________, dated __________, 199_.
(b) We selected, on a judgmental basis, a sample of 20% of
those disbursements at the request of the Company
individually less than $5,000.
(c) We read the documentation supporting the disbursements
noted in (a) and (b), and compared the documentation to
the disbursement and to the construction budget
category and found the disbursement had documentation
to support the nature of the disbursement, the
disbursement was appropriately categorized against the
construction budget classification, and total
disbursements to date, in such category, did not exceed
the budgeted amount for such category, except as
follows:
These agreed-upon procedures are substantially less in scope
than an audit, the objective of which is the expression of an
opinion on the selected financial information. Accordingly, we
do not express such an opinion.
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Based on the application of the procedures referred to
above, nothing came to our attention that caused us to believe
that the disbursements in the schedules prepared by the Company
that summarize the construction disbursements for East Chicago
Showboat for disbursement No. ______________, dated
_________________ 199_, lacked supporting documentation or were
improperly categorized against the construction budget line
items, except as noted. Had we performed additional procedures,
or had we made an audit of the selected financial information,
other matters might have come to our attention that would have
been reported to you.
Showboat, Inc.,
a Nevada corporation
By:
Name:
Title:
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<PAGE>
EXHIBIT H TO ESCROW AND DISBURSEMENT AGREEMENT
FORM OF DISBURSEMENT AUTHORIZATION
[Letterhead of Disbursement Agent]
Date: [Draw Date], 199_
Showboat, Inc., Disbursement Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Re: Disbursement Authorization
Ladies and Gentlemen:
This Disbursement Authorization is delivered to you
pursuant to that certain Escrow and Disbursement Agreement (the
"ESCROW AND DISBURSEMENT AGREEMENT") dated March 28, 1996 by and
among Showboat Marina Casino Partnership, an Indiana general
partnership ( "SHOWBOAT PARTNERSHIP"), Showboat Marina Finance
Corporation, a Nevada corporation ("FINANCE CORPORATION" and,
together with Showboat Partnership, the "COMPANY"), American Bank
National Association, a national banking association, as trustee
(the "TRUSTEE") under the Indenture (as defined in the Escrow and
Disbursement Agreement) and Showboat, Inc., a Nevada Corporation
("SHOWBOAT"), as escrow agent (the "ESCROW AGENT") and as
disbursement agent (the "DISBURSEMENT AGENT"). Capitalized terms
used herein and not otherwise defined shall have the meanings
ascribed to them in the Escrow and Disbursement Agreement.
Pursuant to Section 3 of the Escrow and Disbursement Agreement,
you are hereby authorized and directed to disburse from the
Escrow Account funds in the amount of $______________.
[IF THIS DISBURSEMENT AUTHORIZATION IS THE FINAL
DISBURSEMENT OF FUNDS TO THE COMPANY PURSUANT TO SECTION 5.1 OF
THE ESCROW AND DISBURSEMENT AGREEMENT, ADD THE FOLLOWING
SENTENCE: In addition, pursuant to Section 5.1 of the Escrow and
Disbursement Agreement, the Disbursement Agent hereby directs the
Escrow Agent to retain funds in the Escrow Account in an amount
equal to $______________ in order to pay the Retainage Amounts
pursuant to Section 6.2.1 of the Escrow and Disbursement
Agreement.]
We certify that we have received, reviewed and approved
a Disbursement Request of the Company and that the disbursement
authorized hereby is permitted pursuant to the Escrow and
Disbursement Agreement.
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Please confirm the transfer described above by
returning a notice of confirmation to the undersigned at the
address set forth above.
as Disbursement Agent
By:
Name:
Title:
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<PAGE>
EXHIBIT I TO ESCROW AND DISBURSEMENT AGREEMENT
FORM OF PAYMENT REQUEST
[Letterhead of Company]
Date: [Draw Date], 199_
Showboat, Inc., as Escrow Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
American Bank National Association, as Trustee
101 East 5th Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department
Re: Payment Request
Ladies and Gentlemen:
This Payment Request is delivered to you pursuant to
that certain Escrow and Disbursement Agreement (the "ESCROW AND
DISBURSEMENT AGREEMENT") dated March 28, 1996 by and among
Showboat Marina Casino Partnership, an Indiana general
partnership ( "SHOWBOAT PARTNERSHIP"), Showboat Marina Finance
Corporation, a Nevada corporation ("FINANCE CORPORATION" and,
together with Showboat Partnership, the "COMPANY"), American Bank
National Association, a national banking association, as trustee
(the "TRUSTEE") under the Indenture (as defined in the Escrow and
Disbursement Agreement) and Showboat, Inc., a Nevada Corporation
("SHOWBOAT"), as escrow agent (the "ESCROW AGENT") and as
disbursement agent (the "DISBURSEMENT AGENT").
Pursuant to Section 3.3 of the Escrow and Disbursement
Agreement, you are hereby directed to pay to _________________
(the "PAYING AGENT") on _______________________ (the "PAYMENT
DATE") funds in the amount of $_________________ from the Escrow
Account maintained by you in the name of the Company. The
undersigned hereby certifies that payments in an amount equal to
such sums will be due and payable on the First Mortgage Notes on
the Payment Date.
Please confirm the transfer described above by
returning a notice of confirmation to the undersigned at the
address set forth above.
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<PAGE>
THE COMPANY: SHOWBOAT MARINA CASINO PARTNERSHIP,
an Indiana general partnership
By: SHOWBOAT MARINA PARTNERSHIP, an
Indiana general partnership, its
general partner
By: SHOWBOAT INDIANA INVESTMENT
LIMITED PARTNERSHIP, a Nevada
limited partnership, its
general partner
By: SHOWBOAT INDIANA, INC., a
Nevada corporation, its
general partner
By:
Name: J. Keith Wallace
Title: President and Chief
Executive Officer
SHOWBOAT MARINA FINANCE
CORPORATION, a Nevada corporation
By:
Name: Mark J. Miller
Title: Treasurer
cc: American Bank National Association, as Trustee under the
Indenture
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EXHIBIT J TO ESCROW AND DISBURSEMENT AGREEMENT
FORM OF CONSENT TO COLLATERAL ASSIGNMENT OF CONTRACT
CONTRACTING PARTY'S CONSENT TO ASSIGNMENT
THIS CONTRACTING PARTY'S CONSENT TO ASSIGNMENT (this
"CONSENT")is made as of _____________, 199_, by
,a(the "CONTRACTING PARTY"), whose address is
,for the benefit of American Bank National Association (the
"TRUSTEE"), whose address is 101 East 5th Street, St. Paul,
Minnesota 55101, Attention: Corporate Trust Department.
RECITALS
A. FIRST MORTGAGE NOTES. Pursuant to that certain
Indenture dated as of March 28, 1996, by and among Showboat
Marina Casino Partnership, an Indiana general partnership, and
Showboat Marina Finance Corporation, a Nevada corporation, and
the Trustee, as trustee (the "INDENTURE"), the Company has issued
$140,000,000 principal amount of their 13 1/2% First Mortgage Notes
due 2003 (the "FIRST MORTGAGE NOTES"). All defined terms used
herein and not otherwise defined, shall have the meanings set
forth in the Indenture, or the Escrow and Disbursement Agreement,
as applicable. The proceeds of the First Mortgage Notes have
been deposited into an escrow account maintained by the Escrow
Agent pursuant to that certain Escrow and Disbursement Agreement
(the "ESCROW AND DISBURSEMENT AGREEMENT") dated March 28, 1996 by
and among Showboat Marina Casino Partnership, an Indiana general
partnership ( "SHOWBOAT PARTNERSHIP"), Showboat Marina Finance
Corporation, a Nevada corporation ("FINANCE CORPORATION" and,
together with Showboat Partnership, the "COMPANY"), American Bank
National Association, a national banking association, as trustee
(the "TRUSTEE") under the Indenture (as defined in the Escrow and
Disbursement Agreement) and Showboat, Inc., a Nevada Corporation
("SHOWBOAT"), as escrow agent (the "ESCROW AGENT") and as
disbursement agent (the "DISBURSEMENT AGENT").
B. SECURITY. The Company must use certain proceeds of the
First Mortgage Notes disbursed pursuant to the Escrow and
Disbursement Agreement for the construction or operation of East
Chicago Showboat. Contracting Party and the Company are parties
to that certain dated
, 199___ (the "CONTRACT") relating to construction or operation
of East Chicago Showboat. The Company has executed an assignment
of contracts and documents, collaterally assigning all of the
Company's right, title and interest in and to, among other
things, the Contract (the "COLLATERAL ASSIGNMENT"), dated as of
_______, 1996, in favor of Trustee.
CONSENT
NOW THEREFORE, for good and valuable consideration,
receipt of which is hereby acknowledged, Contracting Party agrees
as follows:
1. CONSENT TO ASSIGNMENT. Pursuant to the Contract,
Contracting Party has performed or supplied, or agreed to perform
or supply, certain services, materials or documents in connection
with the Property or East Chicago Showboat. Contracting Party
hereby consents to the assignment thereof by the Company to
Trustee as provided in the Collateral Assignment and this
Consent.
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2. COMPANY'S DEFAULT UNDER CONTRACT. If the Company
defaults under the Contract, before exercising any remedy,
Contracting Party shall deliver to Trustee at its address set
forth above, by registered or certified mail, postage prepaid,
return receipt requested, written notice of such default,
specifying the nature of the default and the steps necessary to
cure the same. If the Company fails to cure the default within
the time permitted under the Contract, then Trustee shall have an
additional 30 days after the expiration of the time permitted
under the Contract (but in no event less than an additional 30
days after the receipt by Trustee of the said notice from
Contracting Party) within which Trustee shall have the right, but
not the obligation, to cure such default. Contracting Party's
delivery of such a notice of default to Trustee and Trustee's
failure to cure the same within the said additional period shall
be conditions precedent to the exercise of any right or remedy of
Contracting Party arising by reason of such default, except that
Contracting Party shall not be required to continue performance
under the Contract for the said additional period, unless and
until Trustee agrees to pay Contracting Party for that portion of
the work, labor and materials rendered during the said period.
3. COMPANY'S DEFAULT UNDER LOAN DOCUMENTS. If
Trustee gives written notice to Contracting Party that the
Company has defaulted under the Loan Documents and requests that
Contracting Party continue its performance under the Contract,
Contracting Party shall thereafter perform for Trustee under the
Contract in accordance with its terms, so long as Contracting
Party shall be paid pursuant to the Contract for all work, labor
and materials rendered thereunder, including payment of any sums
due to Contracting Party for work performed up to and including
the date of the Company's default.
4. PERFORMANCE FOR TRUSTEE. If Trustee (a) cures any
default by the Company pursuant to Paragraph 2 above, (b) gives
written notice to Contracting Party that the Company has
defaulted under the Collateral Documents pursuant to Paragraph 3
above, (c) becomes the owner of East Chicago Showboat,
(d) undertakes to complete the construction of East Chicago
Showboat pursuant to its rights under the Collateral Documents,
or (e) following an Event of Default, otherwise requires the
performance of Contracting Party's obligations under the Contract
or the use of any plans and specifications, drawings, surveys or
other materials or documents previously prepared or provided by
Contracting Party pursuant to the Contract, then in any such
event, so long as Contracting Party has received and continues to
receive the compensation required under the Contract related
thereto, Trustee shall have the right to obtain performance from
Contracting Party of all of its obligations under the Contract,
and to use all such plans and specifications, drawings, surveys
and other materials and documents, and the ideas, designs and
concepts contained therein, in connection with the completion of
East Chicago Showboat, without the payment of any additional fees
or charges to Contracting Party.
5. AMENDMENTS AND CHANGE ORDERS. Contracting Party
agrees that it will not modify, amend, supplement or in any way
join in the release or discharge of Contracting Party's
obligations under the Contract unless (a) such change is
commercially reasonable, and (b) the Disbursement Agent under the
Escrow and Disbursement Agreement or the Trustee has consented to
such change in writing, and Contracting Party agrees that it will
not perform any work pursuant to any change order or directive
unless the same is issued and executed in accordance with the
terms and conditions of the Contract.
6. LIST OF SUBCONTRACTING PARTIES. Upon the written
request of the Trustee or the Disbursement Agent at any time and
from time to time, Contracting Party shall furnish to the Trustee
and the Disbursement Agent a current list of all persons with
whom Contracting Party has entered into subcontracts or other
agreements related to the rendering of work, labor or materials
under the Contract, together with a statement as to the status of
each such subcontract or agreement, and the respective amounts,
if any, owed by Contracting Party related thereto.
7. REPRESENTATIONS AND WARRANTIES. Contracting Party
represents and warrants to the Trustee and the Disbursement Agent
that (a) it is duly licensed to conduct its business in the
jurisdiction contemplated by the Contract, and will at all times
maintain its license in full force and effect throughout the term
thereof, (b) the Contract has not been amended, modified or
supplemented except as set forth therein, (c) the
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Contract constitutes a valid and binding obligation of
Contracting Party and is enforceable in accordance with its
terms, (d) there have been no prior assignments of the Contract,
and (e) all covenants, conditions and agreements of the Company
and Contracting Party contained in the Contract have been
performed as required therein, except for those that are not due
to be performed until after the date hereof.
APPLICATION OF FUNDS. Nothing herein imposes or
shall be construed to impose upon Trustee any duty to direct the
application of any proceeds of the First Mortgage Notes, and
Contracting Party acknowledges that Trustee is not obligated to
Contracting Party or any of its subcontracting parties,
materialmen, suppliers or laborers.
ACKNOWLEDGMENT OF INDUCEMENT. Contracting Party
is executing this consent to induce the purchasers of the First
Mortgage Notes to purchase the First Mortgage Notes. Contracting
Party understands that the purchasers of the First Mortgage Notes
would not advance such funds and make such purchases but for
Contracting Party's execution and delivery hereof.
IN WITNESS WHEREOF, Contracting Party has executed this
Consent as of the date first above written.
CONTRACTING PARTY:
________________________
a_______________________
By:
Name:
Title:
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EXHIBIT K TO ESCROW AND DISBURSEMENT AGREEMENT
PRE-OPENING EXPENSES
The Pre-Opening Expenses are described in the Attachment to
this Exhibit K. The attachment further sets forth several line
items of Pre-Opening Expenses and the respective maximum amounts
which may be drawn under the line items for expenses incurred
during the sequential calendar months from ___________ through
___________. No disbursement may be made for a particular line
item category for expenses incurred in that category in any given
calendar month in excess of the maximum set forth for the line
item and the calendar month; PROVIDED, HOWEVER, that: (a) if the
Company incurs less expenses under a line item for a given
calendar month than the maximum set forth for that line item and
calendar month, then the difference can be re-allocated to a
later calendar month for the same line item and thereby increase
the maximum expenditures for the line item in the specified later
calendar month; and (b) if at any time all of the work, services
and materials contemplated under a line item have been completed
and the aggregate expense through said completion is less than
the figure listed for the line item under the column entitled
"Total," then the difference may be re-allocated to other line
items in the Construction Budget (including line items which are
not "Pre-Opening Expenses"). All re-allocations pursuant to the
foregoing shall be made by Construction Budget Amendments
pursuant to the process set forth in the Escrow and Disbursement
Agreement.
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EXHIBIT L TO ESCROW AND DISBURSEMENT AGREEMENT
_____________, 199__
[INSERT NAME AND ADDRESS OF ISSUER OR TRANSFER AGENT FOR THE
ISSUER, AS APPLICABLE]
_______________________________________
_______________________________________
Attention: _____________________
Re: Pledge of securities of [INSERT NAME OF ISSUER] (the
"ISSUER")
Gentlemen and Ladies:
This letter shall provide you with irrevocable instructions
concerning securities (the "SECURITIES") of beneficial
interest of _______________ [INSERT NAME OF ISSUER] to be held in
account no. (the "ACCOUNT") and
registered in the name of the undersigned (the "SECURITYHOLDER").
The undersigned hereby certifies and agrees as follows:
1. The Securityholder has pledged and granted a
security interest in the Securities, together with all interest,
dividends, gains and other income thereon and reinvestments
thereof, together with all right, title and interest of
Securityholder in the Account with respect to the foregoing (the
"PLEDGE"), to American Bank National Association (the "TRUSTEE")
in its capacity as trustee under that certain Indenture dated as
of March 28, 1996, by and among Showboat Marina Casino
Partnership, an Indiana general partnership ( "SHOWBOAT
PARTNERSHIP"), Showboat Marina Finance Corporation, a Nevada
corporation ("FINANCE CORPORATION" and, together with Showboat
Partnership, the "COMPANY"), and American Bank National
Association, a national banking association, as trustee (the
"TRUSTEE") (the "INDENTURE") pertaining to the 13 1/2% First
Mortgage Notes due 2003. In such capacity, the Trustee is
referred to herein as the "PLEDGEE."
2. The Securityholder hereby represents to you that:
(a) the Pledgee has designated _____________ [INSERT NAME OF
AGENT] (the "AGENT") to serve as the Pledgee's designee and agent
in order to perfect the security interest in favor of the
Pledgee; and (b) the Securityholder has not granted any security
interest, right or claim in the Securities or the Account to any
person other than the Pledgee.
3. Accordingly, the Securityholder hereby irrevocably
directs you to make such notations in the records pertaining to
the Securities and the Account as are necessary to reflect the
Pledge, including the registration of the Securities and the
Account in the name of [INSERT SHOWBOAT MARINA CASINO PARTNERSHIP
OR SHOWBOAT MARINA FINANCE CORPORATION, AS APPROPRIATE] and the
registration of the Pledge of the Securities in the following
name:
"___________________ [INSERT NAME OF AGENT],
as agent for American Bank National Association,
in the latter's capacity as trustee under that
certain Indenture dated as of March 28, 1996, by
and among Showboat Marina Casino Partnership, an
Indiana general partnership, Showboat Marina
Finance Corporation, a Nevada corporation, and
American Bank National Association, a national
banking association, as trustee, pertaining to the
13 1/2% First Mortgage Notes due 2003"
4. The Securityholder hereby further irrevocably
directs you to reinvest any and all dividends or distributions
from net investment income and capital gains in additional
Securities of the Issuer, subject to the Pledge. In addition,
the Securityholder hereby irrevocably instructs you,
notwithstanding any contrary instructions from the
Securityholder, to follow only instructions received from the
Agent, furnished in writing, concerning (a)
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the payment or reinvestment of dividends or distributions and (b)
the redemption, transfer, sale or any other disposition or
transaction concerning the Securities or the interest, dividends,
gains and other income thereon.
5. The Securityholder also irrevocably authorizes and
directs you to send all notices, statements and all other
communications concerning the Securities or the Account to the
following address or such other address as may be specified in
written instructions from the Agent: [INSERT NAME AND ADDRESS OF
AGENT]
[INSERT NAME OF AGENT], AS AGENT FOR [INSERT NAME OF TRUSTEE]
[INSERT ADDRESS OF AGENT]
Attn:
Re: Showboat Marina Casino
Partnership, and
Showboat Marina Finance
Corporation
6. The Securityholder agrees that neither you, the
Issuer or any of their respective partners, trustees, officers,
employees or affiliates (collectively, the "Issuer Affiliates")
shall be liable for complying in good faith with the instructions
contained herein or failing to comply with any contrary or
inconsistent instructions that may subsequently be issued by the
Securityholder. The Securityholder further agrees to hold
harmless and indemnify each of the Issuer Affiliates against any
claim or loss arising out of any actions or omissions taken by
any person in reliance on or compliance with the instructions and
authorizations contained herein.
7. The Securityholder agrees that the instructions
contained herein may be revoked by the Securityholder only upon
the receipt by you of the Agent's written consent to such
revocation or written notification from the Agent that the Pledge
has been terminated.
Very truly yours,
THE COMPANY: SHOWBOAT MARINA CASINO PARTNERSHIP,
an Indiana general partnership
By: SHOWBOAT MARINA PARTNERSHIP, an
Indiana general partnership, its
general partner
By: SHOWBOAT INDIANA INVESTMENT
LIMITED PARTNERSHIP, a Nevada
limited partnership, its
general partner
By: SHOWBOAT INDIANA, INC., a
Nevada corporation, its
general partner
By:
Name: J. Keith Wallace
Title: President and Chief
Executive Officer
SHOWBOAT MARINA FINANCE
CORPORATION, a Nevada corporation
By:
Name: Mark J. Miller
Title: Treasurer
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GUARANTEE OF SIGNATURE
Authorized Signature
By: Address:
Title:
Dated: Dated:
The undersigned hereby confirms the following for the
benefit of the above-referenced Pledgee and Agent:
(i) The undersigned is [CHECK APPROPRIATE BOX]
[ ] The Issuer of the Securities, and the Issuer
has been organized under the laws of a
jurisdiction which has adopted Article 8 of
the Uniform Commercial Code pertaining to
investment securities, and said laws
accordingly permit the undersigned to register
a pledge of the Securities in favor of the
Pledgee by taking the steps referenced in
numbered paragraph 3 of the above letter.
[ ] The transfer agent for the Issuer of the
Securities, and the Issuer has been organized
under the laws of a jurisdiction which has
adopted Article 8 of the Uniform Commercial
Code pertaining to investment securities, and
said laws accordingly permit the undersigned
to register a pledge of the Securities in
favor of the Pledgee by taking the steps
referenced in numbered paragraph 3 of the
above letter.
(ii) The undersigned agrees to comply with the
instructions set forth in the above letter. The
Pledge has been registered on ______________,
199_ [INSERT DATE].
(iii) Immediately after registration of the Pledge,
there were no liens, restrictions or adverse
claims (as to which the undersigned has a duty
to disclose under the Uniform Commercial Code)
to the Securities, other than the Pledge.
Date: _____________________, 199_
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EXHIBIT M TO ESCROW AND DISBURSEMENT AGREEMENT
FORM OF SHOWBOAT DISBURSEMENT AUTHORIZATION (SHOWBOAT DISBURSEME
NT CERTIFICATE)
[Letterhead of Showboat]
Date: ______, 199_
Showboat, Inc., Disbursement Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
America Bank National Association
101 East 5th Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department
Re: Showboat Certificate
Ladies and Gentlemen:
This certificate (the "SHOWBOAT DISBURSEMENT
CERTIFICATE") is delivered to you pursuant to that certain Escrow
and Disbursement Agreement (the "ESCROW AND DISBURSEMENT
AGREEMENT") dated March 28, 1996 by and among Showboat Marina
Casino Partnership, an Indiana general partnership ( "SHOWBOAT
PARTNERSHIP"), Showboat Marina Finance Corporation, a Nevada
corporation ("FINANCE CORPORATION" and, together with Showboat
Partnership, the "COMPANY"), American Bank National Association,
a national banking association, as trustee (the "TRUSTEE") under
the Indenture (as defined in the Escrow and Disbursement
Agreement), Showboat, Inc. ("SHOWBOAT"), a Nevada corporation, as
escrow agent (the "ESCROW AGENT") and as disbursement agent (the
"DISBURSEMENT AGENT"). Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the
Escrow and Disbursement Agreement.
DISBURSEMENT
Pursuant to Section 3 and Section 17 of the Escrow and
Disbursement Agreement, you are hereby authorized and directed to
disburse from the Escrow Account funds in the amount of
$______________.
[IF THIS DISBURSEMENT AUTHORIZATION IS THE FINAL
DISBURSEMENT OF FUNDS TO THE COMPANY PURSUANT TO SECTION 5.1 OF
THE ESCROW AND DISBURSEMENT AGREEMENT, ADD THE FOLLOWING
SENTENCE: In addition, pursuant to Section 5.1 of the Escrow and
Disbursement Agreement, we hereby direct you to retain funds in
the Escrow Account in an amount equal to $______________ in order
to pay the Retainage Amounts pursuant to Section 6.2.1 of the
Escrow and Disbursement Agreement.]
AMENDMENTS TO CONSTRUCTION BUDGET OR TO CONTRACTS
We hereby certify that the attached Construction Budget
Amendment or Contract Amendment, as the case may be, is
effective.
1
<PAGE>
Showboat hereby makes to the Escrow Agent and the
Trustee the representations and warranties set forth in Section
17.2 of the Escrow and Disbursement Agreement. All such
representations and warranties are true and correct on the date
hereof.
Showboat, pursuant to Section 17 of the Escrow and
Disbursement Agreement, hereby certifies that the disbursement,
Construction Budget Amendment and/or Contract Amendment, as the
case may be, authorized hereby is permitted under the Escrow and
Disbursement Agreement.
Please confirm the transfer described above by
returning a notice of confirmation to the undersigned at the
address set forth above.
Showboat, Inc.
By:
Name:
Title:
2
<PAGE>
EXHIBIT N TO ESCROW AND DISBURSEMENT AGREEMENT
FORM OF PRE-CLOSING DISBURSEMENT CERTIFICATE
Showboat Marina Casino Partnership
Showboat Marina Finance Corporation
2001 East Columbus Drive
East Chicago, Indiana 46312
March 28, 1996
Showboat, Inc., as Escrow Agent
c/o Showboat Development Company
6601 Ventnor Avenue
Suite 105
Ventnor, New Jersey 08406
Attention: R. Craig Bird
American Bank National Association
101 East 5th Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department
Re: Pre-Closing Disbursements Certificate
Ladies and Gentlemen:
This Pre-Closing Disbursement Certificate is delivered to
you pursuant to that certain Escrow and Disbursement Agreement
(the "ESCROW AND DISBURSEMENT AGREEMENT") dated March 28, 1996 by
and among Showboat Marina Casino Partnership, an Indiana general
partnership ( "SHOWBOAT PARTNERSHIP"), Showboat Marina Finance
Corporation, a Nevada corporation ("FINANCE CORPORATION" and,
together with Showboat Partnership, the "COMPANY"), American Bank
National Association, a national banking association, as trustee
(the "TRUSTEE") under the Indenture (as defined in the Escrow and
Disbursement Agreement) and Showboat, Inc. ("SHOWBOAT"), a Nevada
corporation, as disbursement agent (the "DISBURSEMENT AGENT"),
and as escrow agent (the "ESCROW AGENT"). Capitalized terms used
herein shall have the meanings assigned to such terms in the
Escrow and Disbursement Agreement.
The Company hereby irrevocably instructs the Escrow Agent to
disburse the following sums to the following parties:
(a) $__________ to Chicago Title Insurance Company, as
payment of certain title insurance premiums and other costs
incurred in connection with the issuance of the First Mortgage
Notes; and
(b) $___________ to Stewart Title Guaranty Company, as
payment of certain title insurance premiums and other costs
incurred in connection with the issuance of the First Mortgage
Notes.
[SIGNATURE PAGE FOLLOWS]
1
<PAGE>
THE COMPANY: SHOWBOAT MARINA CASINO PARTNERSHIP,
an Indiana general partnership
By: SHOWBOAT MARINA PARTNERSHIP, an
Indiana general partnership,
its general partner
By: SHOWBOAT INDIANA INVESTMENT LIMITED
PARTNERSHIP, a Nevada limited
partnership, its general partner
By: SHOWBOAT INDIANA, INC., a Nevada
corporation, its general partner
By:
Name: J. Keith Wallace
Title: President and Chief
Executive Officer
SHOWBOAT MARINA FINANCE CORPORATION, a
Nevada corporation
By:
Name: Mark J. Miller
Title: Treasurer
2
<PAGE>
[ARTICLE] 5
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] JUN-30-1996
[CASH] 26684
[SECURITIES] 46283
[RECEIVABLES] 17600
[ALLOWANCES] 2551
[INVENTORY] 2863
[CURRENT-ASSETS] 104935
[PP&E] 584772
[DEPRECIATION] 197951
[TOTAL-ASSETS] 802331
[CURRENT-LIABILITIES] 53853
[BONDS] 530556
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 16182
[OTHER-SE] 0
[TOTAL-LIABILITY-AND-EQUITY] 802331
[SALES] 208904
[TOTAL-REVENUES] 211815
[CGS] 0
[TOTAL-COSTS] 113826
[OTHER-EXPENSES] 79468
[LOSS-PROVISION] 2551
[INTEREST-EXPENSE] 14929
[INCOME-PRETAX] 609
[INCOME-TAX] 274
[INCOME-CONTINUING] 335
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 335
[EPS-PRIMARY] .02
[EPS-DILUTED] .02
</TABLE>
